In re Complaint as to the Conduct of LARRY O.
GILDEA, Accused.
SC S42543
SUPREME COURT OF OREGON
325 Ore. 281;
936 P.2d 975;
1997 Ore. LEXIS 36
March 6, 1996, Argued and submitted
May 8, 1997, FILED
PRIOR HISTORY:
[***1]
OSB 92-125. On review of the decision of a Trial Panel of the Disciplinary
Board.
DISPOSITION: The accused is suspended from the practice of law for a period of 120 days
commencing on the effective date of this decision.
COUNSEL: David Jensen, of Jensen, Fadeley
& Elmore, P.C., Eugene, argued the cause and filed the briefs for the accused.
F. William Honsowetz, of Lombard, Gardner, Honsowetz, Brewer
& Potter, Eugene, argued the cause for the Oregon State Bar. With him on the
brief was Chris Mullman, Assistant Disciplinary Counsel, Lake Oswego.
JUDGES: Before Carson, Chief Justice, and Gillette, Van Hoomissen, Graber, and Durham,
Justices. *
* Unis, J., retired June 30, 1996, and did not participate in this decision;
Fadeley, J., did not participate in the consideration or decision of this case.
OPINION:
[*283]
[**976] PER CURIAM
In this lawyer
disciplinary proceeding, the Oregon State Bar (the Bar) filed an amended formal complaint
against the accused on March 3, 1995. The complaint consisted of five causes
that alleged a total of 14 violations of the Code of Professional
Responsibility (DRs) and two violations of
ORS 9.527(4). n1 The accused denied all the allegations. Following a six-day hearing,
[***2] a trial panel found the accused guilty of four violations of the Code of
Professional Responsibility and selected a
one-year
suspension as the
appropriate sanction. n2
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n1 The Bar's amended complaint alleged that the accused violated the following
provisions: DR 1-102(A)(3) (three counts); DR 5-101(A) (two counts); DR
5-101(B) (two counts); DR 5-104(A); DR 9-101(A) (three counts); and DR
9-101(C)(3) (three counts). The text of those provisions, as well as
ORS 9.527(4), is set out below. In several instances, the complaint did not refer to the
versions of the DRs that were in effect at the time that the alleged violations
occurred. However, those DRs have not changed in any material way with respect
to his alleged violations. Therefore, for ease of reference and sake of
clarity, we refer to the DRs as alleged in the Bar complaint.
n2 At the close of evidence, one count of both DR 1-102(A)(3) and
ORS 9.527(4) was dismissed.
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Because the accused's
suspension was for more than 60 days, this court automatically
[***3] reviews that decision de novo on the record.
ORS 9.536; Bar Rules of Procedure (BRs) 10.1 and 10.6. In his petition to this court,
the accused challenges the trial panel's finding of guilt only with respect to
one of the
disciplinary rules, DR 9-101(C)(3). In addition, the accused challenges his
one-year
suspension as being too severe. The Bar, on cross-petition for review, seeks disbarment
on the ground that the accused is guilty of
violating several
disciplinary rules in addition to those found by the trial panel. Most
[**977] significantly, the Bar asserts that the accused stole from his client.
We hold that the Bar has failed to establish that the accused stole from his
client. However, we conclude that, in addition to those violations that were
found by the trial panel, the accused violated four other
disciplinary rules. Finally, we conclude that, based on the violations committed and
applicable precedent, the
appropriate sanction is a 120-day
suspension from the practice of law.
[*284] FACTUAL FINDINGS
All the issues and charges in this case arise out of the accused's friendship
with and representation of Margaret Benston (Benston). The accused represented
Benston with respect to various
[***4] matters from approximately 1965 until her death on May 12, 1992. Throughout
that time, and until her death, the accused and Benston were close friends. The
matters relevant to this proceeding occurred during the years 1988 through 1991.
In 1988, the accused began working on two property foreclosures for Benston. In
October 1988, the accused and his wife became concerned about Benston's health.
The accused brought Benston to Eugene, where the accused lived, to meet with
Dr. England. Benston was preliminarily diagnosed as having Alzheimer's disease,
but that diagnosis later was changed to multi-infarct dementia. Dr. England and
the accused agreed that Benston should be placed in a foster home. Within days,
Benston moved into foster care, where she remained for two and one-half months.
