Oregon Supreme Court Reports
IN RE SKAGEN, S52940 (Or. 12-21-2006) IN RE COMPLAINT AS TO
THE CONDUCT OF CHRISTOPHER KNUTE SKAGEN, Accused. (OSB
03-64; SC S52940). Oregon Supreme Court. Filed: December
21, 2006.
On review of the decision of a trial panel of the
Disciplinary Board. Argued and submitted September 11,
2006.
Christopher Knute Skagen, Portland, argued the cause and
filed the briefs for himself.
Jane E. Angus, Assistant Disciplinary Counsel, Lake Oswego,
argued the cause and filed the brief for the Oregon State
Bar. With her on the brief was Roscoe C. Nelson, II.
Before DE MUNIZ, Chief Justice, and CARSON, GILLETTE,
DURHAM, BALMER, and KISTLER, Justices.[fn**]
[fn**] Riggs, J., retired September 30, 2006, and did not
participate in the consideration or decision of this case.
Walters, J., did not participate in the consideration or
decision of this case.
The accused is suspended from the practice of law for one
year, commencing 60 days from the filing of this decision.
PER CURIAM
In this lawyer disciplinary proceeding, the Oregon State
Bar (Bar) charged the accused with violating the following
Disciplinary Rules (DR) of the Oregon Code of Professional
Responsibility:[fn1] DR 9-101(A) (requiring lawyer to
maintain client funds in trust account and to identify
account with phrase “Lawyer Trust Account”); DR 9-101(C)(3)
(requiring lawyer to maintain complete records of client
funds in possession of lawyer and to render appropriate
accounts to client regarding funds); DR 9-101(D)(1)
(requiring lawyer trust account to be interest-bearing); DR
1-102(A)(3) (prohibiting dishonesty, fraud, deceit, and
misrepresentation); DR 2-106(A) (prohibiting illegal or
clearly excessive fee); DR 1-102(A)(4) (prohibiting conduct
prejudicial to administration of justice); and DR 1-103(C)
(requiring lawyer who is subject of disciplinary
investigation to cooperate and respond fully and truthfully
to inquiries and requests of disciplinary counsel). The Bar
charged those violations in four causes of complaint, based
on the accused’s conduct in four different situations: (1)
the accused’s handling of and accounting for funds held in
his lawyer trust account on behalf of a client, Anderson;
(2) the fee that the accused charged Anderson and a bill
that he submitted to her; (3) the accused’s actions in
establishing and maintaining his lawyer trust account; and
(4) the accused’s conduct during the Bar’s investigation of
the complaint against him and during the subsequent
disciplinary proceeding.
After a four-day hearing, a trial panel of the Disciplinary
Board concluded that the accused had violated all the rules
as charged, except DR 2-106(A) and one of the two alleged
violations of DR 9-101(A). The trial panel suspended the
accused from the practice of law for three years and
imposed an additional two-year probationary term upon his
reinstatement. Pursuant to ORS 9.536(1) and Bar Rules of
Procedure (BR) 10.1 and 10.3, the accused sought review of
the trial panel’s decision in this court.
We review a decision of the trial panel de novo. ORS
9.536(2); BR 10.6. The Bar must establish misconduct by
clear and convincing evidence, which “means evidence
establishing that the truth of the facts asserted is highly
probable.” In re Cohen, 316 Or 657, 659, 853 P2d 286
(1993). For the reasons that follow, we conclude that the
Bar has proved some of, but not all, the violations
charged, and we suspend the accused from the practice of
law for one year.
I. FINDINGS OF FACT
We find the following facts by clear and convincing
evidence. The accused was admitted to practice in Oregon in
1991. At different times since his admission, the accused
maintained offices at locations in Portland, Gresham, and
McMinnville. The accused moved to New Zealand in May
2003.[fn2]
A. Lawyer Trust Account
On February 25, 2000, the accused opened a trust account
with US Bank in Gresham. The accused advised the bank that
he wanted to open an interest-bearing lawyer trust account,
and the bank labeled the account “CHRISTOPHER SKAGEN BENEF,
CLIENT LTAB ACCOUNT, CHRISTOPHER SKAGEN ATTORNEY AT LAW
TSTEE.” The bank’s internal code “LTAB” denoted that the
account was a lawyer trust account; however, the account
name, the accused’s checks, and the accused’s monthly
statements all failed to include the designation “Lawyer
Trust Account.” Pursuant to DR 9-101(D)(2)(c), the interest
on lawyer trust accounts is to be paid to the Oregon Law
Foundation (OLF). Due to a bank error, no interest was
earned on the account or paid to the OLF until May 2004.
Between February 2000 and April 2004, the accused never
reconciled his monthly statements and, therefore, never
verified whether the bank was in compliance with his
original instructions to set up an interest-bearing account
with the name “Lawyer Trust Account.” Moreover, when asked
at his deposition whether he had maintained a trust account
ledger for all client funds kept in his lawyer trust
account, the accused reported that he had kept track of his
clients’ account balances in his head. When asked whether
that approach complied with the relevant disciplinary rule,
the accused replied: “I don’t know. I don’t think it
complies entirely. * * * I haven’t thought about that.”
Finally, the accused stated that he had deposited personal
funds in his lawyer trust account on a “handful of
occasions.”
In November 2001, the accused made out three checks to
himself in the amounts of $450, $250, and $50, drawing down
the balance in his lawyer trust account to $46.13.[fn3]
That amount was insufficient to cover funds belonging to
the accused’s clients, including Anderson, that should have
been in the account.
B. Anderson Matter
On November 27, 2000, Anderson retained the accused to
represent her in the dissolution of her marriage. Anderson
and the accused executed a written fee agreement, which
required Anderson to pay a “nonrefundable lump sum, earned
when paid fee” of $1,500. The agreement provided that the
accused would credit his first ten hours of work to that fee
and that additional time would be charged at $150 per hour
and billed monthly. The agreement also provided that
Anderson would be responsible for “all costs, including
expert witness fees, filing fees, subpoena fees etc.” and
that the accused would send her “pleadings, documents,
correspondence, and other information throughout the case.”
Anderson gave the accused a check for $1,500. The accused
did not deposit that check into his lawyer trust account;
instead, he deposited it into his business account.
Additionally, the accused advised Anderson that the filing
fee in her case would be $300 and asked Anderson to give him
a separate check for that amount. Anderson gave the accused
a second check in the amount of $300, which he deposited
into his lawyer trust account. On November 28, 2000, the
accused filed a Petition for Dissolution of Marriage in
Yamhill County Circuit Court and drew a check against his
lawyer trust account in the amount of $225 to pay the filing
fee.
Subsequently, the accused performed legal services for
Anderson in the dissolution matter. During his
representation of Anderson, the accused did not keep
regular time records of services that he performed for her,
did not provide monthly billings as provided in the fee
agreement, and never prepared any billing statements or
other accountings concerning her funds in the trust
account.
On September 20, 2001, Anderson wrote a letter to the
accused in which she expressed her dissatisfaction with his
representation and terminated his services. In that letter,
Anderson requested an itemized statement detailing the
services rendered to her by the accused, a copy of her
file, and a refund of the unearned portion of the $1,500
retainer. In response to that letter, on September 25,
2001, the accused prepared a billing statement concerning
Anderson’s dissolution matter. In that billing statement,
the accused represented that he had devoted 18.9 hours to
Anderson’s dissolution matter between November 27, 2000,
and September 14, 2001, and that, after the $1,500 retainer
was deducted from the total amount due, Anderson owed an
outstanding balance of $1,335. Because the items in that
billing are central to certain of the Bar’s allegations, we
discuss a few of them in further detail.
The accused billed Anderson 3.3 hours on November 28, 2000,
for preparing and filing the petition for dissolution and
other related documents. Additionally, he billed 1.8 hours
on November 30, 2000, to “Finalize Initial Dissolution
Documents.” On that date, the accused filed an amended
petition that was identical to the original petition filed
on November 28, except that the amended petition included
the date of the Andersons’ marriage and husband’s Social
Security Number — information that the accused had
omitted from the original petition.
The accused billed Anderson for a “Telephone call to
[husband] re inheritance” on January 10, 2001, and for a
“Conference with [husband] re Uniform Affidavit” on April
13, 2001. At his deposition, the accused stated that he
could not recall having any conversations with husband. The
accused further testified that the January billing entry
must have been wrong, because the telephone call must have
been to either husband’s lawyer (Bierly) or Anderson, and
that the April billing entry incorrectly referred to
husband instead of some other person. Nothing in the
record, other than the billing statement itself, indicates
that the accused had any communication with Anderson,
Bierly, or any other person connected to Anderson’s case on
either of those dates. Indeed, the testimony of several
witnesses, including the accused, contradicted those time
entries.[fn4]
The accused also billed Anderson for a conference with
husband’s attorney’s office on July 12, 2001. That billing
entry states: “JO: Telephone conference with Bierly office
re filing pleadings; receive letter from Bierly’s office re
out of Town until 7/23/01.” The Bar asserts that that entry
was for time spent on Anderson’s case by the accused’s
legal assistant, whose initials were “JO.” Bierly testified
that his office had contact with the accused’s assistant on
July 12, 2001, but not with the accused. The accused
testified that he recalled doing work on Anderson’s case on
that date and that he thought that the entry actually
reflected time that he had spent on the case. He further
testified that, if the entry reflected his assistant’s time,
he had not intended to bill for that time because the fee
agreement did not permit him to do so. The accused also
stated that, if his assistant had performed work on
Anderson’s case on that date, then he likely had, as well.
