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Paul D. Jacobson (WSBA No. 26939, admitted 1997), of Redmond, was ordered to receive a reprimand plus two years’ probation by order of the Disciplinary Board on March 30, 2010, following approval of a stipulation. This discipline is based on conduct involving trust account irregularities and failure to properly supervise a non-lawyer assistant.
In 2002, Mr. Jacobson opened the Jacobson Law Group, which focused primarily on providing criminal defense work as a contractor, with one associate handling a small number of general cases. Prior to opening Jacobson Law Group in 2002, Mr. Jacobson’s practice was almost exclusively criminal defense and he had little, if any, exposure to trust accounting. He delegated the IOLTA setup and operation for Jacobson Law Group to his staff. Although Mr. Jacobson signed all trust account checks, he relied upon his staff to determine what disbursements were appropriate and to draft the checks for his signature. Mr. Jacobson did not properly supervise his staff in either the setup or the operation of the IOLTA account. As a result, client ledgers were not maintained for individual client balances, and the checks drawn on the IOLTA account did not always identify the client on whose behalf the funds were being disbursed.
In 2005, during the investigation of a grievance, the Bar Association opened an investigation into the adequacy of Mr. Jacobson’s trust account practices. During the period from November 2002 through October 2007, a variety of bookkeeping errors went undetected due to the lack of client ledgers and the resulting inability to incorporate a set of client ledgers into the monthly reconciliations as a means of detecting errors. These errors included errors in the disbursements to the Jacobson Law Group for fees, at times disbursing the fees before they had been fully earned, and at times failing to remove earned fees from the account. Similar errors were made in disbursements to third parties and in payment and reimbursement of costs.
Over a period of years, these errors accumulated, and while the errors were serious, no client or third party complained; due to the deficiencies in the trust account records, Mr. Jacobson had no way of knowing of the errors. To ascertain that all client funds had been properly accounted for, it was necessary for the WSBA auditor to reconstruct a set of trust account records, including individual client ledgers. The auditor’s reconstruction covered the period from November 19, 2002, when the account was opened, to November 30, 2009. The failure to identify each disbursement by client made this reconstruction problematic. Mr. Jacobson and his staff cooperated with the WSBA auditor in obtaining the documentation necessary to identify the clients on whose behalf disbursements had been made.
Upon completion of the trust account reconstruction, it was determined that the account was short by $1,189.45, and Mr. Jacobson placed his own funds in this amount into the account to bring the account current and balanced. Mr. Jacobson also paid his own funds of $161.14 to the Legal Foundation of Washington, which represents the amount of interest that the WSBA auditor identified should have been earned had all funds been properly maintained in the trust account and had the bank properly transmitted earned interest to the Legal Foundation. In addition, the WSBA auditor assisted Mr. Jacobson and his bookkeeper in setting up a proper set of trust account records, including individual client ledgers.
Mr. Jacobson’s conduct violated former RPC 1.14(a) and current RPC 1.15A(c), requiring that all funds of clients paid to a lawyer or law firm be deposited into one or more identifiable interest-bearing trust accounts and no funds of the lawyer be deposited therein; former RPC 1.14(b)(3) and current RPC 1.15A(h)(2), requiring a lawyer to maintain complete records of all funds, securities, and other properties of a client coming into possession of the lawyer and render appropriate accounts to his or her client regarding them; and RPC 5.3(b), requiring that a lawyer having direct supervisory authority over a non-lawyer make reasonable efforts to ensure that the person’s conduct is compatible with the professional obligations of the lawyer.
Randy V. Beitel represented the Bar Association. Leland G. Ripley represented Mr. Jacobson.
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