## Facts

- A paralegal discovered an account discrepancy at a law firm, leading to the discovery that a partner, John Duncan, had misappropriated client funds.
- Managing partner David Warren investigated, confronted Duncan, and learned Duncan had been mishandling and embezzling client money; Duncan promised restitution and offered to resign.
- Warren informed the firm’s executive committee (six partners), who decided not to accept the resignation and did not promptly notify disciplinary authorities or the firm’s in-house counsel.
- Warren delayed informing the director of Duncan’s practice group for roughly three months, citing concern about Duncan’s mental state.
- After the delayed disclosure, further investigation revealed additional misappropriations.
- The firm eventually terminated Duncan and then notified disciplinary authorities, law enforcement, and affected clients.
- The six executive-committee partners were the only lawyers who initially knew of Duncan’s misconduct; disciplinary authorities alleged they failed to ensure adequate firm-wide measures for compliance and safeguarding client funds.

## Issues

1. Whether the bar court abused its discretion by quashing a prehearing subpoena issued by Bar Counsel.
2. Whether the six partners violated Maine Bar Rule 3.2(e)(1) by failing to report Duncan’s misconduct when they first learned of it.
3. Whether the six partners violated Maine Bar Rule 3.13(a)(1) by failing to make reasonable efforts to ensure the firm had measures providing reasonable assurance of firm-wide compliance with professional duties.

## Decision

- The court affirmed the order quashing Bar Counsel’s prehearing subpoena.
- The court affirmed the judgment that the six partners did not violate Rule 3.2(e)(1) because the factfinder supportably found they did not subjectively believe Duncan’s conduct, at the time, raised a “substantial question” about his honesty, trustworthiness, or fitness.
- The court vacated the judgment finding no rule violations as to Rule 3.13(a)(1) and held the six partners violated that rule by failing to take reasonable steps to implement procedures to deter and detect misappropriation and related ethical failures.
- The case was remanded for imposition of appropriate disciplinary sanctions consistent with the Rule 3.13(a)(1) violation.

## Legal Principles

- A prehearing discovery order in attorney discipline proceedings is reviewed for abuse of discretion; quashing a subpoena is upheld absent such abuse.
- Under Maine Bar Rule 3.2(e)(1), the duty to report another lawyer’s serious misconduct turns on the reporting lawyer’s subjective knowledge and belief at the relevant time.
- Under Maine Bar Rule 3.13(a)(1), law-firm partners with managerial authority have an objective duty to make reasonable efforts to ensure firm-wide measures exist that provide reasonable assurance of compliance with professional rules.
- Firm leadership may be disciplined for inadequate compliance structures—especially for trust-account oversight and internal escalation procedures—even if individual lawyers are not found to have breached mandatory reporting duties.

## Conclusion

The court upheld the quashing of a prehearing subpoena and agreed the partners did not breach mandatory reporting duties based on their contemporaneous subjective belief, but it held that firm leadership violated their objective obligation to maintain adequate compliance measures to prevent and detect misuse of client funds, requiring remand for sanctions.


Bd. of Overseers of the Bar v. Warren, 34 A.3d 1103 (Me. 2011)