In Re Phillips

SUPREME COURT OF ARIZONA
En Banc

In the Matter of a Member of the ) Arizona Supreme Court
State Bar of Arizona, ) No. SB-10-0036-D
)
JEFFREY PHILLIPS, ) Disciplinary Commission
Attorney No. 13362 ) Nos. 05-1161, 05-1888
) 06-1137, 06-1138
) 06-1212, 06-1582
) 07-0085, 07-0176
) 07-0177, 07-0178
) 07-0231, 07-0232
) 07-0239, 07-0275
) 07-0278, 07-0289
) 07-0412, 07-0512
) 07-0569, 07-0628
) 07-0639, 07-0697
) 07-0887, 07-0889
) 07-0890, 07-0891
) 07-0892, 07-0894
) 07-0895, 07-1326
) 07-1342, 07-1461
) 07-1561, 07-1601
) 07-1885, 08-0397
Respondent. )
)
) O P I N I O N
__________________________________)

Disciplinary Action from the Disciplinary Commission

SUSPENSION AND PROBATION ORDERED
________________________________________________________________

OSBORN MALEDON PA Phoenix
By Mark I. Harrison
Sara S. Greene
Mark Hummels
Attorneys for Jeffrey L. Phillips

STATE BAR OF ARIZONA Phoenix
By Steve Little
Attorneys for State Bar of Arizona
________________________________________________________________
P E L A N D E R, Justice

¶1 We granted review in this attorney disciplinary case

to determine whether the Hearing Officer erroneously used a

vicarious liability standard in finding that Petitioner Jeffrey

Phillips violated Arizona Rules of Professional Conduct (“ERs”)

5.1(a) and 5.3(a), and whether the recommended suspension of six

months and one day was appropriate. Although we accept the

Hearing Officer’s determination that Phillips violated ERs

5.1(a) and 5.3(a), we reduce the suspension to six months.

I. Facts and Procedural Background

¶2 Phillips is the founder and managing attorney of

Phillips & Associates (“P&A”), a large law firm based in

Phoenix. A self-styled “consumer law firm,” P&A handles a high

volume of cases, having represented approximately 33,000 clients

between 2004 and 2006. At the time of the disciplinary

proceedings, P&A employed 250 people, including thirty-eight

lawyers. The firm’s practice was limited to criminal defense,

bankruptcy, and personal injury.

¶3 Phillips no longer represents clients, but instead

supervises and manages the firm. His duties include setting

firm policy on billing, accounting, and intake procedures.

Although Phillips has general control over the firm, during the

relevant period he had delegated primary responsibility for the

2
criminal division to Robert Arentz, and for the bankruptcy

division to Robert Teague.

¶4 In 2002, Phillips was the subject of disciplinary

proceedings resulting in his conditionally admitting to

violations of ERs 5.1, 5.3, and 7.1, and agreeing to a censure

and two years’ probation. The judgment and order entered in

2002 included detailed probationary terms relating to the

management of P&A. Those terms required specific changes to

P&A’s intake procedures, accounting procedures, and ethics

training. Among other things, the 2002 order required the

following:

Prior to entering into a written attorney/client
agreement for the firm, an Arizona licensed attorney
must speak with the client and approve the legal fees
to be charged and retention of the Firm [sic] by the
client.

. . .

Bonuses paid to intake personnel cannot be based
exclusively on either the number of clients who retain
the firm or on the amount of fees received from those
clients. The criteria for determining bonuses must be
provided to the intake personnel in writing.

. . .

All attorneys and other billable staff members who
work on criminal cases shall keep contemporaneous time
records to enable the firm to conduct a “backward
glance” at the conclusion of a case in order to
determine whether a refund is due.

. . .

3
 The firm shall provide a written accounting of time
spent and fees incurred within 15 days of a request by
a client. When a client terminates the firm’s
representation in a criminal case and the firm has
been permitted to withdraw by the court, the firm
shall, within fifteen (15) days following receipt of
the Order permitting withdrawal, provide to the client
a written accounting of the time spent, fees incurred,
and when appropriate, a refund of unearned fees.

Phillips successfully completed his probation in 2004.

¶5 Between August 2006 and May 2008, the Bar issued a

series of probable cause orders against Phillips and Arentz.

The Bar filed a formal complaint against them in October 2007

and, after several amendments, ultimately charged twenty-two

counts, alleging violations of ERs 1.1, 1.2, 1.3, 1.4, 5.1, 5.3,

7.1, and 8.4.

¶6 A hearing was held over eleven days in 2008. The

Hearing Officer heard testimony from many witnesses, including

former P&A clients, current and former P&A attorneys, and

experts for both Phillips and the Bar.

¶7 In detailed findings of fact, conclusions of law, and

recommendations, the Hearing Officer found that Phillips had

violated ERs 5.1(a), 5.3(a) and 7.1, and Arentz had violated ERs

5.1(a) and (b), 5.3(a) and (b), and 1.5(a). Phillips had a

total of twelve ethical violations and Arentz had nineteen. The

Hearing Officer found that all the clients involved in the

matters giving rise to the allegations were unsophisticated. He

recommended that Arentz be suspended for sixty days, and that
4
Phillips be suspended for six months and one day. The Hearing

Officer also recommended that Phillips and Arentz be placed on

two years’ probation upon reinstatement.