Following the termination of his services on September 20,
2001, the accused did not return to Anderson the remaining
$75 of the $300 that she had advanced for filing fees.
Neither did he provide an accounting of those funds. As
noted above, by November 2001, the accused had drawn down
the balance in his trust account to $46.13. More than a year
later, after the Bar began its investigation, the accused,
on October 10, 2002, deposited $75 into his trust account
to cover the funds belonging to Anderson.
C. Bar Investigation
On April 29, 2002, Anderson complained to the Bar about the
accused’s performance in handling her dissolution matter.
In that complaint, Anderson stated that, after she had
compared her own records of her communications with the
accused to the itemized billing statement that he had sent
her, she believed that many of the dates corresponding to
the billing entries had been “fabricated.” Among other
things, Anderson also complained specifically about the
accused’s failure to notify her of the scheduled trial date
and generally of his failure to attend to several aspects
of her case. As a result of her experience with the
accused, Anderson stated that she was forced to find another
lawyer to represent her in the dissolution matter and that
she was “frightened” to do so because she was “afraid that
all attorneys acted in such manner with their clients.”
In response to Anderson’s complaint, on April 30, 2002, the
Bar’s disciplinary counsel wrote to the accused informing
him of its investigation and requesting that he provide his
account of the matter along with a copy of his billing
statements, time records, and correspondence concerning his
representation of Anderson. On June 10, 2002, the accused
responded that, because he had moved his office and home in
February and March of that year, he was unable to locate
Anderson’s file and suggested that the Bar obtain copies of
as much of the file as possible from Anderson to help
expedite his further response. The accused also disputed
any contention that his fee was excessive and stated that,
because Anderson still owed him $1,335, he was holding a
“disputed” amount of $75 in trust. Subsequently, the Bar
sent another letter to the accused on July 12, 2002,
requesting responses to a number of additional inquiries,
including whether he had billed Anderson monthly for his
time, what records he had used to prepare the itemized
billing statement dated September 25, 2001, and why that
billing statement did not account for the funds that
Anderson had advanced to cover the filing fees in her case.
Additionally, the Bar requested that the accused provide a
copy of his lawyer trust account statements from November
2000 to the present.
The accused responded to those requests in a letter dated
August 8, 2002. The accused stated that he had not billed
Anderson monthly for his services because the fee agreement
had required that he do so only after his services had
exceeded ten hours[fn5] and because he “did not have time
to do the billing for fees.” With respect to the preparation
of Anderson’s billing statement, the accused stated that
his assistant had prepared the billing based on his notes,
which indicated the dates, the work performed, and the
amount of time spent to perform that work. The accused
admitted that he had not provided an accounting of
Anderson’s $300 filing-fee advance in the billing statement
and that his failure to do so was an “error.” Finally, in
response to the Bar’s request for copies of his lawyer
trust account statements, the accused provided the
following explanation for why he could not comply with that
request:
“The main reason is based on my clients[‘] rights to
privacy. I assert my clients[‘] attorney/client privilege.
I previously provided records relating to [Anderson.] Your
request is outside the scope of this investigation and
the breadth of the request spills over into my other
clients[‘] rights to privacy. Trust accounting for my
clients is not an issue in this matter. Whatever my
clients have held in my trust account is a client secret
and not subject to disclosure. * * * I am sorry, but I
cannot give you what you request[.] * * * All bar
proceedings are public record. My clients have a
constitutional right to privacy.”
On September 3, 2002, the Bar renewed its request for a copy
of the accused’s lawyer trust account statements. The Bar
informed the accused that its investigation included his
handling of Anderson’s funds and that his lawyer trust
account should have maintained a $75 balance of funds
belonging to Anderson from November 2000 to the present.
The accused provided copies of some of his monthly
statements in response to that request on October 10, 2002.
The accused reported that the statements for several months
were missing and that he had requested copies of those
statements from the bank and would forward them to the Bar
immediately upon receipt. One of the missing monthly
statements was that for November 2001. As noted previously,
that statement would have shown that the accused wrote
checks to himself in November 2001 for a total of $750,
drawing the balance in the account down to $46.15. At that
time, the account should have held at least the extra $75
that Anderson had paid in excess of the actual filing fee
for the dissolution proceeding. In a letter to the accused
dated May 6, 2003, the Bar stated that it had not received
copies of those missing statements and again requested that
the accused submit them no later than May 16, 2003.
On May 19, 2003, disciplinary counsel had a telephone
conversation with the accused’s lawyer, who reported that
the accused was no longer located in Oregon and that he had
closed his practice and moved to New Zealand on or about
May 5, 2003. In a follow-up letter to that conversation,
the Bar requested that the accused provide current contact
information and again requested that he provide the missing
bank statements. The Bar suggested that the accused make
immediate arrangements with the bank to have the records
forwarded to the Bar. On June 5, 2003, the accused
responded with a letter indicating that the requested bank
statements were enclosed. The Bar immediately wrote back,
stating that several bank statements still had not been
forwarded, including the November 2001 statement. Finally,
on June 19, 2003 — more than 11 months after the
Bar’s initial request — the accused provided the
remaining bank statements to the Bar.
The Bar filed a formal complaint against the accused on
September 10, 2003. In response, the accused filed a motion
to require the complaint to comply with BR 4.1(c),[fn6]
arguing that it “fail[ed] to connect alleged facts with
alleged violations in a manner that clearly state[d] which
pleaded allegations violate[d] which Disciplinary Rules.”
Subsequent to filing its complaint, the Bar made several
requests that the accused provide dates for his deposition.
Due to the accused’s failure to cooperate with those
requests, the Bar filed a Motion to Compel Deposition on
December 1, 2003.
In an order dated December 9, 2003, the trial panel
addressed those issues and a number of others presented by
both parties. First, the trial panel granted the accused’s
motion to require the complaint to comply with BR 4.1(c)
and ordered the Bar to file an amended complaint.[fn7]
Additionally, the trial panel granted the Bar’s motion to
compel the accused’s deposition and ordered the accused to
make himself available for a telephone deposition between
February 1 and March 30, 2004. Finally, the trial panel
sustained the accused’s objection to the Bar’s request for
discovery of all client files other than Anderson’s.
On March 26, 2004, the Bar deposed the accused by
telephone. During that deposition, the accused repeatedly
objected and refused to answer questions posed by the Bar
on various grounds, including lawyer-client privilege,
client secrets, work product, and harassment. The following
illustrates the types of questions asked and objections
made:
“Q. After Ms. Anderson terminated the attorney-client
relationship in September 2001 until the Bar asked you
about Ms. Anderson’s cost advance, did you review your
trust account records?
“A. I’m going to object to that question on the basis it
asks for information about other clients, and that
information is privileged, that information is secret. And
it goes way beyond the scope of this proceeding as limited
by the trial panel chairperson.
“Q. When do you contend that you determined or discovered
that you had not maintained Ms. Anderson’s funds in your
lawyer trust account?
“A. I’m going to object to that question on the basis of
work product.
“Q. Are you going to answer the question?
“A. No, I’m not going to answer it.
“Q. What caused you to review the issue?
“A. Which issue?
“Q. Whether or not you had Ms. Anderson’s funds
maintained in your lawyer trust account, the issue that
we’ve been questioning?
“A. I’m going to object to that question again on the
basis of privilege and work product.
“Q. When did you make the review?
“A. The review of what?
“Q. The records.
“A. Which records?
“Q. Did you review any records to determine whether or
not Ms. Anderson’s funds had been disbursed from your
trust account?
“A. Again I’m going to object to that particular question
on the basis of work product. I won’t answer it.
“Q. Any other objections?
“A. Work product. Privileged. You’re asking some pretty
general questions, but it appears to be specific with
regards to Ms. Anderson. I’ll just simplify it and state
that there’s probably some correspondence with you which
reflects — from me which reflects a point at which
that matter was answered and responded to. And —
just leave it at that.
“Q. * * * [W]ould you please answer the question?
“A. It also goes beyond the scope of these proceedings as
well. But it is work product and it is privileged whatever
I might have discovered and when I discovered it with
regard to these proceedings.
“Q. So you’re refusing to answer the question?
“A. Yes, I am. Again you’re just perpetuating the
questions. This is unnecessary information, you don’t need
to know it. You’re just using it to harass and prolong the
proceedings.
“Q. When you determined that Ms. Anderson’s funds had not
been maintained in your lawyer trust account, what did you
do?
“A. That assumes a fact not in evidence. And you’re
asking me two questions.
