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In re Petition for Disciplinary Action against James L. Berg: ETHICS - indefinite 5-year suspension

Original Jurisdiction
Per Curiam
In re Petition for Disciplinary Action against James L. Berg,
a Minnesota Attorney, Registration No. 139105.
Filed: November 29, 2007
Office of Appellate Courts
Because of numerous mitigating circumstances, we adopt the stipulated discipline
of an indefinite five-year suspension for an attorney who admitted several forms of
Heard, considered, and decided, by the court en banc.
This attorney discipline case concerns the appropriate discipline to be imposed on
respondent James L. Berg. The Director of the Office of Lawyers Professional
Responsibility filed a petition and a supplementary petition for discipline alleging several
acts of misconduct. Berg agreed that he committed the acts of misconduct alleged in the
petitions by entering a stipulation for discipline with the Director. In the stipulation, Berg
and the Director jointly recommended that Berg be suspended from the practice of law in
Minnesota for a minimum of five years with conditions placed on reinstatement. Because
of the presence of numerous mitigating factors and because it is appropriate in this case
to give some deference to the Directors recommendation in the stipulation, we impose
the discipline of a five-year suspension.
In October 1982, Berg was admitted to practice law in Minnesota. Until the
Director filed the petition in this case, Berg had never been the subject of a disciplinary
action. Berg initially filed an answer to the petition, but withdrew that answer and agreed
to the allegations and those of the supplementary petition. Bergs acts of misconduct
include misappropriation and mishandling of client funds, a single instance of forgery,
making false statements, failing to communicate with clients, neglecting client matters,
failing to enter written contingency fee agreements, and failing to cooperate with the
disciplinary investigation underlying this case.
Berg admitted to misappropriating the funds of six different clients. During his
representation of C.W., Berg misappropriated funds he received on C.W.s behalf by
disbursing the proceeds from his client trust account prior to April 1, 2005. To whom
Berg made these disbursements is unclear, but his trust account retained a sufficient
balance to cover the C.W. funds at other times during the Directors audit of this account.
Then in May and June 2005, Berg misappropriated settlement funds he received on
behalf of J.R. by withdrawing the entire amount from his client trust account. In October
or November 2005, Berg misappropriated settlement funds he received on K.S.s behalf
by disbursing those funds from his client trust account. Berg made these disbursements
after negotiating the check by forging K.S.s signature on the endorsement. Sometime
before November 18, 2005, Berg misappropriated funds he received on behalf of B.C. by
disbursing them from his client trust account for his own use. Berg also misappropriated
insurance premium and mortgage escrow funds he received for L.H. by disbursing them
for his own use in February 2007. Finally, Berg misappropriated funds he received from
G.B. as an advance fee payment and an appellate filing fee, by failing to deposit them in
his client trust account. Berg agreed that each of these disbursements, and his failure to
deposit money he received from G.B., violated Minn. R. Prof. Conduct 1.15(a) & (b) and
8.4(b) & (c). Berg agreed that his forgery of K.S.s signature, though made under the
mistaken belief that he was authorized to negotiate the check for K.S., violated Minn. R.
Prof. Conduct 8.4(b) and (c).
During an audit of Bergs trust account from April 2005 through April 2006, the
Director discovered that Berg deposited personal funds into and made personal cash
withdrawals from his client trust account. Berg also authorized his own creditors to make
electronic withdrawals from that account. He also failed to disburse funds to clients by
trust account checks. Berg and the Director agreed that these actions violated Minn. R.
Prof. Conduct 1.15(a) and (b).
Berg failed to enter written contingency fee agreements with four different clients.
Berg made these unwritten contingency fee arrangements with J.R. in March 2005, with
K.S. in October 2003, with L.L.P. sometime before December 23, 2005, and with T.L
sometime before January 4, 2006. Berg also received settlement funds on behalf of J.R.
for which he has never accounted. Berg agreed that his failure to execute written
contingency fee agreements violated Minn. R. Prof. Conduct 1.5(c).
