Case Name: In re Complaint as to the Conduct of William D. Brandt, Accused. In re Complaint as to the Conduct of Mark E. Griffin, Accused
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 2000-09-14
Citations: 331 Or. 113
Docket Number: OSB 95-6; SC S45122, S45123
Parties: In re Complaint as to the Conduct of William D. Brandt, Accused. In re Complaint as to the Conduct of Mark E. Griffin, Accused.
Judges: Before Carson, Chief Justice, and Gillette, Van Hoomissen, Kulongoski, Leeson, and Riggs Justices.
Reporter: Oregon Reports
Volume: 331
Pages: 113–177

Head Matter:
Argued and submitted September 8, 1999,
Griffin suspended from the practice of law for 12 months and Brandt suspended from the practice of law for 13 months September 14, 2000
In re Complaint as to the Conduct of William D. Brandt, Accused. In re Complaint as to the Conduct of Mark E. Griffin, Accused.
(OSB 95-6; SC S45122, S45123)
10 P3d 906
Peter R. Jarvis, Stoel Rives LLP, Portland, argued the cause and filed the briefs for the accused, William D. Brandt.
W. Eugene Hallman, Pendleton, argued the cause and filed the briefs for the accused, Mark E. Griffin.
Mary A. Cooper, Assistant Disciplinary Counsel, Lake Oswego, argued the cause and filed the brief for the Oregon State Bar. With her on the brief was Jeffrey Sapiro.
Before Carson, Chief Justice, and Gillette, Van Hoomissen, Kulongoski, Leeson, and Riggs Justices.
PER CURIAM
Kulongoski, J., concurred in part, dissented in part, and filed an opinion in which Riggs, J., joined in part.
Riggs, J., concurred in part, dissented in part, and filed an opinion in which Kulongoski, J., joined in part.
Durham, J., did not participate in the consideration or decision of this case.

Opinion:
PER CURIAM
In this consolidated lawyer discipline proceeding, the Oregon State Bar (Bar) charged William D. Brandt and Mark E. Griffin (collectively, "the accused") with violating four disciplinary rules of the Code of Professional Responsibility: Disciplinary Rule (DR) 5-101(A)(l) (prohibiting accepting or continuing employment when exercise of lawyer's judgment will be or reasonably may be affected by lawyer's own interest, except with consent of client after full disclosure); DR 1-102(A)(3) (prohibiting engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation); DR 1-103(C) (requiring full and truthful responses to inquiries in disciplinary proceeding); and DR 2-108(B) (prohibiting, in connection with settlement, entering into an agreement that restricts lawyer's right to practice law). A trial panel of the Disciplinary Board found that the accused had committed all the charged violations and recommended that each lawyer be suspended from the practice of law for six months. One panel member dissented, concluding that the charges against the accused should be dismissed.
The accused have sought review of the trial panel's decision. ORS 9.536(1); Bar Rule of Procedure (BR) 10.1. This court reviews the record de novo. ORS 9.536(3) and BR 10.6. The Bar has the burden of establishing alleged misconduct by clear and convincing evidence. BR 5.2. The testimony of an accused lawyer, if this court deems it credible, can be sufficient to establish facts. In re Gildea, 325 Or 281, 295-96, 936 P2d 975 (1997). We hold that the accused violated DR 5-101(A)(l), DR 2-108(B), and DR 1-102(A)(3). We suspend Griffin for a period of 12 months, and we suspend Brandt for a period of 13 months.
I. FACTS
We find the following facts by clear and convincing evidence. The accused are partners in different law firms. Brandt's firm is in Salem, and Griffin's is in Portland. For many years, Brandt successfully represented hand tool distributors against the manufacturers of those tools. When the volume and complexity of those cases grew, Brandt began to associate Griffin as co-counsel. Griffin's practice emphasizes plaintiffs' complex business fraud litigation. In 1992, the accused agreed to represent Eric Bramel and his wife, former hand tool distributors, in resolving claims against Mac Tools. Bramel signed a retainer agreement that included a contingent fee provision of 45 percent of any recovery from settlement, trial, or appeal.
Initially, Bramel had hoped to net $1.5 million after all legal expenses. Late in December 1992, Bramel filled out a client questionnaire that Brandt had given him, and Brandt then drafted, but did not file, a complaint seeking $150,000 in compensatory damages and $4,445,000 in punitive damages from Mac Tools.
On April 1, 1993, Brandt told Bramel that Bramel's hope to net $1.5 million was not realistic, that Bramel should demand $275,000, and that he should accept a net settlement of between $130,000 and $150,000. Later that month, Brandt told Mac Tools that Bramel would settle his claims for $275,000. In mid-September 1993, Mac Tools countered with a net settlement offer of $19,700. Griffin recommended that Bramel reject that offer, and Bramel did so.