¶8 The Hearing Officer’s findings regarding Phillips’s

ethical violations can be generally categorized as follows:

A. Caseloads of Bankruptcy Attorneys

¶9 The Hearing Officer found that Phillips violated ER

5.1(a) as alleged in Counts 3 and 4, which related to the

caseloads of P&A’s bankruptcy attorneys, each of whom carried as

many as 500 cases at a time. A former P&A attorney testified

that, upon joining the firm, she was immediately responsible for

540 cases. Counts 3 and 4 involved circumstances in which

clients’ needs were not met because of the high volume of cases

assigned to bankruptcy attorneys. In both counts, the Hearing

Officer also found that, because of the number of attorneys

handling a given case, inadequate attention was paid to the

problems presented in the case and the client was confused and

not adequately informed.

¶10 Count 3 specifically involved a breakdown in

communication between the attorney and the client, missed

hearings by the attorney, and a failure to keep the client

reasonably informed. Count 4 involved P&A’s practice of having

one attorney handle all of the firm’s “341 meetings,” which are

short, informal meetings that debtors are required to attend
5
after filing a bankruptcy petition under Chapter 7 or Chapter 13

of the federal Bankruptcy Code. The P&A attorney handled forty

files per day and at times would have six to seven 341 meetings

within thirty minutes. Count 4 included a client’s complaint

that a P&A attorney had missed a 341 meeting and failed to act

with reasonable diligence. The Hearing Officer concluded that

Phillips violated ER 5.1(a) in both counts for establishing and

maintaining a business model in which such ethical violations

were likely to occur.

B. Intake and Retention Procedures

¶11 Another category of violations related to P&A’s intake

and retention procedures. Prospective clients who visit the

firm’s offices do not immediately meet with an attorney.

Instead, they are provided a blank fee agreement and a general

questionnaire. After completing the questionnaire, the

prospective client meets with a P&A legal administrator, a

nonlawyer tasked with retaining clients. Legal administrators

are paid a base salary and monthly bonuses, based in part on the

number of cases that the legal administrator retains. After

obtaining general information from the client, the legal

administrator meets with a lawyer who sets the fee. After the

fee agreement is prepared, the client speaks with a lawyer to

make sure the client understands the fee agreement, who the

lawyer will be, and the scope of P&A’s representation. The
6
Hearing Officer found that this process, known as “closing,” was

often not completed by an attorney knowledgeable in the relevant

practice area.

¶12 On Counts 9, 12, and 17, the Hearing Officer found

P&A’s retention policies, as implemented, impeded potential

clients from obtaining the information needed to make informed

decisions about retention. With respect to Counts 9 and 12, the

Hearing Officer found that a P&A legal administrator gave a

client’s family member unreasonable expectations about the

representation, suggesting that the firm would be able to reduce

the client’s sentence in criminal proceedings.

¶13 In Count 9, the client’s father was told that the firm

should be able to reduce his son’s sentence. An attorney signed

a fee agreement describing the scope of the services as

“mitigation of sentencing.” The client, however, had already

entered into a plea agreement with a stipulated sentence, and no

one at P&A advised the client or his father of the unlikelihood

of mitigating the sentence. Despite the client’s expectations,

the client’s sentence was not reduced.

¶14 In Count 12, a client’s mother signed a fee agreement

after being told by a legal representative that the firm should

be able to help reduce her son’s sentence. As the firm was

aware, however, the client had already stipulated to a

particular sentence. The client’s mother met with a bankruptcy
7
attorney, who did not know what a stipulated plea agreement was.

A criminal attorney did not meet with her until the day of

sentencing, when she was informed that her son would receive the

sentence stipulated in the plea agreement.

¶15 The Hearing Officer found that Phillips and Arentz

violated ERs 5.1(a) and 5.3(a) in both counts because the firm’s

retention practices did not require a knowledgeable attorney to

speak with the potential client before entering into a fee

agreement, and the firm used nonlawyers in its retention

process. Similarly, in Count 17, a client with a suspended

driver’s license met only with a bankruptcy attorney and a legal

administrator before hiring P&A to represent him. The client

wanted to have his license reinstated but also had an

unadjudicated DUI charge. The scope of services set forth in

the fee agreement did not match the client’s expectations. The

firm did not follow the client’s decisions regarding the scope

of the representation, and the firm waited weeks before telling

the client his driver’s license could not be reinstated until

the DUI charge was resolved. The firm also failed to inform the

client prior to retention that the firm could not accomplish his

goals. The Hearing Officer found that both Phillips and Arentz

violated ER 5.1(a).

C. Conduct by Legal Administrators

¶16 The Hearing Officer also found violations of ER 5.3
8
arising from P&A’s providing legal administrators with bonuses

based, in part, on the number of clients retained. Count 8

involved a legal administrator who used “high pressure tactics”

to attempt to dissuade a client from terminating P&A’s

representation. Count 19 involved a client who retained the

firm for defense of a DUI charge and, as the firm was aware, was

also in the process of becoming a United States citizen. When

the client asked to terminate P&A’s representation after meeting

with a legal administrator and a bankruptcy attorney, the client

was subjected to intimidation and false statements from a P&A

employee. At one point, the employee warned the client that he

was “looking to lose his citizenship,” and the employee

insinuated that if the client stopped payment on the retainer

check, the firm could have the police investigate his

immigration status. After making several unsuccessful attempts

to obtain documents he had furnished to P&A, the client was only

able to recover the papers after hiring new counsel.