Berg disbursed to L.L.P. the portion of the settlement funds to which she was
entitled, but he did not provide her a written statement showing the outcome of the matter
or the method by which the funds were divided between his fees and her remittance.
Berg did not provide K.S. and T.L. with documentation showing the outcome of their
cases. Nor did he provide them with documentation showing the method of division
between his fees and their remittance. Berg agreed that his failure to provide appropriate
documentation to these clients violated Minn. R. Prof. Conduct 1.5(c).
Berg made false statements to G.B. and L.H. while representing them. He also
made false statements to the Director during the disciplinary investigation. Berg told
L.H. that he was unable to release funds to which she was entitled without first obtaining
additional signatures. This statement was false because Berg had actually
misappropriated the funds. Berg told G.B. that opposing counsel had asked Berg to
withdraw G.B.s appeal in March 2007 in order to settle the case. This statement was
false because opposing counsel had actually contacted Berg about settling the case more
than a month earlier. In response to a complaint K.S. made to the Director about Bergs
representation, Berg falsely stated that he had received a settlement offer in December
2005 to which K.S. agreed. Berg had actually agreed to the settlement without K.S.s
consent in August 2005. Berg agreed that these acts violated Minn. R. Prof. Conduct 4.1
and 8.4(c).
Berg admitted to several instances of failing to communicate with clients and
neglecting client matters. He failed to communicate with J.R.s bankruptcy attorney in
late 2005 about the status of funds Berg held on J.R.s behalf. Berg also failed to resolve
a lien on J.R.s property. Berg failed to respond to K.S.s attempts to contact him from
August through December 2005. While handling an appeal for G.B., Berg failed to file a
memorandum ordered by the court of appeals. This failure led to the dismissal of G.B.s
appeal. Berg never informed G.B. of the dismissal. Berg agreed that these acts violated
Minn. R. Prof. Conduct 1.1, 1.3, 1.4(a), 1.4(a)(4), 3.2, 3.4(c), and 8.4(d).
Finally, Berg did not cooperate with the disciplinary investigation. He failed to
comply with the district ethics committee investigators and the Directors requests that
he provide trust account records; failed to return settlement funds to J.R. pending the
resolution of Bergs claim that Berg was entitled to them; failed to respond to the
Directors March 2006 notice of investigation of Bergs representation of C.W. and
another request regarding that representation in November 2006; failed to provide the
Director with the file, retainer agreement, and trust account records related to his
representation of G.B.; failed to provide trust account records related to his representation
of L.H.; and failed to provide records related to the overdraft of his trust account. Berg
agreed that his lack of cooperation with the investigatory process violated Minn. R. Prof.
Conduct 8.1(b) and Rule 25 of the Rules on Lawyers Professional Responsibility
Initially, Berg responded to the petition for discipline by denying many of its
allegations. He later withdrew that answer and admitted all the allegations of the petition
and supplementary petition as part of the terms of the stipulation. In the stipulation, the
parties jointly recommended an indefinite suspension for a minimum of five years with
conditions placed on reinstatement. Because the agreed acts of misconduct would justify
disbarment, we invited the parties to file briefs explaining why Berg should not be
In the memorandum attached to the stipulation, the Director described certain
aspects of Bergs conduct and of his physical and psychological condition that were
considered in mitigation of some of his misconduct. First, at the time briefs were filed
the Director had verified that Berg had made restitution to all of his clients other than J.R.
At oral argument, the Director confirmed that Berg had made restitution to J.R. Second,
prior to this disciplinary action, Berg had no disciplinary history in over 20 years of
practice. Third, before any of the events leading to this disciplinary action occurred,
Berg was diagnosed with a terminal heart condition known as idiopathic dilated
cardiomyopathy. For Berg, this condition carries with it a 70 percent likelihood of death
within the next five years. Bergs treating cardiologist indicated that the loss of function
in Bergs heart caused by his condition has resulted in a deterioration of the quality of
Bergs life which may have had an impact on his ability to handle client matters
effectively. Finally, Berg suffers from depression and anxiety as a result of this
diagnosis. The Director recognizes Bergs depression as a mitigating factor with respect
to his unintentional misconduct, but not with respect to his intentional misconduct.
