Title: In re Claussen

State: oregon

Issuer: Oregon Supreme Court

Document:

Filed:  November 9, 2000
		IN THE SUPREME COURT OF THE STATE OF OREGON

In re Complaint as to the Conduct of:
WILLIAM J. CLAUSSEN,
	Accused.
(OSB 96-107; SC S42174)

	En Banc
	On review of the decision of a trial panel of the
Disciplinary Board.
	Argued and submitted September 10, 1999.
	Gary M. Bullock, of Bullock and Regier, P.C., Portland,
argued the cause and filed the brief for the accused.  Daniel R.
Reitman, filed the reply brief.
	Mary A. Cooper, Assistant Disciplinary Counsel, Oregon State
Bar, Lake Oswego, argued the cause and filed the response for the
Oregon State Bar.
	PER CURIAM
	Complaint dismissed.
		PER CURIAM
		In this lawyer disciplinary proceeding, a trial panel
of the Disciplinary Board found that the accused lawyer, William
J. Claussen, violated Code of Professional Responsibility
Disciplinary Rule (DR) 1-102(A)(3) (prohibiting conduct involving
dishonesty, fraud, deceit, or misrepresentation) and DR 7-102(A)(7) (prohibiting counseling or assisting client in conduct
that lawyer knows is illegal or fraudulent).  The Oregon State
Bar (Bar) alleged that the accused violated those ethical rules
while representing Jean Wilkinson in a bankruptcy proceeding. 
Specifically, the Bar contended that, in a letter that the
accused sent to an insurance company, the accused misrepresented
that federal bankruptcy law entitled Wilkinson to the cash
surrender value of an insurance policy.  The trial panel agreed
with the Bar, imposed an eight-month suspension, and required the
accused to retake the professional responsibility portion of the
Bar examination.  We review de novo.  Bar Rule of Procedure (BR)
10.6.  We conclude that the Bar has failed to prove by clear and
convincing evidence that the accused violated either DR 1-102(A)(3) or DR 7-102(A)(7).  Accordingly, we dismiss the Bar's
complaint.
I.  FACTS

