## Facts

- Tammy Forsberg retained attorney John R. Casey on a contingency fee to pursue a personal injury claim arising from a 1978 motorcycle accident.
- Casey negotiated a $35,000 settlement, deposited the proceeds into his trust account, and converted Forsberg’s share; Forsberg did not receive $23,233.34.
- After failing to obtain payment from Casey for years, Forsberg hired attorney James H. Himmel in 1983 to recover the missing funds under a fee arrangement tied to amounts recovered.
- Himmel investigated and learned Casey had misappropriated the settlement funds; he discussed the matter with Forsberg in the presence of her mother and fiancé and also obtained information from Casey and insurance-related third parties.
- Himmel negotiated an agreement under which Casey would pay Forsberg $75,000 in exchange for her promise not to initiate civil, criminal, or attorney discipline proceedings against Casey.
- Forsberg instructed Himmel not to report Casey to disciplinary authorities because she feared it would impede recovery; Himmel did not report.
- Casey defaulted; Himmel obtained an uncollected $100,000 judgment against Casey.
- Disciplinary authorities later learned of Casey’s conduct, and Casey was disbarred; disciplinary proceedings were then brought against Himmel for failing to report.

## Issues

1. Whether Himmel violated former Illinois Code of Professional Responsibility Rule 1-103(a) by failing to report another lawyer’s conversion of client funds.
2. Whether the reporting duty was excused because the client had complained, the information was protected by attorney–client privilege, or the lawyer followed the client’s instruction not to report.
3. Whether communications about the misconduct made in the presence of third parties, and knowledge obtained from third parties, constituted “unprivileged knowledge” triggering Rule 1-103(a).

## Decision

- The Illinois Supreme Court found that Himmel violated Rule 1-103(a) by failing to report Casey’s conversion of client funds.
- The court rejected defenses based on the client’s request for secrecy, the client’s own contacts with disciplinary authorities, and claims of privilege.
- The court concluded Himmel possessed “unprivileged knowledge” because the information was disclosed in the presence of non-agent third parties and was also learned from independent sources.
- The court treated the agreement conditioning payment on non-reporting as contrary to the public policy served by mandatory reporting rules.
- The court imposed a one-year suspension from the practice of law.

## Legal Principles

- A lawyer with unprivileged knowledge that another lawyer engaged in serious dishonest or illegal conduct has a mandatory, personal duty to report to appropriate disciplinary authorities under Rule 1-103(a).
- A client’s preference for non-reporting, or a client’s separate complaint to disciplinary authorities, does not relieve the lawyer of the lawyer’s own reporting obligation.
- Attorney–client privilege does not apply to client communications made in the presence of third parties who are not agents necessary to the legal consultation; such disclosure renders the information nonprivileged for purposes of the reporting rule.
- A settlement arrangement that seeks to suppress disciplinary reporting of attorney misconduct conflicts with the public-protection purpose of lawyer discipline and does not excuse non-reporting.
- Failure to report serious conversion of client funds warrants substantial discipline, including suspension.

## Conclusion

The Illinois Supreme Court held that an attorney who learns, through nonprivileged information, of another attorney’s conversion of client funds must report the misconduct, regardless of client instructions or parallel client complaints, and imposed a one-year suspension for noncompliance and participation in an agreement aimed at preventing disciplinary action.


In re Himmel, 125 Ill. 2d 531, 533 N.E.2d 790 (Ill. 1988)