Because Berg does not challenge the allegations in the petitions and admits to
engaging in professional misconduct, the only issue before us is the appropriate discipline
to be imposed. See In re Dovolis, 572 N.W.2d 734, 736 (Minn. 1998). Disciplinary
sanctions for professional misconduct are imposed to protect the public and the judicial
system, and to deter future misconduct. In re Crandall, 699 N.W.2d 769, 771 (Minn.
2005). In determining the appropriate sanction for professional misconduct by an
attorney, we consider four factors: (1) the nature of the misconduct; (2) the cumulative
weight of the disciplinary violations; (3) the harm to the public; and (4) the harm to the
legal profession. In re Nelson, 733 N.W.2d 458, 463 (Minn. 2007). Analogous cases
provide guidance on the appropriate discipline in a given case, but sanctions are imposed
on a case-by-case basis in light of aggravating and mitigating circumstances. Id. at 463-
Nature of the Misconduct
We have generally said that cases involving misappropriation result in disbarment.
In re Wentzel, 711 N.W.2d 516, 520-21 (Minn. 2006). But we have occasionally
imposed the less severe sanction of a lengthy suspension where substantial mitigating
circumstances are present. And we have occasionally deferred to recommendation of the
Director for suspension even where mitigating factors were not emphasized. In re
Rooney, 709 N.W.2d 263, 272 (Minn. 2006) ([E]xtraordinary stress in an attorneys
personal life, such as the serious illness of a loved one, is a mitigating factor that can lead
to a sanction less than disbarment in a misappropriation case.); In re Neal, 733 N.W.2d
117 (Minn. 2007) (imposing 18-month suspension as jointly recommended where
attorney misappropriated funds, without mention of mitigating factors); In re Singer, 630
N.W.2d 404, 404 (Minn. 2001) (accepting stipulation for indefinite suspension where
attorney misappropriated funds, without mention of mitigating factors).
Bergs misconduct involved concealment of the misappropriation, failure to
cooperate with the disciplinary investigation and other misconduct in addition to
misappropriation. See Rooney, 709 N.W.2d at 269 (noting cases where disbarment
followed several types of misconduct in addition to misappropriation). But Bergs
misappropriations were accompanied by a number of mitigating factors.
In misappropriation cases it is appropriate to consider restitution to the affected
clients as a mitigating factor so long as restitution is not prompted by [an attorneys]
fear of getting caught. Rooney, 709 N.W.2d at 271 (citing In re Stromwall, 481 N.W.2d
60, 62 (Minn. 1992)). We agree with the parties that Bergs complete restitution to each
of his clients should be considered in mitigation of his misconduct.
A factor that mitigates Bergs unintentional misconduct is his depression.
Ordinarily, for an attorneys psychological disability to be considered a mitigating factor
proof of five factors is required: (1) that the attorney has a severe psychological
disability; (2) that the disability caused the misconduct; (3) that the attorney is seeking
treatment; (4) that the treatment has stopped the misconduct; and (5) that the misconduct
is not likely to recur. In re Weyhrich, 339 N.W.2d 274, 279 (Minn. 1983). We agree
with the Director that Bergs depression does not mitigate his intentional misconduct,
such as misappropriation and the forgery of K.S.s signature. See In re Jellinger, 655
N.W.2d 312, 316 (Minn. 2002) (recognizing causal link between depression and passive
misconduct). The Director acknowledges that Berg likely only meets the first of the
Weyhrich factors, but our decisions have occasionally considered depression in
mitigation where an attorneys psychological condition does not completely satisfy the
Weyhrich test. See Jellinger, 655 N.W.2d at 316 (mitigating discipline where attorney
made partial showing of causative relationship between depression and passive
misconduct, receipt of treatment for the disability, and lack of pecuniary loss to clients
stemming from misconduct); In re Bergstrom, 562 N.W.2d 674, 678 (Minn. 1997)
(considering the significant role depression played in causing misconduct).
