Attorney Suspended for Allowing Use of Trust Account by Nonclient Employer
In an
Order dated June 10, 2026, the Supreme Court of Pennsylvania suspended an Allegheny County lawyer for allowing a company, not his client, to use his trust account as a company escrow account and for failing to follow the Rules of Professional Conduct regarding funds deposited into the account.
The Disciplinary Board found that Fred William Freitag, IV, through a company he owned called Keystone Legal Solutions LLC, had a relationship with Global Escrow Boutique, Inc. which was variously described as an agent, employment, or attorney-client, but the Disciplinary Board found that it was not an attorney-client relationship. On several occasions, Freitag accepted funds from or on behalf of Global Escrow but handled these according to directions of a vice president of Global Escrow and did not treat them as attorney trust funds.
In the case in question, the complaining party, Kalaimani Ponnusamy on behalf of Goldleaf Investment LLC, entered into a loan application agreement which provided that Global Escrow would serve as the escrow agent for the transaction. The agreement provided that Ponnusamy was entitled to return of all funds he paid in connection with the transaction if he did not proceed with the loan. The agreement identified Freitag’s PA trust account as the escrow account for the transaction. Freitag was not a party to this agreement and did not know its terms, or even of its existence.
Ponnusamy wired $300,000 to Freitag’s trust account. On directions from the vice president of Global Escrow, Freitag transferred the funds to a third party without asking any questions. He did not observe any of the recordkeeping or other requirements of
Rule 1.15 of the Rules of Professional Conduct in his handling of the funds.
The loan transaction did not go through. Ponnusamy repeatedly sought refund of the $300,000 from Freitag, but Freitag denied any responsibility for the funds and threatened Ponnusamy with criminal prosecution for harassment. Ponnusamy filed a claim with the Pennsylvania Lawyers’ Fund for Client Security and a complaint with the Disciplinary Board.
At the hearing, Freitag denied any knowledge of the transaction from which the funds were generated and asserted his responsibility was merely to handle the funds in accordance with directions from the vice president of Global Escrow. He testified that he did not need to maintain proper records or render an accounting to Ponnusamy because he assumed the funds were Global Escrow's money.
The Disciplinary Board found that Freitag violated several provisions of Rule 1.15 in failing to maintain the funds in the account, failing to keep required records, and failing to render an accounting or to disburse the funds to the legal owner, Ponnusamy. The Board also found that he violated
RPC 8.1(a), false statement of material fact in a disciplinary proceeding, by claiming that the Lawyers’ Fund for Client Security had dismissed the Ponnusamy claim, and
RPC 8.4(c), conduct involving dishonesty, by making a representation he knew to be false.
The Disciplinary Board found several aggravating factors including Freitag’s failure to accept responsibility for his misconduct and lack of remorse. He contended he had done nothing wrong and cast the blame entirely on Global Escrow and others involved in the transaction and, in fact, described himself as a victim. He also had an extensive disciplinary record consisting of four prior private and public disciplinary actions.
Based on these factors and a review of prior discipline, the Board concluded that a period of suspension that would require Freitag to apply for reinstatement was appropriate and recommended a suspension for one year and one day. The Supreme Court accepted this recommendation and ordered Freitag’s suspension for that interval.
ABA Opinion: When Must a Lawyer Speak Out About Cause for Judicial Recusal?
What should a lawyer do if they know there is reason for the judge in a case they are litigating to recuse or be disqualified, but the judge does not do so? A new
Formal Opinion from the American Bar Association’s Standing Committee on Ethics and Professional Responsibility discusses the circumstances under which a lawyer must disclose information that may provide a basis for a judge to recuse or be disqualified.
Formal Opinion 522, entitled “Lawyer’s Obligation to Disclose Information About Grounds for a Judge’s Disqualification,” was published April 8, 2026. It discusses lawyers’ obligations under the ABA Model Rules of Professional Conduct when the lawyer represents a client in a matter before a tribunal and knows information establishing the possibility that the judge’s impartiality might reasonably be questioned, but the judge fails to raise the possibility of recusal.
The Opinion notes that in proceedings that are not ex parte proceedings, lawyers generally do not have a duty to inform the tribunal of all material facts necessary to make informed judicial decisions. However, in certain circumstances, lawyers in judicial proceedings have a limited duty to disclose procedural or jurisdictional information that may undermine the legitimacy of the proceeding.
The Opinion cites several examples of how a lawyer may acquire knowledge of such a disqualifying factor, such as prior employment connections, campaign contributions, involvement of spouse or family law firms, and business relationships with a family member.
The Opinion states, “If the lawyer knows there is a procedural flaw in the proceedings that goes to their fairness and integrity — in this case, the judge’s failure to consider the recusal obligation — the lawyer must rectify that procedural deficiency.” It adds, “This is not the kind of evidentiary information relating to the court’s rulings that one may leave to the opposing party to uncover; nor may a party fairly exploit the opposing party’s lack of diligence in failing to uncover this sort of information.” Failure to do so is conduct prejudicial to the administration of justice prohibited by
Model Rule 8.4(d).
The Committee notes that this duty is qualified by the need to maintain client confidentiality under
Model Rule 1.6. It points out that
Model Rule 8.3(c) specifically provides that the confidentiality provisions of Rule 1.6 take precedence over the lawyer’s duty to report judicial misconduct. However, there are exceptions to the requirement of confidentiality. Model Rule 1.6(b)(6) permits a lawyer to “reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary . . . to comply with other law.”
Model Rule 3.3(b) provides, “A lawyer who represents a client in an adjudicative proceeding and who knows that a person intends to engage, is engaging or has engaged in criminal or fraudulent conduct related to the proceeding shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal.”
