A Letter Left on a Copier Spurs an Associate’s Ethical Response

Legal Ethics

A Letter Left on a Copier Spurs an Associate’s Ethical Response

Posted Jun 17, 2008, 11:46 am CDT
By Debra Cassens Weiss

Associate Louis Schneider says he knew he had to take action when he found a letter on a copy machine last December asking the Las Vegas partner who had hired him to explain why her trust account was overdrawn.

Schneider told the Las Vegas Review Journal he knew the account should have contained $50,000 for his clients and $50,000 for the clients of another lawyer who worked in the office, Tracy Itts.

Schneider and Itts placed an anonymous call to the bar’s ethics hotline and learned of the consequences of failing to report the missing money. Their next action, taken within the hour, was a trip to the State Bar of Nevada to report that at least $100,000 was missing from the account maintained by lawyer Jeanne Winkler.

Schneider had been hired by Winkler only a few months before and was to be elevated to her partner on Jan. 1, the story says. It was a second career for him, started after he sold his business to finance law school.

Winkler has since submitted an affidavit to the state bar admitting she misappropriated more than $200,000 from the trust account, the story says. She maintains the problems began after she became involved in an investment opportunity supposedly administered by “a gentleman working directly for the president of the United States” and promising big returns. She is still waiting for a payout.

Since then Schneider has compensated all 20 of his clients whose money disappeared by performing their legal work for free or giving them credit for the missing money.

Schneider told the newspaper some in the legal community have criticized him for filing the ethics complaint, but he relied on lessons he learned from his father, a retired military man, in coming forward. "He has always told me you do the right thing, even if you stand alone," he said. “I have always wanted to be an attorney, and I was not going to risk losing my license to practice law, or embarrass my son or my father."

A hat tip to Legal Profession Blog.

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Posted by Texan99 - 2 months, 2 weeks, 4 days, 4 hours, 14 minutes ago

Good for Louis Schneider, I say. It would have been easy to think of lots of reasons why he should have stood by and pretended not to notice. Shame on any members of his legal community who expected him to do that.
Posted by Todd Rainer - 2 months, 2 weeks, 2 days, 6 hours, 14 minutes ago

You know what concerns me? Those people who criticized him… what do THEY have up their sleeves?
Posted by JAK - 2 months, 2 weeks, 2 days, 5 hours, 16 minutes ago

I’m shocked that people criticized him for taking an ethically correct course of action. Where have our morals gone? Maybe its just a Vegas thing…
Posted by Sylvia - 2 months, 2 weeks, 2 days, 5 hours, 10 minutes ago

Thanks Mr. Schneider. The right thing is not always easy, but we have to protect our profession and our law licenses.
Posted by nichole - 2 months, 2 weeks, 2 days, 5 hours, 2 minutes ago

The only criticism I have is that they should have given Ms. Winkler an opportunity to answer to them for her actions and report to the bar association herself before they reported on her. If she didn’t fess up, then they would have still had the opportunity to report it.
Posted by CAF - 2 months, 2 weeks, 2 days, 4 hours, 43 minutes ago

A word to the wise: don’t leave incriminating information on the photocopier or in other publicly-visited places. Not that Winkler was right, but see what happens when you do that?
Posted by SFS - 2 months, 2 weeks, 2 days, 4 hours, 22 minutes ago

What puzzles me is who wrote the letter to Winkler in the first place and why didn’t they report it? Why was it on the copier?
Posted by SPF30 - 2 months, 2 weeks, 2 days, 4 hours, 2 minutes ago

SFS - I thought the same thing.

The letter could have been from any number of parties - it may have been from the bank, asking to explain an overdraw situation or some party to whom a (bounced) check was written (e.g., a client, opposing counsel who received a check as part of a settlement).

Perhaps it was sent by PDF or perhaps the author of the article used “letter” when it was simply an e-mail.
Posted by A. L. DeWitt - 2 months, 2 weeks, 2 days, 3 hours, 58 minutes ago

Sometimes people ask for help in the most unusual ways. A lawyer who cannot admit stealing might leave a letter like that lying around in the hope that someone else would put her out of her misery. But someone dumb enough to believe that they could invest with a representative of THIS president was probably incompetent anyway.
Posted by A. C. Parsons - 2 months, 2 weeks, 2 days, 2 hours, 44 minutes ago

I attended a recent ABA ethics webiinar during which one of the panelist repeatedly said “No one likes a rat” while complaining about the new ethics rule requiring lawyers to report ethics violations. It is gratifying to see that the overwhelming response to this article in support of Mr. Schneider - ethics violators need to be repoorted both for the harm they do clients as well as the harm done to the legal profession.
Posted by Illinois Atty - 2 months, 2 weeks, 2 days, 2 hours, 37 minutes ago

If in IL, Himmel would make reporting it mandatory
Posted by Nicole - 2 months, 2 weeks, 2 days, 2 hours, 6 minutes ago

I don’t think an associate is in a position to ask his hiring partner to explain missing fund from a client escrow account. Mr. Schneider did the right thing on all accounts. He conferred with a colleague. He anonymously checked the ethics rules with the state bar. Then he reported what he thought was an ethical violation. His clients must be gratified to know that they have counsel who is truly looking out for them. I’ll bet he’s created a really loyal client base there.

