Proposal to audit accounts targets dishonest lawyers

RICHMOND

To protect the public from dishonest lawyers, the Virginia State Bar agreed Friday to study the idea of random audits of lawyer trust accounts.

State Bar President Howard W. Martin Jr., a Norfolk lawyer, made the proposal in response to news reports about Troy A. Titus, a Virginia Beach lawyer accused of misusing millions of dollars of clients’ money.

Martin said four Virginia lawyers, including Titus, misappropriated more than $10 million in the past two or three years.

“The bar and the lawyers of Virginia have a problem,” Martin told the State Bar’s executive committee. “We need to put the clients and the public first. When we do that, we elevate our profession.”

Eleven states, including North Carolina, conduct random audits of lawyer trust accounts. In 1992, the American Bar Association recommended that every state do so.

Lawyers use trust accounts to temporarily hold clients’ money until it is paid out. It is considered a serious breach of conduct for a lawyer to mingle his personal funds with trust funds. It is a crime for lawyers to take money from the accounts without authorization.

The State Bar’s 11-member executive committee agreed unanimously to send the random audit proposal to the Committee on Lawyer Discipline for study.

During a half-hour discussion, Titus’ name came up repeatedly, along with Stephen Thomas Conrad, a Northern Virginia lawyer who settled clients’ cases without their knowledge and kept their money . Martin said Conrad misappropriated $3.7 million from about 250 clients.

The State Bar also will study the idea of requiring insurance companies to notify clients directly when their cases are settled, instead of notifying only the lawyers. The State Bar overwhelmingly rejected that idea last year.

Irving M. Blank, a Richmond lawyer on the executive committee, told his colleagues the State Bar has to do more to protect the public from dishonest attorneys. “If we don’t do something,” he said, “members of the Fourth Estate are going to roast us.”

Virginia Beach lawyer Judith L. Rosenblatt told her colleagues she is less concerned with how they are perceived by the public than in taking action to protect clients.

Citing Conrad and Titus, Rosenblatt told the executive committee, “We look horrible, and we should look horrible, because we are not policing ourselves.”

Titus’ law license was revoked in 2005 after he bounced 72 checks totaling $3.3 million from 2002 to 2005.

Since then, he has been sued by several former clients and investors who accused him of taking $2 million to $3 million.

“The amount was sort of staggering,” Blank told the State Bar’s executive committee. “The time it went on didn’t make us look so great.”

Titus has lost several lawsuits, and others are pending. In one case, a judge awarded Titus’ former client $600,000 and ruled that Titus had committed fraud. In two others, the State Bar concluded that Titus had embezzled money.

The FBI is investigating Titus. He has not been charged with any crimes.

This is the second time the State Bar has considered random audits of lawyer trust accounts.

The last time, in 1993, was prompted by the biggest scandal in the State Bar’s history – Newport News lawyer David Murray stole $42 million, then killed himself before he could be prosecuted.

Random audits were endorsed by the State Bar’s executive committee in 1993 but rejected by the governing council. Some lawyers considered it insulting and intrusive.

No one on the State Bar’s executive committee expressed that view Friday.

Marc Davis, (757) 222-5131, marc.davis@pilotonline.com