Yes, it is generally an ethics violation for an attorney in Minnesota to not pay a debt lawfully owed. Usually, this means a court must have declared the debt owed.
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Background
Attorneys are subject to more laws than other people. Attorneys are subject to ethics rules, such as the Minnesota Rules of Professional Conduct. As a result, the consequences for not paying a debt can include professional discipline.
Debts Related to the Practice of Law
The rule that attorneys must pay their debts clearly applies to debts related to the practice of law. See Professional Responsibility for Professionally Incurred Debts, by Betty M. Shaw, Senior Assistant Director Minnesota Office of Lawyers Professional Responsibility, Minnesota Lawyer (January 24, 2000).
It is well-established in Minnesota that attorneys who fail to pay professionally incurred debts violate their professional responsibilities. See In re Pokorny, 453 N.W.2d 345 (Minn. 1990) and In re Stanbury, 561 N.W.2d 507 (Minn. 1997).
Id.
But it is not always clear whether this rule applies to all other debts.
Debts Unrelated to the Practice of Law
This rule certainly applies to some debts that are unrelated to the practice of law.
For example, it is an ethics violation for an attorney to fail to (1) pay child support, (2) repay debts to clients, and (3) breach some other legal obligations. See Honoring Financial Obligations, by Kenneth L. Jorgensen, First Assistant Director Minnesota Office of Lawyers Professional Responsibility, Bench & Bar of Minnesota (July 1997).
In addition, lawyers who fail to pay employer withholding taxes (In re Gurstel, 540 N.W.2d 838, 842 (Minn. 1995)) or who continue to practice after being suspended for failing to pay their annual attorney registration fee (In re Lallier, 555 N.W.2d 903 (Minn. 1996)) can face disciplinary suspension. Discipline can also result from failing to pay binding fee arbitration awards (In re Hartke, 529 N.W.2d 678, 683 (Minn. 1995); see also Opinion No. 5 of the Lawyers Board), failing to honor a letter of protection to a client’s creditor (see Marcia Johnson, “Summary of Admonitions,” Bench & Bar 50:2 (February 1993), p. 11), improperly disbursing funds in accordance with an escrow agreement (see Marcia Johnson, “Summary of Admonitions,” Bench & Bar 51:2 (February 1994), p. 12), and failing to repay loans obtained from clients (In re Wyant, 533 N.W.2d 397 (Minn. 1995); simply borrowing money from clients can by itself be a basis for discipline. See Rule 1.8 (a)).
Id. (emphasis added).
Also, in the case of In re Wackerbarth, 287 N.
Practice Tip
Before you file a claim against an attorney for not paying a debt, you generally need to get a final judgment from a court before your claim will be investigated (unless there are aggravating circumstances).
Since 1983 the Director’s Office has limited its investigation of complaints by most creditors to those complaints involving aggravating circumstances. Becoming involved in legitimate disputes between creditors and lawyers as debtors constitutes an imprudent use of limited resources. Consequently, the vast majority of complaints from lawyers’ creditors today are dismissed on the basis that the Director’s Office is without the resources to become a specialized collection agency for lawyers. In 1996 alone, 34 complaints from lawyer creditors were summarily dismissed without investigation.
The aggravating circumstances giving rise to today’s investigations have not changed dramatically. Failure to pay judgments obviously constitutes the most recurring scenario warranting investigation. Other aggravating circumstances which have invoked the demonstrably fraudulent standard include lawyers who continue to incur liability for professionally incurred services without any reasonable expectation of being able to pay, failure to pay a court reporter after obtaining funds from the client to pay the court reporter, and failure to pay an expert after the expert’s fee had been taxed as a cost and recovered from the adverse party.