Bravo, Mr. Schneider! Bravo!
Posted by Kevin - 2 months, 2 weeks, 2 days, 1 hour, 49 minutes ago

Illinois Atty - The Himmel decision makes it mandatory to report attorneys who take a penny from the tray at the gas station.

This guy did the right thing though, good for him. Although this probably won’t be reported widely in mainstream news, because nobody wants to read a story about a lawyer behaving ethically.
Posted by NCLawyer - 2 months, 2 weeks, 2 days, 1 hour, 6 minutes ago

"because nobody wants to read a story about a lawyer behaving ethically” Sad but true.

Good for you, Mr. Schneider. It’s nice to see one of the good guys get some press for a change.
Posted by tx lawr - 2 months, 2 weeks, 2 days, 7 minutes ago

Shouldn’t he have talked to the partner about it first. Its neither noble nor wise to simply rat her out before even seeking an explanation. There are a myriad of reasons why the account could have been overdrawn. I hope he wants a solo practice. Good luck trying to work with anyone else in that city.
Posted by Good news - 2 months, 2 weeks, 1 day, 23 hours, 57 minutes ago

The good news, of course, is that the article manages to find a way to get Bush in the picture.

I’m a little disappointed that she didn’t also blame global warming for her theft…

Who are people going to blame if the Messiah wins in November? Bush will be gone and global warming is going to end. What then?
Posted by Dave W. - 2 months, 2 weeks, 1 day, 23 hours, 38 minutes ago

High ethical standards and our reputations are all we have going for us. It’s called a “Trust” account for a reason - clients trust us with their money. Unfortunately I think we may see more of this as attorneys fall on hard economic times.

Also, if Schneider had notified Winkler, she could very well have absconded with the rest of HIS clients money and skipped town. I certainly would not have taken that risk. Kudos.
Posted by Rick Rutledge - 2 months, 2 weeks, 1 day, 23 hours, 29 minutes ago

While there may be myriad reasons why the account was overdrawn, there are few if any LEGITIMATE reasons why a TRUST account could be overdrawn, given that there are few if any reasons why any funds would come out of a trust account for any purpose other than that for which they went in (IOLTA is arguably the only clear exception beyond bank error).

While he could have talked to her first, she did not owe him an answer, and would likely have compounded the underlying error with lies.

Under the North Carolina rules, even IF he had spoken to her, I believe he would have been obligated to report it nonetheless. Allowing the bar to raise the issue is arguably a cleaner process.

As to the matter of “trying to work with anyone else in that city,” I would expect even marginal firms might clamor for him, only for the good press by association. Apparently “tx lawyer” feels that many or most of the legal profession is dirty to begin with, and doesn’t want the risk of unfettered honesty drifting about the office. I for one, don’t feel I would have anything to fear from working with someone like that. I would, on the other hand, have misgivings about working with anyone who would scold him for what he did; as a prospective near-future member of the bar, I know that a new lawyer is probably more inclined to err on the side of disclosure. I hope I’m never tempted to deviate from that practice.
Posted by Rick Rutledge - 2 months, 2 weeks, 1 day, 23 hours, 24 minutes ago

(As to Winkler, if I were her client, I think I’d be more concerned about her good judgment for having imputed a whit of credibility to an “investment opportunity” by virtue of whether the purported pitchman had ANY relationship with ANY president, past or present, living or dead. You don’t judge an investment opportunity by who else is invested, unless [perhaps] your circumstances are exactly the same. I don’t care if the pope bought in; I judge an investment opportunity on its merits. Does she judge the merits of a potential case on the whom the client knows?)
Posted by Grant - 2 months, 2 weeks, 1 day, 23 hours, 6 minutes ago

I’d like to know even a few of the “myriad” legitimate reasons the account could have been overdrawn, when the article clearly says there should have been $50K for Schneider’s clients and $50K for Itts’ clients, and the letter inquired from the partner why the account was overdrawn. If all of the money was for Schneider’s clients and Itts’ clients, and the partner was aware that the money was missing but hadn’t asked Schneider or Itts about the account, then the “myriad” of reasons the money was missing seems to dwindle to the only explanation being some conduct of the partner which was not conveyed to the two attorneys whose clients had an interest in the account. Even if there was a legitimate explanation, the partner probably committed an ethical violation by failing to keep Schneider and Itts advised about their clients’ money.
Posted by George - 2 months, 2 weeks, 1 day, 23 hours ago

Motivated by ethics or fear?

It was Schneider’s client that had the funds missing. The first to person to shoulder the blame in the law office was Schneider. The same if true for Itts.

While their conduct was ethically correct, was it motivated by ethical concerns or fear that they would be accused of the theft?

As the new associates in the office it would be easy for the partner to shift the blame to them. The best way to avoid the accusation is to report the theft.