¶17 Although the P&A employees’ tactics violated P&A’s

policies, the Hearing Officer concluded that Phillips and Arentz

violated ER 5.3(a) in both counts because legal administrators’

bonuses were tied, in part, to client retention. These

incentives provided “the motive for the misconduct.” The words

in the firm’s policy manual prohibiting such conduct were

insufficient to insulate managers and supervisors from ethical
9
responsibility when the actual ongoing practices were to the

contrary.

D. Refund Policy

¶18 In Count 11, the Hearing Officer found that P&A

employees failed to act promptly on a client’s termination

request. The firm took more than five months to refund money to

the client despite repeated requests for a refund. The Hearing

Officer found that both Arentz and Phillips violated ERs 5.1(a)

and 5.3(a) for failing to have practices in place to prevent

difficulty in obtaining a refund.1

E. Disciplinary Commission Decision

¶19 On review, pursuant to Rule 58, Arizona Rules of the

Supreme Court, the Disciplinary Commission considered the

parties’ objections to the Hearing Officer’s decision and held

oral argument. In December 2009, by a vote of 6-2, the

Commission adopted the Hearing Officer’s findings of fact,

conclusions of law, and recommendations. The two dissenting

Commission members found no basis for disturbing the Hearing

Officer’s factual findings but concluded that “the recommended

1
The Hearing Officer also found (in Count 20) that Phillips
negligently violated ER 7.1 by writing and using a materially
misleading television advertisement in 2007 regarding P&A’s DUI
defense services and a new DUI law. But the Hearing Officer
found that violation did not “warrant significant discipline”
because it was neither knowing nor actually injurious; rather,
his recommended sanction was based solely on Phillips’s knowing
violations of ERs 5.1(a) and 5.3(a).
10
discipline is too severe” and that lesser sanctions were

appropriate – suspensions of thirty days for Arentz and ninety

days for Phillips.

¶20 Phillips and Arentz jointly petitioned for review.

This Court granted review on only two discrete issues Phillips

raised: whether the Hearing Officer erroneously applied a

vicarious liability standard in finding ethical violations by

Phillips, and whether the recommended sanction for him is

appropriate. We denied review of any issues raised by Arentz,

thereby leaving undisturbed his sixty-day suspension. The Bar

did not file a cross-petition for review to challenge the

recommended sanction for Arentz. We therefore limit our

discussion to the two issues regarding Phillips on which review

was granted.

II. Managerial and Supervisory Liability

¶21 Phillips first argues that the Hearing Officer used an

improper standard of vicarious liability in finding violations

of ERs 5.1(a) and 5.3(a) because his analysis was based solely

on the ethical breaches of other firm employees. We disagree.

¶22 Ethical Rule 5.1(a) provides that a partner or an

attorney with comparable managerial authority “shall make

reasonable efforts to ensure that the firm has in effect

measures giving reasonable assurance that all lawyers in the

firm conform to the Rules of Professional Conduct.” Similarly,
11
ER 5.3(a) provides that a partner or a lawyer with comparable

managerial authority must make “reasonable efforts to ensure

that the firm has in effect measures giving reasonable

assurances that” nonlawyers employed by the firm or associated

with the lawyer comply with the professional obligations of the

lawyer.

¶23 These duties require not only supervision, but also

that the supervising attorney establish “internal policies and

procedures” providing reasonable assurances that lawyers and

nonlawyers in the firm conform to the Rules of Professional

Conduct. ERs 5.1 cmt. 2; 5.3 cmt. 2. The size of the firm is

relevant in determining what is “reasonable,” and in a large

firm such as P&A, “more elaborate measures may be necessary.”

ER 5.1 cmt. 3.

¶24 The rules imposing managerial and supervisory

obligations, however, do not provide for vicarious liability for

a subordinate’s acts; rather, they “mandate an independent duty

of supervision.” In re Galbasini, 163 Ariz. 120, 124, 786 P.2d

971, 975 (1990). Nor is a supervising attorney of a nonlawyer

assistant “required to guarantee that that assistant will never

engage in conduct that is not compatible with the professional

obligations of the lawyer.” In re Miller, 178 Ariz. 257, 259,

872 P.2d 661, 663 (1994).

¶25 The Hearing Officer expressly recognized these legal
12
principles in his decision and did not apply an incorrect

vicarious liability standard when finding that Phillips violated

ERs 5.1(a) and 5.3(a). Although he found on many of the counts

that P&A attorneys’ and staff members’ conduct violated various

ethical rules, the supervisory and managerial breaches for which

Phillips was found liable under ER 5.1 or 5.3 were independent.

For each violation of ER 5.1 or 5.3, the Hearing Officer found

that Phillips had personally failed to engage in the required

supervision of either lawyers or nonlawyer personnel. Indeed,

on a number of counts (for example, Counts 5 and 6), the Hearing

Officer found that someone at P&A had violated an ethical rule,

but that Phillips had not personally violated the rules

requiring supervision. Had the Hearing Officer or the

Commission applied a vicarious liability standard, Phillips

would have been held liable for those violations as well.

