Vol. 76, No. 11, November 2003

Regulating the Legal Profession:
OLR Annual Report

by the Board of Administrative Oversight & Office of Lawyer Regulation

The Office of Lawyer Regulation (OLR) and Board of Administrative Oversight (board) file annually with the Wisconsin Supreme Court a report on the lawyer regulation system. This is the third report filed under the new lawyer regulation system, which became effective on Oct. 1, 2000. This past year, the system made tremendous gains in reducing an excessive caseload that began to develop in 1996 and persisted during the transition to the new system. The reduction is nearly complete, and the caseload should be within normal operating capacity sometime this fall. The system's efficiency and effectiveness continue to improve through refinement of policies and procedures.

Lawyer Regulation System Overview

The Wisconsin Supreme Court created the lawyer regulation system to carry out the court's constitutional responsibility to supervise the practice of law and protect the public from misconduct by persons practicing law in Wisconsin. Figure 1 shows the composition and organization of the lawyer regulation system. The court has adopted standards of professional conduct for attorneys. The court confers the privilege to practice law on an attorney conditioned on his or her compliance with those standards.¹ A failure to comply with the court's standards may constitute misconduct or may be evidence of a medical problem.

The OLR director is required to investigate any possible misconduct or medical incapacity of an attorney licensed to practice in Wisconsin.² Communications with the OLR alleging lawyer misconduct are privileged, and no lawsuit predicated on those communications may be instituted against any grievant or witness.³ Attorneys and grievants may consult with and be represented by counsel at any stage of an investigation. Before the filing of a formal complaint or petition, all papers, files, transcripts, and communications in an OLR investigation must be kept confidential by the OLR.⁴ The OLR may, however, provide relevant information to the respondent and the grievant.⁵ Although the Supreme Court Rules provide no sanction for disclosure of a grievance by the respondent or the grievant, the OLR requests that those involved in an OLR investigation keep confidential all documents generated by the investigation.

Initially, the OLR staff screens all inquiries and grievances concerning attorney conduct. If the allegations made are not within the OLR's jurisdiction, or if the allegations are not supported by a sufficient factual basis, staff will close the file. The grievant may make a written request for the director's review of the closure. The director's decision is final. After preliminary evaluation, staff also may forward the matter to another agency; attempt to reconcile the matter between the grievant and attorney if the dispute is minor; or refer the matter to the director for diversion or investigation. Before or after investigation, the director may divert the matter to an alternatives to discipline program, provided that nothing more than minor misconduct is involved, the respondent agrees, and the respondent is eligible to participate. Alternatives to discipline are usually educational programs or monitoring arrangements that help an attorney improve the quality of his or her practice.

If the grievance sets forth sufficient information to support an allegation of a violation of SCR Chapter 20, OLR staff may initiate an investigation. The OLR staff will send a letter to the respondent, enclosing the grievance and requesting a response within 20 days. In most instances, staff will forward the attorney's response to the grievant for comments. When the OLR staff has completed the preliminary investigation, the director will determine whether: 1) an uncontested violation exists; 2) the grievance should be dismissed for lack of merit; 3) further staff investigation is needed; or 4) the matter should be assigned to a district investigative committee for further investigation, pursuant to SCR 22.04(1).

If the grievance is further investigated by staff or a district committee, the respondent and the grievant will be kept advised about the investigation. The committee chair can assign the matter to one of the committee's investigators. Pursuant to SCR 22.04(2), the respondent may request a substitution of a district committee investigator within 14 days of receiving notice of the assignment of the investigator. The respondent shall be granted one such substitution as a matter of right, and any other requests for substitution shall be granted by the committee chair for good cause shown. If the committee decides to take sworn testimony regarding a grievance at an investigative meeting, the respondent and the grievant will receive timely notice of the meeting. Committee members elicit pertinent information from witnesses at such a meeting. For each matter referred to committee, the committee will prepare a report summarizing the facts and potential disciplinary violations. That report will be sent to the respondent and grievant for comment.

After the investigation is completed by staff and/or a committee, the director may dismiss the matter for lack of sufficient evidence of cause to proceed, divert the matter to an alternatives to discipline program, obtain the respondent's consent to a private or public reprimand, or present the matter to the Preliminary Review Committee (PRC) for a determination of whether there is cause to proceed. In cases in which the director dismisses the matter, the grievant has 30 days after receiving written notice of the dismissal to make a written request for review of the decision by the PRC. The decision of the PRC is final.

If, after the investigation is completed, the director does not dismiss the grievance, seek a consent reprimand, or divert the matter, the OLR staff will prepare an investigative report and provide copies to the grievant and the respondent for comment. (In cases in which a district committee investigates a matter, its report will serve as the investigative report.) The grievant and the respondent may submit written responses to the report within 10 days after they receive the report.

