A Kenosha attorney faces a two-year suspension for allegedly, among other things, depositing thousands of dollars of his former firm’s money into personal bank accounts.
A complaint filed Jan. 7 by the Office of Lawyer Regulation alleges that John Hotvedt, from 2011 to 2014, converted client money belonging to his former law firm, wrote off client fees owed to the firm but were paid to him, established a shell company to convert client fees and decreased his billing rate for clients to advance his own interests.
The complaint stems from Hotvedt’s employment at Lloyd, Phenicie, Lynch, Kelly, Hotvedt & Terry SC in Burlington. He was a stockholder, director and officer of the firm.
Hotvedt, according to the complaint, had worked there from the time he graduated from law school in 2001 to May 2014, when he and Todd Terry withdrew from the firm and established their own practice, Hotvedt & Terry LLC, Kenosha.
After the dissolution of Lloyd, Phenicie, Lynch, Kelly, Hotvedt & Terry, the firm’s president, Dennis Lynch, noticed billing discrepancies involving significant write-offs of firm billings by Hotvedt from 2011 to 2013, including many instances in which Hotvedt had written off the billings yet clients had reported that they had paid fees directly to Hotvedt.
For years Hotvedt had deposited client fee payments into his personal bank account rather than the law firm account, according to the OLR. In 2011, he converted firm money 16 separate times for a total of $18,584.06; he did it again in 2012 on 30 separate instances for a total of $43,027.70; and again in 2013, he converted firm money on 25 separate occasions for a total of $46,381.64, according to the OLR.
He also continued converting firm money in 2014, even after he announced his departure from Lloyd in January 2014, according to the OLR.
Lynch filed a grievance with the OLR in November 2014. Based on the OLR investigation, Hotvedt converted more than $173,000 in identifiable client money from 2011 to 2014.
The OLR’s investigation also found that in 2014, Hotvedt created his own consulting company, JBG Consulting Services, while he was preparing to leave the firm and used that company to convert $41,484 of attorney’s fees belonging to the firm. Those fees, according to the complaint, were for legal work Hotvedt did for Bear Property Management, a key client.
Hotvedt, according to the complaint, worked closely with the owners of Bear, which controls more than 100 domestic and foreign limited liability companies for their real estate investments.
Hotvedt also wrote off client bills for Bear and other clients who planned to transfer their legal work to him after he left the firm and reduced his standard billing rate from $250 an hour to $200, according to the complaint.
Hotvedt reduced his billing rate for Bear to pay for cost overruns while building the new offices for Hotvedt & Terry LLC, which was in the same building as Bear’s offices, according to the OLR.
The OLR has asked the Wisconsin Supreme Court to suspend Hotvedt’s license for two years. He has 20 days to respond to the complaint. Hotvedt could not immediately be reached Wednesday.
Hotvedt, who currently practices with Hotvedt & Terry, graduated from Marquette University Law School. The Wisconsin Supreme Court has not previously disciplined him. Hotvedt’s license is active and in good standing, according to the State Bar and OLR websites.