A recent NLJ story, “N.J. Supreme Court Spares Partner From Disbarment Over Fee Dispute With Firm” reports that the New Jersey Supreme Court suspended attorney David Gross for three months for not telling his law firm partners about a $50,000 bonus from a satisfied client.  The court found a lack of “clear and convincing” evidence that Gross failed to safeguard funds or knowingly misappropriated funds in violation of Rule of Professional Conduct 1.15 (a) and (b), as the Disciplinary Review Board had found.  The court’s action is significant because it seems to carve an exception to In re Siegel, 133 N.J. 162 (1993), which made misappropriation of law firm funds a ground for automatic disbarment.

In 1998, Gross, then a managing partner at Budd Larner accepted the $50,000 bonus from Keene Creditors Trust, but never informed his partners.  Gross’ secretary Claudette McCarthy testified that she was instructed by Gross to delete a letter from her computer setting up Keene payment.  In arguing before the court, Gross’ attorney, Justin Walder insisted that the firm had no right to the money.  “This was a payment over and above legal fees,” he said.  “It was intended for David Gross, not the firm.”  When Justice Roberto Rivera-Soto said that “at the very least” Gross should have told his partners, Walder agreed, saying it was a mistake.  “But he had a good-faith belief that there was no policy,” Walder added.