In late September, Bramel told Griffin that he needed $100,000 "in his pocket," because his financial situation was desperate and he might be forced to declare bankruptcy. Griffin responded that he would have more information about a settlement within 30 days.
By fall 1993, the accused had 49 clients, including Bramel, who had claims against Mac Tools. In October 1993, Brandt met in Denver with three other lawyers — Wagner, Miller, and Napper — who represented clients with claims against Mac Tools and its parent company, The Stanley Works (Stanley). Among them, the lawyers represented approximately 120 clients. The lawyers discussed the possibility of "global settlement negotiations" with Mac Tools and Stanley.
On October 18, 1993, Bramel told Griffin that he would settle his claim for $175,000. Later that month, Griffin told Bramel that Mac Tools and Stanley had agreed to try to settle the cases on a "global" basis and that Griffin and Brandt would continue "to press [Bramel's] individual settlement demand." Griffin also told Bramel that Mac Tools and Stanley had agreed to toll the statute of limitations until after the global settlement negotiations had terminated.
Mac Tools, Stanley, and the plaintiffs' lawyers agreed to meet in Chicago with a private mediator on November 5, 1993, to discuss settlement. On November 2, 1993, Bramel had reduced his demand to $165,000, an amount he told the accused was "the bare minimum acceptable."
On November 3,1993, apparently in response to conversations that Wagner, Napper, Miller, and Brandt had had during their October meeting in Chicago, Wagner sent Griffin a copy of an article from an ABA Journal and an ABA ethics opinion about restricting the practice of law in connection with settlements. The article criticized Model Rules of Professional Conduct, Rule 5.6(b), and Model Code of Professional Responsibility, DR 2-108(B), both of which prohibit a lawyer from participating in offering or making an agreement that restricts the lawyer's right to practice law when settling a case. The ethics opinion expressed the view that "a lawyer may not offer, nor may opposing counsel accept, a settlement agreement which would obligate the latter to limit the representation of future claimants." ABA Comm, on Professional Ethics and Grievances, Formal Op. 371 (1993).
Griffin attended the meeting in Chicago on November 5, 1993. Four days later, on November 9, he told Brandt and Weiss, another plaintiffs' lawyer, that Weddle, a Stanley vice-president, had expressed concern during the November 5 meeting that there be "no future litigation" against his company and had stated that the only way that he could be assured of that would be to retain the plaintiffs' lawyers to represent Mac Tools and Stanley in the future. According to Griffin, Weddle had "insisted that there be a linkage between settlement of present cases and a future agreement that we [the plaintiffs' lawyers] be retained by Mac [Tools] and Stanley." The plaintiffs' lawyers who were present at the meeting had responded that they would not discuss future employment and walked out of the room. Communicating through the mediator, the plaintiffs' lawyers subsequently offered to settle all the cases for approximately $18,060,000. Stanley countered with an offer of $9.5 million, which the plaintiffs rejected. Griffin has no "independent recollection" whether he told Bramel about Weddle's offer to hire the plaintiffs' lawyers. Brandt told some, but not all, of his clients about Stanley's retainer offer.
On December 20, 1993, both the accused attended another settlement meeting in Chicago. The lawyers present at that meeting agreed to settle all the claims for $13.32 million, subject to the approval of individual plaintiffs. The proposed settlement made no mention of the plaintiffs' lawyers being retained by Stanley in the future. After December 20, the accused began conferring with their clients to determine whether the clients would agree to the settlement amounts contained in the December 20 proposal. According to Brandt, Griffin had more responsibility for contacting clients than Brandt did. Brandt did talk informally with some of the clients, but neither he nor Griffin sent out letters about the December 20 proposed settlement, and Brandt kept no notes about what he said to any of the clients. Brandt believed that, by January 4, 1994, he and Griffin "had basically communicated with most of them or I think all of them that we had reached the numbers [i.e., amount of the settlement]." However, Brandt himself did not have "any recollection of any discussion with the clients," and he could not recall having any telephone conversations with Bramel between November 1, 1993, and January 11, 1994. On January 6, 1994, Brandt disagreed with Wagner that the agreement of December 20, 1993, was final regarding the amount of the settlement, because "we had some clients to contact. But we had expressed to [Wagner] we were confident those clients would accept the Mac final offer."