The director may then submit the results of the investigation to the PRC. The PRC determines whether the evidence presented supports a reasonable belief that an attorney has engaged in misconduct or has a medical incapacity that may be proved by clear, satisfactory, and convincing evidence.⁶ If the PRC dismisses the matter, the grievant has 30 days after being notified of the dismissal to file a written request for review of that decision. The supreme court will select a referee to review the matter, and the referee's decision is final.

If the PRC determines that the director has established cause to proceed, the director may file a complaint with the supreme court alleging misconduct. The OLR, rather than the grievant, is the complainant in such a matter. If the director files a complaint, an answer is required within 20 days of service of the complaint. Upon proof of service, the supreme court appoints a referee to hear the matter pursuant to SCR 22.13(3). The referee holds a scheduling conference to define the issues and to determine the extent of discovery. The referee then presides at a public hearing that is conducted as a trial of a civil action to the court.⁷ The OLR must prove misconduct or medical incapacity by clear, satisfactory, and convincing evidence.⁸

Within 30 days after the hearing concludes, the referee will submit his or her report to the supreme court, including findings of fact, conclusions of law, and a recommendation of dismissal or imposition of discipline. The OLR or a respondent may file an appeal of the referee's report within 20 days after the report is filed. If no appeal is timely filed, the supreme court reviews the referee's report and determines appropriate discipline in cases of misconduct and appropriate action in cases of medical incapacity. The court may, on its own motion, order the parties to file briefs. Either the respondent or the OLR may file a motion for reconsideration of the supreme court's decision within 20 days of the filing of the court's decision. The filing of a motion for reconsideration does not stay enforcement of the judgment. The supreme court's final dispositions of disciplinary and medical incapacity proceedings are published in the Wisconsin Reports and in the Wisconsin Lawyer.

The Year in Review

Significant Lawyer Regulation System Developments. Fiscal 2001 efforts focused on implementing the new system. Fiscal 2002 efforts focused on improving the system's efficiency and effectiveness. As system participants have become more experienced, decision-making and efficiency have improved. The new system has a significantly greater capacity than the prior system, due in equal part to the increase in staff and the new central intake procedure. Under the new system, a higher percentage of matters are being resolved within 90 days and within 180 days.

During Fiscal 2003, the system completed most of the older investigations. At the beginning of the fiscal year, the total number of all pending formal investigations was 750; by the end of the year, the number was down to 479. This number continues to decline. At the beginning of the fiscal year, the number of formal investigations over a year old was approximately 400; by the end of the year, the number was approximately 190. This number also continues to decline. The OLR and Board of Administrative Oversight are especially appreciative of the contributions of the district committees and limited term employees, whose hard work has been instrumental in this year's achievement.

The supreme court met with the Board of Administrative Oversight, the Preliminary Review Committee, special investigators, and the Special Preliminary Review Panel on April 11, 2003, to discuss current developments in the lawyer regulation system. This fall, the court considered amendments to the trust account rule and several procedural rules. This year, in response to the ABA Ethics 2000 report, the court established a committee to review the Wisconsin Rules of Professional Conduct. The committee will seek comments from the bench, bar, and public and will recommend changes to Wisconsin rules in the form of a petition to be filed by October 2004.

The PRC re-elected attorneys James Wickhem, Janesville, chair, and James D. Friedman, Milwaukee, vice chair. The PRC has considered whether cause to proceed existed in 86 matters and has reviewed the director's dismissals in 16 matters. The PRC met specially on two occasions during the fiscal year and again in July to complete a large number of investigations. PRC meetings will continue quarterly.

The Board of Administrative Oversight re-elected attorneys William H. Levit Jr., Milwaukee, chair, and Ann Ustad Smith, Madison, vice chair. Subcommittees to study district committees, to establish board priorities, and to review rules proposals continued their work. The board resolved to recommend retaining district committees, and is considering improvements in their operations. The board will complete its study this fall and submit its report to the supreme court by April 1, 2004.

The board assesses perceptions of the regulation system through a questionnaire that is sent to each grievant and each respondent after the grievance is resolved. The response rate is approximately 8 percent for grievants and 12 percent for respondents. While perceptions generally relate to the grievance outcome, the questionnaire responses provide helpful information. The board will continue to monitor trends in these perceptions.

Finally, the board remains aware of several significant policy initiatives, including Ethics 2000, proposals for licensure of paralegals, recommendations for improving lawyer regulation system procedures, and reduction of the caseload to achieve capacity and timeliness goals.