While living there, Benston
visited the accused's family on weekends, holidays, and other special occasions. She
was unhappy in foster care, and her conduct was disruptive. Although she was
lucid while visiting the accused's home, Benston relapsed into varying states
of dementia while at her foster home.
In January 1989, Benston moved to Riverpark Care Center, which provided
assisted living units for
[***5] residents. She remained there until her death. Benston initially showed marked
improvement at Riverpark -- her conduct was not disruptive and she was able to
handle her daily affairs. By October 1991, however, her condition had
deteriorated, and she was moved to a dementia unit at Riverpark. The following
transactions occurred between Benston and the accused while she resided at
Riverpark:
1. General
Power of Attorney
Benston and the accused agreed that Benston would give the accused a
power of attorney over her affairs. The accused prepared a
power of attorney document and had Benston sign it at his office. However, the accused's
secretary, Charlotte Stirling, refused to notarize the document,
[*285] because she did not believe that Benston was competent to sign. The accused
drafted a second
power of attorney, which he delivered to Riverpark with instructions to have Benston sign it, if
the Riverpark staff believed that she was competent to do so. Three Riverpark
personnel witnessed Benston sign the document; they believed that she was
competent. n3
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n3 The accused did not instruct Benston to seek independent
legal advice before signing the document, nor did he instruct her that the
power of attorney created a potential
conflict of interest for the accused. However, the Bar did not allege that the failure to advise
Benston violated a rule of professional responsibility. No issue as to that
question is before us.
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[***6]
2. Financial Matters
Also during her stay at Riverpark, Benston asked the accused to take over
maintenance of her financial matters. Benston would endorse checks over to the
accused. The accused then would place those checks into his general client
trust account, and Benston's bills were paid out of that account. In addition to that
arrangement, the accused set up a separate
trust account for Benston in her name. Income from Benston's property dealings typically was
placed in that separate
trust account. The accused
visited Benston regularly and discussed her financial matters with her, but he did not
provide Benston with written summaries of income and disbursements.
On December 5, 1988, the accused
transferred $ 2,212.95 from Benston's
trust account to his firm's account. On December 20, 1988, the accused
transferred $ 5,000 into his firm's
[**978] account from Benston's
trust account. On January 19, 1989, the accused
transferred another $ 1,000 from the account into his firm's account. The accused
variously described those transfers as
"advances on fees" and
"flat fees." A ledger entry (whose accuracy the accused denies) described one of the
transfers as a
"loan." The accused
[***7] acknowledged that all those payments were advances for fees, for work not yet
performed, that he needed to pay operating expenses at his firm. The accused
discussed the transactions with Benston in advance, but he neither told Benston
to seek independent
legal advice before agreeing to the transfers nor memorialized the transactions by written
agreements with Benston.
[*286] One other financial transaction is pertinent here. A check for $ 321.34, dated
August 13, 1991, and sent to the accused as final payment for certain property
in Florence that Benston had sold, was deposited into the accused's
personal account instead of into Benston's
trust account, where the accused had placed previous
trust deed property contract payment checks. The deposit was made, without the accused's
knowledge, by the accused's
daughter, who was serving as the accused's bookkeeper at the time.
3. Real Estate
The accused personally guaranteed Benston's payments to Riverpark. The accused
used the Benston
power of attorney to assign to himself a
trust deed on Benston's Florence property. There was no consideration given by the
accused to Benston in exchange for that assignment. The accused assigned the
[***8]
trust deed to himself to ensure that future monthly payments on the property would not go
as reimbursements to Medicaid but would, instead, continue to be applied to
Benston's Riverpark payments. Although Benston agreed to that arrangement, the
accused did not instruct her to seek independent
legal advice from another lawyer, nor did he explain in writing the
conflict of interest that such an arrangement created. All the money that the accused acquired
under the Florence property contract payments either was applied to Riverpark
payments or was placed in Benston's
trust account.
4.
Personal Property
When it became apparent that Benston would not be returning to her Florence
home, she asked the accused to clean out the home, discard any useless
property, and bring the remaining possessions to Eugene. The accused in turn
asked his housekeeper, Cynthia Stillman, to perform that task. Stillman and her
husband cleaned out the home, threw out various items, and returned to Eugene
with most of the furniture and other property, such as dishes and glassware.
Neither the Stillmans nor the accused inventoried the property. Some of the
property was placed in Benston's new accommodations.
[***9] The accused stored the balance of property at his home and at his office
without charge.
