10.29.2013 Order of Discipline – Consent Order of Suspension [Wake County]

Photo Courtesy of the North Carolina State Bar

This disciplinary order relates to two different trust accounts maintained by John H. McWilliam at two different firms during two different time periods. Prior to May 31, 2011, McWilliam was a member of Firm 1, where he maintained a trust account with BB&T. On May 31, 2011, McWilliam formed Firm 2, where he maintained a trust account with North State Bank. For both trust accounts, McWilliam employed and had direct supervisory authority over a bookkeeper. This bookkeeper oversaw receipt and deposit of entrusted client funds, as well as maintenance of account records; however, McWilliam did not review the bookkeeper’s handling of the funds. Specifically, Mr. McWilliam did not review bank statements and did not adequately reconcile either account. During the applicable time periods, the bookkeeper embezzled entrusted funds from each account.

The Disciplinary Hearing Commission concluded that McWilliam was in violation of two North Carolina Rules of Professional Conduct. First, McWilliam violated Rule 5.3, which regulates an attorney’s responsibilities regarding non-lawyer assistants because he failed to review the bookkeeper’s handling of client funds. Additionally, he did not make reasonable efforts to effect measures giving reasonable assurance that the non-lawyer assistant’s conduct was compatible with his own professional obligations. Secondly, McWilliam violated Rule 1.15-3(d), which mandates quarterly and monthly reconciliations of general trust accounts.

In its additional findings of fact regarding discipline, the Commission noted that “McWilliam’s excessive delegation coupled with his failure to supervise created the circumstances that enabled the [bookkeeper] to embezzle entrusted funds.” Following discovery of the embezzlement, McWilliam took prompt action to replenish client funds and revise his trust account procedures. Nevertheless, the Commission entered an order of suspension for a period of two years. The suspension was stayed for two years, however, so long as McWilliam complies with various conditions, including (1) providing monthly reconciliation of trust accounts to the State Bar and (2) completing a special CLE course on maintenance of client trust accounts.

View the full disciplinary order here.