“Q. When you determined that Ms. Anderson’s funds had not
been maintained in your lawyer trust account, what did you
do?
“A. That[] assumes a fact that is not in evidence.”
As the result of several similar exchanges between the
accused and disciplinary counsel throughout the deposition,
the Bar filed a Motion to Compel Accused’s Response to
Deposition Questions on April 30, 2004. In that motion, the
Bar argued that the accused’s objections at his deposition
were unjustified, were not supported by law, and served
only to obstruct and delay the Bar’s discovery. As a
result, the Bar contended, the accused unnecessarily had
increased the time and expense associated with the
proceeding.
Also in April 2004, the Bar served the accused with a
Request for Production of Documents related to the
accused’s treatment of the funds that Anderson had
delivered to him. Additionally, the Bar requested documents
related to the accused’s maintenance of his lawyer trust
account, including whether he specifically identified the
account by use of the phrase “Lawyer Trust Account,”
whether the account was an interest-bearing account, and
whether any interest earnings had been paid to the OLF.
Finally, the Bar requested documents related to the
accused’s representation of Anderson, including time records
and Anderson’s client file. The accused refused to comply
with those requests. As a result, the Bar filed a Motion to
Compel Production of Documents on May 6, 2004, in which it
requested that the trial panel compel the accused to
produce the documents. In that motion, the Bar argued that
the accused’s failure to comply with its requests violated
BR 4.5(b),[fn8] ORCP 36 (providing general provisions
governing discovery), and ORCP 43 (governing production of
documents).
On June 9, 2004, the trial panel ruled on the Bar’s
motions. After reviewing the accused’s deposition, the
trial panel concluded that the Bar’s questions properly had
related to Anderson’s case in particular or to the
accused’s maintenance of his lawyer trust account in
general. The trial panel further concluded that the Bar’s
questions were reasonable under DR 1-103(C) (requiring
lawyer subject to disciplinary proceeding to respond fully
and truthfully to inquiries from investigating tribunal)
and had not violated the trial panel’s order of December 9,
2003. Additionally, the trial panel concluded that the
documents that the Bar had requested were not protected by
any privilege and did not qualify as work product.
Consequently, the trial panel ordered the accused to submit
to another deposition, “to fully and truthfully respond to
all reasonable inquiries,” and “to provide those documents
to which he has access,” including Anderson’s client file
and those records reflecting his receipt, deposit, and
withdrawal of Anderson’s funds. Because the accused did not
comply with the trial panel’s order to produce the latter
documents, the Bar issued a subpoena to US Bank in October
2004 to obtain the bank’s documents related to his lawyer
trust account.[fn9]
The Bar deposed the accused again on November 11, 2004. At
that deposition, the accused admitted that, at some point
prior to his first deposition in March 2004, he had made a
conscious decision to not send to the Bar a deposit slip
reflecting a return of Anderson’s $75 to his lawyer trust
account — a document that the Bar had requested and
the trial panel had ordered him to produce. The accused did
not provide that deposit slip to the Bar until November 29,
2004, the first day of the hearing in this proceeding.
D. Trial Panel Disposition
The trial panel held the accused’s hearing on November 29
and 30, 2004, and January 5 and 6, 2005, and filed an
opinion on August 1, 2005. As discussed below, the trial
panel found that the Bar had established by clear and
convincing evidence that the accused violated the following
disciplinary rules: DR 9-101(A); DR 9-101(C)(3); DR
1-102(A)(3); DR 9-101(D)(1); DR 1-102(A)(4); and DR
1-103(C). The trial panel also found, however, that the Bar
had not established by clear and convincing evidence that
the accused had charged Anderson an illegal or clearly
excessive fee in violation of DR 2-106(A) or that he had
failed specifically to identify his lawyer trust account by
use of the phrase “Lawyer Trust Account,” in violation of
DR 9-101(A). As noted above, the trial panel suspended the
accused from the practice of law for three years and
imposed a two-year probationary term upon his
reinstatement, with conditions related to obtaining
professional office management assistance and establishing
appropriate procedures regarding time records and bank
accounts.
The accused seeks review of the trial panel’s decision,
raising eight assignments of error. In the discussion that
follows, we first consider the assignments of error related
to the trial panel’s findings of fact and conclusions of
law, in the context of the four causes of complaint that
the Bar alleged. Next, we consider the accused’s due
process arguments, and, finally, we consider his challenges
to the trial panel’s sanction and to the trial panel’s
refusal to sanction the Bar for alleged discovery
violations. For its part, the Bar asserts on review that
the trial panel erred in concluding that it had not proved
by clear and convincing evidence that the accused violated
DR 2-106(A) and one of the two alleged violations of DR
9-101(A).
II. ALLEGATIONS
A. First Cause of Complaint: DR 9-101(A) and DR 9-101(C)(3)
In its first cause of complaint, the Bar alleged that the
accused (1) failed to maintain client funds in a trust
account, in violation of DR 9-101(A);[fn10] and (2) failed
to maintain complete records of and render appropriate
accounts for client funds in his possession, in violation
of DR 9-101(C)(3).[fn11]
The trial panel found that the Bar had established by clear
and convincing evidence that the accused had violated DR
9-101(A) because the balance in his trust account had
reached $46.13 in November 2001. The trial panel also found
that the Bar had established by clear and convincing
evidence that the accused had violated DR 9-101(C)(3)
because he never gave Anderson a written accounting of the
funds held in trust for costs associated with her case.
1. DR 9-101(A)
The accused first argues that the trial panel erred in
finding that he had violated DR 9-101(A) because his
failure to maintain Anderson’s $75 in his trust account was
nothing more than “negligence,” and “negligence is not a
disciplinary matter.” The accused points to the following
statement in In re Gygi, 273 Or 443, 450-51, 541 P2d 1392
(1975), to support that proposition: “Although negligence
may be a sufficient basis for civil liability under Rule
10b-5 in a federal securities suit, we are not prepared to
hold that isolated instances of ordinary negligence are
alone sufficient to warrant disciplinary action.”
The accused’s reliance on Gygi is misplaced. Gygi was a
case in which this court refused to give preclusive effect
to a federal trial court’s ruling in a securities action
that the accused lawyer had been negligent, because that
civil proceeding required proof of the accused lawyer’s
negligence by only a preponderance of the evidence, whereas
the subsequent disciplinary proceeding required the Bar to
prove the accused lawyer’s unethical negligent conduct by
clear and convincing evidence. Nevertheless, Gygi is often
cited, as it is here, for the proposition that an isolated
instance of ordinary negligence alone is insufficient to
warrant disciplinary action. As this court has stated
before, however, Gygi does not support such a broad rule:
“The accused contends this court has held that isolated
instances of negligence are not grounds for discipline.
That is too broad a statement. In [Gygi], we held an
attorney’s negligence in preparing a corporate annual
report was not sufficient to warrant disciplinary action.
However, we contrasted In re Marvin G. Hollingsworth, 272
Or 319, 536 P2d 1244 (1975), in which we held that
negligence in making court appearances and disbursing
funds did warrant discipline.
“A breach of the Code is a subject of disciplinary action
if done negligently and if the breach is apt to cause the
harm the Code sought to prevent.”
In re McCaffrey, 275 Or 23, 28, 549 P2d 666 (1976).
In further support of his position, the accused relies on
In re Starr, 326 Or 328, 952 P2d 1017 (1998), where this
court stated in a footnote that it “never has held that DR
9-101(A) is a strict liability offense.” Id. at 337 n 3.
The Bar responds by pointing to In re Phelps, 306 Or 508,
760 P2d 1331 (1988), where this court stated, “Failing to
maintain funds in a trust account does not require
intent[.]” Id. at 513. The Bar argues that Phelps held that
proving that a lawyer failed to maintain funds in a lawyer
trust account does not require proof of any particular
mental state. As we shall explain, however, this case does
not present circumstances requiring us to consider the
merits of that argument by the Bar.
Here, following the termination of his services on
September 20, 2001, the accused did not account for or
disburse to Anderson the remaining $75 of the $300 that she
had advanced for filing fees. Rather, two months after that
termination, he made out three checks from the trust
account to himself in the amounts of $450, $250, and $50,
drawing down the balance to $46.13.
Based on our de novo review of the record, we find that the
accused was negligent in handling his lawyer trust account.
The record does not contain clear and convincing evidence
to support the claim that the accused “knowingly” withdrew
trust account funds that belonged to Anderson, and, indeed,
the accused may not have been aware that the balance in his
trust account was below $75 in November 2001. However, it
is undisputed that the accused never reconciled his monthly
bank statements, and, when asked whether he had prepared a
trust account ledger to keep track of his clients’ funds,
he responded that he kept track of those funds in his head.
Defendant was negligent in failing to maintain records from
which he would have known the amount of money in his trust
account and in writing checks to himself that caused the
balance in that account to fall below the level required to
maintain the funds that belonged to Anderson. In sum, the
accused negligently failed to comply with DR 9-101(A), and
the rule is satisfied by proof of that kind.
