PORTLAND — A prosecutor seeking professional sanctions against six lawyers at a prominent Maine law firm said Friday that their prolonged inaction against a law partner who turned out to be stealing clients’ money appeared to be a “cover-up.”
In contrast, attorneys representing the defendants at the local law firm of Verrill Dana said in Maine Supreme Judicial Court on Friday that several factors properly explained the months of lag time before the firm took aggressive actions that revealed extensive wrongdoing on the part of law partner John Duncan in 2007.
The managing partner at the firm at that time, David Warren, had described Duncan as an emotionally fragile figure who, Warren feared, might commit suicide if the matter was pursued swiftly. That had happened with an attorney at another firm where Warren had worked.
Moreover, Duncan, when confronted by Warren with evidence that Duncan had written 14 checks to himself from a client’s checkbook and had misrepresented them as earmarked for the firm, confessed his misdeeds, promised the fees were proper and meant for the firm and said it had been an isolated incident.
Warren believed Duncan, a respected partner at the firm for three decades, as did the other co-defendants: James Kilbreth III, then-chairman of Verrill Dana’s executive board, and four other members of the board in 2007, Eric Altholtz, Mark Googins, Roger Clement and Juliet Browne.
Warren briefed the board members at a July 9 meeting about the matter, assuring the other partners that Duncan had paid back $77,500, the total of the 14 checks and that none of the firm’s clients had been harmed or would be harmed. Acting on a recommendation by Warren and Kilbreth, they all declined Duncan’s offer to resign.
More than three months later, they would learn that Duncan had, in fact, stolen a total of nearly $300,000 from six clients and the firm.
Warren’s attorney, Peter Murray, said Friday his client and the other five defendants at the firm believed Duncan, whose reputation at the firm was impeccable, when he said he’d kept money intended for the firm. They didn’t believe it was theft.
“They were deliberately lied to and deceived by their partner,” Murray said.
But J. Scott Davis, counsel for the Bar, said Friday it didn’t matter whether the attorneys at the firm believed Duncan had stolen from them or from a client.
If Duncan had been pocketing money that didn’t belong to him, they had a duty to report his actions to the Board of Overseers of the Bar as a violation of bar rules, Davis said.
“The conduct that has to be reported by attorneys is misconduct that raises substantial questions as to another lawyer’s honesty, trustworthiness or fitness to practice. It doesn’t have to be a crime,” he told Maine Supreme Judicial Court Justice Donald Alexander on Friday during closing arguments in the case. Testimonial hearings ran for thee days at a Lewiston courtroom earlier in the week.
Even if his colleagues at Verrill Dana believed the “God-like figure of John Duncan” was “the last person in the world” who would commit a wrongful act, they were bound by bar rules to report him, Davis said. Their “blind denial” resulting in a failure to report Duncan to the Maine bar or even to the firm’s general counsel, whose job is to handle ethics issues, “sure looks like a cover-up,” Davis said.
A decision by the judge isn’t expected until sometime after Christmas. Sanctions range from no disciplinary action to disbarment.
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