¶26 In contesting the findings that he violated ERs 5.1(a)

and 5.3(a), Phillips refers to the “mountain of undisputed

evidence” adduced at the hearing of P&A’s supervisory efforts

and the “relatively rare” occurrence of ethical breaches by

other P&A employees. But the prior modification of firm

policies, made pursuant to the 2002 judgment and order, did not

alleviate Phillips’s ongoing duty to ensure that his

subordinates complied with the revised policies and ethical

rules. Because the Hearing Officer clearly understood and
13
correctly applied the law by carefully not conflating vicarious

liability with managerial and supervisory liability, we find no

error in his determination, adopted by the Disciplinary

Commission, that Phillips violated ERs 5.1(a) and 5.3(a).

III. Sanction

¶27 We next address Phillips’s argument that the

recommended six-months and one-day suspension was

disproportionate and excessive. We review recommended sanctions

de novo. In re White-Steiner, 219 Ariz. 323, 327 ¶ 25, 198 P.3d

1195, 1199 (2009). Although we independently review a

recommended sanction, we give “serious consideration to the

findings and recommendations” of the Commission. In re Pappas,

159 Ariz. 516, 518, 768 P.2d 1161, 1163 (1988) (citing In re

Neville, 147 Ariz. 106, 108, 708 P.2d 1297, 1299 (1985)).

¶28 “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

White-Steiner, 219 Ariz. at 325 ¶ 9, 198 P.3d at 1197 (citing In

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

Another purpose is to instill public confidence in the Bar’s

integrity. In re Horwitz, 180 Ariz. 20, 29, 881 P.2d 352, 361

(1994) (citing In re Loftus, 171 Ariz. 672, 675, 832 P.2d 689,

692 (1992)).

¶29 In determining sanctions, we are guided by the
14
American Bar Association’s Standards for Imposing Lawyer

Sanctions (2005). In re Van Dox, 214 Ariz. 300, 303 ¶ 11, 152

P.3d 1183, 1186 (2007). Several factors are relevant in

determining the appropriate sanction: (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. Id. (citing ABA Standard

3.0). We may also consider any similar cases to assess what

sanctions are proportionate to the unethical conduct. Id. at

307 ¶ 39, 152 P.3d at 1190.

A. Duty Violated

¶30 ABA Standard 7.0 provides sanctions for violations of

duties owed as a professional. The Hearing Officer and the

Commission concluded that ABA Standard 7.0 governed this case

because the violations of ERs 5.1 and 5.3 involved duties owed

to the legal profession. Although these violations also

implicate duties owed to the client, ABA Standard 7.0 will guide

our analysis because we find no error on this point and because

Phillips does not challenge the applicability of that standard.

See In re Lenaburg, 177 Ariz. 20, 23, 864 P.2d 1052, 1055 (1993)

(applying ABA Standard 7.0 to supervisory violations); In re

Rice, 173 Ariz. 376, 377, 843 P.2d 1268, 1269 (1992) (same).

B. Mental State

¶31 A lawyer’s mental state affects the appropriate
15
sanction for ethical violations. Intentional or knowing conduct

is sanctioned more severely than negligent conduct because it

threatens more harm. In re White-Steiner, 219 Ariz. at 325

¶ 13, 198 P.3d at 1197.

¶32 ABA Standard 7.0 provides the following guidelines

with regard to sanctions:

7.1 Disbarment is generally appropriate when a lawyer
knowingly engages in conduct that is a violation of a
duty owed as a professional with the intent to obtain
a benefit for the lawyer or another, and causes
serious or potentially serious injury to a client, the
public, or the legal system.

7.2 Suspension is generally appropriate when a lawyer
knowingly engages in conduct that is a violation of a
duty owed as a professional and causes injury or
potential injury to a client, the public, or the legal
system.

7.3 Reprimand is generally appropriate when a lawyer
negligently engages in conduct that is a violation of
a duty owed as a professional and causes injury or
potential injury to a client, the public, or the legal
system.

¶33 The Hearing Officer expressly found that both

Phillips’s and Arentz’s violations of ERs 5.1 and 5.3 were

“knowing.” Although Phillips challenged that finding in his

petition for review, we did not grant review of that issue and,

therefore, accept as established that Phillips knowingly

violated ERs 5.1(a) and 5.3(a).

C. Actual or Potential Injury

¶34 The Hearing Officer found actual injury in each of the

16
client-related counts. P&A clients were misled and improperly

advised by unqualified lawyers, had difficulty obtaining

refunds, and were misinformed about the reasonable objectives of

the representation. Clients were also financially harmed,

having paid unreasonable fees or retainers without a full

understanding of the likely results of the representation. The

record supports these findings.

D. Aggravating and Mitigating Factors

¶35 Because Phillips’s knowing conduct caused actual

injury to clients, we agree with the Hearing Officer that the

presumptive sanction in this case is suspension. See ABA

Standard 7.2. The Hearing Officer and the Commission found the

following aggravating and mitigating factors apply to Phillips:

Aggravating Factors
(1) Prior disciplinary offense
(2) Selfish motive
(3) Multiple offenses
(4) Refusal to acknowledge wrongful nature of conduct
(5) Vulnerability of victim
(6) Substantial experience in the practice of law

Mitigating Factors
(1) Full and free disclosure to the Bar
(2) Delay in disciplinary proceedings
(3) Willingness to remedy practice
(4) Character

¶36 We find none of these findings clearly erroneous. And

we agree with the Hearing Officer that the aggravating and

mitigating factors, in conjunction with Phillips’s knowing

misconduct, further support suspension as an appropriate
17
sanction. See In re Galbasini, 163 Ariz. at 121, 125-26, 786

P.2d at 972, 976-77 (adopting recommended six-month suspension

of attorney for knowingly failing to supervise nonlawyer

employees who engaged in debt collection and improperly

solicited clients in attorney’s name); Davis & Goldberg v. Ala.

