Verrill Dana fires longtime partner John D. Duncan and promises to reimburse misappropriated funds.

One of Maine's most prominent law firms has fired a longtime partner for allegedly stealing money from his clients and the firm. The discovery has rocked the Portland offices of Verrill Dana LLP and prompted the firm to send an unusually candid apology to the approximately 1,000 clients John D. Duncan served over the years. Verrill Dana "severed its relationship" with Duncan because he "misappropriated funds" from the firm and "misused client funds or billed clients improperly," according to the letter sent to those clients last month. The firm promised to compensate anyone harmed by Duncan, who had been with Verrill Dana since 1978 and primarily handled wills, estates and trusts. A report on Duncan's billing and accounting practices -- compiled by two outside law firms and an accounting firm hired by Verrill Dana to review the work -- is expected to be turned over today to the Maine Board of Bar Overseers, the state agency that governs lawyers' professional ethics. Duncan did not return repeated phone messages left at his Falmouth home seeking comment. He could lose his license to practice law and face criminal charges stemming from the allegations. Verrill Dana itself could face penalties for not reporting the information sooner, the firm's spokesman said. Duncan's legal secretary uncovered the alleged misconduct in early June, but Duncan stayed on the job until Oct. 28. Gregg Ginn, the Verrill Dana partner who is acting as a spokesman on the matter, said the firm had been looking into the concerns raised by the secretary, Ellie Rommel, but did not have a complete picture of the situation until October. When the outside audit revealed possible criminal activity, Ginn said, one of the law firms conducting the audit, Norman Hanson & DeTroy, informed the Board of Bar Overseers that a report would be forthcoming. That firm also notified Paula Silsby, the U.S. Attorney for Maine, and Stephanie Anderson, the Cumberland County District Attorney. Anderson's spokeswoman, Tamara Getchell, said the district attorney is aware of the case and is waiting to see the report from Verrill Dana before deciding if charges or an investigation are warranted. Silsby's office had no comment. Duncan's firing and the public disclosure of his alleged thefts have rippled through Verrill Dana, which traces its roots to 1862 and employs about 100 lawyers and 100 other staffers. Three lawyers in Verrill Dana's Kennebunk office have quit, citing the scandal, Ginn said. He and the other partners continue to try to get a handle on the scope of the alleged embezzlement. Ginn said Tuesday he could not comment on how much money Duncan is believed to have stolen. But he said the impact is broad, hitting multiple clients over a period of years. Insurance will cover some of the losses, Ginn said, but the partners expect to pay most of the claims out of pocket. Ginn sent letters in November to about 1,000 clients of Duncan, going back to the early years of his employment. "While we are hurt and embarrassed by this betrayal of trust and of our firm's core values, our principal focus now is to make sure that our clients are taken care of," Ginn wrote. In a telephone interview, Ginn said the firm will investigate any allegations brought by Duncan's clients. "Anyone who has any questions about John's services and the bills that he sent, we would have reviewed by outside counsel," Ginn said. Duncan's 29-year career with the Portland-based firm included a stint as chairman of the firm's executive board. For most of his clients, Duncan did not have direct access to funds, Ginn said. But at any given time, he was serving in a fiduciary capacity for about 25 accounts. That gave him access to bank accounts, because he often held the power of attorney, and he was a trustee for private trusts. Ginn said Duncan had overbilled clients, taken money from private accounts, and redirected money to himself that was supposed to go to the firm. "It is really the position of ultimate trust for an attorney," Ginn said of Duncan's position as head of Verrill Dana's private clients group. Rommel, Duncan's legal secretary, discovered in June that Duncan had written $77,500 in checks to himself from one client. She brought that information to other partners. Daniel Lilley, Rommel's lawyer, said the secretary was told the matter would be handled internally. He said the stress of the discovery led Rommel to submit her notice of resignation. She later reconsidered and asked for short-term medical leave, but the request was denied, so she felt forced to