		The following facts are undisputed.  In 1984, Philip
and Janette Cushman filed a nuisance action against Wilkinson. 
In June 1988, Wilkinson created a revocable living trust, with
her ill mother as primary beneficiary and herself as trustee and
contingent beneficiary.  Wilkinson transferred some of her real
estate holdings into that trust.  In July 1988, the Cushmans
obtained a judgment against Wilkinson. 
		In August 1988, Wilkinson, using proceeds from a loan
secured by other property she owned, purchased a life insurance
policy from Pacific Standard Life Insurance Company (Pacific) for
$35,000.  Wilkinson named the trust as beneficiary of that
policy.  Later that month, Wilkinson contacted the accused and
asked him to file a bankruptcy proceeding for her.  She was
unable to file for personal reorganization under Chapter 13 of
the United States Bankruptcy Code, 11 USC § 1301 et seq., because
her debt level was too high.  Instead, in September 1988, she
filed for reorganization under Chapter 11 of the Code, 11 USC §
1101 et seq., which usually is used by business entities.  
Although Wilkinson was a secretary, she listed her business in
the bankruptcy petition as "Owning and Rental of Real Estate." 
She listed the life insurance policy in her schedule of personal
property.  In the schedule of property claimed as exempt, she
listed "[l]ife insurance proceeds," the value of which she listed
as "ALL."  The total value of assets claimed in that schedule,
however, was only $21,000.  It is unclear whether that number
included the assets referred to as "ALL." (1) 
		The filing of the bankruptcy petition prevented
creditors from seizing Wilkinson's assets without the approval of
the bankruptcy court.  See 11 USC § 362(a)(2) (providing for stay
of enforcement, against debtor or against property of estate, of
judgment obtained before commencement of proceedings).  On
September 27, 1988, the Cushmans' lawyer deposed Wilkinson, and
she testified that she had purchased the Pacific life insurance
policy with the loan proceeds.  The Cushmans did not object to
the claimed exemption of the insurance policy in the bankruptcy
proceedings. (2) 
		In November 1989, Wilkinson expressed to the accused
her concern that Pacific was unstable financially and repeatedly
asked him to assist her in transferring the life insurance policy
to another company. (3)  The accused advised Wilkinson to leave the
policy with Pacific.  Wilkinson then contacted Pacific and
demanded a "maximum partial withdrawal" from the policy.  Pacific
paid her $8,600 before it recognized, apparently because the
Cushmans previously had sent a letter to Pacific requesting
information about the policy, that Wilkinson had filed
bankruptcy.
		On November 16, 1989, Pacific's lawyer, Liptak, advised
the accused that Pacific would not release any additional funds
unless the accused provided Pacific with a letter stating that
there was no trustee in bankruptcy and that the withdrawal was in
the ordinary course of business of the estate.  Liptak also
informed the accused that, alternatively, a discharge in
bankruptcy or a court order would suffice to release the funds.  		
In November 1990, the Cushmans moved to dismiss the
bankruptcy petition as having been filed in bad faith.  They
alleged that Wilkinson deliberately had hindered their attempts
to collect on their judgment because, as she wrote in August 1986
(two years before the bankruptcy petition was filed), "if I lose
the case and have to pay Cushman's [sic] money after the misery
they cause Bob & I [sic], I'd give everything away to Charity
before I could live seeing them with it."  The Cushmans noted
that, within 60 days of filing her bankruptcy petition, Wilkinson
had encumbered other real property she owned and then used part
of the loan proceeds to buy the insurance policy.  They argued
that Wilkinson had stated in her deposition that the policy "was
intended to provide for care of her mother in the event
[Wilkinson] died," but that her mother had died in the summer of
1989.  They also alleged that she had engaged in other abuses of
the bankruptcy process, including resisting court orders and
making false statements on loan applications.
		On January 11, 1991, the bankruptcy court heard the
Cushmans' motion to dismiss.  The accused participated by
telephone.  The court indicated that it would grant the motion,
explaining:
		"The payment of the entire premium on the eve of
bankruptcy, taken in the context of the debtor's other
conduct, [and] an express declaration that she would
rather give her assets to charity than allow the
Cushmans to reach them, certainly suggests that the
transfer was one element of her scheme to frustrate
creditor's attempts to reach her assets."
	That same day, Wilkinson again demanded that the
accused help her obtain additional funds from her policy.  She
told him that she would retain the funds until the case was
dismissed by final order.  The accused was worried that he might
be liable to Wilkinson for not obtaining the additional funds as
she had requested.  He researched the issue that weekend.  
	On January 14, 1991, the accused sent the following
letter to Pacific:
		"I represent the above named individual who is
presently involved in a Chapter 11 proceeding in the
U.S. Bankruptcy court in Portland, Oregon.  This case
is a non-trustee case and Mrs. Wilkinson is operating
as a Debtor-in-Possession.
		"Mrs. Wilkinson is requesting that your company
cancel her life insurance policy and surrender any
unused premiums and/or cash value to her.
		"It appears to me that her request is in the
ordinary course of business and is appropriate without
applying to the Court for authorization."
The letter did not refer to the bankruptcy court's expressed
intent to dismiss the bankruptcy proceedings.  The accused,
however, sent a copy of his letter to a representative of the
