Iowa attorney who stole $99K from client will get license back

Grant Rodgers, grodgers@dmreg.com

A prominent Council Bluffs trial attorney who was disbarred after taking more than $99,000 from a client will be allowed to practice law again in Iowa.

In a rare move, the Iowa Supreme Court unanimously ruled to reinstate the law license of Michael Reilly. The judges' decision released Friday was made against the advice of the state's attorney disciplinary board.

The court initially revoked Reilly's license in 2006, several years after the attorney's bank reported suspicious transactions to federal investigators. Reilly took settlement money won during a lawsuit brought by the family of a young boy who was left with permanent eye damage when he was attacked by a neighbor's rooster. He had represented the family in the lawsuit.

Reilly worked hard to overcome a gambling addiction that left him needing cash and led to the theft, according to Friday's ruling. A group of western Iowa lawyers wrote letters vouching for his character and Reilly provided several documents asked for by the high court, including a copy of his current credit report and a positive evaluation from a counselor who treated him for gambling addiction for six years.

"We conclude he has proved by a convincing preponderance of the evidence that he has good moral character, is fit to practice law, and is in all respects worthy of readmission to the Iowa bar," the justices ruled together in an unsigned opinion.

Stealing money from a client is generally considered among the worst offenses a lawyer can commit, and can lead to an attorney's license being suspended or revoked completely.

It is rare for the state's highest court to give a license back once a lawyer is disbarred, and reinstatement is almost unheard of in cases involving client money. In a brief opposing the move, an attorney representing the Iowa Supreme Court Attorney Disciplinary Board cited just one case in which a lawyer got his license back five years after he was disbarred for stealing $7,000 in client funds.

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The ruling also is a reversal of the court's stance toward Reilly. It denied the attorney's request for reinstatement in 2009. At that time, Reilly had not proven to the justices that he would not threaten the public if allowed to practice again, according to the Friday ruling.

But last year the seven justices changed Iowa rules to spell out a process that allows disbarred attorneys a chance at rejoining the profession if they show rehabilitation and "good moral character."

"Though we acknowledge the important purposes served by attorney disciplinary proceedings, we share the view of other state supreme courts that 'a fallen lawyer may rise again,'" the court wrote in the Friday ruling.

Reached by phone, Reilly declined to speak at length with a reporter on Tuesday. "I’m obviously very pleased with the decision,” he said.

Before the revocation of his license, Reilly had a reputation as a skilled attorney. He served a term beginning in 1998 as president of the Iowa Trial Lawyers Association. The post was held before him by many notable members of the state's legal community, including former Gov. Tom Vilsack and current Iowa Supreme Court justices David Wiggins and Daryl Hecht.

In 2000, Reilly won a $137,500 settlement on behalf of the family of Jacob Reid, the young boy who received a serious eye injury. Reilly took $99,736.75 that was meant to be placed in a conservatorship on the young boy's behalf and deposited it into his own bank account. He admitted that he used the money for personal expenses.

In September 2001 Reilly used a flawed check fraud scheme in an attempt to put money back into the conservatorship. Federal authorities were notified when the scheme left one of Reilly's accounts overdrawn by $96,000. He paid restitution to the bank the following year.

In the disciplinary board's brief arguing against reinstatement, attorney Wendell Harms argued that revoking a lawyer's license sends a strong message to other attorneys.

But in reinstating Reilly's license, the justices noted that the attorney began getting treatment for his gambling addiction years before his license was revoked. Reilly submitted an affidavit saying that he had stopped gambling at casinos in February 2002.

The ruling does not immediately give Reilly his license back. Before he can practice law again, he will have to finish 30 hours of continuing legal education, as well as pass an ethics exam, the ruling said.

Since losing his license Reilly has worked as a litigation consultant and has offered mediation services.