leave, Lilley said. Ginn said there was no retaliation against Rommel, she was not fired and she made the decision to leave. Ginn also said Rommel is regarded with the utmost respect for raising the concerns about Duncan, and she would be welcome to return as an employee. "She is a hero," Ginn said. He said the firm started the internal review when Rommel came forward in June. Ginn also said Duncan offered his letter of resignation in June, but the decision was made to keep him as a partner, at least temporarily. The firm wanted to explore the facts and work with Duncan to find out exactly what happened, Ginn said. Duncan continued to come into the office from June to October, Ginn said, but he was under close watch and understood that he was the focus of a review. Duncan repaid $77,500 to the partners, Ginn said, for the account that had been flagged by Rommel in June. "There was a time that John was profusely apologetic, remorseful and regretting what he had done," Ginn said. "He maintained it was a matter of funds that were earned and should have been deposited to the firm's account. ... We were eliciting his support and cooperation. We thought there was a single client and a single account." Lilley said that even if the thefts were only from the firm and not from clients, they should have been reported to the proper authorities. "Their reaction was totally inadequate," he said. "I would have thought someone would have said, 'Wait a minute, this guy didn't just steal from the firm. He may have stolen from clients.' " In early October, Lilley warned Verrill Dana to preserve e-mails, computers and other evidence in case Rommel decided to file a lawsuit against Duncan and the firm. That month, Verrill Dana retained the services of three outside firms to review Duncan's work. LeBlanc & Young has investigated overbilling; Dawson, Smith, Purvis & Bassett has looked into accounts for which Duncan had access to funds; and Norman Hanson & DeTroy is representing the firm in any litigation that might stem from the situation. By the end of October, new evidence produced by the outside auditors made it clear to the Verrill Dana partners that Duncan had not merely been taking funds meant for the firm, Ginn said. "That story was not holding up," he said. Peter DeTroy notified Silsby, Anderson and the Board of Bar Overseers at that point, Ginn said. He said Duncan himself sent a personal report to the board, admitting his guilt. The executive board for Verrill Dana accepted Duncan's resignation Oct. 28, and the partners officially expelled Duncan from the firm Nov. 8. Lilley criticized the firm for not acting quickly enough. Lilley said he intends to file a complaint with the Maine Human Rights Commission against Duncan, Verrill Dana and other lawyers at the firm on behalf of Rommel. The commission gives plaintiffs guidance on whether they have reasonable grounds for a lawsuit. Among several claims, Lilley alleges the firm violated state and federal laws that protect whistle-blowers. Ginn said Verrill Dana is in the process of reviewing its internal controls. Verrill Dana has established a fiduciary services unit over the past two years, he said. The unit includes a committee that oversees trusts controlled by lawyers, and a trust officer who oversees financial records. In the past, individual attorneys, including Duncan, had been responsible for all of those functions. "We thought we needed to be better organized and have these kind of controls," said Judith Coburn, a Verrill Dana lawyer who leads the fiduciary services unit. Coburn had worked in the same group with Duncan for nearly 30 years, and said if tighter controls had been in place earlier, they would have discovered the alleged thefts. Ginn conceded that Duncan's kind and mild-mannered personality made the alleged thefts hard to fathom. Duncan won awards for his work as a lawyer, and has given presentations to the public on estate planning and the establishment of living wills. A native of Aroostook County, Duncan graduated from Bowdoin College. He earned his law degree from the University of Virginia in 1978, the same year he joined Verrill Dana, according to a biography that was removed from the firm's Web site when he was fired. Based on his work and reputation, Duncan had been elected by his peers as a member of the American College of Trusts and Estates Counsel. "John Duncan is one of the last people on the planet you would have assumed would be engaging in this type of activity," Ginn said. Staff Writer Trevor Maxwell can be contacted at 791-6451 or at: tmaxwell@pressherald.com

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