The Nissenbaum Law Group is a boutique commercial law firm with an emphasis that includes defending attorneys facing NY ethics complaints and NY IOLA trust account audits. The firm has an experienced defense team of attorneys and paralegals who specifically focus on ethics and trust account matters. The team is headed by Anthony C. Gunst, IV, Esq., and is overseen by our managing attorney, Gary D. Nissenbaum, Esq. The two of them have an enormous depth of experience in defending attorneys in a wide range of ethics matters.

Attorneys Representing Attorneys: A Law Firm That Will Both Defend Clients Whose Trust Accounts Are Being Audited and Those Responding to Ethics Complaints

The Nissenbaum Law Group is experienced in defending attorneys who are accused of violating the New York Rules of Professional Conduct. Moreover, the firm has a robust practice involving preparing attorneys for audits of their trust accounts, such as for example, those triggered by  dishonored check investigations. In addition, the firm provides ethics-related representation to law firms involving a variety of other areas: everything from strengthening retainer agreements to analyzing the ethical issues involved in succession planning and potential law firm mergers.

Many of the most serious ethics matters relate to trust accounting. This can involve not only accusations of financial misappropriation, but also such items as the improper allocation of damage awards in contingency matters, dishonored checks, or retaining too much of the attorney’s own funds in trust. Defending against such allegations often raises strikingly similar principles and legal strategies as those in the commercial context relating to defending against an allegation of civil fraud or breach of fiduciary duty. Hence, the Nissenbaum Law Group’s experience handling ethics defense and commercial litigation matters creates a synergy of sorts.

One such area of overlap is that a client’s defense of an ethics matter can often center on the expert opinion of a forensic accountant or a financially-trained investigator, something one would more typically see in a commercial litigation matter. However, obtaining a counter-opinion from a forensic accountant retained on behalf of the respondent can be critical to convincing the Attorney Grievance Committee that no ethical infraction occurred, or, if it has, that it was minor and should be resolved in short order.

This raises the obvious fact that it is best to seek to nip the matter in the bud at the outset; in short, to have it dismissed. That can mean working with the investigator to convince them that the investigation is being taken seriously, the respondent is fully cooperating and they are not a danger to the public. Within that context, if the respondent can likewise demonstrate that the conduct did not rise to the level of an ethics infraction, it might well be dismissed. Having said that, unfortunately, obtaining an immediate dismissal of the matter is not always possible.

One of the compelling truths that has emerged in the Nissenbaum Law Group’s ethics defense practice is how little attorneys know about the intricacies of the procedure for ethics investigations and hearings; in other words, at times, the respondents can inadvertently undermine their own defense without realizing it. That is because the public policy underlying  an ethics matter is quite different than that which normally applies in a civil lawsuit or criminal matter. The attorney ethics system is centered on the objective that the client’s interests must be protected. The irony is that this can result in a situation involving fairness to a client—which is, of course, laudable—that engenders unfairness to their current or former attorneys.

Legal Strategies for Defending Attorneys Alleged to Have Violated the NY Rules of Professional Conduct

If an ethics complaint proceeds, it generally will start with the respondent receiving a complaint that originates with the Attorney Grievance Committee. Thereafter, it will normally make its way through the system, and ultimately be considered by the Appellate Division.

An attorney in that situation needs an advocate. It is not always about convincing the investigator that something which is alleged to have happened actually did not—although that can, at times, be effective. It can instead be about admitting a part of what happened and explaining it in a way that convinces the investigator—and ultimately, the Attorney Grievance Committee—that no ethical violation occurred or that the misconduct was de minimis and not deserving of formal discipline. This is a process that can play out over many conversations with the investigator or others involved in the process and is often well worth the effort.

How Does an Ethics Matter in One State Affect the Attorney’s Status in Another State?

One of the critical aspects of representing attorneys accused of ethical violations is to keep in mind the domino effect that a disposition in one jurisdiction can have on another in which that attorney is licensed. Generally, there is a seamless web of enforcement among the various jurisdictions in which an attorney is licensed, such that one will normally be notified of discipline in another. In fact, there are also ethical duties on the part of attorneys to proactively inform other jurisdictions in which they are licensed when the attorney has been disciplined.

Of course, the rules on what stage will trigger that duty on the part of the attorney differ from state to state. Accordingly, when a lawyer is facing an ethics investigation in one jurisdiction, they will be well-served by having the input of counsel regarding when and if they have a duty to report it to the others.

