VSB - VIRGINIA: BEFORE THE FIRST DISTRICT SUBCOMMITTEE OF THE VIRGINIA STATE BAR IN THE MATTER OF EDWIN GRIER FERGUSON

THERE WERE NO JUDGES INVOLVED.

ONLY 2 LAWYERS AND ONE LAW PERSON SERVED ON THE SUBCOMMITTEE THAT RULED ON THIS EGREGIOUS MATTER.

FINDINGS OF THE 1ST DISTRICT COMMITTEE OF THE VIRGINIA STATE BAR

I. FINDINGS OF FACT

1. At all times relevant, Respondent has been licensed to practice law in the
Commonwealth of Virginia and has been active and in good standing.
2. The Respondent was admitted to the Bar of the Commonwealth of Virginia on
May 18, 1977.
3. Respondent first represented the Complainant in a real estate closing sometime
back in 1993.
4. From that point forward, Complainant retained Respondent to handle of all of his
business and financial dealings involving real estate.
5. During the course of his representation of the Complainant, Respondent borrowed
money from the Complainant.
6. In his answer to the Complaint, Respondent did not deny that he had entered into
the loans with Complainant and did not deny that some may not have been, repaid in full.
7. Respondent further did not deny that prior into entering into the loans with the
Complainant that he did not advise the Complainant in accordance with Rule 1.8 of the Rules of
the Supreme Court of Virginia.
8. During the time that Respondent was providing legal advice and engaging in
financial transactions with the. Complainant, he was the Trustee of certain trusts which were
established in 1992 and 1998. Each of these trusts were irrevocable.
9. During the time that Respondent was providing legal advice and engaging in
financial transactions with the Complainant, Respondent made at least 17 loans to the
Complainant using trust funds ("Loans").
10. Sixteen of the Loans did not have any documentation such as promissory notes or
other evidence of the debt owed by Complainant to the trusts. The loans were all repaid.
11. Respondent never advised the trust settlor or the beneficiaries of the trusts that he
was loaning money from those trusts to the Complainant.
12. Respondent charged Complainant and agreed to an interest rate often percent on
the Loans that the trusts made to Complainant.
13. Respondent kept five percent of the repaid interests for himself as a fee, in
addition to the fees he charged the trusts for services rendered as Trustee.
14. . The settlor became aware of the Loans to Complainant in 2013 and 2014 when he
reviewed accountings that the Respondent had provided.
15. The settlor, after retaining counsel, determined that Respondent had paid himself
fees that were not reasonable or justified by keeping a portion of the earned interest on the Loans
in addition to charging the trusts administration fees for acting as Trustee.
16. Respondent and the settlor met to discuss the matters uncovered, and both agreed
that Respondent would pay back $500,000.00 to the trust; the settlor did not join in this
complaint.
17. Respondent executed a promissory note on January 1, 2015 in the amount of
$500,000.00 plus interest at 5% payable in 120 monthly installments to the 1998 trust
("Promissory Note").
18. Respondent had paid back approximately $207,000.00 of the principal owed on
the Promissory Note.

II. NATURE OF MISCONDUCT

Such conduct by Respondent constitutes misconduct in violation of the following
provisions of the Rules of Professional Conduct:

RULE 1.5 Fees
(a) A lawyer's fee shall be reasonable. The factors to be considered in determining the
reasonableness of a fee include the following:
(1) the time and labor required, the novelty and difficulty of the questions
involved, and the skill requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular
employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the
services; and
(8) whether the fee is fixed or contingent.
(b) The lawyer's fee shall be adequately explained to the client. When the lawyer has not
regularly represented the client, the amount, basis or rate of the fee shall be communicated to the
client, preferably in writing, before or within a reasonable time after commencing the
representation.
* * * *

RULE 1.7 Conflict of Interest: General Rule.
(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the
representation involves a concurrent conflict of interest. A concurrent conflict of interest exists
if:
(1) the representation of one client will be directly adverse to another client; or
(2) there is significant risk that the representation of one or more clients will be
materially limited by the lawyer's responsibilities to another client, a former client or a
third person or by a personal interest of the lawyer.

* * *

RULE 1.8 Conflict of Interest: Prohibited Transactions
(a) A lawyer shall not enter into a business transaction with a client or knowingly acquire
an ownership, possessory, security or other pecuniary interest adverse to a client unless:

(1) the transaction and terms on which the lawyer acquires the interest are fair and
reasonable to the client and are fully disclosed and transmitted in writing to the client in a
manner which can be reasonably understood by the client;
(2) the client is given a reasonable opportunity to seek the advice of independent
counsel in the transaction; and
(3) the client consents in writing thereto.