United States Trustee's Office who had attended the hearing on
the Cushmans' motion to dismiss.  After the accused sent the
letter to Pacific, Wilkinson appeared in Pacific's office in
California and demanded the funds.  Relying on the accused's
letter, Pacific gave her a check for $29,753.52.  Wilkinson later
absconded with that money.  At about the time that Wilkinson
received the check from Pacific, the accused discovered that
Wilkinson had deeded certain real estate to her boyfriend.  The
accused became upset and advised Wilkinson to reverse the
transaction because he believed that it was fraudulent. 
	On January 18, 1991, the bankruptcy court entered an 
order dismissing Wilkinson's petition.  A week later, Pacific
received a writ of garnishment from the Cushmans.  Pacific
responded that the value of Wilkinson's policy at that time was
$1,321.72.  The Cushmans filed an action against Pacific.  In
August 1991, the California Attorney General's Office notified
the Cushmans that a court had appointed the California Insurance
Commissioner as Pacific's conservator and that the court's order
prohibited any litigation against Pacific without that court's
consent.  The Cushmans decided against proceeding further against
Pacific.  Thereafter, the accused lost contact with Wilkinson. 
In April 1991, he received permission to withdraw as her lawyer
in the bankruptcy proceedings. 
	In October 1991, the Cushmans moved to reopen the
bankruptcy proceedings and asked the court to impose sanctions on
the accused based on his letter to Pacific.  The bankruptcy court
refused to reopen the case, stating:
		"On the issue of the fact when she went and got
the money out of the insurance company using this
letter from [the accused], there is no evidence that
she dissipated the money during the pendency of the
case.  Maybe it caused question whether that was the
ordinary course of business.  But I don't think that
there is anything clearly wrong with what occurred
there.  I don't think she had an obligation to arrange
her affairs to make it easy for the Cushmans to execute
after the case was dismissed."
The Cushmans' lawyer conceded that "it is possible that under
further scrutiny that [the withdrawal] could have been in the
ordinary course of business, even though it may have been a close
call.  But we just want that opportunity to present evidence on
that particular issue."  The court responded:
		"I guess I don't get what you are going to do with
that.  Because she had the cash.  The insurance company
gave her the cash.  So she's holding the cash on the
day the case gets dismissed.  I mean, there is no
evidence that the cash went anywhere, at least not what
you gave to me.  So what are you going to do with that
information?  What is the consequence of her taking
that policy and turning it into cash?  It is like she
had a $27,000 asset, at one point it was in the form of
a policy, next point it is in the form of cash, and
then I dismissed the case.  I don't understand.
		"* * * * *
		"In this case, the conduct consisted of [the
accused] writing a letter expressing his opinion that
the debtor, Chapter 11 Debtor-in-Possession, had the
authority to take possession of the cash surrender
value of the life insurance policy.
		"While there may be some dispute regarding the
correctness of that conclusion, especially in view of
the court's ruling a few days earlier regarding
dismissal, the Cushmans do not suggest that [the
accused] did not reasonably believe that his opinion
was correct.
		"Accordingly, I do not believe that the integrity
of the judicial process hinges upon whether [the
accused] is punished for assisting his client in
obtaining the cash surrender value of the policy.
		"I believe that the Cushmans' understandable
frustration in their unsuccessful collection efforts
colors their perception, the propriety of the events. 
However, there is no legal obligation of a debtor to
voluntarily surrender assets to a judgment creditor nor
arrange their affairs to maximize the probability that
the creditor's collection efforts will be successful.
		"While the debtor reduced the surrender value of
the policy to zero while the case was pending, she did
not dissipate that asset while the case was pending.  
* * * 
		"I guess I find it quite persuasive here that all
that happened was the surrender value was converted
from one form to another."
	In November 1995, the Cushmans complained to the Bar
regarding the letter that the accused had sent to Pacific,
asserting that the accused had acted dishonestly.
	In October 1997, the Bar filed a formal complaint
against the accused, charging him with violating DR 1-102(A)(3)
and DR 7-102(A)(7).  The Bar alleged two misrepresentations under
DR 1-102(A)(3).  First, "[t]he Accused's letter of January 14,
1991, was misrepresentative in that it failed to disclose that
the bankruptcy had been dismissed, four days previously." (4) 
Second, "[t]he letter also misrepresented that the withdrawal was
being made in the 'ordinary course of business.'"  Further,
"[t]he Accused made the above misrepresentations in an effort to
assist his client to withdraw her assets from the insurance
company, and thereby avoid the claims of her creditors."  The
Bar's complaint pleaded that the accused's letter to Pacific
involved "dishonesty, fraud, deceit or misrepresentation" in
violation of DR 1-102(A)(3) and that the accused assisted his
client in conduct that he knew to be "illegal or fraudulent" in
violation of DR 7-102(A)(7).  As noted, the trial panel found
that the accused had violated both rules, suspended him from the
practice of law for eight months, and required him to pass the
professional responsibility portion of the Bar exam before
reinstatement.  Because the suspension imposed was greater than
six months, this court's review is automatic.  ORS 9.536(2).
II.  ANALYSIS