State Bar, 676 So. 2d 306, 307-08 (Ala. 1996) (upholding two-

month suspension of two partners for implementing policies

designed to minimize expenses and maximize profits, to clients’

detriment, when firm’s practices resulted in unmanageable

caseloads and permitted nonlawyers to perform legal services);

Att’y Grievance Comm’n of Md. v. Kimmel, 955 A.2d 269, 292-94

(Md. 2008) (holding that violations of ethical rules requiring

adequate supervision warranted a ninety-day suspension when

attorneys had no prior disciplinary record).

E. Proportionality Review

¶37 We may consider the sanctions imposed in similar cases

“‘to preserve some degree of proportionality, ensure that the

sanction fits the offense, and avoid discipline by whim or

caprice.’” In re Dean, 212 Ariz. 221, 225 ¶ 24, 129 P.3d 943,

947 (2006) (quoting In re Struthers, 179 Ariz. 216, 226, 877

P.2d 789, 799 (1994)). The Hearing Officer cited two cases for

comparison purposes, but they are distinguishable and not very

18
helpful.2 Nor have the parties cited any authorities that bear

on whether the recommended length of suspension is appropriate

here. Although we have sometimes engaged in comparative

analysis, see In re Van Dox, 214 Ariz. at 307-08 ¶¶ 39-42, 152

P.3d at 1190-91, we agree with the Hearing Officer that this

case, involving a “consumer law firm” and a high volume

practice, is difficult to compare with others. In any event,

“[p]roportionality review . . . is ‘an imperfect process’” that,

as here, often provides little guidance. In re Dean, 212 Ariz.

at 225 ¶ 24, 129 P.3d at 947 (quoting In re Owens, 182 Ariz.

121, 127, 893 P.2d 1284, 1290 (1995)).

¶38 In assessing the duration of Phillips’s suspension,

however, we must also consider internal proportionality, in

particular the length of his suspension in relation to Arentz’s.

We considered internal proportionality in In re Dean, 212 Ariz.

at 225 ¶ 25, 129 P.3d at 947. That case involved a romantic

relationship between a prosecutor and a superior court judge.

Id. at 221 ¶ 2, 129 P.3d at 943. We reduced from one year to

2
See In re Lenaburg, 177 Ariz. at 24, 864 P.2d at 1156 (imposing
public censure with probation on attorney who negligently
violated ER 5.1, causing lack of communication with clients and
failure to refund fees in four separate cases); In re Rice, 173
Ariz. at 377, 843 P.2d at 1269 (imposing censure and probation
on attorney with no prior disciplinary record who negligently
failed to adequately supervise staff during firm’s rapid
expansion, resulting in sloppy office procedures and
mismanagement).

19
six months the Commission’s recommended suspension for the

prosecutor in part because the judge had not been disciplined.

Id. at 225 ¶ 25, 129 P.3d at 947. The prosecutor’s ethical

violations involved the same conduct as the judge’s, and we

concluded that a reduced sanction for the prosecutor was

warranted to avoid a disparity in treatment. Id. Without

minimizing the seriousness of the attorney’s misconduct, we

determined that “the interests of justice” required

reconsideration of an otherwise suitable sanction. Id.

Although the judge’s immunity from lawyer discipline in that

case had resulted inadvertently from this Court’s prior action,

see id., the rationale employed there also applies here.

¶39 In this case, the Hearing Officer found, and the

Commission affirmed, that Arentz had a total of nineteen ethical

violations (eighteen of which were found to be knowing),

compared to Phillips’s twelve violations (eleven of which were

found to be knowing). The Hearing Officer consistently found

that Arentz, but not Phillips, violated subsection (b) of ERs

5.1 and 5.3 based on Arentz’s having had direct supervisory

authority of P&A’s criminal department.3 Arentz was also

3
Ethical Rule 5.1(b) requires that a lawyer having direct
supervisory authority over another lawyer make “reasonable
efforts to ensure that the other lawyer conforms to the Rules of
Professional Conduct.” Similarly, ER 5.3(b) requires that a
lawyer having direct supervisory authority over a nonlawyer make
20
directly involved in approving excessive fees, as alleged in

Counts 8, 9, and 12, in violation of ER 1.5. In contrast, as

the dissenting Commission members noted, the Hearing Officer did

not find that Phillips had direct personal knowledge of any of

the specific conduct giving rise to the allegations of ER 5.1 or

5.3 violations until after the conduct occurred. Yet Arentz

received a suspension of only sixty days compared to Phillips’s

six-month and one-day suspension. Neither the Hearing Officer

nor the Commission addressed or explained this disparity.

¶40 Moreover, a six-month and one-day suspension is not

actually completed in that time period. Under Rule 65(a),

Arizona Rules of the Supreme Court, any suspension exceeding six

months requires the lawyer to go through formal reinstatement

proceedings. That process extends the effective length of a

suspension considerably. An applicant for formal reinstatement

must provide an array of personal and financial information and

prove by clear and convincing evidence his or her

rehabilitation, compliance with all disciplinary orders and

rules, fitness to practice, and competence. See Ariz. R. Sup.

