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In re Klaila

Supreme Court of Louisiana

March 23, 2018

IN RE: LOUISE ANNE KLAILA

         ATTORNEY DISCIPLINARY PROCEEDING

          PER CURIAM

         This disciplinary matter arises from formal charges filed by the Office of Disciplinary Counsel ("ODC") against respondent, Louise Anne Klaila, an attorney licensed to practice law in Louisiana, but currently ineligible to practice.[1]

         FORMAL CHARGES

         The ODC filed two sets of formal charges against respondent under disciplinary board docket numbers 15-DB-030 and 16-DB-089. Respondent failed to answer the formal charges. Accordingly, the factual allegations contained therein were deemed admitted and proven by clear and convincing evidence pursuant to Supreme Court Rule XIX, § 11(E)(3). No formal hearing was held, but the parties were given an opportunity to file with the hearing committees written arguments and documentary evidence on the issue of sanctions. Respondent filed nothing for the hearing committee's consideration in either matter. The formal charges were considered by separate hearing committees, and then consolidated by order of the disciplinary board in June 2017. The board filed in this court a single recommendation of discipline encompassing both sets of formal charges.

         15-DB-030

         In January 2014, the ODC received notice from Chase Bank that a check in the amount of $225 drawn on respondent's client trust account had been returned unpaid for insufficient funds in the account. The ODC then sent respondent a letter requesting an explanation for the returned check as well as copies of six months of bank records for the account; however, the correspondence was returned to the ODC unclaimed. As a result, a formal complaint was opened.

         Notification of the formal complaint was mailed to respondent in March 2014, again requesting the previously sought information. By letter dated April 7, 2014, respondent provided the requested financial records. She also provided a formal response to the complaint wherein she acknowledged that she deposited personal funds into her client trust account and left earned fees in the account to pay operating expenses.

         In September 2014, the ODC requested that respondent explain certain online transfers from her client trust account into a Chase Bank checking account. The ODC requested that this information be furnished within fifteen calendar days of the date of the correspondence. Respondent failed to respond to the request for supplemental information, necessitating the issuance of a subpoena on October 29, 2014. On November 4, 2014, respondent submitted the supplemental information.

         In December 2014, the ODC conducted an audit of respondent's client trust account. The audit revealed that respondent misused her trust account and engaged in commingling and conversion of client funds. Respondent deposited money into her trust account to cover office-related expenses on November 5, 2013 and on December 11, 2013. Respondent paid her office rent twice during the audit period, once on November 13, 2013 and again on December 27, 2013. Both checks were written in the amount of $225.

         On November 7, 2013, respondent made a $200 deposit into her trust account for the benefit of Sabrina Walker. During the audit period, the balance of the account fell below the amount held on Ms. Walker's behalf. On December 26, 2013, respondent electronically transferred $100 to her operating account to cover expenses; however, only $35.75 in attorney funds was available at this time. On January 7, 2014, respondent made a $1, 000 deposit into her trust account for the benefit of Lucinda Weed. Electronic transfers for attorney's fees were subsequently processed totaling $800, leaving $200 held in the account on Ms. Weed's behalf. As of February 28, 2014, the balance of respondent's client trust account was $238.32, which is below the total of $400 respondent was holding on behalf of Ms. Walker and Ms. Weed.

         The ODC alleged that respondent's conduct violated the following provisions of the Rules of Professional Conduct: Rules 1.15 (safekeeping property of clients or third persons) and 8.1(c) (failure to cooperate with the ODC in its investigation).

         Hearing Committee Report

         After considering the ODC's deemed admitted submission in 15-DB-030, the hearing committee determined that the factual allegations in the formal charges were deemed admitted and proven by clear and convincing evidence. Specifically, the committee found that respondent improperly used her trust account to pay law office operating expenses, including rent and utilities, which constitutes a commingling of her personal funds with her clients' funds. In addition, on at least one occasion respondent transferred $100 from her trust account to her operating account when only $35.75 in attorney funds was available in the account. This constitutes a conversion of her clients' funds.

         With regard to the charge that respondent failed to cooperate with the ODC, the committee acknowledged that on both occasions when respondent's replies to the ODC's requests for information were delayed, she offered an explanation for the delay, apologized, and denied any intention not to cooperate with the ODC. The committee stated that these explanations may be persuasive, but ultimately they are of no avail ...


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