		The Bar has the burden of establishing misconduct by
clear and convincing evidence.  BR 5.2.  "Clear and convincing
evidence" means evidence establishing that the truth of the facts
asserted is highly probable.  In re Johnson, 300 Or 52, 55, 707
P2d 573 (1985).  Even though this court reviews disciplinary
proceedings de novo, we give weight to a trial panel's
credibility finding.  In re Trukositz, 312 Or 621, 629, 825 P2d
1369 (1992).  At the same time, the testimony of an accused
lawyer, if this court deems it credible, can be sufficient to
establish facts.  See In re Gildea, 325 Or 281, 296, 936 P2d 975
(1997) (relying on testimony of an accused to establish a
client's prior consent).
		As noted, the Bar charged two misrepresentations under
DR 1-102(A)(3).  This court has noted that fraud, deceit,
dishonesty, and misrepresentation overlap but are not identical
concepts.  In re Starr, 326 Or 328, 342, 952 P2d 1017 (1998). 
The Bar's theory is that the accused engaged in dishonesty,
fraud, and misrepresentation in his letter to Pacific.  
		Dishonesty is a "[d]isposition to lie, cheat or
defraud; untrustworthiness; lack of integrity."  In re Hockett,
303 Or 150, 158, 734 P2d 877 (1987) (citation omitted).  In
Hockett, the court concluded that a lawyer's act of assisting a
client's fraudulent transfers, done with the intent to cheat
creditors, constituted dishonesty in violation of current DR 1-102(A)(3). 
		Misrepresentation under DR 1-102(A)(3) requires a
knowing misrepresentation, which includes misrepresentation by
nondisclosure.  In re Gustafson, 327 Or 636, 647, 968 P2d 367
(1998).  Evaluating misrepresentation involves a two-part
inquiry:  (1) whether the lawyer knew that the lawyer's statement
was a misrepresentation; and (2) whether the lawyer knew that it
was material.  Id. at 648.  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. at 649.  
		Fraud under DR 1-102(A)(3) is not synonymous with civil
fraud.  "A misrepresentation becomes fraud or deceit when it is
intended to be acted on without being discovered."  In re Hiller,
298 Or 526, 533, 694 P2d 540 (1985).  Reliance is not required. 
See In re Benson, 317 Or 164, 169, 854 P2d 466 (1993) (success is
not required; it is enough that the accused tried to mislead). (5)
We turn to the circumstances of the alleged violations of DR 1-102(A)(3). 
	The accused's letter to Pacific stated in part that
"[i]t appears to me that [Wilkinson's] request is in the ordinary
course of business and is appropriate without applying to the
Court for authorization."  "Ordinary course of business" is a
term of art in bankruptcy law that is not defined in the
bankruptcy statutes or the legislative history.  Generally, once
a business is in bankruptcy, the trustee or the debtor-in-possession (here, Wilkinson) must apply to the bankruptcy court
for permission to sell, lease, or use assets.  See 11 USC §
363(b)(l) (requiring notice and a hearing).  If a sale, lease, or
use is in the ordinary course of business, however, notice and a
hearing are unnecessary.  See 11 USC § 363(c)(1) ("unless the
court orders otherwise, the trustee may enter into transactions,
including the sale or lease of property of the estate, in the
ordinary course of business, without notice or a hearing, and may
use property of the estate in the ordinary course of business
without notice or a hearing"). 
	Determining whether an activity is in the "ordinary
course of business" can be difficult.  One authority states that
"the margin between what is ordinary course and what is not is
quite ragged and hard to distinguish."  David G. Epstein, Steve
H. Nickles, and James J. White, 1 Bankruptcy § 4-3 at 379 (1992). 
The authors of that treatise also observe: 
		"The richness and the variety of different factual
circumstances -- each raising issues never before
considered, and most calling for a subtle judgment
based upon the particular business involved -- make it
unlikely that even the most sophisticated test can make
the boundary between ordinary course and non-ordinary
course smooth and clear."
Id.  
	Courts sometimes rely on horizontal and vertical
analyses to evaluate whether a transaction is in the ordinary
course of business.  The horizontal dimension asks whether the
"transaction is of a type that other similar businesses would
engage in as ordinary business."  In re Dant & Russell, Inc., 853
F2d 700, 704 (9th Cir 1988). 
	"[T]his showing is required merely to assure that
neither the debtor nor the creditor [did] anything
abnormal to gain an advantage over other creditors[;]
an extensive showing that such transactions occurred
often, or even regularly, is not necessary.  The
transaction need not have been common; it need only be
ordinary.  A transaction can be ordinary and still
occur only occasionally."
Id. (quoting In re Johns-Manville Corp., 60 BR 612, 618 (Bankr SD
NY 1986)).  The vertical dimension "views the disputed
transaction 'from the vantage point of a hypothetical creditor
and inquires whether the transaction subjects a creditor to
economic risks of a nature different from those he accepted when
he decided to extend credit.'"  Id. at 705 (quoting Johns-Manville, 60 BR at 616).  What is "ordinary" depends on the
interested parties' reasonable expectations of the kinds of
transactions that the debtor-in-possession is likely to enter
into in the course of its business.  Id. 
	In 1989, a leading bankruptcy treatise made the
following points about "ordinary course of business":
		"The strict wording of the statute would bar a
trustee from using assets of the estate without a court
order if the business were not being operated.  Many
trustees ignore this in such simple applications as
using the desk or office machinery in the debtor's
office to examine records or using a fork lift to move
items around to prepare for a sale.  Any substantial
use that would consume assets or decrease their value
palpably should be preceded by court permission."
Daniel R. Cowans, et al., 2 Cowans Bankruptcy Law and Practice §
11.9(1) at 407 (1989) (emphasis added) (Cowans).  The accused
asserts that he consulted and relied on the emphasized sentence
from Cowans in determining whether withdrawing funds from Pacific
was in the ordinary course of business. 
	The Bar's expert witness opined that, in light of
Wilkinson's "business" -- whether characterized as working for a
