PORTLAND — The six partners at Verrill Dana who responded to John D. Duncan’s thefts from the law firm and its clients lacked policies to deter unethical conduct by the firm’s lawyers, the state’s highest court ruled Thursday.

The Maine Supreme Judicial Court found that the lawyers who served as the Portland firm’s executive committee — David Warren, James Kilbreth III, Eric Altholz, Mark Googins, Roger Clement Jr. and Juliet Browne — violated an ethics rule regarding the responsibilities of partners and supervisory lawyers.

The rule requires partners to make reasonable efforts to have policies to make lawyers in their firm act responsibly.

Before his thefts were discovered in 2007, Duncan had a reputation for integrity and for being one of Maine’s best lawyers for wills, trusts and estates. An audit revealed that Duncan stole about $300,000 from clients and the prestigious firm over 10 years.

Duncan served two years in federal prison after pleading guilty to theft and tax evasion. He was disbarred for life.

After presiding over a disciplinary hearing last year, one supreme court judge ruled that the six lawyers broke no ethics rules in their response to Duncan’s thefts.

Justice Donald Alexander found that the lawyers acted in good faith based on the information they had at the time. The Maine Board of Bar Overseers, whose lead counsel alleged a variety of ethics violations, appealed Alexander’s ruling to the supreme court.

In a 3-1 decision, the court agreed with Alexander that there was no violation of an ethics rule governing when a lawyer must report another’s misconduct to the Board of Bar Overseers. J. Scott Davis, the board’s lead counsel, maintained that the six lawyers should have reported Duncan months earlier than they did.

With Thursday’s ruling, the high court remanded the case for a judgment consistent with its opinion and for appropriate sanctions. It did not specify what the sanctions could be.

Justice Ellen Gorman, writing for the majority, said the attorneys did not act in bad faith when they failed to report Duncan to the Board of Bar Overseers or others — including the firm’s own lawyer — who were in a better position to assess the situation.

But the firm’s failure to have policies and practices that would require its leadership to consider reporting Duncan constitutes a violation of the rule in question, Gorman wrote.

“When faced with the significant malfeasance of a self-destructing partner, none of the attorneys even recognized that the Maine Code of Professional Responsibility required them to contemplate reporting that partner’s conduct and subsequent breakdown,” she wrote.

Gorman also noted that Duncan was allowed to practice law for more than three months while the firm failed to adopt measures to ensure his ethical behavior.

The high court’s finding about the need for better policies could apply to nearly all law firms in Maine, said Melissa Hewey, a lawyer with Drummond Woodsum who represented Kilbreth.

Hewey was designated as the spokeswoman for the firms representing the individual lawyers.

“The good thing about this decision is it affirms that there was no cloud, that there was no cover-up,” she said. “Although we would have preferred a different ultimate result, the determination the law court made was that these people were honest and they didn’t cover anything up. And that’s what matters.”

Keith Jones, Verrill Dana’s managing partner, echoed Hewey’s sentiments.

“We are pleased that the decision confirmed Justice Alexander’s finding that each individual did not violate his or her obligation to report Mr. Duncan’s conduct more quickly than they did,” Jones said Thursday in a prepared statement. “The court did, however, find that this firm’s policies and procedures, as they existed at the time, were insufficient. We continually review our internal policies and procedures to ensure that they meet appropriate ethical standards.”

Davis, from the Board of Bar Overseers, could not be reached for comment late Thursday.

In June 2007, Duncan’s secretary, Ellie Rommel, resigned and provided to attorney Gregory Foster evidence that Duncan had written checks to himself from the account of an elderly client. Foster told Warren, who was the firm’s managing partner. When confronted by Warren, Duncan confessed, apologized tearfully and claimed it was an isolated incident. In July 2007, Warren advised the executive board to accept the apology and repayment of $77,500.

Warren was supposed to tell Kurt Klebe, the head of Duncan’s department, but did not do so until Oct. 2.

During the disciplinary hearing before Justice Alexander in December 2010, Warren said he waited because didn’t want more people to know about the matter until Duncan — whom he feared was suicidal — was mentally stable.

Within a few days, Klebe found evidence that Duncan had misappropriated funds from other clients. The firm hired outside lawyers and accountants to review Duncan’s files. The partnership voted in November 2007 to expel Duncan and report him to the Board of Bar Overseers and prosecutors.

Warren, who had led the firm since 1994, stepped down as managing partner in the wake of the scandal.

Staff Writer Ann S. Kim can be contacted at 791-6383 or at:

akim@pressherald.com