In re Scholz: Burden-Shift and Restitution Policy in Attorney Discipline

Introduction

Office of Lawyer Regulation v. Carl Robert Scholz, 2025 WI 13, presents a watershed moment in Wisconsin attorney-discipline jurisprudence. Attorney Carl Robert Scholz was charged with 48 counts of professional misconduct spanning 19 client matters, including conversion of client trust funds, trust-account violations, failure to communicate or return unearned fees, misrepresentations to tribunals and to the Office of Lawyer Regulation (OLR), unlicensed practice, and refusal to cooperate with disciplinary investigations.

The central issues were (1) whether Scholz committed the misconduct alleged; (2) the appropriate sanction; (3) whether revocation should run retroactively to a prior suspension; and (4) how restitution should be handled when the OLR contends a claimed amount is “not reasonably ascertainable” due to an attorney’s own recordkeeping failures. By unanimous per curiam decision, the Wisconsin Supreme Court revoked Scholz’s license, declined to make it retroactive, and—importantly—reaffirmed and amplified a new restitution framework that shifts the burden of proof onto attorneys when restitution amounts are murky due to their own misconduct.

Summary of the Judgment

The OLR filed a 48-count complaint against Attorney Scholz for extensive trust-account misconduct and related violations. He maintained multiple client trust accounts as a “slush fund,” converting tens of thousands of dollars in client funds.
Scholz did not appeal the referee’s factual report and thus the Supreme Court treated his admissions and stipulations as establishing misconduct by clear, satisfactory, and convincing evidence.
The Court agreed that revocation of Scholz’s law license was mandatory under ABA and Wisconsin standards given the pattern of conversion, dishonesty, prior discipline, and continued uncooperativeness.
The Court refused to backdate revocation to a prior suspension, finding no mitigating circumstance or overlapping misconduct that would justify a retroactive sanction.
On restitution, the OLR had originally claimed $83,232.36 owed to six different clients or estates. After last-minute waivers and incomplete OLR explanations, only $4,000 (owed to one client, S.J.C.) remained uncontested.
The Court adopted the parties’ stipulation and ordered $4,000 in restitution, but issued a sharp caution: in future cases the OLR must adhere to its January 2020 Board of Administrative Oversight policy and the holdings in In re Ruppelt (2017 WI 80) and In re Muwonge (2017 WI 12). When an attorney’s own conduct renders restitution amounts “not reasonably ascertainable,” the burden shifts to the attorney to establish offsets or demonstrate lack of liability. Third-party waivers must be documented with detail and explanation.
Costs of $10,905.68 were assessed against Scholz, and he was ordered to comply with SCR 22.26 and conditions for any future reinstatement.

Analysis

1. Precedents Cited

The judgment builds on several key decisions and rule changes:

In re Disciplinary Proceedings Against Ruppelt (2017 WI 80): held that when the OLR cannot ascertain restitution due to an attorney’s conduct, the burden shifts to the attorney to prove offsets.
In re Medical Incapacity Proceedings Against Muwonge (2017 WI 12): applied the same restitution-burden shift in cases of disputed amounts caused by attorney misconduct.
January 16, 2020 Board of Administrative Oversight Report: formally recommended OLR adopt a policy requiring burden-shift and detailed justification for any waiver of restitution claims.
In re Disciplinary Proceedings Against Woods (2011 WI 46): set out the general rule disfavoring retroactive sanctions absent compelling circumstances.
Cooper (2013 WI 55) and Mandelman V (2014 WI 100): examples of limited circumstances in which revocation or suspension was made retroactive when misconduct periods overlapped and license remained suspended.
Other discipline cases (e.g., Menard, Weigel, Constant) affirm that license revocation is mandatory for knowing conversion of client trust funds.

2. Legal Reasoning

The Court’s reasoning can be divided into four pillars:

Evidence and Admission: Scholz withdrew his answers and entered stipulations. Under SCR 22.17(2) and case law like Runyon (2020 WI 74), the complaint’s factual allegations are deemed admitted and suffice to prove misconduct by clear, satisfactory, and convincing evidence.
Appropriate Sanction: ABA Standard 4.11 and Wisconsin precedent require revocation where an attorney knowingly converts client funds. Here, 48 counts across 19 matters, a “business model” of conversion, prior discipline, bad-faith obstruction, and no significant mitigation command the harshest sanction.
Retroactivity: Retroactive sanctioning is “the exception, not the rule.” Woods and Jelinske demonstrate that overlapping misconduct alone does not warrant retroactivity. We must balance aggravating and mitigating factors; none supported leniency here.
Restitution Policy and Burden-Shift: The Court rebukes last-minute OLR waivers unsupported by adequate factual findings. It reaffirms the BAO’s policy: where attorney conduct prevents a “reasonably ascertainable” restitution calculation, the burden shifts to the attorney to provide records, proofs, or offsets. Third-party waivers of restitution must be knowing, informed, documented, and explained in detail to OLR and the Court.

3. Impact

This decision has four significant consequences:

OLR Restitution Statements: Must expressly follow the BAO policy, shifting the burden to attorneys when recordkeeping failures hamper restitution calculations.
Future Discipline Proceedings: Any waiver by a client or estate must be fully documented—showing notification of the amount sought, the client’s understanding, and OLR’s reasons for acceptance.
Deterrence and Consistency: Emphasizes that conversion of client funds and misrepresentations warrant revocation without regard to the total amounts; a pattern of theft is disqualifying.
Retroactivity Standard: Clarifies that retroactive revocation remains rare; overlapping misconduct alone is insufficient without compelling mitigating factors.

Complex Concepts Simplified

“Reasonably Ascertainable” Restitution: If an attorney’s own sloppy or deceptive records prevent the OLR from calculating exactly how much a client lost, the attorney must supply the missing data or prove why they owe less. The OLR cannot simply drop a claim because it can’t do the math.

Retroactive Sanction: Making a suspension or revocation effective from a date in the past. Disfavored unless extraordinary circumstances—overlapping misconduct plus ongoing suspension without reinstatement—justify it.

Deemed Admission: When an attorney withdraws an answer or fails to answer a disciplinary complaint, the factual allegations are taken as true for purposes of proving misconduct.

Conclusion

In re Scholz reaffirms Wisconsin’s tough stance on trust-fund conversion: when a lawyer treats client money as a personal slush fund, revocation is mandatory. It cements the restitution burden-shift policy: the onus is on attorneys, not the OLR, to supply a clear restitution calculation when their own conduct clouds the figures. And it underscores that retroactive license revocation will remain exceptional. For practitioners and regulators alike, this decision brings clarity to restitution practices in lawyer disciplinary proceedings and fortifies the integrity of client trust accounting in Wisconsin.