Ct. 65(a)-(b).

F. Appropriate Sanction

¶41 Although Arentz had more violations than Phillips and

“reasonable efforts to ensure that the person’s conduct is
compatible with the professional obligations of the lawyer.”
21
was more directly involved in the underlying ethical violations

of P&A employees in his department, we conclude Phillips’s

conduct and disciplinary history warrant a more severe sanction

for him than Arentz received. Unlike Phillips, Arentz has no

prior disciplinary record. We take Phillips’s prior

disciplinary record seriously, considering it involved the same

type of supervisory shortcomings at issue here. The goal of

attorney discipline is to protect the public. In re Rivkind,

164 Ariz. 154, 157, 791 P.2d 1037, 1040 (1990). Neither the

Hearing Officer nor the Commission erred in determining that the

2002 discipline did not adequately rehabilitate Phillips and was

insufficient to protect P&A clients.

¶42 We also recognize that Phillips, as managing partner

of a law firm representing more than 10,000 clients per year,

was in a position of greater supervisory authority than Arentz.

Phillips, not Arentz, had full power and control over P&A’s

policies and practices. As such, he was better able to effect

positive change and insist on full compliance with ethics

standards. Conversely, Phillips’s lapses in these areas might

potentially cause greater harm. Phillips’s apparent delegation

of responsibility and hands-off approach does not make his

policies any less of a danger. Indeed, the decisions he makes

directly affect the public, the profession, and the integrity of

the legal system.
22
¶43 Although attorney partners and supervisors are not

guarantors of their employees’ conduct, they must take

reasonable steps to ensure that firm practices, not merely

policies, actually comply with ethical rules binding all lawyers

practicing law in this state. Phillips’s failure to do so,

particularly in view of his disciplinary history, warrants a

significant period of suspension followed by a lengthy probation

term with strict conditions.

¶44 A longer suspension for Phillips is therefore

justified. But we do not believe that a sanction at least six

times harsher than Arentz’s is proportional in this case.4

Rather, as the two dissenting Commission members observed when

recommending a ninety-day suspension for Phillips, a lesser

sanction against him would appropriately address the violations

4
Rule 64(e)(1), Arizona Rules of the Supreme Court, permits a
lawyer who has been suspended for more than six months to apply
for reinstatement no sooner than ninety days prior to the
expiration of the suspension. Rule 65(b)(1), as amended this
year and effective to reinstatement proceedings commencing after
January 1, 2011, provides that a Bar hearing panel will hold a
hearing within 150 days of the filing of the application.
Within thirty days after completing the hearing, the hearing
panel must file a report with this Court containing findings of
facts and recommendations concerning the reinstatement. Ariz.
R. Sup. Ct. 65(b)(3). The Court must “promptly” review the
report and decide whether the applicant is qualified for
reinstatement, a process that typically takes about two months.
Id. at 65(b)(4). Thus, the reinstatement process for Phillips
would, at the very least, last five to six months after his
suspension is complete, effectively extending his suspension to
a total of twelve months, six times longer than Arentz’s
suspension.
23
found here while deterring future misconduct and thereby

protecting the public. We therefore reduce Phillips’s

suspension to six months. In doing so, we do not minimize the

seriousness of Phillips’s misconduct. But we believe a six-

month suspension avoids an unjust disparity in treatment between

him and Arentz.

¶45 The Hearing Officer and the Commission recommended

that Phillips’s two-year probation term and conditions of

probation begin and take effect after Phillips’s suspension is

fully served. We accept that recommendation. Although Phillips

is prohibited from practicing law or holding himself out as an

active attorney during his suspension, he is permitted and

strongly encouraged during that time to work with the Bar to

immediately address the issues and rectify the problems that led

to the violations of ERs 5.1 and 5.3 in this case. Otherwise,

P&A would be left with many of its current problems and no

immediate solution during Phillips’s period of suspension.

¶46 During the suspension, however, Phillips’s name may

not be used in firm advertisements, letterhead, or other

communications.5 Nor is Phillips entitled to receive any income

5
See ERs 5.5(b)(2); 7.1; 7.5(a) and (d); see also State Bar of
Ariz. Comm. on Rules of Prof’l Conduct, Formal Op. 02-07 (2002)
(concluding that a law firm should not continue to use
attorney’s name in the firm name, letterhead, business cards, or
stationary while the attorney is on disability inactive status,
and noting that “a suspended partner’s name must be dropped in
24
generated by the firm during his suspension.6

¶47 In addition to reducing Phillips’s suspension to six

months, we remove from the Commission’s recommended terms of

probation term number 13, which would have permitted the Bar to

send at random times unidentified “testers” to P&A to check the

firm’s compliance with required intake procedures. The Bar did

not request that particular term and, at oral argument in this

Court, acknowledged that it was not warranted. We adopt the

Commission’s probation terms in all other respects, as set forth

in the appendix, as well as the restitution amounts it ordered.

