No. BD-2003-080
S.J.C. Order denying Reinstatement entered by Justice Gants on October 18, 2010 1
MEMORANDUM OF DECISION
Attorney Gerald L. Shyavitz has petitioned for reinstatement to the bar under "S.J.C. Rule 4:01, § I8(4), as amended, 394 Mass. 1106 (1985), after having been suspended from the practice of law in Massachusetts for an indefinite period by a single justice of this court on December 17, 2003. His petition for reinstatement is denied.
Background. Bar Counsel's petition for discipline alleged that, as managing partner of the law firm of Shyavitz & Shyavitz, Shyavitz (1) failed to keep adequate records of client trust funds and commingled personal or business funds with trust funds, (2) as to two clients, intentionally misappropriated funds due the clients' creditors with intent to deprive the creditors of these funds at least temporarily, with actual deprivation resulting, and (3) as to two other clients, deprived them of funds due them, at least temporarily, with actual deprivation resulting. Shyavitz and Bar Counsel jointly recommended the sanction of indefinite suspension.
After Shyavitz petitioned for reinstatement, the Hearing Panel found that Shyavitz had met his burden of establishing that he possesses the moral qualifications, competency, and learning in the law to be reinstated to practice, and that his resumption of the practice of law will not be detrimental to the integrity and standing of the bar. The Hearing Panel recommended his reinstatement, but with three conditions: (1) that he purchase and maintain professional liability insurance with coverage of at least $500,000 per claimant and a deductible not to exceed $10,000 for a period of five years; (2) that he refrain from handling any client funds for a period of five years, and thereafter agree to have all client trust accounts audited annually for a period of five years at his expense; and (3) that he accept peer review support from a named attorney.
The Board of Bar Overseers (Board) also recommended reinstatement, but with somewhat different conditions: (1) that he obtain professional liability insurance if he returns to the private practice of law; (2) that he refrain from handling client funds for five years; and (3) that he not engage in the practice of law as a sole practitioner.2
In a Memorandum of Decision dated May 27, 2010, I did not accept the Board’s recommendation that Shyavitz be reinstated as an attorney but be prohibited from handling client funds for five years. I wrote:
"I recognize that reinstatement on conditions is often appropriate and consistent with the standard for reinstatement. Public confidence is sometimes best served when a disbarred or suspended attorney who is reinstated is required, as a condition of reinstatement, to demonstrate his continued sobriety, his continuing legal education, or his adherence to accounting principles to protect client trust funds. I do not see, however, how the Board's condition that Shyavitz refrain from handling client funds for five years is consistent with the Board's implicit finding, by its recommendation of reinstatement, that Shyavitz is morally fit to practice law, that he is worthy of public confidence, and that he will be perceived by the public as morally fit. The condition suggests that he is fit to practice law as long as he does not handle client funds, which suggests that he cannot be trusted with those funds. This condition is significantly different from a condition requiring a reinstated attorney to conduct independent audits of client trust fund accounts. Such a condition applies the Russian proverb of 'trust, but verify;' the prohibition against handling any client funds suggests that the reinstated attorney is unworthy of trust, even with verification. I do not believe the public will have (or should have) confidence in an attorney without also having confidence that the attorney will safeguard any client funds he may receive."
Memorandum of Decision, May 27, 2010 at 3-4. I remanded the matter to the Board for its recommendation as to reinstatement if Shyavitz were permitted to handle client funds, "perhaps with other conditions." On June 14, 2010, the Board unanimously recommended that Shyavitz's petition for reinstatement be denied, declaring that it "would not have voted to recommend reinstatement without restriction as to client funds."
After the Board's vote, the court issued its opinion In the Matter of Nicholas J. Ellis, 457 Mass. 413 (2010) (Ellis), where the court reinstated the disbarred attorney and agreed with the conditions proposed by the Board, which included conditions that the attorney for five years not engage in practice with any family member or former member of his family's law firm, and not take any personal injury or workers' compensation cases.3
Represented by new counsel, Shyavitz contends that my rejection of the condition that he refrain from handling client funds for five years is inconsistent with the court's adoption of the conditions in Ellis. He proposes that I reconsider my earlier ruling in light of Ellis and reinstate him with the conditions imposed by the Board in its earlier vote or on such other conditions as I deem just.
