Justices choose shorter license suspension for Madison-area attorney

The Wisconsin Supreme Court has suspended the license of a Madison-area attorney for three months for mishandling his former firm’s trust account.

The disciplinary action on Wednesday stems from an Office of Lawyer Regulation complaint filed last year charging Michael Erhard with breaking Wisconsin’s attorney-ethics rules 11 times while he was a member and owner of the now-defunct firm Erhard and Payette, which was out of Madison.

All of the charges involved violations of the court’s trust-accounting rules.

The OLR had asked the high court to suspend Erhard’s license for nine months.

Erhard, who is being represented by Edward Hannan of Waukesha-based Hannan Legal, filed a response to the complaint in August, admitting to all 11 violations.

There was a hearing in December before a court-appointed referee, William Eich.

Although both the OLR and Erhard had agreed on what sort of misconduct was committed, the two disagreed on the disciplinary measures Eich ought to recommend.

Erhard contended that because the rule violations were negligent and not intentional, he should be publicly reprimanded, meaning that there would be no ban on his practicing but the court’s decision would be made public.

Erhard also suggested that the public reprimand be conditioned on his never in the future taking responsibility for fiduciary-property, trust-property and similar accounts in the future.

Eich submitted a report in February recommending that Erhard’s license be suspended for six months and adopting Erhard’s suggestion, noting that Erhard would have to certify to the OLR each year that he is not responsible for any trust account or trust property.

Erhard filed a motion for reconsideration in March, asking Eich to reconsider his conclusion that Erhard had admitted to violating the rule prohibiting cash withdrawals from a trust account.

Erhard’s motion also requested that Eich decrease his recommendation for a license suspension so that Erhard would not have to petition the court for reinstatement. Attorneys whose licenses are suspended for more than six months must undergo reinstatement proceedings that include a hearing before a referee.

Eich rejected both arguments.

The Wisconsin Supreme Court chose on Wednesday not to follow Eich’s recommendations. The court instead suspended Erhard for three months and required him to attend six credits worth of continuing-legal-education courses involving trust-account management within the next year.

The justices rejected the condition that Erhard never handle trust-property or fiduciary-property, deeming it “impossible.” They argued that even accepting an advanced fee from a client would impose a fiduciary obligation on a lawyer, even if someone else were supervising the firm’s trust account.

However, the justices declined to weigh in on whether the purchase of cashier’s checks should be considered a cash withdrawal prohibited by the trust-accounting rules, saying it did not affect the disciplinary measures it had imposed.

The court noted that the disciplinary action should be mitigated by Erhard’s “lack of intent or malice” and that Erhard had, among other things, acquiesced in the OLR’s investigation, admitted to misconduct and expressed remorse for what he had done.

“Attorney Erhard has a substantial history as a practicing lawyer in this state, and the testimony that he presented at the evidentiary hearing supports a conclusion that his failure to manage his trust account properly was an aberration, rather than an indication of his character,” the court wrote.

Erhard’s license suspension takes effect Oct. 12. To be reinstated, he will need to only submit an affidavit stating that he has followed the terms of the justices’ suspension order.

The justices also ordered Erhard to pay the OLR for its costs incurred during the proceeding, which were $3,190.26 on April 17.

Justice Rebecca Dallet neither participated in the decision on Wednesday nor in the case.