IV. Conclusion

¶48 For the foregoing reasons, we modify the recommended

length of Phillips’s suspension, but otherwise accept the

Commission’s recommendations. The probation terms and

all communications with the public”); Wash. State Bar Ass’n,
Formal Op. 196 (2000) (prohibiting use of suspended lawyer’s
name in firm name or business communications).
6
See ER 5.4(a) (“A lawyer or law firm shall not share legal fees
with a nonlawyer.”); Disciplinary Counsel v. McCord, 905 N.E.2d
1182, 1189 (Ohio 2009) (concluding that lawyer’s receipt of
attorney fees while suspended from practice of law was improper
and actionable as ethics violation); Office of Disciplinary
Counsel v. Jackson, 637 A.2d 615, 620 (Pa. 1994) (noting a
suspended attorney is a “‘non-lawyer’ within the meaning of the
rules”); Comm. on Prof’l Ethics, State Bar of Tex., Op. 592
(2010) (prohibiting a lawyer from sharing legal fees with
suspended attorney); cf. West v. Jayne, 484 N.W.2d 186, 190-91
(Iowa 1992) (allowing lawyer in breach of contract action
against fellow associate to collect portion of fee, but
suggesting that attorney would not be entitled to fees for any
work done after he was suspended from practice of law).
25
conditions prescribed by the Commission as set forth in the

appendix to this opinion shall apply.

_____________________________________
A. John Pelander, Justice

CONCURRING:

_____________________________________
Rebecca White Berch, Chief Justice

_____________________________________
Andrew D. Hurwitz, Vice Chief Justice

_____________________________________
Jon W. Thompson, Judge∗

W E I S B E R G, Judge, concurring in part and dissenting in
part

¶49 As the majority explains, the impact of a suspension

of six months and one day is a great deal more than the impact

of a suspension of only six months. Here, however, even

allowing for the subjectivity that creeps into the “imperfect

process” when considering proportionality, I must respectfully

dissent from the majority’s decision to reduce Phillips’s

suspension from the six months and one day recommended by the

∗
Pursuant to Article 6, Section 3 of the Arizona Constitution,
the Honorable Jon W. Thompson, Judge of the Arizona Court of
Appeals, Division One, was designated to sit on this matter.
26
Hearing Officer. I do so because, unlike the majority, I

conclude that a six-month and one day suspension is internally

proportionate to the two-months suspension meted out to Arentz.

¶50 The majority’s conclusion is understandably not based

on a general proportionality review. Not only is that approach

no longer favored, but it is of little benefit here because

Phillips’s firm is a fairly unique “consumer” law firm with

accordingly tailored practices. The disciplinary cases

referenced by the parties are just not comparable enough to be

helpful.

¶51 In this case, it is enough that Phillips’s violations

are the sort for which the relevant ABA Standard mandates a

suspension. Specifically, ABA Standard 7.2 provides that

“[s]uspension is generally appropriate when a lawyer knowingly

engages in conduct that is a violation of a duty owed as a

professional, and causes injury or potential injury to a client,

the public, or the legal system.” Phillips’s conduct clearly

falls within that described by the ABA Standard. I therefore

consider next whether Phillips’s recommended suspension of six

months and one day would be proportionate to Arentz’s two

months. I conclude it would.

¶52 To begin, Phillips is not being sanctioned for his

second ethics violation. He is being sanctioned for his ethics

violations eighteen through twenty-nine. I am not aware of any
27
other attorney in Arizona who has committed twenty-nine

violations and received only a six-month suspension for his

twenty-ninth. While Arentz was arguably punished too lightly

for having committed nineteen violations, and Phillips’s latest

violations number twelve, Phillips had committed seventeen

earlier violations. This comparison alone supports the

recommended six months and one day suspension.7

¶53 Second, Arentz’s sanction consisting of a two-month

suspension and two years of probation represents his first such

sanction. It is to be hoped and presumed that this sanction

will be sufficient to prevent further violations by him.

Phillips, on the other hand, was punished for his earlier

violations and completed that probationary period.

Unfortunately, he has reoffended multiple times. Thus, a

greater penalty that includes a six-month and one day suspension

is both warranted and proportionate.

¶54 Finally, Arentz committed his ethical violations while

working in a system that was developed, implemented, and

supervised by Phillips. It was Phillips’s decision as to what

P&A resources would be devoted to meet its attorneys’ ethical

responsibilities to their clients. He clearly did not attach

7
I also note that these most recent twelve violations of
Phillips involved separate complaints by nine of P&A’s clients,
while Arentz’s complaints involved only six clients.

28
sufficient importance to those ethical responsibilities. As the

attorney in sole charge of P&A, his fault was therefore far

greater than that of Arentz.

¶55 For the foregoing reasons, and although I concur with

all else in the majority’s opinion, I must respectfully disagree

with its decision to reduce the period of Phillips’s suspension.

_______________________________
SHELDON H. WEISBERG, Judge∗

∗
Pursuant to Article 6, Section 3 of the Arizona Constitution,
the Honorable Sheldon H. Weisberg, Judge of the Arizona Court of
Appeals, Division One, was designated to sit on this matter.

29
 APPENDIX

1. Phillips shall refrain from engaging in any conduct
that would violate the Rules of Professional Conduct or other
rules of the Supreme Court of Arizona.

2. Phillips shall contact the director of LOMAP within
thirty (30) days from the filing date of this opinion and shall
schedule and submit to a LOMAP audit within forty-five (45) days
thereafter. Following the audit, the director of LOMAP shall
formulate and include recommendations based on the audit in a
Probation Contract to be executed and implemented by Phillips.
The director of LOMAP shall also monitor the terms of probation.