Cumulative Weight of Disciplinary Violations
[T]he cumulative weight and severity of multiple disciplinary rule violations may
compel severe discipline even when a single act standing alone would not have warranted
such discipline. Nelson, 733 N.W.2d at 464 (citing In re Oberhauser, 679 N.W.2d 153,
160 (Minn. 2004)). In Nelson we noted that an attorneys prior disciplinary history can
be considered as an aggravating factor while considering the cumulative weight of an
attorneys misconduct. 733 N.W.2d at 464-65. But we have also considered an
attorneys lack of a disciplinary history as a mitigating factor in determining the
appropriate discipline. See, e.g., In re Hottinger, 731 N.W.2d 827, 828 (Minn. 2007)
(noting the lack of a prior disciplinary record in 34 years of attorneys practice). We
emphasize here that prior to the events leading to this disciplinary action, and before
Bergs diagnosis with a terminal heart condition, he had no disciplinary history.
Because Berg engaged in multiple acts of misappropriation, dishonesty, and other
forms of misconduct, however, the cumulative weight of his misconduct is great and
warrants serious discipline. See In re Holker, 730 N.W.2d 768, 776 (Minn. 2007)
(imposing indefinite suspension where attorney mishandled trust account, failed to
diligently represent clients, and failed to cooperate with the disciplinary investigation).
Harm to the Public and Harm to the Legal Profession
We must also consider the harm to the public and to the legal profession resulting
from Bergs misconduct. The purpose of attorney discipline is not to punish the attorney
but rather to protect the courts, the public, and the legal profession. Jellinger, 655
N.W.2d at 316. All of Bergs misappropriations have been repaid. But the harm to the
public and the perception of the legal profession caused by an attorneys
misappropriation of funds warrants serious discipline. See In re Wentzel, 711 N.W.2d at
522 (noting that misappropriation of client funds reflects poorly on the entire legal
profession and erodes the publics confidence in lawyers). Bergs false statements and
forgery also warrant serious discipline as they are akin to a breach of trust. See Nelson,
733 N.W.2d at 465 (Honesty and integrity are chief among the virtues the public has a
right to expect of lawyers.).
Because of the Directors prominent role in the administration of the attorney
discipline process, we give some deference to the Directors recommendation of
discipline, particularly where contained in a stipulation with the attorney. We observe
that under Rule 5, RLPR, the Director shall be responsible and accountable directly to
the [Lawyers Professional Responsibility] Board and through the Board to this Court for
the proper administration of the Office of Lawyers Professional Responsibility and [the
RLPR]. Although we are ultimately responsible for determining the appropriate
discipline to be imposed in cases involving professional misconduct by attorneys, we
recognize that Director is in the best position to weigh the cost and risk of litigation and
to determine when a stipulated discipline will best serve the interests of the Board.
The Director and Berg stipulated to discipline based on the existence of mitigating
factors. As in Rooney, [t]he presence of numerous mitigating circumstances, none of
which alone would suffice to avoid disbarment, persuades us that disbarment in this case
is not necessary to achieve the goals of attorney discipline. 709 N.W.2d at 272.
Because we agree that the presence of numerous mitigating factors makes disbarment
unnecessary to achieve the goals of attorney discipline, we hold that Bergs misconduct
warrants the discipline recommended by the stipulation.
Accordingly, we order that:
1. Respondent James L. Berg is indefinitely suspended from the practice of
law in the State of Minnesota, effective 14 days from the date of this
decision, and is ineligible to apply for reinstatement for a minimum of five
2. Berg shall comply with the notice requirements or Rule 26, RLPR;
3. Berg shall pay to the Director costs in the amount of 0 plus interest and
disbursements in the amount of 3.66 plus interest pursuant to Rule 24,
RLPR; and
4. If Berg seeks reinstatement, he shall comply in all respects with Rule 18,
So ordered.


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