[*287] In March 1992, the accused had a
garage sale of his own property and, with Benston's oral approval, included Benston's
stored property in the sale. The accused had two antique dealers examine
Benston's property and assist in its valuation. Stillman organized and
conducted the sale. She kept a ledger that distinguished payments for the
accused's property and Benston's property. After paying a 20 percent commission
to Stillman for her work, the accused placed the remaining proceeds from
Benston's property into her
trust account. n4 Benston's property never was inventoried before the sale, nor did the
accused provide Benston with an
accounting of the property sold.
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n4 The amount of proceeds reflected in the ledger equaled $ 738.50. Of that, $
147.70 was subtracted for Stillman's fee. That would have left $ 590.80.
However, the accused placed $ 1,141 into Benston's
trust account as her proceeds from the sale. The accused testified that he learned of that
overpayment only upon reviewing his records in preparation for the trial
panel's proceeding.
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[***10]
5. Automobile
Shortly after Benston was moved to Eugene, and at her request, the accused
brought her 1976 Volkswagen
van to his home. The
van was in poor repair, and the accused had it cleaned and repaired at his own
expense. Although Benston no longer
[**979] had a driver license, she had a strong attachment to the
van and enjoyed seeing and riding in it when she
visited the accused's home. Because Benston had no license, she could not get
insurance on the
van. Pursuant to a recommendation from the accused's insurance broker, Benston and
the accused agreed to transfer the title of the
van to the accused's professional corporation for the purpose of obtaining
insurance on it. On November 12, 1989, the accused had Benston sign a
power of attorney in favor of the accused for the purpose of
transferring title to the
van. The transfer was completed that same day. No consideration was paid for the
van. The accused did not advise Benston to seek advice from another lawyer before
signing the
power of attorney or
transferring title.
In the summer of 1991, Benston orally agreed to sell the
van to the accused's
daughter for $ 1,000. The
daughter did not have the full amount at that time,
[***11] so Benston, the accused, and his
daughter agreed that she would pay $ 100
[*288] per month. On August 13 1991, title to the
van was
transferred from the accused's professional corporation to the accused's
daughter. No consideration was paid at that time. On September 9, 1991, the accused paid
$ 2,000 of his own money into Benston's
trust account to cover payments due to Riverpark. Because he considered this payment to
cover the $ 1,000 owed Benston for the
van, the accused instructed his
daughter that she no longer needed to pay Benston.
ANALYSIS:
Violations Found by Trial Panel
The accused does not dispute that he violated DR 9-101(A) n5 by failing to
deposit the $ 321.34 check, which was the final payment to Benston from a
contract sale of her Florence property, into his client
trust account. We find that the Bar proved that the accused is guilty of that violation.
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n5 DR 9-101(A) provides in part:
"All funds of clients paid to a lawyer or law firm, including advances for costs
and expenses and escrow and other funds held by a lawyer or law firm for
another in the course of work as lawyers, shall be deposited and maintained in
one or more identifiable trust accounts in the state in which the law office is
situated."
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[***12]
Neither does the accused dispute that he violated DR 5-101(A)(1) n6 and DR
5-104(A) n7 by failing to make
full disclosure to Benston of the possible conflict of interest in
assigning Benston's
trust deed on the Florence property to himself. We find that the Bar proved that the
accused is guilty of those violations as well.
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n6 DR 5-101(A)(1) provides in part:
"Except with the consent of the lawyer's client after
full disclosure,
(1) a lawyer shall not accept or continue employment if the exercise of the
lawyer's
professional judgment on behalf of the lawyer's client will be or reasonably may be affected by the
lawyer's own financial, business, property, or personal interests."
n7 DR 5-104(A) provides:
"A lawyer shall not enter into a business transaction with a client if they have
differing interests therein and if the client expects the lawyer to exercise
the lawyer's
professional judgment therein for the protection of the client, unless the client has consented
after
full disclosure."
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[***13]
The accused argues that the trial panel erred in concluding that he violated DR
9-101(C)(3) n8 by failing to
inventory Benston's
personal property either before or in connection with the
garage sale. The accused argues that Stillman
[*289] was responsible for the
garage sale and that, if anyone should have conducted an
inventory, it was Stillman. The accused further argues that with respect to that matter,
he acted in his personal capacity, not pursuant to a lawyer/client
relationship, and therefore was not obligated to
inventory the property. The accused's arguments are unpersuasive.