The accused raises an alternative argument, which he claims
justifies his actions with respect to Anderson’s funds in
the trust account. He contends that he was not required to
return the balance of Anderson’s cost advance upon
termination because that amount was disputed, in light of
the remaining $1,335 that he asserts Anderson owed to him.
DR 9-101(A)(2), however, prohibits the withdrawal of
disputed funds from a lawyer trust account “until the
dispute is finally resolved.” Here, the accused withdrew a
portion of Anderson’s funds from his lawyer trust account
even though she disputed the amount. Thus, he also failed
to adhere to the rule’s requirement with respect to
disputed funds.
Finally, the accused asserts that his conduct did not
violate DR 9-101(A) because he later replaced the money,
the amount involved was “de minimis,” and the money “was
not of concern to the client.” We reject those contentions
without discussion.
We find that the Bar has proved by clear and convincing
evidence that the accused failed to maintain client funds
in his lawyer trust account, in violation of DR 9-101(A).
2. DR 9-101(C)(3)
The accused argues that the trial panel erred in finding
that he had failed to maintain appropriate trust account
records or to provide Anderson with an accounting in
violation of DR 9-101(C)(3) because (1) there were records
of his dealings with Anderson; (2) he accounted for the $75
as part of the investigation; and (3) that rule does not
specify that an accounting is to be made at a particular
time. The accused further contends that the rule does not
require an accounting until the client requests one. Thus,
according to the accused, because his correspondence with
Anderson does not reveal a specific request on her part for
an accounting, he was not required to provide one.
First, the facts discussed above prove by clear and
convincing evidence that the accused failed to maintain
“complete records” of Anderson’s $300 filing-fee advance,
as required by DR 9-101(C)(3). Moreover, the accused
admitted that he kept track of his clients’ account
balances in his head. That conduct is insufficient to
comply with the rule. Second, with respect to the accused’s
contention that the accounting requirement contained in DR
9-101(C)(3) is dependent upon a request for an accounting
from the client, this court previously has rejected that
argument. See In re Gildea, 325 Or 281, 290-91, 936 P2d 975
(1997) (concluding that text of DR 9-101(C)(3) makes clear
that requirement that lawyer render all “appropriate”
accounts is not preconditioned on client first asking for
an accounting). In any event, Anderson’s letter terminating
her lawyer-client relationship with the accused, in which
she requested an itemized statement detailing the services
rendered to her by the accused and the return of any unused
portion of the initial fee, constituted a request for an
accounting of all funds provided to the accused.
The accused nevertheless argues that DR 9-101(C)(3) does
not specify that a lawyer must make an accounting at a
particular time. The facts of this case do not make that
argument available to the accused. As this court put the
matter in Gildea: “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.” 325 Or at 291 n 10
(emphasis in original). Although the accused eventually
sent Anderson a bill that detailed the services that he had
provided to her, that bill did not provide an accounting of
Anderson’s funds in the accused’s lawyer trust account.
We hold that the Bar has proved by clear and convincing
evidence that the accused failed to maintain complete
records of and render appropriate accounts for client funds
in his possession, in violation of DR 9-101(C)(3).
B. Second Cause of Complaint: DR 1-102(A)(3) and DR
2-106(A)
In its second cause of complaint, the Bar alleged that the
accused (1) engaged in conduct involving dishonesty and
misrepresentation, in violation of DR 1-102(A)(3);[fn12]
and (2) charged an illegal or clearly excessive fee, in
violation of DR 2-106(A).[fn13]
The trial panel determined that the accused made
misrepresentations in violation of DR 1-102(A)(3) in the
billing statement that he prepared and sent to Anderson.
The trial panel reached that conclusion based on a number
of errors in the billing statement, some of which we
describe below. The trial panel found that the accused had
not performed some of the services identified in the bill
that he had sent to Anderson, but also that the accused had
performed other services for Anderson that were not
identified in the bill. The trial panel stated:
“[The accused] prepared the billing knowing that he could
not substantiate or verify all time charged. The trial
panel finds that the [a]ccused acted recklessly in
preparing his billing. There were misrepresentations in
the billing that a reasonable person would know did not
accurately reflect the work actually performed on
Anderson’s behalf. This lack of attention to detail, and
failure to insure that documents related to the case were
accurately prepared is similar to the lack of attention to
detail that the [a]ccused has given to his monthly lawyer
trust account statements * * *.”
The trial panel rejected the Bar’s charge that the accused
had violated DR 2-106(A), which prohibits charging an
excessive fee. The trial panel found that “time charged on
January 10, 2001, April 13, 2001, and July 1[2], 2001, was
not performed for the client” and therefore was excessive,
but nevertheless concluded that the total fee charged was
not excessive, because, as noted, the accused also
performed work that was not reflected in the bill.
1. DR 1-102(A)(3)
The accused argues that the trial panel erred in finding
that he violated DR 1-102(A)(3) because his conduct
constituted nothing more than “unintentional errors” in the
billing. Therefore, the accused argues, the alleged
misrepresentation and dishonesty were not committed
knowingly, which is a prerequisite for a violation of DR
1-102(A)(3). The Bar responds that the accused “knowingly”
and “intentionally” engaged in misrepresentation and
dishonesty by billing for services that he did not perform
or that did not occur and by inflating the time for
services rendered (or taking excessive time to perform those
services).
Evaluating an allegation of affirmative misrepresentation
under DR 1-102(A)(3) involves a two-part inquiry: (1)
whether the accused lawyer knew that the lawyer’s statement
was a misrepresentation — i.e., the
misrepresentation must have been committed knowingly; and
(2) whether the lawyer knew that it was material. In re
Claussen, 331 Or 252, 261, 14 P3d 586 (2000). A material
misrepresentation involves information that, if the
decision-maker had known of it, would or could have
influenced the decision-making process significantly. Id.
The Bar also may prove a violation of DR 1-102(A)(3) by
demonstrating that the accused lawyer engaged in “conduct
involving dishonesty.” In contrast to what is required to
prove an affirmative misrepresentation, the Bar may prove
dishonest conduct without proving that the accused
knowingly made affirmative false statements. See In re
Carpenter, 337 Or 226, 233-34, 95 P3d 203 (2004)
(describing differences in evidence required to prove
“misrepresentation” and “dishonesty” under DR 1-102(A)(3)).
Dishonest conduct is “conduct that indicates a disposition
to lie, cheat, or defraud; untrustworthiness; or a lack of
integrity.” Carpenter, 337 Or at 234 (quoting In re Dugger,
334 Or 602, 609, 54 P3d 595 (2002)). Although proving that
a lawyer acted dishonestly does not require evidence that
the lawyer intended to deceive, it does require a mental
state of knowledge — that is, that the accused
lawyer knew that his conduct was culpable in some respect.
See Carpenter, 337 Or at 235 (“[D]ishonesty requires a
mental state of knowledge or intent.” (Emphasis in
original.)).
We note first that the trial panel did not find that the
errors in the accused’s billing had been knowing or
intentional. Rather, the trial panel concluded that the
accused had acted “recklessly” and that he had prepared a
bill knowing that he could not substantiate or verify all
of the entries on the bill with contemporaneous records.
When a lawyer prepares a bill that is inaccurate in one or
more respects, as the accused admits the bill prepared for
Anderson was, that conduct may breach a contract between
the lawyer and the client or it may provide a basis for the
client’s refusal to pay disputed charges on the bill.
However, unless the Bar proves by clear and convincing
evidence that the accused lawyer knowingly or intentionally
prepared a bill that contained material misrepresentations
or was the product of the lawyer’s dishonest conduct, the
lawyer has not violated DR 1-102(A)(3).
We now turn to the specifics of the bill at issue here.
As noted above, after Anderson requested a bill, the
accused directed his assistant to prepare a bill based on
the available documentation, which she did. The Bar
identifies three aspects of the bill that it asserts
constitute misrepresentation or dishonesty: billing for
services that were not performed; billing for services for
which the accused was not authorized to charge; and
inflated or excessive time for certain activities.
As noted previously, the billing statement includes entries
for a telephone conference between the accused and husband
on January 10, 2001, and another conference between the
accused and husband on April 13, 2001. It is undisputed
that the accused did not confer with husband on either of
those dates. The accused admits that those entries
contained errors, but asserts that the conferences to which
they referred actually occurred and were conferences either
with husband’s lawyer or with Anderson and may have
occurred on other dates.