* * *

RULE 1.15 Safekeeping Property

(a) Depositing Funds.
( 1) All funds received or held by a lawyer or law firm on behalf of a client or a
third party, or held by a lawyer as a fiduciary, other than reimbursement of advances for
costs and expenses shall be deposited in one or more identifiable trust accounts; all other
property held on behalf of a client should be placed in a safe deposit box or other place of
safekeeping as soon as practicable.
(2) For lawyers or law firms located in Virginia, a lawyer trust account shall be
maintained only at a financial institution approved by the Virginia State Bar, unless
otherwise expressly directed in writing by the client for whom the funds are being held.
(3) No funds belonging to the lawyer or law firm shall be deposited or maintained
therein except as follows:
(i) funds reasonably sufficient to pay service or other charges or fees
imposed by the financial institution or to maintain a required minimum balance to
avoid the imposition of service fees, provided the funds deposited are no more
than necessary to do so; or
(ii) funds in which two or more persons (one of whom may be the lawyer)
claim an interest shall be held in the trust account until the dispute is resolved and
there is an accounting and severance of their interests. Any portion finally
determined to belong to the lawyer or law firm shall be withdrawn promptly from
the trust account.

(b) Specific Duties. A lawyer shall:

(1) promptly notify a client of the receipt of the client's funds, securities, or other
properties;
(2) identify and label securities and properties of a client, or those held by a
lawyer as a fiduciary, promptly upon receipt;
(3) maintain complete records of all funds, securities, and other properties of a
client coming into the possession of the lawyer and render appropriate accountings to the
client regarding them;
(4) promptly pay or deliver to the client or another as requested by such person
the funds, securities, or other properties in the possession of the lawyer that such person
is entitled to receive; and
(5) not disburse funds or use property of a client or third party with a valid lien or
assignment without their consent or convert funds or property of a client or third party,
except as directed by a tribunal.

III. PUBLIC REPRIMAND WITH TERMS

Accordingly, having approved the agreed disposition, it is the decision of the
Subcommittee to impose a PUBLIC Reprimand with Terms. The terms are:
1. Respondent shall have all of his trust accounts kept in accordance with Rule 1.15
and other fiduciary accounts audited twice a year, at his expense, by a Certified Public
Accountant authorized to conduct such audits in Virginia. The audits shall be performed for a
two year period beginning on the date of the issuance of the disposition imposing the Public
Reprimand with Terms set forth herein.
2. The Certified Public Accountant shall submit a written report to the Bar Counsel
of the biannual audits certifying that all of Respondent's trust and fiduciary accounts are in
compliance with Rule 1.15 of the Virginia Rules of Professional Conduct. Such reports shall be
submitted to bar counsel with 30 days of the expiration of every six-month period.
3. Within 60 days of the date of the issuance of the disposition imposing Public
Reprimand with terms, Respondent shall provide to Bar Counsel a written status report
indicating the status of the Promissory Note Respondent executed to pay back the Trust monies
he overcharged in fees. If the Promissory Note is not current, Respondent shall bring the Note
current within 30 days of his report to Bar Counsel and provide a further written certification
attesting to the fact that the has brought the Promissory Note Current.
4. Respondent shall thereafter continue to repay the Promissory Note in full as a
condition of this sanction of Public Reprimand with Terms.
5. If the Respondent does not continue to keep the Promissory Note current, then he
shall be in breach of the terms of this Public Reprimand with Terms.
If any of the terms are not met by the time specified, pursuant to Part 6, § IV, ,r 13-15.F
of the Rules of the Supreme Court of Virginia, the District Committee shall hold a hearing and
Respondent shall be required to show cause why a Certification for Sanction Determination
should not be imposed. Any proceeding initiated due to failure to comply with terms will be
considered a new matter, and an administrative fee and costs will be assessed.
Pursuant to Part 6, §IV,, 13-9.E. of the Rules of the Supreme Court of Virginia, the
Clerk of the Disciplinary System shall assess costs.

FIRST DISTRICT SUBCOMMITTEE
OF THE VIRGINIA STATE BAR
Veronica E. Meade, Esq.
Subcommittee Chair