Griffin testified that he did not believe that Bramel had conversations with anyone else except Griffin about the settlement. Griffin also testified that, although he "may have mentioned" the December 20 settlement to Bramel before January 13, he specifically remembers talking to Bramel on January 13. Griffin testified that Bramel agreed to the amount of the settlement on that date and that Griffin wrote "1-13-94, okay[ ]" next to $133,045.31 on the ledger that he had prepared reflecting the amount that each of his and Brandt's clients would receive under the terms of the proposed settlement.
Bramel, by contrast, testified that he did not learn of the amount of the settlement until he received a letter from the accused dated January 17, 1994. He also testified that the letter concerned him because the "settlement amount was lower than we had discussed" with the accused previously.
Whether Bramel had agreed orally by January 11, 1994, to accept $133,045.31 to settle his claims against Mac Tools is significant regarding the conflict-of-interest issues that are at the heart of this case. Based on the record before us, we find that Bramel did not agree to the amount of the proposed settlement until after January 11,1994.
On January 4, 1994, Richards, a lawyer for Stanley, sent Brandt drafts of three forms of settlement reflecting the three kinds of claims that the parties were negotiating: one "where there is a filed action against Mac Tools; one where there is a filed action against both Mac and [Stanley]; and one where action is unified." Those drafts made no mention of Stanley retaining plaintiffs' counsel.
On January 5, 1994, Richards talked to Wagner, who was acting as the spokesperson for the plaintiffs' lawyers, and she again raised the issue of Stanley retaining the plaintiffs' lawyers as part of the settlement. On January 6, Wagner sent a letter to Richards expressing "distress" over Richards's proposal for a retainer provision in the settlement agreement. Wagner reminded Richards of earlier conversations they had had about "ethical prohibitions" and the parties' agreement not to make "the negotiation and settlement of existing claims and cases contingent in any way upon any agreement regarding representation of future claimants." Wagner reiterated that "[t]he Chicago settlement [of December 20] was not contingent upon any agreement to represent or not represent Stanley or Mac [Tools], post settlement." Finally, Wagner also told Richards that the drafts of the settlement agreement that Richards had sent on January 4 were acceptable to the plaintiffs' lawyers. Wagner sent copies of his letter to the other plaintiffs' lawyers, including the accused, who agreed with Wagner about "the issue of retention."
On January 6,1994, after she had received Wagner's letter, Richards sent all the plaintiffs' lawyers a new paragraph that she proposed be inserted into the various settlement agreements. It provided:
"#. Retention of Counsel. Distributor understands that, upon execution of this Agreement resolving all matters and disputes between the Distributor and Mac Tools, counsel for the Distributor will be retained by Mac Tools at counsel's normal hourly rates to advise Mac Tools, and the Distributor approves this retention. By his signature approving this Agreement, counsel for Distributor agrees to, acknowledges, approves and accepts this retention."
Richards enclosed a copy of Kaplan v. Emerson Radio Corp., No. 90-CV-3166, 1991 WL 41846 (E.D.N.Y Mar. 14, 1991), which, in her view, indicated that it was ethical and proper to have a retainer provision as part of a settlement agreement.
On January 7,1994, Wagner, on behalf of the plaintiffs' lawyers, wrote to Richards:
"The case you have provided to us does not discuss whether it is ethical for a defendant to make the retention of a plaintiffs attorney a component of the settlement of a claim between the parties.
"Our firm has reached an agreement with Mac [Tools]/ Stanley to settle all the claims we presently have. Our agreement was not contingent upon our firm agreeing to represent Mac [Tools]/Stanley in the future. We consider your proposal to include the 'Retention of Counsel' language in the settlement agreements to be inconsistent with the settlement agreement. Again, we will not agree to be retained by Mac [Tools]/Stanley nor will we even discuss such a topic, nor the topic of possible procedures relating to our representation of future clients until such time as the releases are signed and the money distributed."
(Emphasis added.)
In Griffin's view, the retainer provision that Richards proposed on January 7 meant that the parties "didn't have a meeting of the minds and therefore we [didn't] have a settlement agreement." On January 10, Griffin wrote a memo to Brandt stating that " 'No meeting of the minds' comes through loud and clear" and that "[i]t is interesting that [Richards] admits that our future retention is a condition of settlement." The plaintiffs' lawyers discussed trying to enforce the settlement agreement without the retainer provision, but they were concerned that doing so would delay settlement and that rejecting the retainer provision would unravel the proposed agreement that the lawyers had reached on December 20. The lawyers also were concerned about the impact of a summary judgment ruling that Stanley recently had obtained in a similar case.