The end result would likely be the same, it just prevented Schneider and Itts from being the intital suspects.
Posted by jesse skipper - 2 months, 2 weeks, 1 day, 22 hours, 48 minutes ago

of course he did the right thing. i can’t imagine a good explnation for an overdrawn trust account, and if there is one she needed to tell it to the state bar, not her associate. what if she had come up with some ostensibly valid explanation, but with only her own credibility to back it? he would have still been obligated to report it, at least here in florida, as i understand the rules.

and, by definition the boss has no business practicing law anyway. taking money from a trust account to put in treasury bonds, even if there’s a full intention to put it back, is still unethical and theft to boot. taking trust funds to turn over to someone who holds himself out as a representative of the pres of the us (or a nigerian prince, much the same) is just more stupid, and no less theft.

anyone who suggests this lawyer should have given his boss a chance to explain isn’t thinking or doesn’t understand ethics in the first place. any lawyer who wouldn’t hire a lawyer who did this has no more business practicing law than this winkler person.
Posted by Ralph Rutledge - 2 months, 2 weeks, 1 day, 22 hours, 14 minutes ago

Reporting is right. Comingling of funds is always against the rules.
Posted by Reinero - 2 months, 2 weeks, 1 day, 22 hours, 11 minutes ago

Now, what I really wonder is how can anyone pass the bar exam who is so intellectually challenged to fall for an investment scam that is brought to her by “someone who works close to the president.”?
Posted by Carl Ian Schwartz - 2 months, 2 weeks, 1 day, 19 hours, 58 minutes ago

I believe Mr. Schneider did the right thing. An attorney’s trust account is a TRUST. Funds must be clearly labelled and traceable as to whom, why, and when they are disbursed.

While nobody should care what you do horizontally in your private life, what you do standing or sitting in your professional life deserves the closest scrutiny. Mr. Schneider’s employer used her position of trust to breach that trust by her clients. I’m glad Mr. Schneider and his colleague decided that THEIR professional reputation was worth more than a partnership with someone with elastic ethics.
Posted by Bill - 2 months, 2 weeks, 1 day, 19 hours, 47 minutes ago

According to the Las Vegas Review Journal, the letter left on the copier asking for an explanation of the overdrawn trust ccount was from the Nevada Bar.
Posted by bg - 2 months, 2 weeks, 1 day, 19 hours, 18 minutes ago

In New York, if you overdraw your trust account, the bank reports you. Then you have to explain it to the Grievance Committee. I know firms that have undergone investigations because of bank errors and third-party forgery.

Those that criticize Schneider for reporting this violation only perpetuate the public perception that lawyers are dishonest as a whole. It is unfortunate that mandatory reporting requirements are necessary, but for so long as lawyers believe it is wrong to “rat” on each other, they will be necessary. While I am sure it was unpleasant and he took no joy in it, Schneider did the right thing.
Posted by Whitney - 2 months, 2 weeks, 1 day, 2 hours, 31 minutes ago

I am currently a law student, and this is exactly the sort of situation that our professors have been preparing us to handle. Mr. Schneider has set a positive example for those of us who seek to practice and maintain our professional integrity.
Posted by Loner in Vegas - 2 months, 2 weeks, 1 day, 2 hours, 26 minutes ago

It is a Vegas thing as one blogger said. I moved from LA to Vegas in 2001 to run the local Vegas office. There is so much corruption in the legal community in Vegas that it becomes very difficult sometimes to just get up & go to court.
Posted by djb - 2 months, 2 weeks, 20 hours, 19 minutes ago

Whitney #28 - I totally agree. While PR class may have been hard to concentrate in, it seems fairly obvious that this is one lawyer without a large monkey on his back any more.
Posted by George Sly - 2 months, 2 weeks, 2 hours, 17 minutes ago

There is no doubt that Mr. Schneider did the right thing he owed it to his firm’s clients and to the profession to report Ms. Winkler. I don’t know what Nevada’s rules are but in New Jersey the knowing misappropriation of funds from an attorney’s trust account results in that attorney’s disbarment. There are no excuses and there is no possibility of reinstatement. It’s a death sentence. If Mr. Schneider had failed to report Ms. Winkler, once he knew of the misappropriation, the same discipline would have applied to him. He would have no choice if wants to remain a lawyer. As far as I am concerned he is a model for our profession. We need more like him.
Posted by MaryM - 2 months, 1 week, 6 days, 17 hours, 18 minutes ago

To Loner in Vegas-maybe you don’t know many of those in the LV community very well. We’re given a bad name by the few corrupt who make the news. There are many hardworking, honest attorney’s, judges, paralegals, clerks, & law students working in the Las Vegas legal community and who, like me, are proud of what we do.
Posted by KNS - 2 months, 1 week, 3 days, 23 hours, 40 minutes ago

I am also very impressed (and happily surprised) to see that the majority of responses here are in support of Mr. Schneider. I was quite frankly expecting more responses criticizing his choice, like #15 tx lawr. I suspect that the people who are uncomfortable with Mr. Schneider’s actions are the same people who fear being exposed for their own ethically questionable behavior.

In this day and age - where it’s all about looking out for #1, and where many people believe that it’s ok to lie and cheat so long as you don’t get caught - it’s refreshing to see that someone still believes in doing what’s right, even if it means standing alone.

Kudos to Mr. Schneider. Thanks for being an example to us all.

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