In Re White-Steiner

SUPREME COURT OF ARIZONA
In Division

In the Matter of a Member of the ) Arizona Supreme Court
State Bar of Arizona, ) No. SB-08-0119-D
)
JANET L. WHITE-STEINER, ) Disciplinary Commission
Attorney No. 14295 ) No. 06-0796
)
)
)
Respondent. )
)
) O P I N I O N
__________________________________)

Review from the Disciplinary Commission
No. 06-0796 (Filed May 19, 2008)

VACATED IN PART; DISCIPLINE IMPOSED
________________________________________________________________

JENNINGS, STROUSS & SALMON, P.L.C. Phoenix
By J. Scott Rhodes
Attorneys for Janet L. White-Steiner

STATE BAR OF ARIZONA Phoenix
By Patricia J. Ramirez
Attorney for the State Bar of Arizona
________________________________________________________________

B A L E S, Justice

¶1 In reviewing attorney discipline cases, the

Disciplinary Commission must accept a hearing officer’s factual

findings if they have any reasonable basis. Because the

Commission here did not defer to the Hearing Officer’s finding

that the attorney acted negligently, we decline to impose the

Commission's recommended sanction of suspension, and instead
order censure and two years probation on the terms recommended

by the Hearing Officer.

I. FACTS AND PROCEDURAL BACKGROUND

¶2 Respondent Janet White-Steiner was admitted to

practice law in Arizona in 1992. She and her husband, Richard

Steiner, are the sole partners in Steiner & Steiner, P.C., a law

firm that also employs an associate and a paralegal. Mr.

Steiner spends half or more of his time in Colorado, where he is

also licensed to practice law. When he is in Colorado, White-

Steiner oversees the firm’s Arizona office.

¶3 In May 2006, the State Bar learned that the firm’s

trust account had been overdrawn by $44.27. The State Bar asked

White-Steiner, the only lawyer registered on the account, to

explain this event. The State Bar made several follow-up

inquiries and, over the next several months, received responses

in letters signed by White-Steiner, in a letter from Mr.

Steiner, and at a meeting with Mr. Steiner and the firm’s

paralegal.

¶4 The State Bar’s investigation revealed deficiencies in

the firm’s trust accounting practices. The firm used a credit

card account, which was not a trust account, to receive both

client funds and earned fees. The firm would transfer the

entire amount of certain client credit card payments to a

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separate trust account for later disbursement. The firm

overlooked, however, that the bank was deducting administrative

fees from the credit card receipts. By not depositing personal

funds into the credit card account to pay these fees and

inaccurately reflecting amounts held in the trust account, as

well as disbursing amounts from the trust account that were not

collected funds, the firm co-mingled and converted client funds.

The State Bar’s investigation further established that the law

firm had not completed monthly three-way reconciliations of the

trust account, properly accounted for credit card transaction

fees charged on retainers, maintained accurate client ledgers,

or deposited sufficient personal funds in the trust account to

pay bank fees and charges.

¶5 The State Bar filed a formal complaint against White-

Steiner, who responded by admitting all but three of the State

Bar’s allegations. At the disciplinary hearing, the State Bar

learned that Mr. Steiner had drafted all the written responses

to its inquiries. Mr. Steiner also had prepared the answer to

the complaint for White-Steiner. At the hearing, White-Steiner

asserted for the first time that Mr. Steiner, and not she, was

responsible for maintaining the law firm’s trust account.

¶6 The Hearing Officer found that White-Steiner was a

party responsible for the maintenance of the law firm’s trust

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account even though she had relied on Mr. Steiner to oversee the

account, to ensure its procedures complied with applicable

rules, and to respond to the State Bar’s investigation. The

Hearing Officer further concluded that White-Steiner had

violated ERs 1.15(a), 5.1, and 5.3, and Supreme Court Rules 43

and 44 by improperly dealing with client trust accounts and

failing to supervise those responsible for maintaining the

firm’s trust accounts.1 The Hearing Officer did not find,

however, that White-Steiner had violated ER 8.1 and Arizona

Supreme Court Rule 53(f) by failing to disclose earlier to the

State Bar that Mr. Steiner was the responsible party or that he

had prepared the responses to the State Bar inquiries and the

answer to the formal complaint.