Having reviewed the record, we find that the Bar has not
proved by clear and convincing evidence that the accused
knew, at the time that he sent the bill, that those entries
were incorrect. Neither has the Bar demonstrated that those
entries did not reflect conferences that the accused
actually had with husband’s lawyer or with Anderson, albeit
on different days than indicated in the bill. In other
words, on this record, the accused’s explanation of the
errors in the bill is plausible. That conclusion is
supported by the trial panel’s determination that the
accused acted “recklessly” and not intentionally or
knowingly with respect to the errors in the bill and the
trial panel’s factual finding that the accused performed
work on Anderson’s dissolution that was not reflected in
the time entries in the bill. Moreover, for a
misrepresentation to violate DR 1-102(A)(3), it must be
material. An entry on a bill that accurately reflects work
performed for a client, but misstates the name of a person
the accused lawyer talked to or the particular day the work
was performed, ordinarily will not be material.[fn14]
The Bar also argues that the accused violated DR
1-102(A)(3) by billing Anderson for certain work that
accused’s assistant performed and billing for that work at
the same rate that the accused billed for his own time. The
Bar asserts that the fee agreement did not permit the
accused to bill for his secretary’s time. We agree with the
Bar’s assertion: The fee agreement is silent as to whether
the accused could charge Anderson for work that his
assistant performed on Anderson’s behalf. In the absence of
such an agreement, the accused was not entitled to bill for
that activity. The accused testified, however, that he
understood that the fee agreement did not permit him to bill
for his assistant’s time and that he did not intend to do
so. He states that the entry, which we have quoted
previously, does not necessarily indicate that he was
billing for her time and that he billed only for his own
time. He further testified that he had worked on Anderson’s
case on that date.
While the accused’s explanations leave room for doubt and
the trial panel was plainly correct in concluding that the
accused “acted recklessly” in preparing his billings, we
cannot say that the record in this case shows by clear and
convincing evidence that the accused knowingly made a
material misrepresentation when he included the July 12,
2001, entry in the bill. The Bar has not proved a violation
of DR 1-102(A)(3) in that respect.
Finally, the Bar asserts that the accused violated DR
1-102(A)(3) with respect to a billing entry for November
30, 2000. The accused billed 3.3 hours on November 28,
2000, for preparing Anderson’s dissolution petition and
related documents, which he filed on that day. He then
billed 1.8 hours on November 30 for filing an amended
petition, which was identical to the November 28 petition
except that it included husband’s Social Security Number
and the date of the marriage, which had been omitted from
the earlier petition. The record also indicates that other
papers were prepared and filed with the court on November
30, including a motion for a temporary restraining order,
but those documents were not mentioned in the accused’s
billing entry for that date. The accused was unable to
recall what work he had performed for Anderson on November
30.
The trial panel agreed with the Bar that the accused had
violated DR 1-102(A)(3) with respect to the November 30
billing entry. The trial panel stated that the accused was
not entitled to bill Anderson for time spent correcting the
accused’s own mistakes.
We disagree. Again, the Bar and the trial panel appear to
have confused what may be a contract dispute between the
accused and Anderson with the stricter standards for
proving misrepresentation or dishonest conduct. Whether the
accused could charge Anderson for correcting the omissions
in the initial petition — even assuming that those
omissions demonstrated some error on the accused’s part
— is a matter of the agreement between the accused
and Anderson. But the mere fact that he billed her for
preparing and filing an amended petition that included
required information not included in the initial petition
does not demonstrate any misrepresentation; neither does it
constitute dishonest conduct. Similarly, the record does
not contain clear and convincing evidence that the
accused’s billing of 1.8 hours for work performed on
November 30, 2000, was a material, false statement or
constituted dishonest conduct.
We hold that the Bar has not proved by clear and convincing
evidence that the accused knowingly engaged in conduct
involving misrepresentation of dishonesty, in violation of
DR 1-102(A)(3).
2. DR 2-106(A)
As noted, the trial panel concluded that the accused had
not violated DR 2-106(A) because the total fee that he had
charged to Anderson had not been excessive, even if
individual billing entries may have been excessive. The Bar
argues that the trial panel’s statement of the legal
standard is incorrect and that the accused charged an
excessive fee in violation of the rule because he billed
for work that he did not do, billed for his assistant’s
work when the fee agreement did not permit that, and billed
for “inflated or excessive time.”
We agree with the Bar that the trial panel misstated the
appropriate legal standard. This court has held that a
particular charge in a bill may be excessive and in
violation of DR 2-106(A), even if the fee as a whole is
reasonable. See In re Paulson, 335 Or 436, 440-41, 71 P3d
60 (2003) (concluding that accused lawyer who charged fee
that client had no obligation to pay had charged excessive
fee even though excessive charge appeared within bill
containing other reasonable charges). However, we disagree
with the Bar that the record here proves by clear and
convincing evidence that the accused charged an excessive
fee. We turn to the specific charges at issue.
The Bar argues that the charges for the conferences on
January 10, 2001, and April 13, 2001, were “clearly
excessive” because those conferences did not take place on
those days or with the individual identified in the billing
entries. As discussed above, the evidence in the record
supports the accused’s position that those entries were
simple mistakes and that around those specific dates the
accused did, in fact, have conferences with husband’s
lawyer (although not with husband, as the entries
indicated) or with Anderson. Those charges are not “clearly
excessive” within the meaning of DR 2-106(A). The Bar also
argues that the accused violated the rule in charging
Anderson for certain services rendered by the accused’s
assistant. We reject that argument for the reasons
previously given.
Finally, the Bar argues that the accused “inflated” his
time for certain work, specifically, the 1.8 hours that he
spent on November 30, 2000, preparing the amended
dissolution petition. As discussed above, however, the
trial panel found that the accused had prepared other
documents on behalf of Anderson that day that he did not
identify in the bill. In Paulson, this court stated, “The
test for whether a fee is clearly excessive is whether,
`after a review of the facts, a lawyer of ordinary prudence
would be left with a definite and firm conviction that the
fee is in excess of a reasonable fee.'” 335 Or at 440
(quoting DR 2-106(B)). The evidence here falls short of
that standard. The accused did not violate DR 2-106(A).
C. Third Cause of Complaint: DR 9-101(A) and DR 9-101(D)(1)
In its third cause of complaint, the Bar alleged that the
accused (1) failed specifically to identify his lawyer
trust account by use of the phrase “Lawyer Trust Account,”
in violation of DR 9-101(A);[fn15] and (2) failed to
maintain an interest-bearing lawyer trust account, in
violation of DR 9-101(D)(1).[fn16]
The trial panel found that the Bar had not established by
clear and convincing evidence that the accused had violated
DR 9-101(A) because the accused had made an effort to
properly label his account as a “Lawyer Trust Account.” The
trial panel found, however, that the Bar had established by
clear and convincing evidence that the accused had violated
DR 9-101(D)(1) because he never reconciled his monthly
statements and, therefore, never verified whether the bank
was in compliance with his original instructions to set up
an interest-bearing account.
The accused argues that the trial panel erred in finding
that he had violated DR 9-101(D)(1) because he had
instructed the bank to set up his lawyer trust account in
compliance with the rule and he had been unaware that the
bank, due to its own error, had not done so.
As discussed above with respect to the accused’s failure to
maintain client funds in a trust account in violation of DR
9-101(A), DR 9-101(D)(1) does not specify a particular
mental state that the Bar must prove to establish a
violation of that rule. Accordingly, a violation can be
proved if the lawyer failed to comply with the requirements
of the rule and did so either intentionally, knowingly, or
negligently.
DR 9-101(A) and DR 9-101(D)(1) require lawyers to ensure
that any client funds be deposited and maintained in a
trust account that bears interest and that is specifically
identified by use of the phrase “Lawyer Trust Account.” As
demonstrated by his instructions to the bank in setting up
his lawyer trust account, the accused was aware of that
obligation. Nevertheless, between February 2000 and April
2004, his lawyer trust account did not comply with those
rules.
The accused is correct that the bank committed the initial
errors in failing to establish the account as an
interest-bearing account and in failing to designate the
account properly as a “Lawyer Trust Account” on checks and
monthly statements. Here, however, the accused’s lawyer
trust account failed to comply with DR 9-101(A) and DR
9-101(D)(1) from February 2000 through April 2004. The
accused received a bank statement for the lawyer trust
account each month within that time frame and made deposits
and withdrawals from the account. A reasonable lawyer would
have reviewed those monthly statements and checks and would
have noticed that the trust account was not an
interest-bearing account and was not properly identified as
a “Lawyer Trust Account.” The accused was negligent in
failing, for more than four years, to bring his lawyer
trust account into compliance with the rules.
We hold that the Bar has proved by clear and convincing
evidence that the accused violated both DR 9-101(A) and DR
9-101(D)(1).
D. Fourth Cause of Complaint: DR 1-102(A)(4) and DR
1-103(C)
In its fourth cause of complaint, the Bar alleged that,
based on the accused’s conduct during the Bar’s
investigation and this proceeding, the accused (1) engaged
in conduct prejudicial to the administration of justice, in
violation of DR 1-102(A)(4);[fn17] and (2) failed to
cooperate and respond fully and truthfully to the inquiries
and requests of disciplinary counsel, in violation of DR
1-103(C).[fn18]
The trial panel found that the Bar had established by clear
and convincing evidence that the accused had violated DR
1-102(A)(4) and DR 1-103(C) because the accused had lacked
any justification to withhold discovery once the trial
panel had ordered him to do so and because he “unreasonably
and without valid cause” refused to cooperate with numerous
discovery requests from disciplinary counsel.