The district committees continue to make a valuable contribution to the system, particularly this year. Committees were instrumental in reducing the number of investigations. Improvements in training and in information sharing have increased their effectiveness. The OLR developed a new manual for district committees that is distributed to each committee member.

Special investigators and the Special Preliminary Review Panel process matters involving allegations against attorneys who serve with the regular components of the regulation system. During Fiscal 2003, special investigators received 37 referrals and resolved 49 matters. The Special Preliminary Review Panel considered 13 matters: it dismissed 11 matters, found cause to proceed in one matter, and returned one matter for further investigation. The court appointed six attorneys as special investigators this year to increase the number.

The alternative to discipline program provides an effective way to improve an attorney's ability to practice in accordance with high professional standards. Frequently, this is a more effective measure than professional discipline. The court has authorized diversion to an alternative program in situations where the program will likely benefit the attorney, and where the attorney will not likely harm the public. Alternative programs may include mediation, fee arbitration, law office management assistance, evaluation and treatment for alcohol and other substance abuse, psychological evaluation and treatment, medical evaluation and treatment, monitoring of practice or trust account procedures, continuing legal education, ethics school, and the multistate professional responsibility examination. During the fiscal year, 128 attorneys were diverted to alternative programs and 85 attorneys completed diversions.

The central intake program receives inquiries and grievances concerning attorney conduct and provides preliminary evaluation of grievances before any formal investigation. Inquiries and grievances may be received by telephone; callers may use a toll-free number to contact the OLR. After the preliminary evaluation, the central intake staff may forward the matter to another appropriate agency, attempt to reconcile the matter if it is a minor dispute, close the matter if it does not present sufficient information to support an ethical allegation, or refer the matter for investigation or diversion to an alternative to discipline.

Central intake received 2,261 inquiries and grievances. This represents a slight decrease from the prior fiscal year. Of the matters evaluated in central intake during the fiscal year, approximately 19 percent were forwarded for formal investigation; 12 percent involved the resolution of minor disputes or grievances that were withdrawn; 2 percent involved diversion programs; and the remaining 67 percent were closed for lack of sufficient information to suggest an allegation of potential ethical misconduct.

The regulation system is more accessible than in the past. The ability to communicate by telephone with grievants and respondents provides more personal contact and increases the level of satisfaction with the process. Central intake also provides an efficient means to respond to grievances. Decisions whether to close or to formally investigate are made more promptly. As a result, the number and percentage of matters resolved within 90 days and within 180 days have increased.

Overdraft Notification Program

The Overdraft Notification Rule⁹ went into effect on Jan. 1, 1999. That rule requires attorneys to authorize their financial and investment institutions to notify the OLR of overdrafts on their client trust accounts and fiduciary accounts. Information regarding the trust account overdraft program is available from the OLR Web page, www.wicourts.gov/olr.

During Fiscal 2003, 138 overdrafts were reported to the OLR, 21 more than in the previous fiscal year. Overdraft reports resulted in the commencement of one disciplinary proceeding this year. In addition, overdraft notifications have resulted in the following dispositions: diversion - 26; dismissal after diversion program successfully completed - 3; dismissal after investigation - 17; dismissal after investigation/advisory letter sent - 79; closed without investigation¹⁰ - 13; closed without investigation/bank errors - 32; closed without investigation/bank errors/advisory letter sent - 10; closed pending reinstatement proceedings - 2.

The advisory letters sent during Fiscal 2003, some of which included more than one advisory, related to the following issues and record keeping deficiencies: bank procedures/delays in posting transactions - 14; availability of funds for disbursement - 32; lack of maintenance account - 21; lack of proper endorsement - 5; deposit slip errors - 9; check errors - 5; check stubs/inadequacy as a check register - 14; signatory authority on trust accounts - 6; failure to confirm wire transfers - 5; failure to maintain canceled checks - 5; computer software deficiencies - 10; subsidiary ledger deficiencies - 9; impropriety of credit card transactions - 1; lack of running balances in register and ledgers - 12; other - 7.

The OLR staff presented two half-day seminars on trust account management in conjunction with diversions. Trust account management also was covered at the OLR's Professionalism Seminar, another diversion program, in November 2002.

The director and the overdraft investigator, with assistance from the State Bar and the Wisconsin Bankers Association, completed work on proposed amendments to SCR 20:1.15. In December 2002, the OLR and the State Bar filed a joint petition with the Wisconsin Supreme Court seeking the adoption of a new trust account rule. The court ordered a public hearing on the petition for September 2003.

Survey of Matters

Overall Processing. Since the inception of the new system, the number of grievances has increased approximately 60 percent. System capacity also has increased, such that the processing of matters occurs efficiently. The reduction of the caseload is almost complete.