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n8 DR 9-101(C)(3) provides in part that
"[a] lawyer shall":
"Maintain complete records of all funds, securities and other properties of a
client coming into the possession of the lawyer and render appropriate accounts
to the lawyer's client regarding them."
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This situation exemplifies the dangers inherent in providing legal
representation to a friend. In matters where the client/friend's
[**980] legal and financial interests are
[***14] concerned, a lawyer runs the risk that he or she will be deemed to have acted
in the lawyer's
professional capacity. In considering whether a lawyer's services were provided in a personal or
professional capacity, the accused mistakenly assumes that his belief with respect to the nature of
those services is dispositive. That is incorrect. Rather, it is the client's
reasonable expectations that are the dispositive consideration.
In
In re Harrington, 301 Ore. 18, 718 P.2d 725 (1986), this court was required to determine whether a lawyer had acted in his
professional or personal capacity in a transaction involving a client. The
lawyer represented an elderly woman in her legal matters and became a close
friend and confidant as well. During one of their many visits, the lawyer
mentioned that he was in need of $ 5,000 and indicated that he might have to
sell some of his stock to get it. The friend offered to loan him the money; the
lawyer drafted the documents that memorialized the transaction. The lawyer was
charged with
violating former DR 5-104(A) (business relations with a client); he defended against the
charge by arguing that the loan arose out of his friendship with
[***15] the client and that he acted in his personal capacity with respect to it.
This court disagreed, finding that the lawyer had acted in his
professional capacity. In so holding, the court relied on the following passage from
In re Montgomery, 292 Ore. 796, 804, 643 P.2d 338 (1982), quoted in
Harrington, 301 Ore. at 25:
"'When a lawyer seeks to borrow money from a non-lawyer client * * *, the lawyer
must assume, in the absence of
[*290] contrary expression by the client, that the client is relying on the lawyer
for
professional judgment to the same extent that the client would rely on the lawyer for advice had the
client consulted the lawyer concerning such a loan to a third person.'"
Although this case involves the sale of a client's personal possessions rather
than a loan, we believe that the same analysis applies. Just as in Harrington,
the client's financial interest was at stake, and the lawyer had provided
professional services with respect to numerous other financial matters of the
client. In the absence of evidence that Benston did not rely on the accused in
his
professional capacity, she is deemed to have done so. Because no such evidence has been presented,
[***16] the accused cannot avoid the requirements of DR 9-101(C)(3) by asserting that
he was acting in his personal capacity, and not as her lawyer, with respect to
the transfer, storage, and sale of Benston's possessions.
Neither can the accused argue that Stillman, not the accused, was responsible
for making the
inventory. As the lawyer for Benston, the ultimate responsibility for carrying out an
inventory rested with the accused. The failure of Stillman to make an
inventory at the time of moving the
personal property to Eugene, or at the time of the
garage sale, does not absolve the accused from his ultimate responsibility.
Finally, the accused argues that DR 9-101(C)(3) does not require an
accounting, unless there has been a request for one from the client. The accused is
mistaken. DR 9-101(C)(3) provides that a lawyer not only shall
"maintain complete records of all funds, securities and other properties of a
client coming into possession of the lawyer," but also
"render appropriate accounts to the lawyer's client regarding them." The text makes clear that a lawyer must render all
"appropriate" accounts. That requirement, by its terms, is not preconditioned on a client's
first asking
[***17] for an
accounting. In contrast, the immediately following provision, DR 9-101(C)(4), expressly
requires that a lawyer promptly pay or deliver to a client funds or property of
the client, as requested by the client. We think that the term,
"appropriate," unambiguously refers to the form of the account that must be rendered, not to
whether it must be rendered at all. n9 We find
[**981] that the Bar
[*291] proved that the accused violated DR 9-101(C)(3) when he failed to render any
accounting to his client. n10
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n9 This court's prior cases that have found violations of DR 9-101(C)(3) (or
its predecessor) for failure to render an
accounting, typically have involved situations in which the lawyer failed to respond to a
client's request for an
accounting. See, e.g.,
In re Sousa, 323 Ore. 137, 915 P.2d 408 (1996);
In re Hedges, 313 Ore. 618, 624, 836 P.2d 119 (1992);
In re Boothe, 303 Ore. 643, 649, 740 P.2d 785 (1987). But those cases do not support the proposition that the rule cannot be
violated unless a client has requested an
accounting.
n10 The accused also argues that the rule is too vague to be enforced against
him, because it does not specify whether and, if pertinent, when an
accounting is to be made. Whatever efficacy it might have in other circumstances, that
argument cannot aid the accused here, because the rule clearly requires an
accounting at some time, and the accused never made one.