As an initial matter, we set forth the rules of procedure
governing discovery in lawyer disciplinary proceedings. The
Bar Rules of Procedure provide that “[r]equests for
admission, requests for production of documents, and
depositions may be utilized in disciplinary proceedings”
and that the manner of discovery concerning those items
“shall conform as nearly as practicable to the procedure
set forth in the Oregon Rules of Civil Procedure.” BR
4.5(b). Three rules of civil procedure are pertinent here:
ORCP 36, which establishes the scope of discovery
generally; ORCP 43,[fn19] which governs the production of
documents; and ORCP 39, which sets out the procedures for
taking depositions. ORCP 36 B(1) provides:
“For all forms of discovery, parties may inquire
regarding any matter, not privileged, which is relevant to
the claim or defense of the party seeking discovery or to
the claim or defense of any other party, including the
existence, description, nature, custody, condition, and
location of any books, documents, or other tangible
things, and the identity and location of persons having
knowledge of any discoverable matter. It is not ground for
objection that the information sought will be inadmissible
at the trial if the information sought appears
reasonably calculated to lead to the discovery of
admissible evidence.”
The accused argues that the Bar’s requests for the
production of documents and the Bar’s questions to him
during deposition sought documents and information that
were privileged or otherwise protected from disclosure and
that his failure to produce the requested documents and to
answer the relevant questions therefore was permissible.
1. DR 1-103(C)
With respect to DR 1-103(C), the accused argues that the
trial panel erred in finding that he had violated that rule
because, in every alleged instance of misconduct, he had
been exercising an “applicable right or privilege.” For the
reasons that follow, we conclude that the accused’s
objections were not justified by any applicable right or
privilege.
As discussed above, the Bar’s discovery requests and
deposition questions related to the accused’s lawyer trust
account and his representation of Anderson. During this
proceeding, the accused objected to those requests multiple
times — in response to deposition questions, in
written responses to discovery requests, and in multiple
letters to the Bar and the trial panel — on various
grounds, including lawyer-client privilege, client secrets,
work product, and harassment.
We observe first that the rules for the conduct of lawyer
disciplinary proceedings and the Oregon Rules of Civil
Procedure permit a person from whom discovery is sought to
object to the discovery request if the information
requested is privileged. See e.g., ORCP 36 B(1) (scope of
discovery does not include “privileged” matter); ORCP 39
D(3)(c) (deponent may object and decline to answer question
“to preserve a privilege”); ORCP 43 B (party receiving
request to produce documents may object to production).
When such objections are made, the rules provide procedures
by which the party objecting can obtain a ruling on the
objections or a party seeking discovery can obtain an order
compelling discovery. See BR 4.5(c) (trial panel
chairperson to rule on discovery disputes in lawyer
disciplinary proceedings); ORCP 46 A (trial court may enter
order compelling discovery). Thus, an accused lawyer, like a
party to a civil action, does not necessarily engage in
improper conduct or conduct prejudicial to the
administration of justice simply by objecting to the
production of documents or by refusing to answer questions
at a deposition based on a claim of privilege. The accused
lawyer is permitted to make an objection and force the Bar
to seek a motion to compel or similar order from the trial
panel.
Here, however, the Bar argues that the accused did not
simply make use of applicable procedures, but rather that
his objections to the Bar’s discovery requests were
frivolous and were made solely to delay and obstruct the
disciplinary proceeding. The Bar points to multiple
letters, filings, and emails that document the accused’s
repeated refusal to provide possible deposition dates, to
produce documents, and to respond to requests for
admissions. The Bar also asserts that the accused’s
substantive objections to certain discovery requests
— primarily on the grounds of lawyer-client
privilege and work product — were frivolous.
We agree with the Bar. As to the accused’s responses to the
Bar’s discovery requests generally, the record amply
demonstrates that the accused violated DR 1-103(C) by
failing to “respond fully and truthfully to inquiries from
and comply with reasonable requests of” the Bar and the
trial panel.
We also conclude that the accused’s lawyer-client and work
product objections to the Bar’s discovery requests were
frivolous. First, the Bar’s document requests did not
request the production of privileged documents, but rather
requested that the accused identify any documents that he
asserted were privileged and the basis for the privilege.
The accused never articulated any basis for the asserted
privilege. He never explained why the lawyer trust account
records that the Bar sought constituted confidential
communications “in furtherance of the rendition of
professional legal services,” such that the records might be
subject to the lawyer-client privilege protected by OEC
503.
More significantly, the accused’s objections ignore the
fact that the Bar proceeding was based on Anderson’s
complaint. The lawyer-client privilege is a privilege of
the client, not the lawyer. It would defy logic to permit
the accused to assert his client’s privilege as a basis for
withholding information needed for the Bar to prosecute a
complaint that the client initiated. Here, given the nature
of Anderson’s complaint and the rules that the Bar charged
the accused with violating, there was no doubt that the
documents requested were necessary to investigate and
prosecute the violations charged.
The accused’s position also ignores OEC 503(4)(c), which
provides an exception to the lawyer-client privilege for “a
communication relevant to an issue of breach of duty by the
lawyer to the client * * * .” Thus, even if the lawyer
trust account records might be considered “communications”
subject to the lawyer-client privilege, that privilege did
not apply to the disciplinary proceeding growing directly
out of Anderson’s complaint about the accused’s conduct.
We conclude that the Bar has proved by clear and convincing
evidence that the accused repeatedly and intentionally
violated DR 1-103(C).
2. DR 1-102(A)(4)
This court has held that, to prove a violation of DR
1-102(A)(4), the Bar must demonstrate that (1) the lawyer
engaged in “conduct,” that is, the lawyer did something
that he or she should not have done or failed to do
something that the lawyer should have done; (2) the conduct
occurred during the “administration of justice,” that is,
during the course of a judicial proceeding or another
proceeding that was analogous to a judicial proceeding; and
(3) the lawyer’s conduct resulted in “prejudice,” either to
the functioning of the proceeding or to a party’s
substantive interests in the proceeding. See In re Coggins,
338 Or 480, 486, 111 P3d 1119 (2005) (so holding); see also
In re Haws, 310 Or 741, 746-48, 801 P2d 818 (1990) (setting
forth test). The Bar asserts that the accused violated DR
1-102(A)(4) by, among other things, failing to comply with
a June 9, 2004, order of the trial panel directing him to
produce certain documents. The accused argues that the trial
panel erred in finding that the first and third elements of
that test were met here.
With respect to the first element, the accused contends
that he did not fail to do something that he should have
done, because the trial panel’s June 9, 2004, discovery
order was “not entirely clear” and “did not specify”
exactly what records the Bar sought to discover. The
accused is wrong. The Bar clearly articulated in its Request
for Production of Documents (and its later motion to
compel) that it sought discovery of those documents related
to the accused’s maintenance of his lawyer trust account
and his representation of Anderson. In granting the Bar’s
motion, the trial panel expressly identified which of the
Bar’s requests it was ordering the accused to comply with.
As noted above, the accused refused to comply with that
order, and none of the various grounds that he asserted to
justify his repeated objections was supported under
applicable law. Consequently, the accused failed to do
something that he should have done.
With respect to the third element, the accused argues that
any alleged misconduct was not prejudicial to the
administration of justice but, rather, was the product of a
“contentious” and vigorous defense.
To conclude that a lawyer’s conduct was prejudicial to the
administration of justice under DR 1-102(A)(4), we must find
that the lawyer engaged either in repeated acts causing
some harm to the administration of justice or a single act
that caused substantial harm to the administration of
justice. Haws, 310 Or at 748. Here, the accused delayed his
compliance with the Bar’s request for copies of his lawyer
trust account statements for more than eleven months.
Additionally, his improper objections at his first
deposition prejudiced the Bar’s ability to prosecute this
case expeditiously and resulted in the added time and
expense of a subsequent deposition. Furthermore, due to the
accused’s intentional refusal to respond fully and
truthfully about his failure to prepare and maintain lawyer
trust account records, the Bar was burdened with the added
expense of subpoenaing records from US Bank pertaining to
the accused’s account. Finally, the accused admitted at his
second deposition that, at some point during the Bar’s
investigation, he had made a conscious decision not to
provide the Bar with the deposit slip reflecting a return
of Anderson’s $75 to his lawyer trust account. The
accused’s repeated actions resulted in prejudice to the
conduct of this proceeding and to the interests of the Bar
and the public. See In re Boothe, 303 Or 643, 654, 740 P2d
785 (1987) (issues in bar disciplinary proceedings directly
and significantly affect members of Bar and general
public). His conduct was prejudicial to the administration
of justice.
We conclude that the Bar has proved by clear and convincing
evidence that the accused intentionally violated DR
1-102(A)(4).
E. Accused’s Due Process Contentions
Throughout this proceeding, the accused has contended that
the failure of the pleadings to provide him with notice of
the charges and facts supporting them denied him a full
opportunity to defend himself and, therefore, violated his
due process rights under the Fourteenth Amendment to the
United States Constitution. Other than a series of
conclusory statements, however, the accused does not provide
any argument to support the alleged due process violations.