Defending Attorneys Whose IOLA Trust Accounts Are Being Audited

The interesting aspect of representing attorneys who are the subject of an IOLA trust account audit or dishonored check investigation is that, often, it is not engendered by an actual allegation of unethical conduct. Indeed, the process is not necessarily an adversarial one; the net result generally should be that, although there might be a need for minor improvements, the internal bookkeeping and reconciliations were done within ethical parameters.

Audits triggered by occurrences other than dishonored check investigations generally arise in two specific situations. First, the fact that the account generally did not “go negative,” so to speak, may not necessarily mean that the funds a particular client deposited were sufficient to provide a balance that would cover the disbursements on that client’s behalf. In other words, the fact that the account balances as a whole does not mean the attorney sufficiently protected another client’s funds from being used to satisfy the disbursements of the first client.

Second, even if no client’s monies were used to pay the obligations of another client and the account itself did not have a negative balance, the mere fact that the required internal procedures were honored in the breach can be a separate ethical problem. The fact that so-called “triple reconciliations” were not done each month can also constitute an inherent ethical breach, regardless of whether the failure to do so caused prejudice to one or more clients.

Frequently Asked Questions (FAQ) When Facing a NY IOLA Attorney Trust Account Audit

The following is a series of frequently asked questions regarding how an attorney should approach an audit of their NY IOLA Trust Account. It includes such items as

• What is a three-way reconciliation of a NY IOLA trust account, and what happens if an attorney has not been performing it?
• What bookkeeping records are required to be maintained by the attorney with respect to their IOLA account and for how long?
• Where is the interest earned on IOLA funds deposited?
• What should an attorney do with unclaimed IOLA trust account funds?
• Can an attorney use their IOLA trust account for law firm administrative operations?

Frequently Asked Questions (FAQ) When Facing a NY Ethics Complaint

The following is a series of frequently asked questions regarding the defense of New York ethics matters. It includes such items as

• Was the attorney ethics complaint filed properly?
• What are the reasons a filed attorney ethics complaint might not be investigated, but declined instead?
• What are the other typical ways in which a New York ethics complaint might be considered by an “alternate forum”?
• What are the guardrails for how a New York ethics investigation should be conducted?
• Once the New York attorney ethics investigation is complete, are there actions that can be taken by the Chief Attorney short of authorizing a formal disciplinary proceeding?
• What is the standard that the New York ethics committee must demonstrate to proceed with a formal disciplinary proceeding against an attorney?

Frequently Asked Questions About Diversion, Interim Suspension, Resignation and the Standard for Imposition of NY Attorney Ethics Discipline

Finally, the following is a series of frequently asked questions regarding the disposition of NY attorney ethics matters. It includes such items as

• Is there a role for a referee to hear an NY formal disciplinary proceeding?
• What sort of items are appropriate for the court to consider in imposing discipline in an NY attorney ethics proceeding?
• What is the standard for imposing a suspension on an interim basis during the pendency of an NY attorney ethic investigation or proceeding?
• What is the standard for an attorney to submit a voluntary resignation from the NY state bar?
• Is there a different procedure for resignation when there has been misappropriation of client funds?
• Does the impairment of the attorney constitute a basis to stay the hearing?

PUBLICATIONS & PRESENTATIONS

Gary D. Nissenbaum, Esq.

• Presented Seminar, Six Aspects of Attorney Ethics Enforcement in NJ, NY & PA That You May Not Have Heard About Before, Lawline, Summer 2024 (Anticipated Presentation Date)
• Presented Seminar, Attorney Ethics and Law Firm Succession Planning, Immigration Law Section, NJSBA, March 2023
• Panelist, New Jersey Trust and Business Accounting, New Jersey Institute for Continuing Legal Education, February 2021
• Presented Seminar, How to Avoid Serious Mistakes When Facing an Ethics Grievance or Random Trust Account Audit, Essex County Bar Association, December 2020
• Presented Seminar, “Good Grievance, Charlie Brown!” Latest Developments in NJ Ethics Law and Procedure, New Jersey Institute for Continuing Legal Education, July 2020
• Presented Seminar, How to Avoid Serious Mistakes When Facing an Ethics Grievance, Wilshire Grand Hotel, December 2019
• Presented Seminar, Attorney Ethics Grievances: 20 Insights from the Trenches, Wilshire Grand Hotel, December 2016
• Presented Seminar, Attorney Ethics Grievance Process, Union County Bar Association, 2011

Anthony C. Gunst, IV, Esq.

• Presented Seminar, Six Aspects of Attorney Ethics Enforcement in NJ, NY & PA That You May Not Have Heard About Before, Lawline, Summer 2024 (Anticipated Presentation Date)
• Presented Seminar, How to Avoid Serious Mistakes When Facing an Attorney Ethics Matter, New Jersey Association of Legal Administrators, April 2023