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[***18]
The foregoing discussion encompasses all the violations of the
disciplinary rules that were found by the trial panel. We turn now to a determination
whether, as the Bar argues, the accused should be found guilty of additional
violations.
1. DR 9-101(C)(3)
The Bar argues that the accused violated DR 9-101(C)(3) by failing to render an
accounting of the $ 321.34 check that was inadvertently placed in the accused's
personal account. For the same reason as previously discussed, the Bar's argument is well taken.
The check came into the accused's possession by way of a final payment for
certain property. The accused failed properly to account for the check. We note
that, had the accused accounted for the check, the mistake of placing the check
in the accused's
personal account might have been avoided. We find that the Bar proved that the accused violated
DR 9-101(C)(3) in this regard.
2. DR 5-101(B)
The Bar argues that, in addition to
violating DR 5-101(A) and 5-104(A), as found by the trial panel, the accused also
violated DR 5-101(B) n11 by preparing an instrument -- the assignment of the
trust deed -- that gave him a
gift. The Bar reasons that, because the accused
[***19] personally had guaranteed payments to Riverpark, he ultimately would have been
[*292] responsible for any default. The Bar reasons that, by
assigning the
trust deed to himself, the accused was protecting himself from the possibility that
Medicaid would acquire any funds derived from the
trust deed, thus leaving the accused responsible for Benston's debt at Riverpark.
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n11 DR 5-101(B) provides:
"A lawyer shall not prepare an instrument giving the lawyer or a person related
to the lawyer as parent, child, sibling, or spouse any substantial
gift from a client, including a testamentary
gift, except where the client is related to the donee."
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We agree with that argument. In doing so, we accept the accused's testimony
that his purpose for
assigning the
trust deed was to ensure future payments to Riverpark. But that purpose, coupled with the
accused's status as guarantor of Benston's Riverpark obligation, demonstrates
why the assignment was a
gift to the accused for purposes of DR 5-101(B). The funds collected under
[***20] the assignment took the accused
"off the hook" to some degree. The accused was aware of the pertinent facts when he prepared
the assignment. We hold that he is responsible for the necessary legal effect
of that assignment.
In so holding, we are mindful that the accused does not appear consciously to
have considered the transaction a
gift. n12 Indeed, after the
gift was made, the accused placed the funds that he received on the
trust deed into Benston's
trust account, once he was sure that Medicaid would not take those funds. But the accused's
subsequent acts, while perhaps relevant to the question of sanction, cannot
change the legal effect of the preparation of the assignment.
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n12 The accused does not argue that, and we therefore do not address whether,
the concept of
"gift" in DR 5-101(B) includes all the common law elements of
gift, viz., donative intent, delivery, and acceptance.
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We find that the accused violated DR 5-101(B) when he prepared the assignment
of the
trust deed.
3. DR 1-102(A)(3);
[***21]
ORS 9.527(4); DR 5-101(A); DR 5-101(B)
The Bar argues that the accused violated
[**982] DR 1-102(A)(3) n13 and
ORS 9.527(4) n14 by dishonestly
transferring
[*293] the
van, first to his professional corporation and then to his
daughter, and that he violated DR 5-101(A) and (B) by engaging in conflicts of interest
with respect to the transfer.
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n13 DR 1-102(A)(3) provides that
"it is professional misconduct for a lawyer to":
"Engage in conduct involving dishonesty, fraud, deceit or misrepresentation."
n14
ORS 9.527(4) provides several grounds for disbarment,
suspension, or
reprimand, including, as pertinent here, where
"the member is guilty of willful deceit or misconduct in the legal profession[.]"
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The Bar's claims with respect to DR 1-102(A)(3) and
ORS 9.527(4) are not well taken. The Bar has not proved by
clear and convincing evidence that the accused engaged in fraud, dishonesty, or misrepresentation concerning
the transfer. The accused discussed the initial transfer of the
van to his professional corporation with Benston, and had her sign a Department of
Motor Vehicles
power of attorney in his favor. The purpose of the transfer was to enable the accused to
purchase insurance on the vehicle, because Benston
[***22] was unable to obtain insurance. In the light of the fact that the accused and
his family drove Benston in her
van when she
visited their home, this effort to acquire insurance was both reasonable and prudent.
