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Illinois Supreme Court Dismisses Charges Against Lawyer Who Acted As Executor of Estate

IN RE KARAVIDAS, Ill: Supreme Court 2013 – Google Scholar.

This is an important decision by the Illinois Supreme Court. The Court considered whether to impose discipline on an attorney who acted as the executor of his father’s estate. As the executor the attorney took substantial loans from the Estate, although he later repaid the loans. Further, the attorney was a beneficiary of the estate.  Karavidas did not act as the lawyer for the estate. Karavidas was found out when a relative began examining trust records. The probate court removed Karavidas as the executor.

The Supreme Court held that Karavidas breached his fiduciary duty to the estate by making loans to himself. The Court declined to rule on whether he had converted estate property. In a decision that is counter-intuitive, the Court held that there was no proof that Karavidas violated any specific rule of professional conduct and that the charges should be dismissed. The court explains:

“As the Review Board noted in the present case, discipline for conduct occurring outside the attorney-client relationship should be limited to situations where the attorney’s conduct violates the Rules by demonstrating “a lack of professional or personal honesty which render[s] him unworthy of public confidence.” In re Bruckner, No. 00-CH-12, at 30 (Hearing Board Aug. 8, 2001), approved and confirmed M.R. 17722 (Nov. 28, 2001).

¶ 79 In sum, we hold that professional discipline may be imposed only upon a showing by clear and convincing evidence that the respondent attorney has violated one or more of the Rules of Professional Conduct. Mere bad behavior that does not violate one of the Rules is insufficient.”

Justice Thomas filed a dissent. He disagrees with the premise of the majority that the Illinois Supreme Court can impose discipline even where there is no violation of a specific rule.

“¶ 107 The problem with the majority’s reasoning is that this court has not merely suggested that an attorney may be subjected to professional discipline for conduct that is not specifically prohibited by the Rules of Professional Conduct. On the contrary, this court has expressly held as much. In In re Rinella, 175 Ill. 2d 504 (1997), this court began its analysis by “reject[ing] respondent’s contention that attorney misconduct is sanctionable only when it is specifically proscribed by a disciplinary rule.” Id. at 514. In doing so, this court explained that “the standards of professional conduct enunciated by this court are not a manual designed to instruct attorneys what to do in every conceivable situation.” Id.”

Comment: In my view, Justice Thomas has the better of the argument. A lawyer acting as an executor of an estate should be held to a higher standard than a citizen acting as an executor. The public places trust and confidence in lawyers. Lawyers who remove trust funds (even though the funds were later repaid) without court permission should be disciplined. It saddens me that the Illinois Supreme Court did not reach the conversion question. That question is important: does an executor who makes loans to himself convert trust property? Again, I believe the answer is “Yes.” I fear that this case will lead to harm to the public. In sum, on this issue, I agree with Justice Thomas and I disagree with the majority opinion.

Edward X. Clinton, Jr.