3. Before entering into any written attorney/client fee
agreement for the firm, an Arizona licensed attorney must speak
with the client and approve the legal fees to be charged and
retention of the firm by the client. The attorney meeting with
the potential client must be knowledgeable in the practice area,
and issues that relate to the retention and retention decision
must be discussed before a decision is made on the retention.
Retention attorneys shall review all paperwork and ensure that
appropriate information is given to the client even if the
client lacks the sophistication or knowledge to ask the right
questions.

4. Any nonlawyer personnel conducting initial
consultations with clients must clearly and affirmatively
identify themselves as nonlawyers to prospective clients.

5. Respondent shall ensure that nonlawyer staff shall not
give legal advice to clients and shall not make predictions or
guarantees as to the outcome of a case.

6. Standard intake forms including a standard fee
agreement shall be utilized. The firm shall participate in fee
arbitration whenever it is requested by the client and the firm
has been unable to resolve the dispute directly with the client.

7. A standardized training manual for intake procedures
shall be provided to each intake employee.

8. Pursuant to ER 5.3, Phillips or other attorneys with
supervisory authority in the firm (over whom Phillips has direct
control) will be responsible for compliance by all intake
personnel and nonlawyer staff with applicable ethical rules.

30
 9. When accepting payment of a client’s fees in a form
other than cash, the firm shall not accept payment without
signed, written consent (which may be evidenced by a check,
electronic signature, credit card authorization, or other
writing) from the party making the payment.

10. A one-time ethics training program, not to exceed
three (3) hours, shall be given to all administrative staff
including intake and collection personnel. The program shall be
provided by the director of LOMAP or designee, and shall be
given at a time within the first six (6) months of the
probationary terms and in a manner that does not disrupt the
firm’s practice. The program may be repeated or additional
programs may be given during the probationary period if needed
as determined by the director of LOMAP. The initial program
shall be taped and shown to any new personnel hired during the
probationary period.

11. A one-time Continuing Legal Education ethics program,
not to exceed three (3) hours, shall be given to all attorneys
employed by Phillips’s firm. The program shall be provided by
the director of LOMAP or designee, and shall be given at a time
within the first six (6) months of the probationary period and
in a manner that does not disrupt the firm’s practice. The
program may be repeated or additional programs may be given
during the probationary period. The initial program shall be
taped and shown to any new lawyers hired during the probationary
period.

12. The firm shall utilize a fee review process,
consistent with In re Swartz, 141 Ariz. 266, 686 P.2d 1236
(1984), and ER 1.5, at the conclusion of all cases in order to
determine whether a refund is due. All attorneys and other
billable staff members who work on criminal cases8 shall keep
contemporaneous time records to enable the firm to conduct a
“backward glance” at the conclusion of a case in order to
determine whether a refund is due.

13. The firm shall provide a written accounting of time
spent and fees incurred within fifteen (15) days of request by a
client. When a client terminates the firm’s representation in a
criminal case and the firm has been permitted to withdraw by the

8
The record indicates that P&A has sold its criminal department.
Assuming that P&A no longer offers services in criminal law,
this term and others relating to P&A’s criminal department no
longer apply.
31
court, the firm shall, within fifteen (15) days following
receipt of the Order permitting withdrawal, provide to the
client a written accounting of time spent, fees incurred, and
when appropriate, a refund of any unearned fees.

14. If Phillips’s firm uses client testimonials in
advertisements, the client must acknowledge in writing that he
or she is not receiving any money benefit (or the equivalent)
for the appearance.

15. Phillips shall develop a system in which he is
promptly advised of all client complaint(s) against the firm or
lawyers employed by the firm, which implicate the provisions of
ERs 5.1 and 5.3. Phillips shall document, in writing, his or
the firm’s response to each such complaint, and shall maintain a
file of such complaints and responses.

16. Phillips shall make reasonable and good faith efforts
to ensure compliance with these probation terms and shall
respond directly or through his counsel to inquiries concerning
the implementation and compliance with these probationary terms.

17. Before conducting a screening investigation into any
new complaint(s) relating to practices covered by these terms
and conditions of probation, the State Bar, when appropriate and
consistent with its normal practice, will first attempt to
resolve the complaint(s) through A/CAP and Central Intake, or
will, when appropriate, consistent with its normal practice and
pursuant to Rule 54(b)(1), Arizona Rules of the Supreme Court,
refer the matter for mediation. Nothing in this paragraph is
intended to limit the jurisdiction or power of the State Bar
disciplinary agency.

18. Bonuses to legal administrators shall not be based, in
whole or in part, on the number of clients retained, the amount
of fees generated, the number of clients who cancel, or the
amount of fees refunded.

19. The firm shall keep accurate records for all work done
on a case.

20. Phillips shall pay all costs incurred as a result of
these probationary terms.

21. In the event that Phillips fails to comply with any of
the foregoing conditions and the State Bar receives information
thereof, bar counsel shall file with the imposing entity a
32
Notice of Non-Compliance, pursuant to Rule 60(a)(5), Arizona
Rules of the Supreme Court. The Hearing Officer shall conduct a
hearing within thirty (30) days after receipt of said notice, to
determine whether the terms of probation have been violated and
whether an additional sanction should be imposed. In the event
there is an allegation that any of these terms have been
violated, the burden of proof shall be on the State Bar of
Arizona to prove noncompliance by a preponderance of the
evidence.

33