Discussion. While deference is given to the decision of the Board, this court retains ultimate authority to decide a person's fitness to practice law in the Commonwealth. G.L. c. 221, § 37. See Matter of Prager, 422 Mass. 86, 89 (1996). "The test of fitness for reinstatement is two pronged. Not only must a petitioner demonstrate the requisite moral qualifications and learning in the law, but he also must show that his resumption of the practice of law will not be detrimental to the integrity of the bar, the administration of justice, or the public interest." Id. at 93, citing S.J.C. Rule 4:01, § 18(5), as amended, 394 Mass. 1106 (1985) . The petitioner must show that, he has so rehabilitated himself that he "currently possesses the necessary moral character to be admitted to the bar of the Commonwealth," Matter of Prager, supra at 92, and will "inspire public confidence once again, in spite of his previous actions." Id. at 89, quoting Matter of Hiss, 368 Mass. 447, 452 (1975). "[I]t is appropriate, despite the lack of specific directives, to consider the public perception of and confidence in the bar when determining the fitness of original applicants to practice law in the Commonwealth. " Matter of Prager, supra at 93.
The conditions approved by the court in Ellis are different in kind, purpose, and effect from the condition I rejected that Shyavitz refrain from handling client funds for five years. In Ellis, supra at 415, the attorney, while still new to the practice of law, joined a law firm established by his father and controlled by his older brother. Ellis played a "supporting role" in the fraud that Ellis' s brother and the firm's clients perpetrated on insurers. Id. at 416. Ellis pleaded guilty to two misdemeanor counts of motor vehicle insurance fraud, id. at 413, but his misconduct "paled in comparison to that of his brother." Id. at 416. In seeking reinstatement, he recognized that "he could not again practice with family members or within their sphere of influence." Id. He had decided no longer to practice personal injury or workers' compensation law, which he had practiced at his former family law firm, and to focus his practice in new areas, where he had arranged for mentors to assist him. Id. at 417. The court, concerned with the effect and perception of his reinstatement on the public and the bar, concluded that the conditions were appropriate because "[t]hey convey the message that [Ellis's] reinstatement is decidedly not a reopening of the disgraced law practice of Ellis & Ellis." Id. at 418. These conditions suggest that Ellis is vulnerable to being led astray by other members of his family, but do not suggest that he is unworthy of trust if he is freed from their influence by steering clear of having anything to do with his family's personal injury and workers' compensation practice.
The condition I rejected in this case suggests that Shyavitz cannot be trusted with client funds. Barring him from handling client funds does not resolve the problem of trust, because if he cannot be trusted to protect client funds, there is no sound reason for the public to believe that he can be trusted to protect other interests of his clients.
Having concluded on reconsideration that a prohibition against handling client funds is not an appropriate condition for reinstatement :of an attorney, I turn to whether to accept the Board's' unanimous recommendation that Shyavitz's petition for reinstatement be denied. I agree with the Board's recommendation.
The Hearing Panel' concluded that Shyavitz accepted responsibility for his past misconduct and has shown sufficient moral character to be reinstated, but also recognized that he ignored a lawsuit brought by former clients against his former law firm, that he accepted a. new personal injury case in September, 2003, in violation of his agreement with bar counsel in July, 2003, to accept no new cases, and then failed to advise the client that he was being suspended from the practice, of law, and that he owes back taxes and is borrowing $1,500 a month from a line of credit because his monthly expenses exceed his income. In view of the deference given to the Board's decision and these troubling instances which suggest that his moral character remains in question, I conclude that his petition for reinstatement should be denied.
Conclusion. For the reasons stated above, Shyavitz's petition for reinstatement is denied.
FOOTNOTES:
1 The complete Order of the Court is available by contacting the Clerk of the Supreme Judicial Court for Suffolk County.
2 At the hearing, Bar Counsel explained that this third condition was imposed because the Board of Bar Overseers (Board) did not see how an attorney could be a sole practitioner without handling client funds.
3 The conditions recommended by the hearing panel, approved by the Board, and agreed with by the court were as follows:
"(1) prior to reinstatement, the petitioner shall take a course recommended by bar counsel concerning the proper method of handling an [Interest on Lawyers Trust Account (IOLTA)] account; (2) the petitioner shall sign an agreement with bar counsel to have his IOLTA account audited for a period of two years at his cost, and shall use for his law practice accounting and auditing an accountant other than Mr. Kyriakis (or any member of his firm), who has been and continues to be his father's accountant; (3) for a period of five years, the petitioner shall not engage in practice with any family member or former member of the Ellis & Ellis firm, or the James N. Ellis, Sr. & Associates firm, nor shall he employ in his law practice any employee of his father's firm or his sister's office employees; (4) the petitioner shall not engage in any personal injury or workers' compensation cases, and shall not represent any family members for a period of five years; (5) the petitioner shall purchase and maintain malpractice insurance in a minimum of $1,000,000 per claimant with a deductible not to exceed $10,000 for a period of five years; and (6) . within the next two years, the petitioner shall take forty hours of [continuing legal education] courses in the areas of the law in which he intends to practice."
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