The pending caseload is slightly more than 1,000 matters, down from the prior year, and more than the optimal caseload capacity of about 870 matters. Increased referrals to district committees and the hiring of temporary staff were effective in reducing the caseload. It is expected that the caseload will be reduced to the normal capacity this fall.

The efficiency with which matters are processed is very good. The average processing time was 240 days, which is abnormally high because of the unusually large number of older investigations that factored into that statistic this year. On the other hand, the percentage of matters resolved within 90 days and 180 days remained high, 50 percent and 73 percent respectively, and should increase significantly next year.

Grievances. Figure 2 breaks down by category the grievances received between July 1, 2002 and June 30, 2003. In describing the nature of the grievances, only the most serious allegation is reflected. While most grievances allege more than one act of misconduct, it is not practical to list all allegations.

The allegations most commonly made in grievances were lack of diligence by the lawyer entrusted with the legal matter and lack of communication with the client. The two areas of practice that produced the most grievances during the year were criminal law and family law. While clients file the majority of grievances, anyone can file a grievance. (See Figure 2.)

Discipline. In Fiscal 2003, 46 attorneys received public disciplinary sanctions. One attorney was sanctioned twice. The supreme court imposed two revocations, three revocations by consent, 17 suspensions, six temporary suspensions, two summary suspensions, and two public reprimands and dismissed two disciplinary matters. Referees issued 15 public reprimands by consent. At the end of the year, 46 formal disciplinary matters were pending in the supreme court. Figure 3 shows the numbers and percentages of attorneys receiving public discipline since Fiscal 1979. Figure 4 shows the types of misconduct found in public discipline decisions.

A referee has authority, under SCR 22.09(3), to issue private reprimands pursuant to an agreement between the director and the attorney. Typically, a private reprimand is imposed for an isolated act of misconduct that caused relatively minor harm. A private reprimand is not imposed if public disclosure of the attorney's misconduct is necessary to protect the public. Private reprimands are retained permanently and may be considered as an aggravating factor on the issue of sanctions if the attorney commits subsequent misconduct. Summaries of private reprimands, without any reference to or identification of the attorney involved, are printed twice a year in the Wisconsin Lawyer.

During this fiscal year, 32 attorneys received private reprimands. One hundred twenty-six attorneys entered the alternatives to discipline program and 85 attorneys completed an alternative program.

Other dispositions included: matters closed after the initial intake evaluation due to insufficient information to support a misconduct allegation (1,880); dismissals after investigation in cases due to insufficient evidence of a violation (184); dismissals with an advisory letter (120); and matters closed pending petition for reinstatement (21).

Reinstatements. During Fiscal 2003, the court completed action on 24 reinstatement petitions, 17 administrative and seven disciplinary, after investigations by the OLR and public hearings.

Finances

The legal profession is unique in assuming all costs for regulating itself. An assessment on every member of the State Bar of Wisconsin pays the costs and expenses of the lawyer regulation system, including all the costs and expenses of the OLR, district committees, the Preliminary Review Committee, and the board. To help offset the costs, the OLR collects costs from attorneys disciplined in formal court proceedings and collects fees on petitions for reinstatement. Collections for Fiscal 2003 were approximately $50,000.

The budget for Fiscal 2004 is $2,201,000, down from $2,318,000 last year. The assessment is $123.12, down from $128.55 last year. The assessment is in line with those of neighboring jurisdictions - somewhat higher than in Michigan and Iowa, the same as in Minnesota, and lower than in Illinois. The assessment is significantly lower than in Colorado, which has a comparable lawyer population and similar programs.

Public Information and Outreach

To promote understanding of and confidence in the lawyer regulation system, public information and outreach efforts are ongoing. General information about the lawyer regulation system is available at www.wicourts/olr.

The Year Ahead

Next year, the lawyer regulation system will finish the caseload reduction, and consolidate the OLR in Madison. Consolidation enhances the management of the OLR's responsibilities and increases the investigative capacity of the system by eliminating redundant overhead. The lawyer regulation system will remain accessible to the public through the central intake telephone procedure. The system also will remain in contact with locations throughout the state through its district committees. Significant work will continue on the district committee study, the trust account management program and trust account rule, and the Wisconsin Ethics 2000 Committee study of ethics rules.

Endnotes

¹ SCR 21.15(2).

² SCR 21.03(6)(a).

³ SCR 21.19.

⁴ SCR 22.40(1).

⁵ SCR 22.40(2).

⁶ SCR 22.001(2).

⁷ SCR 22.16.

⁸ SCR 22.38.

⁹ SCR 20:1.15(i) - (p).

¹⁰All 13 overdrafts involved collection matters and problems inherent to debt collection.

Wisconsin Lawyer