In conclusion, the Committee states, “When a lawyer in a proceeding possesses information that the lawyer knows is reasonably likely to give rise to a judicial disqualification obligation, Model Rule 8.4(d) requires the lawyer, as an officer of the court, to disclose that information to the tribunal. When the lawyer possesses the information only because it is “information relating to the representation of a client” then the lawyer’s disclosure obligation is subject to the duty of confidentiality under Model Rule 1.6.”
Note that this ABA Formal Opinion is advisory only. It is not binding on the Disciplinary Board, the PA Supreme Court, or any other Court.
Florida Supreme Court Adopts New Signature Rule over AI-Generated Documents: State Attorneys General Go After AI Company
The Supreme Court of Florida
has adopted a rule change which requires lawyers to sign a statement on pleadings and other filings affirming that all legal authorities cited in the documents exist and are accurately cited and
authorizes courts to impose penalties on lawyers and nonlawyer parties who file documents containing authorities that do not meet this standard.
Amendments to
Rule 2.515 of the Florida Rules of General Practice and Judicial Administration, Signature and Representations to Court, add a new Subsection (D), specifying that a party’s signature on a court document constitutes an affirmation that “the legal authorities identified exist and are accurately cited.”
If a court finds that the documents filed contain authorities that do not exist or do not support the point in support of which they are cited, the court may, on its own motion or that of another party, call a hearing to determine whether any of a range of sanctions should be imposed upon the party filing the nonconforming document, including reprimand, contempt, striking of the document, dismissal of proceedings, costs, attorneys’ fees, or other sanctions.
In its order, the Court indicates that it is a response to the elevated use of generative artificial intelligence in drafting documents, and states that the rule is intended “principally to create a statewide, uniform replacement for varied circuit court administrative orders imposing disclosure and certification requirements about the use of artificial intelligence in filings.” The rulemaking is not intended to change or comment on the existing authority of courts to impose sanctions for noncompliance.
In other AI-related news, a
number of state attorneys general have opened an investigation into OpenAI, the creator of the artificial intelligence chatbot ChatGPT. A subpoena has been served on the company to provide internal documents relating to its handling of user data, safety of minors and advertising activities. One state, Florida,
has filed a legal action against Open AI, alleging that it “ignored internal and external safety warnings, put children at great risk, and allowed a dangerous product to reach millions of Floridians.” The complaint alleges that the company prioritized speed to market and commercial gain over user safety, disregarded repeated warnings from experts both inside and outside the company, and deployed a product that facilitates and encourages harm—including self-harm and violence—while falsely assuring users it was safe. OpenAI said in a statement, “We take the concerns raised by state attorneys general seriously and intend to engage constructively with their offices.”
Experts Provide Clues as to Whether Clients Understand Their Lawyers
As a lawyer, you understand how important it is to give clients good advice, even though they sometimes don’t want to hear it. But how can you be sure clients understand what you are saying?
An article in the
ABA Journal entitled
“How Can Lawyers Be Sure Clients Understand What They’re Saying?” presents interviews with experts as to how lawyers can evaluate whether clients are following what they are telling them and techniques to assure or improve client understanding of a lawyer’s advice.
The article lists several clues lawyers may pick up that a client is not comprehending what the lawyer says. Some of these include:
- Nodding repeatedly but asking no questions
- Crossing arms
- Staring at one spot instead of making eye contact
- Stop taking notes
- Urgency without clarity – “I don’t care, I just want it all to be over.”
- Repeating unrealistic expectations despite explanations of why they cannot be achieved
Some of the Rules of Professional Conduct are involved in the question of whether a client understands the lawyer’s advice.
Model Rule 1.4 requires a lawyer to keep clients informed and reasonably consult with them as to objectives to be pursued. Such reasonable consultation may not take place if the lawyer’s communications fly over the client’s head.
Model Rule 1.14 states that a lawyer must, as far as reasonably possible, maintain an ordinary client-lawyer relationship with a client with decision-making limitations including when the client’s decision-making limitations impact the client’s ability to provide direction to the lawyer or make reasoned, informed choices. Normally, this is discussed in terms of clients with diminished capacities, but it also applies when the client is simply unable to understand or deal with the lawyer’s communications.
The experts offer strategies for lawyers to help clients achieve understanding of the legal advice and information they are receiving. Avoiding legalisms or arcane words and expressing advice in everyday language is an important skill. Lawyers should be sensitive to when a client is suffering from information overload and stress and may need time to process. Breaking complex advice down into smaller pieces can often assist in understanding. One recommends a verbal-written-verbal approach – discuss the issues with the client, then put the advice in writing, then hold another conversation. Some clients are better able to understand complex issues when they can read them at their own pace. This prepares them to participate more actively in the follow-up discussion. Another states that clients may feel intimidated admitting a lack of understanding to a lawyer and may speak more freely to a paralegal or support staff member.
One of the experts interviewed notes, “You can feel the relief when it finally clicks for them.”
Florida Woman Has Handy Defense to Traffic Ticket
Kathleen Thomas of Lake Worth Beach, Florida had the
perfect defense to a traffic citation charging her with holding a cell phone in her hand while driving. She doesn’t have the hand in question.
Ms. Thomas, a fitness influencer with 468,000 Instagram followers, shared the
bodycam footage of her encounter with a Palm Beach County Sheriff's Office deputy on February 11, 2026. When told by the officer that he had observed her manipulating a cell phone with her right hand, she laughed and held up her right arm, showing that she does not have a right hand because she was born with a limb difference. Evidently not impressed by her amusement, the officer wrote her a citation for “Wireless Comm. Device/Handheld While Driving - First Offense” with a civil penalty of $116. At the hearing on the case, however, the officer moved to dismiss for lack of evidence.