Neither did the subsequent transfer of title from the accused's professional
corporation to the accused's
daughter involve fraud, dishonesty, or misrepresentation. The record indicates that
Benston willingly agreed to the sale of
"her"
van -- although, technically, it then was owned by the accused's professional
corporation -- to the accused's
daughter for $ 1,000. Benston received $ 1,000 as payment for the
van. n15 The accused did not violate DR 1-102(A)(3) or
ORS 9.527(4) concerning this matter.
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n15 The Bar argues that the $ 1,000 was paid only after the accused learned
that a Bar complaint had been filed against him and that the payment would not
have occurred otherwise. The accused's
daughter testified that she had agreed to pay Benston $ 100 a month until the $ 1,000
was paid in full. The accused's $ 1,000 payment occurred less than one month
after the transfer of the
van to the
daughter. Although it is true that this payment occurred after the filing of a complaint
against the accused, the proximity in time of the payment to the transfer of
title persuades us that the accused and his
daughter always intended to pay Benston $ 1,000 for the vehicle.
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[***23]
On the other hand, the Bar's claims with respect to DR 5-101(A) leads to an
analysis and a result like that reached with respect to the assignment of the
trust deed. The Bar proved by
clear and convincing evidence that the accused violated DR 5-101(A) by failing to obtain consent from
Benston after
full disclosure of the
conflict of interest involved in
transferring title to Benston's
van to the accused's
[*294] professional corporation. The fact that the accused's professional corporation
paid the insurance on the vehicle, and that Benston ultimately was paid $ 1,000
for it, did not eliminate the
conflict of interest.
Finally, we hold that the accused did not violate DR 5-101(B), because we find
that the transfer of the
van, first to the professional corporation and then to the
daughter, did not constitute a
gift. Although the professional corporation did not pay consideration for the
transfer, the
van essentially was held in trust for Benston and was operated for her benefit.
Moreover, upon selling the vehicle to the
daughter, the professional corporation did not receive the $ 1,000 payment for the
vehicle; the money went to Benston.
In summary, we hold that the trial panel correctly
[***24] concluded that the accused did not violate DR 1-103(A),
ORS 9.527(4), or DR 5-101(B), but we find that, in addition, the Bar proved by
clear and convincing evidence that the accused violated DR 5-101(A).
4. DR 9-101(A); DR 9-101(C)(3); DR 1-102(A)(3)
The Bar argues that the accused violated DR 9-101(A) by failing to maintain all
of Benston's funds in one or more identifiable trust accounts and that he
violated DR 9-101(C)(3) by failing to maintain adequate records and properly to
account for those funds. In addition, the Bar claims that the accused violated
DR 1-102(A)(3), by fraudulently converting some of Benston's funds to his own
use without her prior written consent.
[**983] Those claims concern the accused's handling of all Benston's funds, but the
parties have focused primarily on a series of
withdrawals from Benston's
trust account that occurred in December of 1988 and January of 1989. n16
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n16 The parties dispute whether the
withdrawals should be construed as loans, advances on fees, or flat fees. The Bar argues
that the accused characterized the
withdrawals in all three ways, and that the flat fee characterization was asserted for the
first time at trial. We do not need to distinguish among those
characterizations because, for the purposes of this case, the same legal result
follows, regardless of the characterization.
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[***25]
[*295] The record does not indicate that the accused failed to deposit funds into
Benston's
trust account concerning those claims. n17 Therefore, the Bar's claim with respect to DR
9-101(A) is not well taken. However, the Bar's claim with respect to DR
9-101(C)(3) is well taken. Although the accused testified that he had discussed
the
withdrawals with Benston in advance, he did not render an
accounting of those
withdrawals after the funds had been removed from Benston's
trust account, as required by that rule. We find that the Bar proved that the accused
violated DR 9-101(C)(3) in that respect.
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n17 Our earlier conclusion that the accused violated DR 9-101(A) applied only
to the $ 321.34 check that never was placed into Benston's
trust account.
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The most serious claim made by the Bar is that the accused converted Benston's
funds without prior consent from Benston and that the conversions were
fraudulent and in violation of DR 1-102(A)(3). The Bar argues that there is no
indication in the record, other than from the
[***26] accused's own testimony, that he had discussed those
withdrawals with Benston in advance. The Bar argues that, in the absence of any
independent evidence to corroborate the accused's testimony, we should presume
that the accused never received consent from Benston for the transfers before
they were made. The Bar argues that any other result would leave it helpless in
pursuing matters of this kind, because an accused could make up any story that
he or she wished. We are not persuaded.