¶7 As a sanction, the Hearing Officer recommended censure

and two years probation, including participation in the State

Bar’s Law Office Management Assistance Program (LOMAP) and trust

account programs, because he found that White-Steiner acted

negligently, was not motivated by dishonesty or selfishness, and

had a strong character and reputation in the legal community.

The State Bar appealed to the Disciplinary Commission, which

1
Both the Hearing Officer's Report, In re White-Steiner, No.
06-0796 (Mar. 3, 2008), and the Disciplinary Commission's
Report, In re White-Steiner, No. 06-0796 (May 19, 2008), are
available at http://supreme.state.az.us/dc/matrix.htm.

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agreed with the Hearing Officer's findings with respect to

White-Steiner’s ethical violations and the aggravating and

mitigating circumstances, but rejected the Hearing Officer’s

finding that White-Steiner had acted negligently. The

Disciplinary Commission instead determined that White-Steiner

knew or should have known that her conduct was improper, and

therefore recommended suspension for six months and one day as

the appropriate sanction.

¶8 White-Steiner petitioned this Court for review of the

Commission's recommended sanction. We have jurisdiction

pursuant to Article 6, Section 5(3) of the Arizona Constitution

and Arizona Supreme Court Rule 59(a).

II. DISCUSSION

¶9 Attorney discipline serves to protect the public, the

legal profession, and the legal system, and to deter other

attorneys from engaging in unprofessional conduct. In re

Scholl, 200 Ariz. 222, 227 ¶ 29, 25 P.3d 710, 715 (2001).

Punishing the offending attorney is not the intended purpose,

but may be the incidental effect, of such discipline. Id. at

224 ¶ 8, 25 P.3d at 712.

¶10 White-Steiner does not challenge the conclusion that

she violated ERs 1.15(a), 5.1, and 5.3, and Supreme Court Rules

43 and 44. The issue before us is the appropriate sanction.

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A. Sanctions

¶11 We consider the following factors in determining

appropriate sanctions: (1) the duty violated, (2) the lawyer’s

mental state, (3) the potential or actual injury caused by the

lawyer’s conduct, and (4) the existence of aggravating or

mitigating factors. See American Bar Association Standards for

Imposing Lawyer Discipline 3.0 (1992) (“ABA Standards”); In re

Peasley, 208 Ariz. 27, 32-33 ¶¶ 19, 23, 90 P.3d 764, 769-70

(2004). We address each factor in turn.

1. Duty Violated

¶12 The Hearing Officer and the Commission found that

White-Steiner improperly dealt with client funds and improperly

managed her client trust account, in violation of ER 1.15(a) and

Arizona Supreme Court Rules 43 and 44, and that she failed to

make reasonable efforts to ensure that the firm had in effect

measures giving reasonable assurance that all lawyers in the

firm conformed to the Rules of Professional Conduct and that all

non-lawyer assistants’ conduct was compatible with White-

Steiner’s professional obligations, in violation of ERs 5.1 and

5.3. These conclusions are not disputed before this Court.

Thus, White-Steiner breached duties owed to her clients to

maintain and safeguard their property. See ABA Standard 4.1.

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2. Mental State

¶13 A lawyer’s mental state affects the sanction imposed

for ethical violations. Because intentional or knowing conduct

threatens more harm than does negligent conduct, it is

sanctioned more severely. The Hearing Officer found White-

Steiner negligent in dealing with client property. The

Disciplinary Commission disagreed, concluding that White-Steiner

knew or should have known that her conduct was improper because

she was “on notice” due to prior disciplinary actions involving

“similar misconduct.”

¶14 A lawyer’s mental state is a fact question. In re Van

Dox, 214 Ariz. 300, 304 ¶ 14, 152 P.3d 1183, 1187 (2007). In

disciplinary proceedings, the Commission must give “great

deference” to a hearing officer’s factual findings and may not

reject them unless they are clearly erroneous. Id. ¶ 15. “To

be clearly erroneous, a finding must be unsupported by any

reasonable evidence.” Id. The Commission may not simply

substitute its judgment for the hearing officer’s or

independently make additional fact findings. Ariz. R. Sup. Ct.

