JONESBORO, Ark. – A local attorney was reprimanded by the Arkansas Supreme Court’s Office of Professional Conduct (OPC) in late 2019 for either losing or using a client’s settlement funds.
On October 18, 2019, Martin E. Lilly of Jonesboro was found to have violated two rules of conduct related to a $59,500 deposit for his clients. The clients were two then-minors who were the children of Christy McWilliams, 26, of Blytheville, killed in an auto-truck collision on October 16, 2001.
At the time of her unfortunate passing, her two minor son’s were age seven and nine. A pre-litigation settlement was reached in August, 2002 with Missouri road contractor J.W. Githens for $1.2 million to be paid to the estate. Five family members were to receive cash payments and two structured annuities were purchased for the two minor sons.
Then in September, 2002 the estate filed a civil suit against the owner’s of the truck, Utley, Inc. On July 13, 2004, a settlement was reached which would see Utley pay $150,000 to settle the claim. $29,750 was to go to each of McWilliams minor sons in a restricted-access guardianship bank account. The $59,500 for the sons was ordered deposited into Northeast Arkansas Federal Credit Union (NEAFCU). There were to be no distributions without a court order.
In late 2011, the oldest child turned 18. His family contacted the NEAFCU about his funds. What they learned next was shocking: There were told no record of any such accounts for either young man existed.
Where’s The Money?
Eventually, the Office of Professional Conduct’s report stated Lilly went to the family’s residence and admitted he could not find the funds. He said he was responsible for making good on the missing funds and would do so. Alarmed by this, the family contacted an outside attorney – Robert “Bobby” Coleman of Blytheville. Coleman passed the information on to the OPC. They contacted Lilly in October, 2012.
On November 7, 2012, Lilly told the OPC he couldn’t account for the money ever actually leaving the client trust account and being deposited into the NEAFCU accounts. He found an uncashed Lilly trust check dated June 20, 2005 that purported to show the $59,500 being paid out, the report says. Lilly admitted his overall trust account balance fell to about $23,000 in May 2007, when he moved it to another bank.
“He admitted the McWilliams $59,500 was not in his trust account after that date, and appeared to have been used by him for other purposes,” The report concludes.
Lilly was asked to promptly replace the missing funds for the family and he did. On November 28, 2012, Lilly tendered a $70,000 check to attorney Coleman for the McWilliams sons’ missing money, plus some interest.
The OPC found that Lilly’s conduct violated Rule 1.3 in that he failed to properly deal with the restricted funds as ordered to by the court. Rule 1.3 requires a lawyer to act with reasonable diligence and promptness in representing a client.
“…Lilly failed to properly deal with these funds, and in fact either “lost” these funds somewhere along the way, or used them for other purposes, and had to borrow funds in November 2012 to replace the missing client funds,” the report states.
The OPC also found Lilly violated Rule 1.15(b)(1) , which states that funds of a client are to be deposited and maintained in one or more separate trusts in the state where the lawyer’s office is situated. OPC determined he failed to maintain the money in either his client trust account or to transfer them to a restricted bank account.
For the incident, Lilly was assessed $50 in costs and issued a reprimand for his conduct.
NEA Report reached out to Lilly for comment but we’ve not received a response as of this publication. If/when we do, this story will be updated.
Read the full OPC report here: 2012-082