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Duluth attorney's suspension extended

A Duluth attorney will remain suspended for at least three additional years after admitting that he used client funds to pay personal debts even as he was under investigation for bookkeeping issues.

The Minnesota Supreme Court on Wednesday extended the disciplinary period for Nicholas Schutz, who has not practiced law since he was first suspended nearly five years ago.

Schutz's actions constituted an "intentional misappropriation of client funds," the Office of Lawyers Professional Responsibility said in a petition filed with the high court. Schutz unconditionally admitted to the allegations and accepted the new sanction.

Schutz, who practiced at Twin Ports Law in downtown Duluth, was suspended for a minimum of 90 days in May 2014 after admitting that he failed to keep required trust account books and was uncooperative with an investigation by the Office of Lawyers Professional Responsibility.

The second disciplinary action arose from his November 2016 petition for reinstatement, when he turned over copies of client accounts, bank statements and other records as part of a standard review process.

"Beginning at some time prior to the review period and continuing through the review period, (Schutz's) trust account was continually short sufficient funds to cover aggregate client balances," wrote Susan Humiston, director of the state agency. "The audit of (Schutz's) trust account showed evidence of both negligent and intentional misappropriation of client funds."

Schutz later met with Humiston and acknowledged that he was unable to attribute particular transactions to individual clients due to his failure to maintain proper records, according to the disciplinary petition. However, he asserted that all funds were eventually earned.

"(Schutz's) misappropriation occurred while he was under investigation for trust account issues, and it was his non-cooperation that prevented the director from discovering the misconduct earlier," the state agency reported.

While suspended, Humiston said Schutz has been issued four admonitions for other infractions, including failing to advise clients of his suspension, working on a client's matter after suspension and failing to provide a clients with case updates and billing statements.

The presumptive sanction for Schutz's misappropriation was disbarment, Humiston said, but she agreed to jointly recommend the three-year suspension based on "the unique facts of the case."

While Schutz only admitted to the misappropriation when confronted, he has "expressed significant remorse" and accepted responsibility for his actions, the agency said in a January stipulation. He also provided medical records showing a diagnosis of anxiety and depression amid "extreme stress" in his personal life.

In addition to the suspension, Schutz must successfully complete the professional responsibility portion of the state bar exam before he can be reinstated, the Supreme Court ruled.

Schutz handled family law, estate planning and immigration cases prior to his suspension.

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