We note, first, that the Bar has the burden of proving by
clear and convincing evidence that the accused violated a rule of professional conduct. BR 5.2. The accused
does not have the burden of proving that he did not commit the violation. Yet,
the Bar's blanket approach would have the effect of shifting the burden to the
accused to disprove the charge. Under the Bar's formula, the accused would have
to produce independent corroborating evidence in support of his testimony or be
found guilty. That approach is contrary to the specific way the burden of proof
is assigned in these cases.
[*296] The question, therefore, is whether the Bar proved by
clear and convincing evidence that the accused violated
[***27] DR 1-102(A)(3). To answer that question, this court must look to all the
evidence in the record pertaining to that charge. In this case, that evidence
includes the accused's testimony. n18
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n18 Although use of the accused's testimony for the purpose of establishing
what Benston agreed to constitutes hearsay, hearsay is admissible in
disciplinary proceedings so long as it
"possesses probative value commonly accepted by reasonably prudent persons in
the conduct of their affairs." BR 5.1;
In re Taylor, 319 Ore. 595, 602 n 6, 878 P.2d 1103 (1994). The accused's testimony meets that standard in this case.
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Second, the Bar is not doomed to failure merely because the accused's own
testimony may be considered and relied on. A trial panel or this court is free
to find the testimony of an accused lawyer credible or not credible based,
inter alia, on the accused's demeanor and other evidence relating to the matter.
The pertinent evidence concerning this matter is as follows: On December 5 and
20, 1988, and
[***28] January 19, 1989, the accused
transferred $ 2,212.95, $ 5,000, and $ 1,000, respectively, from Benston's
trust account to his firm account. The accused testified that he discussed those
transactions with Benston in advance and received her agreement before he
transferred the funds from Benston's account to his firm account. In depositions, and at
his hearing, the accused variously described those transfers as
"advances on fees" and
"flat fees." The accused testified
[**984] that all the payments were advances for fees for work not yet performed that
were needed to pay operating expenses at the firm. However, the accused
conceded that he neither told Benston to seek independent
legal advice before agreeing to the transfers nor memorialized the transactions through
written agreements with Benston.
The Bar produced no evidence that the accused, in fact, did not receive
permission to make those transfers in advance, or that he failed to perform the
work that he promised in return for the transfers. Although we are not bound to
rely on the accused's testimony regarding Benston's prior consent, we conclude
that, in the light of the evidence and
[*297] particularly in the light of the accused's conduct
[***29] in his relationship with Benston with respect to other matters, the accused's
testimony may be relied on in this instance. n19 We note also that the trial
panel similarly accepted the accused's testimony on this subject.
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n19 In its brief to this court, and at oral argument, the Bar put all its eggs
in one basket by arguing solely that this court should not rely on the
accused's own testimony. The Bar did not provide any evidence that the accused
failed to perform work for the advanced fees, or any other evidence that may
have placed the accused's testimony in doubt.
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We agree with the trial panel that the Bar failed to prove that the accused
violated DR 1-102(A)(3) with respect to this matter.
5. DR 9-101(A)
The Bar argues that the accused violated DR 9-101(A) by failing to maintain
Benston's proceeds from the sale of her personal possessions in an identifiable
trust account. We find that the accused did not violate that rule with respect to this matter.
SANCTION
The trial panel recommended a
one-year
[***30]
suspension, based on its conclusion that the accused violated DR 9-101(A), DR 9-101(C)(3),
DR 5-101(A), and DR 5-104(A). In addition to those violations, we have found
the accused guilty of
violating DR 9-101(C)(3) on two other counts, DR 5-101(A) on one other count, and DR
5-101(B) on one other count, for a total of eight violations. n20 We are left
to decide the
appropriate sanction for those violations.
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n20 Although we have found double the number of violations that were found by
the trial panel, all but one of the additional violations were for conduct
virtually identical to that for which the trial panel already had found the
accused guilty.
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In deciding the
appropriate sanction, we are guided by the American Bar Association's Model Standards for Imposing
Lawyer Sanctions (1991) (ABA Standards).
