On this date in 1993, the Supreme Court decided In re Peterman, 134 N.J. 201 (1993). [Disclosure: I was a member of the Supreme Court Committee on Character for fifteen years, including during 1993, but I had no involvement with this case. I currently represent Bar applicants in connection with Committee on Character applications and proceedings.] The Court voted 5-2 to affirm the Committee on Character’s recommendation to admit this candidate to the New Jersey Bar.
Peterman had been a lawyer in Pennsylvania. He had been disbarred there in 1985. The reason for that was, as the Supreme Court of New Jersey’s per curiam in this case noted, that “[a]s a young lawyer in Pennsylvania, Peterman had misappropriated the proceeds of all or part of three insurance checks intended as medical reimbursement payments for a physician [Dr. Richard Kaplan] who had treated, at Peterman’s request, a client in a personal-injury case.”
Peterman did that to feed a drug habit that he had had since college. His actions, which took place in 1980, led to a criminal prosecution, resulting in a conviction for failure to make required disposition of funds. Suspension from the Pennsylvania Bar, and thereafter disbarment, followed.
Peterman was reinstated to the Pennsylvania Bar in 1991. He passed the New York and New Jersey Bar examinations in 1992 and was admitted to the New York Bar in that same year. In New Jersey, the Committee on Character recommended his admission to the Bar. The Supreme Court issued an order to show cause as to why he should be certified for admission.
The Court determined that, on “the unique facts of this case,” Peterman had demonstrated “personal reform and rehabilitation,” such that he had the current character and fitness to practice law, as the Committee on Character panel had concluded. “He has since demonstrated recovery by attendance at Alcoholics Anonymous, Narcotics Anonymous, and Lawyers Concerned With Lawyers. He has successfully turned his life around with a new marriage and with steady employment in the public sector as a youth-services worker. He has long since made full restitution to Dr. Kaplan. He has, as well, been involved in school-board activities, and in 1992 was appointed to the Drug and Alcohol Abuse Committee of the New Jersey State Bar Association.”
Experts in addiction confirmed that Peterman had “done a reversal.” They stated that his “misappropriation of funds was not a part of Peterman’s character but a product of his addiction.”
The key issue for the Court, however, was the rule of In re Wilson, 81 N.J. 451 (1979). That case established the principle that misappropriation of client funds results in automatic disbarment. The Court found that Peterman’s case “does not fit precisely, however, within the Wilson mold and there are several features to the case that temper the inexorable application of that rule.”
Chief among those features was that the funds that Peterman misappropriated belonged to Dr. Kaplan, not to Peterman’s client. Additionally, the Court found it less than completely clear that attorney would have known that “that a knowing misuse of non-client funds in 1980 would have invariably warranted disbarment.” Justices Clifford and Garibaldi dissented, but the majority admitted Peterman to the Bar.
This case shows that virtually no one is irredeemable where reform and rehabilitation can be shown. A witness stated that Peterman, “a man who has really been worthless[,] turn[ed] out to be a terrific individual.” With sufficient effort to rehabilitate oneself, and proper counsel, even candidates with serious blots on their record can become members of the New Jersey Bar.