As stated above, in response to his motion to require the
initial complaint to comply with BR 4.1(c), the trial panel
ordered the Bar to file an amended complaint. The Bar did
so and, as discussed above, the allegations in the amended
complaint related to a specific client and to specific
financial and accounting issues in connection with the
accused’s representation of that client. Consequently, any
due process concern that might have arisen from the
somewhat general nature of the Bar’s initial complaint
— and we do not suggest that such a concern would be
justified — was cured early in this proceeding. The
Bar’s amended complaint provided the accused with the
notice that was due to him under BR 4.1(c) and the Due
Process Clause. The accused’s due process rights were not
violated in this proceeding.
F. Sanctions Against the Bar
In his final assignment of error, the accused argues that
the trial panel erred in not sanctioning the Bar for its
“egregious” discovery violations. Assuming (without
deciding) that such an assignment of error is even
permissible in cases like this, the accused’s assignment
here is not well-taken. The record demonstrates that the
Bar complied with the trial panel’s orders and with the
rules of procedure throughout this proceeding. The trial
panel did not err in refusing to sanction the Bar.
III. SANCTION
Having concluded that the accused violated DR 9-101(A), DR
9-101(C)(3), DR 9-101(D)(1), DR 1-102(A)(4), and DR
1-103(C), we now must determine the appropriate sanction.
In determining the appropriate sanction, we recognize that
the purpose of a sanction is not to penalize the accused,
but rather to protect the public and the integrity of the
legal profession. In re Glass, 308 Or 297, 304, 779 P2d 612
(1989). Consistently with this court’s well-established
methodology, we examine the American Bar Association’s
Standards for Imposing Lawyer Sanctions (1991) (amended
1992) (ABA Standards) and Oregon case law. In re Huffman,
331 Or 209, 223, 13 P3d 994 (2000). We first determine
preliminarily the appropriate sanction by considering (1)
the duty violated; (2) the accused’s mental state; and (3)
the actual or potential injury that the misconduct caused.
ABA Standard 3.0. We then examine any aggravating or
mitigating circumstances to determine whether we should
adjust the preliminary sanction, and, finally, we review
our prior case law for guidance in determining the
appropriate sanction. Huffman, 331 Or at 223.
A. Duty Violated
Under the ABA Standards, the accused’s conduct as described
above violated the following duties. First, in violating DR
9-101(A), DR 9-101(C)(3), and DR 9-101(D)(1), the accused
mishandled his lawyer trust account and his client’s funds,
thereby failing in his duty to preserve client property.
ABA Standard 4.1. Second, in violating DR 1-102(A)(4) and
DR 1-103(C), the accused failed in his duty owed as a
professional to cooperate fully and truthfully with a
disciplinary investigation, ABA Standard 7.0, and in his
duty owed to the legal system to comply with his
obligations under the disciplinary rules, ABA Standard 6.2.
Additionally, because the disciplinary process serves to
protect the public, the accused also violated his duty to
the public by engaging in such conduct. ABA Standard 5.0;
see In re Kluge, 335 Or 326, 349, 66 P3d 492 (2003) (so
stating).
B. Mental State
The ABA Standards recognize three mental states:
intentional, knowing, and negligent. A lawyer acts
intentionally by acting with the conscious objective or
purpose of accomplishing a particular result. A lawyer acts
knowingly by being consciously aware of the nature or
attendant circumstances of the conduct, but not having a
conscious objective to accomplish a particular result. A
lawyer acts negligently by failing to heed a substantial
risk that circumstances exist or that a result will follow,
which failure is a deviation from the standard of care that
a reasonable lawyer would exercise in the situation. ABA
Standards at 7.
Based on the discussion above, we find that the accused
acted negligently with respect to his lawyer trust account
and intentionally with respect to his conduct prejudicial
to the administration of justice and his failure to respond
fully and truthfully during the disciplinary process.
C. Actual and Potential Injury
Under the ABA Standards, the injuries caused by a lawyer’s
professional misconduct may be either actual or potential.
See In re Williams, 314 Or 530, 547, 840 P2d 1280 (1992)
(“[A]n injury need not be actual, but only potential, in
order to support the imposition of a sanction.”). “Injury”
is actual harm to a client, the public, the legal system,
or the profession which is caused by a lawyer’s misconduct.
ABA Standards at 7. “Potential injury” is harm that was
reasonably foreseeable at the time of the lawyer’s
misconduct but that ultimately did not occur. Id.
Here, the accused’s negligent misconduct with respect to
his lawyer trust account, at a minimum, caused potential
injury to Anderson, because the accused failed to maintain
Anderson’s funds in that account. The accused’s intentional
refusal to cooperate fully and truthfully with the Bar’s
disciplinary investigation caused actual injury to the Bar,
because it unnecessarily extended the proceedings and
resulted in the added expense of a subsequent deposition.
Additionally, we conclude that the accused’s unjustified
disruption of the orderly operation of the disciplinary
process also caused actual injury to the public. See Kluge,
335 Or at 350 (so stating under similar circumstances).
D. Preliminary Sanction Under ABA Standards
The ABA Standards suggest that a reprimand is an
appropriate sanction for the accused’s negligent misconduct
concerning his lawyer trust account and client funds. ABA
Standard 4.13. With respect to the accused’s refusal to
cooperate fully and truthfully during the disciplinary
investigation, the ABA Standards suggest that a suspension
is an appropriate sanction for that misconduct. ABA Standard
6.22; ABA Standard 7.2. We now consider the applicable
aggravating and mitigating factors that might affect our
determination of the appropriate sanction.
E. Aggravating and Mitigating Factors
“[A]ggravating circumstances are any considerations or
factors that may justify an increase in the degree of
discipline to be imposed.” ABA Standard 9.21. The Bar first
argues that the aggravating factor of prior disciplinary
offenses, ABA Standard 9.22(a), is present here because the
accused had accepted a letter of admonition in May 2002, in
which the State Professional Responsibility Board (SPRB)
concluded that he had violated DR 2-110(A)(2) (requiring
lawyer to deliver to client property to which client is
entitled) and DR 2-106(A) (prohibiting excessive fee). At
its discretion, the SPRB may issue a letter of admonition to
a lawyer against whom a complaint has been filed with the
Bar, upon a determination that probable cause exists to
believe that misconduct has occurred. BR 2.6(c)(1). The
letter is issued in lieu of referring the complaint either
to a Local Professional Responsibility Committee (LPRC) for
investigation or to the Bar for filing a formal complaint,
provided that the lawyer “accepts” the admonition. Id.
The allegedly improper conduct involved in the letter of
admonition related to the accused’s alleged failure to
return the unearned part of a retainer to a client and
charging an excessive fee. We decline to consider the
letter of admonition as an aggravating factor here, as the
client complaint that led to the letter of admonition was
not made until January 2002 and the letter of admonition
itself was not issued until May 2002. The similar conduct
of the accused in this proceeding predated the letter of
admonition and the client complaint that led to the letter.
Second, the Bar asserts, and we agree, that the accused’s
long delay in producing the lawyer trust account statement
for November 2001 and the deposit slip reflecting that he
had redeposited Anderson’s $75 — both of which
tended to prove the allegations against him —
constituted “bad faith obstruction of the disciplinary
proceeding.” ABA Standard 9.22(e). Indeed, the trial panel
concluded — and the record demonstrates —
that the accused knowingly made false statements to the
trial panel during the proceeding, including representing
that he did not have certain lawyer trust account records,
when, in fact, he did have the records and later offered
them as evidence at the proceeding. The accused’s repeated
refusal to cooperate with the Bar in other aspects of its
investigation and formal proceedings further supports our
finding of this aggravating factor. Finally, the accused’s
misconduct in this case involves multiple offenses. ABA
Standard 9.22(d). We find no mitigating factors.
F. Oregon Case Law
Our preliminary analysis under the ABA Standards suggests
that a reprimand may be an appropriate sanction for certain
of the accused’s violations, while a suspension may be
appropriate for other violations. Considering the accused’s
misconduct as a whole, some period of suspension is
appropriate. We now consider this court’s case law,
focusing on the violations of DR 1-102(A)(4) and DR
1-103(C), for which this court often imposes a suspension.
In In re Eadie, 333 Or 42, 36 P3d 468 (2001), the accused
lawyer committed multiple ethical violations involving four
different client matters, including conduct prejudicial to
the administration of justice and intentional
misrepresentations. After finding several aggravating
factors, but only one mitigating factor (cooperation with
Bar during initial investigation), and actual or potential
injury to more than one client, this court imposed a
three-year suspension. Id. at 72. In other cases, this
court has imposed two-year suspensions when it found that a
lawyer had failed to respond truthfully and fully in
disciplinary proceedings in addition to other serious
misconduct. See In re Gallagher, 332 Or 173, 190, 26 P3d
131 (2001) (accused repeatedly lied to Bar and LPRC in
violation of both DR 1-102(A)(3) and DR 1-103(C)); Huffman,
331 Or at 229 (accused made misrepresentations in motions
filed with court in violation of both DR 1-102(A)(3) and DR
1-103(C)); In re Staar, 324 Or 283, 292, 924 P2d 308 (1996)
(accused failed to cooperate with Bar, engaged in
misrepresentation, and knowingly made false statements of
fact under oath resulting in prejudice to administration of
justice).