wage or real estate management -- cashing-in her insurance policy
was not in the ordinary course of business, because a creditor
would not expect the debtor to cash-in an insurance policy
without notice and an opportunity for a hearing.  From that
opinion, the Bar argues that the withdrawal could not have been
in the ordinary course of business, because Wilkinson's and the
accused's purpose was to turn the insurance policy into money so
that Wilkinson could hide the money from the Cushmans. 
	Although the accused's expert did not offer an opinion
as to whether withdrawing the insurance funds was an ordinary-course transaction, he did not believe that the accused had made
a misrepresentation.  The accused's expert stated that he would
not have requested a withdrawal as an ordinary course
transaction; rather, he opined that Wilkinson was entitled to
receive the funds as exempt from the bankruptcy proceeding.  We
need not resolve that dispute, however.  Even if Wilkinson were
entitled to the funds under another theory, such as exemption,
the accused would not be justified in making a misrepresentation
regarding the ordinary course of business to obtain them. 
	Although neither expert endorsed the accused's argument 
that withdrawal of the funds was in the ordinary course of
business, the accused's conclusion was not without justification. 
The accused contends that he researched the issue and concluded
that withdrawal of the funds was not a sale or a lease, but could
be a "use" of property.  The Bar's expert agreed that cashing-in
the policy was a "use" under 11 USC § 363.  As stated in Cowans,
one test for whether a use requires court permission is whether
that use "would consume assets or decrease their value palpably." 
The accused argues that, before he wrote the letter, he concluded
that transforming an asset from an insurance policy to cash and
then investing the cash in another insurance policy would not
consume or depreciate the value of the asset.  In addition, the
bankruptcy court saw no harm in the transformation of the asset
and declined to sanction the accused for arguing that cashing-in
the policy was a use in the ordinary course of business. 
	As noted, Wilkinson had no choice but to file under
Chapter 11, even though her bankruptcy was a personal one, and in
doing so she was asked to declare a business.  Even the Bar's
expert conceded that Wilkinson's business could be construed as
"working for a wage."  In the ordinary course of personal
affairs, working people open and close bank accounts.  Indeed,
the Bar's expert conceded that changing banks might be in the
ordinary course of business.  Moreover, people buy insurance and
sometimes change insurance companies.  Indeed, it may be sound
financial management to obtain funds from an insurance policy,
particularly if the insurance company is in financial jeopardy. 
The Bar has not cited a case factually on point holding that the
accused's interpretation of ordinary course of business is
incorrect.  Given that the accused's representation was within at
least the rationale of a "use" that was consistent with the
ordinary course of business, when no case appears to hold
otherwise, it is not unreasonable to conclude that his letter was
aggressive advocacy rather than a misrepresentation. 
	Whether one accepts the accused's ordinary-course
statement as a misrepresentation might depend on an evaluation of
the accused's intent, which we must evaluate in any event.  The
trial panel concluded that the accused conspired with Wilkinson
to defraud the Cushmans, but it might be easy to view those
circumstances in hindsight, knowing that Wilkinson absconded with
the insurance proceeds.  The Bar cites no direct evidence that
the accused knew that Wilkinson intended to abscond with the
money.  The Bar argues, however, that the accused had the
requisite intent to defraud, because the bankruptcy court had
dismissed Wilkinson's petition as filed in bad faith.  In the
Bar's view, the accused knew that Wilkinson possessed bad
intentions and that obtaining the funds for her was tantamount to
engaging in a fraud, because he knew that, consistent with her
past behavior, she planned to hide the money from the Cushmans. 
	That view rests on several faulty assumptions that we
cannot accept based on this record.  The accused was Wilkinson's
lawyer, not the Cushmans' lawyer.  His duty was to act in
Wilkinson's best interests by legal and ethical means.  See DR 7-101(A) ("A lawyer shall not intentionally:  (1) Fail to seek the
lawful objectives of the lawyer's client through reasonably
available means permitted by law and [the] disciplinary rules * *
*").  As the bankruptcy court observed, the accused did not have
a duty to muster Wilkinson's assets for the benefit of the
Cushmans' collection efforts.  Moreover, lawyers sometimes are
called on to represent people who are motivated by bad
intentions.  Although a lawyer must take great care to observe
the ethical requirements of representation, we cannot transfer
automatically a client's intent to a lawyer solely because the
client has harmed the opposing party.  
		The Bar argues that the accused was on notice that
Wilkinson was engaged in a scheme to defraud and that the accused
adopted, or at least knowingly facilitated, that scheme.  The
Bar, however, specifically stated in oral argument that it did
not dispute that the accused had contacted Wilkinson when he
discovered, a few days after sending the letter to Pacific, that
she had transferred some properties to her boyfriend, and advised
her to reverse the transaction, because he believed it was
fraudulent.  Such unsolicited advice is inconsistent with the
view that the accused had adopted or knowingly facilitated
Wilkinson's scheme to defraud.  The accused also sent a copy of
his letter to Pacific to a representative of the United States
Trustee, who had attended the hearing that resulted in the
dismissal of Wilkinson's petition.  That fact also seems
inconsistent with fraudulent intent on the accused's part. 
Moreover, it is undisputed that the accused did not hide,
encumber, devalue, or dissipate Wilkinson's assets.  Rather, his
letter persuaded Pacific to put the assets into the hands of his
client, who arguably had a legal right to them.  Wilkinson then
absconded with the money to the Cushmans' detriment.  Holding
that the accused knew that Wilkinson would abscond with the funds