In re Sousa, 323 Ore. 137, 145, 915 P.2d 408 (1996). Under those standards, we consider four factors: (1) the nature of the ethical
duty violated, (2) the mental state of the accused at the time of the violation,
[***31] (3) the extent of the actual or potential
[*298] injury caused by the accused's misconduct, and (4) any
aggravating or mitigating circumstances. ABA Standard 3.0.
The matters at issue here involve the most important ethical
duties under the standards of professional responsibility, viz., those owed to a
client.
Sousa, 323 Ore. at 145. The accused violated his obligations to his client by failing to avoid
conflicts of interest without the informed consent of his client and by
assigning Benston's
trust deed to himself. ABA Standard 4.3. He also violated his
duty to Benston to safeguard her property by failing to have her personal
possessions inventoried, by failing to account to Benston for money that he had
received that was hers, and by depositing one check that was hers in his
personal account. ABA Standard 4.1.
However, from our reading of the record, none of those violations was done by
the accused with intent, i.e., with the conscious objective or purpose to
engage in those violations. See
Sousa, 323 Ore. at 145; ABA Standard 7 (defining intent). Rather, the accused's conduct amounted to
negligence. In addition, although the accused's improper conduct potentially
could
[***32] have caused significant injury to Benston's financial interests, no actual
injury to her financial interests has been shown.
[**985] With respect to
aggravating and mitigating factors, we note this court's disposition of Harrington. In
assessing the
appropriate sanction, the court stated:
"The present case involves more than a single violation. Each of the violations
is a serious matter. However, we find that the accused acted in the utmost good
faith throughout his relationship with [the clients]. We do not doubt the
accused's motivation arose from kindness * * *. [The clients] did not lose
anything as a result of the accused's conduct. On the contrary, they were
provided with many valuable services for which they were never charged. We find
that the accused acted throughout without guile or improper motive."
301 Ore. at 34.
The foregoing statement applies to this case. Although the accused violated
several
disciplinary rules, we
[*299] are satisfied that he acted throughout in good faith and that he attempted to
further Benston's best interests at all times. This amounts to an absence of a
dishonest or selfish motive n21 under ABA Standard 9.32(b), and constitutes a
significant
[***33] mitigating circumstance. n22
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n21 The accused's assignment of the
trust deed to himself could have been for a selfish motive, but we are satisfied from
this record that the accused meant to benefit the client, not himself.
n22 The trial panel reached a similar conclusion:
"The Accused and Margaret Benston had been friends for many years, and the
Accused did see that Margaret Benston sought medical assistance, placed her in
appropriate care facilities, appears to have safeguarded her
personal property and used it for only her benefit. The legal work that the Accused performed
for Margaret Benston * * * appears to have been in Margaret Benston's best
interest."
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However, there also are
aggravating circumstances. First, the accused had practiced law for many years when he
committed the acts of professional misconduct. n23 ABA Standard 9.22(i).
Second, the accused has a prior record of
disciplinary problems, albeit a remote one, having received a private
reprimand in 1972 from the Bar's
disciplinary
[***34] board. ABA Standard 9.22(a). However, we also note that the remoteness of that
prior offense constitutes a mitigating factor. ABA Standard 9.32(m). n24 Third,
due to her advanced age and poor health, Benston was particularly vulnerable.
ABA Standard 9.22(h). Finally, the accused violated multiple
disciplinary rules. ABA Standard 9.22(d).
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n23 The accused has been practicing law for over 30 years.
n24 The trial panel also cited a letter of admonition, received by the accused
in 1982, as another prior offense. The accused acknowledged receiving the
letter, but asserted that it did not constitute a prior
disciplinary offense, because he disputed the letter and the matter was dismissed. We do
not find that matter to be of sufficient moment to weigh in our assessment of
the
appropriate sanction.
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ABA Standards 4.13 and 4.33 provide that, without consideration of
aggravating and mitigating factors, a
reprimand generally is appropriate when a lawyer is negligent either in dealing with a
client's property in a way
[***35] that causes potential injury to the client or in determining whether certain
conduct causes a potential
conflict of interest. The sanction in Harrington was a
reprimand.
Although there are significant mitigating circumstances in this case, we
conclude that, when viewed together
[*300] with the
aggravating circumstances, the facts still warrant more than a
reprimand. However, we also conclude that the trial panel's selection of a
one-year
suspension was too severe. In our view, a 120-day
suspension constitutes an
appropriate sanction.
The accused is suspended from the practice of law for a period of 120 days
commencing on the effective date of this decision.
