Everett lawyer suspended for financial misconduct

Paul Novack, 63, took “very little responsibility” managing his finances, according to the state bar association.

EVERETT — A personal injury lawyer who practiced in Everett has been temporarily suspended for improperly managing client money, failing to keep adequate financial records and more.

Paul Novack, 63, practiced law in Washington state for almost 40 years. This month, the Everett attorney was placed on a nine-month suspension.

From 2017 to 2019, Novack “knowingly” violated the state’s Rules of Professional Conduct by failing to oversee his client trust account, according to a notice of suspension recently made public by the Washington State Bar Association.

Novack designated the bulk of his law firm’s financial duties to a paralegal he employed. The lawyer was the only authorized signer on the firm’s trust account, yet he took “very little responsibility” for managing the account prior to February 2018, according to the bar’s notice.

The paralegal was tasked with processing client settlements and preparing checks for Novack to sign. Novack reportedly failed to supervise the paralegal’s financial management.

Records showed an outside accountant helped Novack with reconciling the firm’s bank accounts, processing payroll checks and filing taxes. The accountant mailed Novack monthly reports. Novack did not review the reports thoroughly, according to to the state bar.

A lawyer must maintain a trust account when holding money on behalf of clients or third parties, to ensure the trust is separate from the lawyer’s personal finances.

In February 2018, Columbia Bank sent three overdraft notices for the trust account.

This prompted an auditor from the state bar’s office of disciplinary council to examine Novack’s trust account activity from 2013 to 2017. The bar found he did not keep records required for the account, and when he did, they were often incorrect.

In August 2013, one of Novack’s receptionists deposited a $50,000 client settlement check into the law firm’s operating account. The check should have been deposited into the trust account, according to state bar guidelines.

Later that month, Novack wrote himself a $16,666 check from the trust.

In October 2013, Novack’s firm disbursed payments totalling $50,000 from the trust account to the client they were owed to. Money belonging to other clients was used to cover those withdrawals.

In May 2017, a client settlement check for $13,500 that was supposed to be deposited into the trust account was deposited into the operating account.

In October 2017, the paralegal wrote two checks — of $10,344 and $48,000 — from the trust account to fund the retirement accounts of the paralegal and Novack. Novack signed the checks.

Five months passed before the money had been replaced in the trust account.

A Daily Herald reporter called Novack’s law firm and left a message, but could not reach him for comment. The firm’s website indicates he is no longer in business.

The website reads, “retired after 40+ years.”

Ellen Dennis: 425-339-3486; edennis@heraldnet.com; Twitter: @reporterellen

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