On January 10, 1994, Griffin wrote to Brandt and two other plaintiffs' lawyers that he had a pretrial statement due on January 12 with a court in California regarding five of the claims in the global settlement negotiations that were scheduled for trial. The statement that Griffin planned to file contained the following paragraph:
"After the settlement agreement was reached, counsel for Mac Tools and [Stanley] has attempted to enforce an additional condition of settlement, one which is both unethical and illegal. That provision is as follows: Mac Tools and [Stanley] have insisted that counsel for the plaintiffs in each of these groups agree to be retained by Mac Tools and [Stanley], This condition, of course, is both unacceptable and unenforceable. It is now the sole impediment to payment of the settlement proceeds."
(Emphasis added.) Griffin told the other plaintiffs' lawyers that, in Griffin's view,
"I think it is time to stop playing games with Ms. Richards and her clients. Perhaps if we sent this [statement to the court] to Ms. Richards and told her our dilemma she might get the hint that it is time to take the money out of their pockets and put it in ours."
Griffin also stated that he could draft a complaint for breach of the settlement agreement in a very short time.
According to Brandt, Richards' proposal to insert a retainer provision into the proposed settlement was "a complete curve" that precipitated an emergency meeting in Chicago on January 11,1994. Brandt attended that meeting; Griffin remained in Portland. At the beginning of the meeting, Weddle congratulated the plaintiffs' lawyers on the agreement to settle the claims and then stated that Stanley wanted to retain them. Richards explained that she had done a good deal of research and was convinced that there was a way to include the retainer provision in the settlement agreement without violating any ethical prohibitions. After the parties went to their respective "break out" rooms, the mediator proposed to the plaintiffs' lawyers that they sign individual retainer agreements with Stanley, and give them to the mediator to hold "in escrow" until all the clients had executed settlement agreements, all settlement amounts had been paid, and all pending actions had been dismissed. According to the mediator, if any of the clients did not consent to the retainer provision, none of the retainer agreements would go into effect.
From Chicago, Brandt called Griffin in Portland to explain the retainer and escrow proposals, and Griffin told him that he wanted to talk to Riemer, the Bar's general counsel. Griffin took only sketchy notes of his conversation with Riemer. Riemer, who receives as many as ten telephone calls a day from lawyers seeking ethical advice, took no notes. According to Griffin, he explained to Riemer that Stanley was attempting to impose another condition of settlement, namely, that the plaintiffs' lawyers sign retainer agreements as part of the settlement, and that Griffin was worried about the "taking yourself out of the market problem." Griffin also wanted to know whether, "if we got a retainer from Mac Tools, would we have to share this retainer with our client." Griffin's final concern was how much information he and Brandt had to share with their clients about their relationship with Stanley. Griffin believes that he told Riemer that the retainer agreement documents were to be signed that day, before any of the lawyers'had had an opportunity to talk to their clients and obtain their consent. Riemer advised Griffin that the proposed course of action was "hypothetically possible." According to Griffin, Riemer told him that Griffin and Brandt would have to give full disclosure under DR 5-101(A)(l). That rule defines full disclosure as an explanation sufficient to apprise a client of the potentially adverse impact to the client of a matter to which a client is being asked to consent.
Although Riemer does not remember the details of his conversation with Griffin, he believed that the retainer proposal did not raise a problem under DR 2-108, because he did not understand that the retainer agreement was a condition of settling the plaintiffs' claims against Stanley. Riemer is certain that, if Griffin had mentioned an escrow arrangement as a means of avoiding violating DR 2-108, Riemer would have remembered it, because that approach would have been "very unique."
Later on January 11, 1994, Brandt, along with the other plaintiffs' lawyers who were at the Chicago meeting, signed a document entitled "Escrow Instructions — Mac Tool Litigation." That document stated that the parties appointed the mediator to serve as the escrow agent and that he was to hold "all conformed copies of the settlement agreement and the retention agreements" until such time as Weddle, on behalf of Stanley, and Napper, on behalf of all the plaintiffs, instructed him to distribute the documents. The document that Brandt signed also stated that, if the mediator did not receive written instructions to distribute the documents "from both Parties by 5:00 p.m. EST on January 26,1994, he shall destroy the documents." Brandt also signed a document entitled "Settlement Agreement." It provided, in part:
"3. The parties acknowledge that Counsel did not solicit, request or otherwise seek to be retained by Mac Tools as part of entering into this Settlement Agreement or the Settlement Agreements on behalf of each of the clients set forth on Attachment A. The parties further acknowledge that retention by Mac Tools is not a term of the Settlement Agreement."
Also on January 11,1994, Griffin signed documents agreeing to act as counsel and provide legal services to Stanley. Those documents provided that he would be paid $10,000 and $175 per hour during 1994. At the request of the plaintiffs' lawyers, the retainer agreement that Griffin signed included a provision indemnifying him from any claim by current clients that might arise from the retainer agreement. The plaintiffs' lawyers placed all the retainer agreements in escrow with the mediator.