58(b); see also In re Tocco, 194 Ariz. 453, 456 ¶ 9, 984 P.2d

539, 542 (1999).

¶15 We must therefore consider whether reasonable evidence

supported the Hearing Officer’s finding that White-Steiner acted

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negligently. See Van Dox, 214 Ariz. at 304 ¶ 16, 152 P.3d at

1187. A lawyer is “negligent” when she fails “‘to heed a

substantial risk that circumstances exist or that a result will

follow, which failure is a deviation from the standard of care

that a reasonable lawyer would exercise in the situation.’” Id.

¶17 (quoting ABA Standards at 12). In contrast, “knowledge”

requires “‘the conscious awareness of the nature or attendant

circumstances of the conduct.’” Id. at 305 ¶ 21, 152 P.3d at

1188 (quoting ABA Standards at 12). Thus, for a lawyer’s

conduct to be knowing with regard to improperly handling client

property, she must be consciously aware that her conduct does

not conform to the requirements of ERs 1.15(a), 5.1, 5.3 and

Arizona Supreme Court Rules 43 and 44. Between “knowing” and

mere negligence, the ABA Standards identify another possible

mental state: that the lawyer should know that her conduct is

improper. ABA Standard 4.12.

¶16 There is a reasonable basis for the Hearing Officer’s

finding that White-Steiner’s improper conduct involving her

trust account and client property was negligent. The Hearing

Officer considered testimony from White-Steiner, Mr. Steiner,

and the law firm’s paralegal. Based on this evidence, the

Hearing Officer found that although White-Steiner was

responsible for time slips and billing, Mr. Steiner was

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responsible for managing the firm’s trust account. The Hearing

Officer also found that White-Steiner relied (although

unreasonably) on her husband “in management of Trust Account,

its oversight and responding to the State Bar.” Hearing

Officer’s Report, In re White-Steiner, No. 06-0796, at 25 (Mar.

3, 2008). In addition, the Hearing Officer concluded that “Mr.

Steiner ostensibly the manager of the Trust Account process was

absent from the practice and did not do his job. Respondent’s

conduct was not intentional, but was severely deficient and

negligent.” Id.

¶17 The Hearing Officer rejected the State Bar’s argument

that White-Steiner should have known of the trust account

problems because she and her husband had received informal

reprimands for violating some of the same ethical rules in 2001

and she also knew that her husband had participated in LOMAP.

The Hearing Officer could have reasonably concluded that neither

the 2001 informal censure (which the State Bar had then

described as resulting in part from an ambiguity in the law

firm’s fee agreement regarding where funds would be deposited)

nor Mr. Steiner’s LOMAP participation, which he successfully

completed in 2002, established that White-Steiner should have

known in 2006 that her firm was violating rules regarding trust

accounts and client property. Moreover, the Hearing Officer

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made no finding that these prior disciplinary actions involved

“similar conduct” or that they put White-Steiner “on notice”

that she was improperly dealing with client funds or mismanaging

her trust account.

¶18 Were we engaged in initial fact-finding, we might

agree with the Disciplinary Commission that White-Steiner knew

or should have known of the identified violations. The Hearing

Officer’s finding that White-Steiner acted negligently, however,

must be accepted on review because it has a reasonable basis in

the record. See Van Dox, 214 Ariz. at 305 ¶ 19, 152 P.3d at

1188.

3. Actual or Potential Injury

¶19 We must also determine whether the ethical violations

resulted in harm to clients. The Hearing Officer found that

White-Steiner’s actions caused actual harm because she paid a

client’s debt with other clients’ funds, although the Hearing

Officer did not identify an injury to any particular client.

The finding of injury, which White-Steiner does not contest, has

a reasonable basis inasmuch as the failure to deposit sufficient

personal funds to pay bank service fees and the issuance of the

insufficient funds check meant that one client’s debts were paid

with trust account monies properly belonging to other clients.