would impute a degree of clairvoyance to the accused that we are
not willing to impute.  See In re Taylor, 319 Or 595, 604, 878
P2d 1103 (1994) ("Once the money was in [the client's]
possession, there was nothing that the accused could do to
control what the client did with it.").  In sum, the record lacks
clear and convincing evidence that it was "highly probable" that
the accused had a fraudulent intent.  
		The accused's motivation is crucial to the Bar's
argument.  According to the Bar, the accused quickly submitted
the letter to Pacific after the bankruptcy hearing but before the
entry of a dismissal order so that Pacific would release the
funds before the stay expired.  The Cushmans believed that, once
the stay had expired, they could garnish the insurance policy and
collect on their judgment.  In this way, the accused allegedly
helped Wilkinson obtain the funds so that she could shelter them
from the Cushmans' judgment.  It is at least equally plausible,
however, that the accused may have moved quickly because he
believed that Wilkinson was threatening him with liability for
not obtaining the funds for her earlier. 
		Taylor is instructive regarding a lawyer's duties under
somewhat similar circumstances.  In that case, the accused
lawyer's fees were secured by a $25,000 promissory note.  That
note, in turn, was secured by a trust deed on the client's home. 
The accused also helped the client sell three contracts for
market value.  The client subsequently lost the proceeds, in part
by gambling.  The trial panel concluded that the accused had: 
(1) caused the client to execute a note secured by a trust deed
on the client's home for the sole purpose of deterring creditors
from executing on the home; and (2) assisted the client in
converting the contracts to cash with the intention of hiding the
assets and failed to prevent the client from squandering the
assets.  On review, this court emphasized that the Bar had to
prove, by clear and convincing evidence, that the accused had the
requisite intent to defraud the client's creditors.  The accused
offered several reasonable explanations for selling the
contracts, including potentially structuring a civil settlement
and obtaining full market value for the contracts.  
		In Taylor, the Bar argued that the accused's delivery
of the cash to the client demonstrated that the accused had no
plan to collect the client's assets to facilitate a settlement. 
This court responded:
	"[I]n the absence of a fraudulent intent, the delivery
of the money to the client was not an unethical act,
because the money belonged to [the client].  The
accused was required to deliver the money to his
client, in the absence of other instructions from the
client.  Once the money was in [the client's]
possession, there was nothing that the accused could do
to control what the client did with it."
319 Or at 604.  The court further noted:
		"The record would permit us to construe the
objective facts about the accused's actions concerning
the contract sales to sustain either of the parties'
competing arguments.  The issues are whether the
accused engaged in those actions with the requisite
fraudulent intent and whether the evidence establishes
that intent by clear and convincing evidence."
Id.  The court concluded that clear and convincing evidence did
not support the Bar's claim that the accused had acted with the
intent to defraud his client's creditors. 
		As in Taylor, the accused here obtained money for his
client and had no control over what the client did with the money
after she received it.  The facts are capable of supporting
either party's view, but the evidence in the record does not
permit us to infer that the alleged violations are "highly
probable."  We conclude that the Bar has failed to prove by clear
and convincing evidence that the accused committed fraud,
misrepresentation, or dishonesty under DR 1-102(A)(3) in sending
his letter to Pacific.  Although in hindsight, the accused's
opinion may be incorrect, his legal research gave him some basis
for making the representation.  Accordingly, we decline to
discipline the accused for a representation regarding an
application of law to these facts. 
		The Bar argues that it was a material misrepresentation
by omission for the accused not to mention in his letter to
Pacific that Wilkinson's bankruptcy action was about to be
dismissed.  As noted, material information is information that,
if it had been known by the court or other decision-maker, would
or could have influenced the decision-making process
significantly.  Gustafson, 327 Or at 649.  No representative of
Pacific testified that that information would have changed
Pacific's decision to release the funds to Wilkinson.  Moreover,
the Bar's own expert was equivocal about whether the omission was
a material misrepresentation, although he opined that it would
have been more accurate to disclose that the bankruptcy court
orally had dismissed the case but that a written order had not
yet been entered.  We conclude that there was insufficient
evidence of the materiality of this omission and that, under
these circumstances, it was not "highly probable" that the
accused made a material misrepresentation by omission. 
		Finally, the Bar contends that the accused violated DR
7-102(A)(7), which provides that, in the lawyer's representation
of a client, a lawyer shall not "[c]ounsel or assist the lawyer's
client in conduct that the lawyer knows to be illegal or
fraudulent."  This court has observed:
	"[A] lawyer's zealous representation of a client must
remain 'within the bounds of the law.' A lawyer must be
able to advise and assist clients in their affairs
without fear of discipline if he is wrong in
interpreting close questions of law.  He or she must be
given some latitude to be wrong."
Hockett, 303 Or at 160.  For the reasons stated above, we
conclude that the Bar has failed to prove by clear and convincing
evidence that the accused counseled or assisted Wilkinson in
conduct that the accused knew to be illegal or fraudulent. 
Rather, the accused persuaded Pacific to release funds that
belonged to his client.  The accused's act was not an illegal or
fraudulent act. 
	We conclude that the Bar has failed to prove by clear
and convincing evidence that the accused violated either DR 1-102(A)(3) or DR 7-107(A)(7).
	Complaint dismissed.

