101 Iowa L. Rev. 465 (2015)
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Abstract
Iowa’s current approach to attorney misappropriation is inadequate. While the Iowa Supreme Court has identified attorney misappropriation of client funds as a grave violation of the Iowa Rules of Professional Conduct, it has a history of failing to define the precise metes and bounds of the violation’s definition, the extent of its possible defenses, and what the complaint charging misappropriation must allege. This ambiguity undermines the court’s self-proclaimed strict approach to misappropriation, leaving the issue unsettled and raising due process concerns. Attorneys subject to discipline for safekeeping violations, i.e. rules governing attorney preservation of client funds and property, lack adequate notice of both (1) the charges against them—whether the safekeeping charge is a trust-account violation or the more serious charge of misappropriation—and (2) the ultimate sanction they may face, ranging from reprimand to license revocation. This Note proposes that the Iowa Supreme Court simplify its distinction between misappropriation and lesser safekeeping violations to put attorneys on better notice of the charges against them and to best comply with the interests identified by the American Bar Association. It compares Iowa’s approach to misappropriation with the approaches of two other jurisdictions that have adopted judge-made rules related to misappropriation: New Jersey and Maryland. New Jersey and Maryland provide paradigmatic examples of how states are adding clarity to the scope of misappropriation, New Jersey by adopting a clear, bright-line rule imposing automatic revocation on attorneys who misappropriate and Maryland by clarifying the elements of misappropriation while still treating misappropriation as a serious rule violation deserving of revocation. This Note compares the three approaches and proposes the adoption of the Maryland rule as a way for the court to seriously address the problem of misappropriation while providing clearer guidance to the legal profession.