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4. Presumptive Sanction

¶20 The ABA Standards identify presumptive sanctions for

violations of duties owed to clients. In cases involving the

failure to preserve client property, ABA Standard 4.13 provides

that a “reprimand is generally appropriate when a lawyer is

negligent in dealing with client property and causes injury or

potential injury to a client.” ABA Standard 4.12 provides that

suspension is appropriate when a lawyer causes such injury and

“knows or should know that [s]he is dealing improperly with

client property.” The commentary to ABA Standard 4.13 further

observes that suspension or even disbarment may be appropriate

for lawyers who are grossly negligent in failing to establish

proper accounting procedures. The same commentary explains that

a reprimand (which would include a censure under Arizona’s

disciplinary procedures) is appropriate when a lawyer fails to

follow his or her accounting procedures or is negligent in

training or supervising office staff concerning proper

procedures in handling client funds.

¶21 Having found that White-Steiner acted negligently, the

Hearing Officer concluded that under ABA Standard 4.13 a censure

is the presumptive sanction. The State Bar does not dispute

that this is the appropriate sanction for negligent violations,

but instead argues that suspension is the presumptive standard

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under ABA Standard 4.12 because White-Steiner should have known

she was dealing improperly with client property or she was at

least grossly negligent.

¶22 We agree with the Hearing Officer that ABA Standard

4.13 applies and that censure is the presumptive sanction. The

State Bar’s argument that White-Steiner should have known that

she was dealing improperly with client property or that she

acted with gross negligence is unavailing given the Hearing

Officer’s finding that she acted negligently. Although the

evidence might have supported a finding that White-Steiner acted

with gross negligence, the State Bar did not even urge the

Hearing Officer to make such a finding in its proposed findings

of fact. We decline to make such a finding de novo on review.

5. Aggravating and Mitigating Factors

¶23 Having identified censure as the presumptive sanction,

we next consider whether any aggravating or mitigating

circumstances negate the presumption. See Peasley, 208 Ariz. at

36 ¶ 36, 90 P.3d at 773. ABA Standards 9.2 and 9.3 list

aggravating and mitigating factors to be considered in

determining appropriate sanctions. The Hearing Officer found

two aggravating factors - prior disciplinary action, ABA

Standard 9.22(a), and refusal to acknowledge wrongful nature of

conduct, ABA Standard 9.22(g) - and two mitigating factors -

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absence of dishonest or selfish motive, ABA Standard 9.32(b),

and character and reputation, ABA Standard 9.32(g). The

Disciplinary Commission agreed with the Hearing Officer’s

findings in this regard, and neither White-Steiner nor the State

Bar contests them on appeal. We accept the Hearing Officer’s

findings of aggravating and mitigating factors and conclude that

they do not alter the presumptive sanction.

B. Proportionality Review

¶24 We also will consider similar cases to assess what

sanctions are proportionate to the improper conduct. Van Dox,

214 Ariz. at 307 ¶ 39, 152 P.3d at 1190. White-Steiner argues

that other cases involving negligent trust account violations

have resulted in censure combined with probation. The State Bar

does not contend that such discipline would be disproportionate

as compared to other cases in which the respondent acted

negligently; nor have we identified any such cases.

C. Appropriate Sanction

¶25 We review de novo the appropriate sanction for

violations of the Rules of Professional Conduct and Supreme

Court Rules. See In re Walker, 200 Ariz. 155, 160 ¶ 20, 24 P.3d

602, 607 (2001). Although we consider the recommendations of

the Hearing Officer and the Disciplinary Commission, this Court

is ultimately responsible for determining the appropriate

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sanction. Peasley, 208 Ariz. at 33 ¶ 23, 90 P.3d at 770.

III. CONCLUSION

¶26 Based on the facts as found by the Hearing Officer,

ABA Standard 4.13, and our proportionality analysis, we conclude

that an appropriate sanction is a censure combined with two

years probation, which shall include participation by White-

Steiner in LOMAP and the State Bar’s Trust Account Program and

Trust Account Ethics Enhancement Program.

___________________________________
W. Scott Bales, Justice

CONCURRING:

___________________________________
Ruth V. McGregor, Chief Justice

___________________________________
Michael D. Ryan, Justice

___________________________________
Andrew D. Hurwitz, Justice

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