1. 	Unless the case is dismissed, property that is exempt
in bankruptcy proceedings is not liable for debts incurred before
the filing of the bankruptcy petition.  11 USC § 522(c).  The
parties' experts disagreed, however, whether Wilkinson had
claimed the exemption properly in the petition.

2. 	Unless a party objects, property that a debtor properly
claims as exempt becomes exempt.  11 USC § 522(l). 

3. 	Wilkinson's concern was not without basis:  Pacific
went into conservatorship on December 11, 1989.  The details
surrounding the conservatorship, however, are not in the record.

4. 	The Bar incorrectly assumed that the dismissal was
effective when the bankruptcy court orally expressed its intent
to dismiss the proceedings.  In fact, the dismissal was not
effective until an order was entered on January 18, 1991.  See
Fed R Bankr P 9021 (a judgment is effective when entered).

5. 	Contrary holdings in some of this court's cases must be
read in their own contexts.  For example, in In re Brown, 326 Or
582, 595, 956 P2d 188 (1998), the suggestion that all the
elements of common law fraud had to be shown to establish "fraud"
under DR 1-102(A)(3) was made in the context of a case in which
this court in fact found that all those elements were proven. 
See also In re Hiller, 298 Or 526, 533, 694 P2d 540 (1985) ("We
do not interpret 'fraud, deceit or misrepresentation' to be three
words for the same thing.  A misrepresentation becomes fraud or
deceit when it is intended to be acted upon without being
discovered.").