Here, the accused’s misconduct was less egregious than that
involved in Eadie. In this case, the accused’s ethical
violations — albeit several — involved only
one client. We also view the accused’s misconduct here as
less egregious than the misconduct in the other cases just
described, where this court imposed two-year suspensions.
Although the accused’s obstructionist tactics during the
disciplinary proceeding were ongoing and serious, we have
concluded that the Bar did not prove by clear and
convincing evidence that the accused made knowing
misrepresentations to Anderson.
In In re Eakin, 334 Or 238, 259, 48 P3d 147 (2002), this
court suspended a lawyer for 60 days for mistakenly
removing a client’s money from the lawyer trust account,
failing to maintain adequate lawyer trust account records,
and failing to return property to the client. In contrast
to this case, however, the accused’s conduct in Eakin was
mitigated by her cooperation with the Bar. 334 Or at 258.
Here, the accused failed to cooperate with the Bar —
indeed, he did so repeatedly, in violation of DR
9-102(A)(4) and DR 1-103(c).
In our view, this case falls somewhere between Eadie and
similar cases — where suspensions of two or three
years were imposed for conduct prejudicial to the
administration of justice and failure to cooperate with the
Bar, as well as misrepresentation under DR 1-102(A)(3)
— and Eakin. Here, the accused’s violation of DR
1-103(C) pervaded the disciplinary proceeding. Because the
public protection provided by the entire disciplinary
process is undermined when a lawyer accused of violating
another disciplinary rule violates DR 1-103(C) by failing
to cooperate in the investigatory process, we emphasize the
seriousness with which this court views that failure. See
Glass, 308 Or at 305 (stating that court does not view
violation of DR 1-103(C) “lightly” because public will lack
confidence in disciplinary process unless DR 1-103(C) is
enforced). “Indeed, the disciplinary system likely would
break down if the mandatory cooperation rule set forth in DR
1-103(C) were not in place, given the lack of incentive for
a lawyer to cooperate with a Bar investigation if that
lawyer had the option of not cooperating.” In re Miles, 324
Or 218, 222-23, 923 P2d 1219 (1996).
Considering together the ABA Standards, the applicable
aggravating factors, and this court’s case law, we conclude
that the appropriate sanction for the accused’s misconduct
is a suspension from the practice of law for one
year.[fn20]
The accused is suspended from the practice of law for one
year, commencing 60 days from the effective date of this
decision.
[fn1] The Oregon Rules of Professional Conduct became
effective January 1, 2005. Because the conduct at issue
here occurred before that date, the Oregon Code of
Professional Responsibility applies.
[fn2] The record does not disclose when the accused returned
to Oregon from New Zealand. However, it is undisputed that,
as of the date that this case was argued and submitted, the
accused was an active member of the Bar and maintained an
office in Portland.
[fn3] The accused experienced financial difficulties in 2001
and 2002 and filed a bankruptcy petition in February 2002.
[fn4] Both Anderson and Bierly testified at the hearing that
they had had no communication with the accused on January
10, 2001. Bierly also testified that, according to his time
records, he had met with husband on April 13, 2001, but had
had no communication with the accused on that date.
[fn5] According to the itemized billing statement that the
accused prepared in September 2001, he had completed the
first ten hours of work on Anderson’s case by January 2,
2001 — more than eight months prior to Anderson’s
termination of the accused’s services.
[fn6] BR 4.1(c) provides:
“A formal complaint shall be signed by Disciplinary
Counsel, or his or her designee, and shall set forth
succinctly the acts or omissions of the accused, including
the specific statutes or disciplinary rules violated, so
as to enable the accused to know the nature of the charge
or charges against the accused. When more than one act
or transaction is relied upon, the allegations shall be
separately stated and numbered. The formal complaint need
not be verified.”
[fn7] The accused made several subsequent challenges to the
Bar’s amended complaints, but the trial panel denied them
all.
[fn8] BR 4.5(b) provides, in part:
“(1) Requests for admission, requests for production of
documents, and depositions may be utilized in disciplinary
proceedings.
“* * * * *
“(4) The manner of making requests for the production of
documents shall conform as nearly as practicable to the
procedure set forth in the Oregon Rules of Civil
Procedure.”
[fn9] At the Bar’s expense, the bank produced copies of
records related to the accused’s lawyer trust account,
including cancelled checks and deposit slips for the period
of October 2000 to April 2002, and monthly statements for
the period of February 2000 to September 2004.
[fn10] 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.”
[fn11] DR 9-101(C) provides, in part:
“A lawyer shall:
“* * * * *
“(3) 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. Every lawyer
engaged in the private practice of law shall maintain and
preserve for a period of at least five years after final
disposition of the underlying matter, the records of the
accounts, including checkbooks, canceled checks, check
stubs, vouchers, ledgers, journals, closing statements,
accountings or other statements of disbursements rendered
to clients or equivalent records clearly and expressly
reflecting the date, amount, source and explanation for
all receipts, withdrawals, deliveries and disbursements of
funds or other property of a client.”
[fn12] DR 1-102(A) provides, in part:
“It is professional misconduct for a lawyer to:
“(3) Engage in conduct involving dishonesty, fraud,
deceit or misrepresentation[.]”
[fn13] DR 2-106 provides, in part:
“(A) A lawyer shall not enter into an agreement for,
charge or collect an illegal or clearly excessive fee.
“(B) A fee is clearly excessive when, after a review of
the facts, a lawyer of ordinary prudence would be left
with a definite and firm conviction that the fee is in
excess of a reasonable fee. Factors to be considered as
guides in determining the reasonableness of a fee include
the following:
“(1) The time and labor required, the novelty and
difficulty of the questions involved, and the skill
requisite to perform the legal service properly.”
[fn14] The Bar identifies a number of other entries on the
bill as misrepresentations. Many of those appear to be
errors that resulted from the accused’s assistant’s efforts
to reconstruct the bill from a variety of contemporaneous
notes and documents. For example, the bill contains an
entry dated February 20, 2001, for receiving and reviewing a
letter from husband’s lawyer that was dated February 20,
2001, and apparently sent by regular mail on that date.
Although the Bar is probably correct that the letter was
actually received and reviewed after February 20, 2001,
nothing in the record suggests that the accused did not, in
fact, receive and review the letter or that the accused
knowingly misrepresented a material fact or acted
dishonestly when he sent the bill that his assistant had
prepared and containing that error.
[fn15] DR 9-101(A) provides, in part: “Trust accounts shall
be specifically identified by use of the phrase `Lawyer
Trust Account.'”
[fn16] DR 9-101(D)(1) provides: “Each lawyer trust account
shall be an interest bearing trust account in a financial
institution selected by the lawyer or law firm in the
exercise of reasonable care.”
[fn17] DR 1-102(A) provides, in part:
“It is professional misconduct for a lawyer to:
“(4) Engage in conduct that is prejudicial to the
administration of justice[.]”
[fn18] DR 1-103(C) provides:
“A lawyer who is the subject of a disciplinary
investigation shall respond fully and truthfully to
inquiries from and comply with reasonable requests of a
tribunal or other authority empowered to investigate or
act upon the conduct of lawyers, subject only to the
exercise of any applicable right or privilege.”
[fn19] ORCP 43 A provides, in part:
“Any party may serve on any other party a request: (1) to
produce and permit the party making the request, or
someone acting on behalf of the party making the request,
to inspect and copy, any designated documents (including
writings, drawings, graphs, charts, photographs,
phono-records, and other data compilations from which
information can be obtained, and translated, if necessary,
by the respondent through detection devices into
reasonably usable form), or to inspect and copy, test, or
sample any tangible things which constitute or contain
matters within the scope of Rule 36 B and which are in the
possession, custody, or control of the party upon whom the
request is served[.]”
[fn20] As noted, the trial panel ordered that the accused be
suspended for three years and that, upon reinstatement, he
be subject to certain terms of probation. This court
recently stated that it did not favor probation. See In re
Obert, 336 Or 640, 656, 89 P3d 1173 (2004) (“[W]e do not
favor probationary terms unless they are the result of a
stipulation. When a lawyer’s misconduct is sufficiently
serious to warrant a lengthy probationary period, the
uncertainties of the monitoring process lead us to prefer,
when appropriate, imposition of a sanction involving a
concrete period of suspension.”) Moreover, the probationary
period here would have commenced after reinstatement, and
we question whether the Bar would be able adequately to
monitor the accused’s compliance with the terms of
probation following his possible reinstatement after a
three-year suspension. In our view, the burden placed on
the accused to demonstrate the requisite good moral
character and general fitness to practice law, should he
apply for reinstatement under BR 8.1(a)(iv) following the
suspension imposed here, adequately will protect the public
and the integrity of the profession.