On January 13, 1994, Griffin called Bramel to discuss the settlement and advised him about Stanley's retainer proposal. Four days later, on January 17, the accused sent a letter to Bramel that stated, in part:
"After we obtained Mac [Tools]/Stanley's agreement to resolve our cases for a sum certain, Mac [Tools]/Stanley made a separate offer to hire [Brandt's and Griffin's law firms] to work for Mac [Tools]/Stanley in the future. Mac [Tools]/Stanley's retaining of [Brandt's and Griffin's law firms] was not solicited by us in any way. However, after consideration, [Brandt's and Griffin's law firms] agreed to provide certain legal advice and counsel on improving their distribution recruitment practices. Once we are retained by Mac [Tools], we will be unable to pursue claims like yours against Mac [Tools]/Stanley in the future. We are disclosing this information to you because we feel that we have an obligation to do so[.]
"Because this situation may appear to create a conflict of interest, we recommend that you seek independent legal advice to determine if consent should be given."
(Emphasis added.) The accused enclosed a copy of the proposed settlement agreement with their letter. The retainer provision that Richards had proposed on January 6, 1994, appeared as paragraph number 7 of the settlement agreement. Although the escrow agreement that Brandt had signed contained a January 26 deadline, the letter to Bramel did not state that Bramel needed to sign the agreement within a specified period of time.
Bramel talked to Griffin on January 22,1994, about the indemnification, confidentiality, and noncooperation provisions in the settlement agreement. Either on that date, or within a few days thereafter, Griffin told Bramel that, if Bramel rejected the settlement, Griffin would not represent him at trial. On January 24, Bramel consulted Kuhling, a Spokane, Washington, lawyer, about the proposed settlement. After that meeting, Bramel told Griffin that he was "considering the settlement proposal" and reminded Griffin that Bramel desired that all information he had shared with Griffin and Brandt "remain confidential."
On January 26,1994, Griffin told Richards that four of his clients, including Bramel, had not yet signed the settlement agreement, but that Richards should receive signed copies of the agreement from those clients by the next morning. The next morning, Bramel told Kuhling that he had received numerous messages on his answering machine from Griffin "stressing the urgency of settlement before 'Mac' changes their mind" and suggesting that Bramel send the documents "back East" by facsimile. That afternoon, Kuhling told Griffin that Bramel was unhappy with the settlement and that Kuhling believed that a conflict of interest existed. Kuhling also told Griffin that Bramel would accept $133,045.31 to settle his claims if the accused would waive their attorney fees. Griffin responded that he would reduce his fee by $5,000 if Bramel accepted his offer to do so before 11:00 a.m. on January 28. Griffin also told Kuhling that Richards had told Griffin that, if she did not have an executed copy of the agreement by noon on January 28, "she will consider the offer to have been rejected."
In a letter dated January 28, 1994, Kuhling told Bramel about his conversation with Griffin. Kuhling's letter stated, in part:
"Mr. Griffin further advises that you have only until noon today to accept the settlement. He advises that after noon today, Mac will deem the settlement repudiated. He advises he will not continue to represent you and that you'll be on your own with a speculative lawsuit against Mac.
«
"I want you to understand that I can offer no opinion about the fairness of the $133,000.00 settlement amount. I do not possess the extensive knowledge of the workings of the Mac Tool Company and their distributorship program that is possessed by you and your lawyer, Mark Griffin. Nor do I possess the knowledge of all the law affecting your case. To gain the requisite knowledge of the applicable facts and law would require extensive research. It is part of the problem that Mr. Griffin has placed you under time pressure to make this decision without adequate time for independent counsel to review the matter. You will have to rely on. your own judgment as to the adequacy of the settlement amount."
However, because Bramel's financial situation had become "desperate," Kuhling suggested that Bramel's "best course of action may be to accept the settlement which, after your [attorneys'] fee, will net you approximately $73,000" and, thereafter, "consider suing your counsel for refund of the fee they extracted."
Bramel signed the settlement agreement, and Kuhling sent it to Richards within minutes of the noon deadline. By that time, all the other plaintiffs also had agreed to the settlement, and the retainer agreements were released from escrow. On January 31, 1994, Brandt sent Bramel a check for $73,174.92, the net amount of Bramel's settlement after deduction of attorney fees. Both the accused performed legal services for Mac Tools during 1994.
In March 1994, Bramel sent a complaint to the Bar. As Bar counsel understood the complaint, Bramel raised several issues. On April 8,1994, the Bar's assistant disciplinary counsel, Cooper, sent Griffin a letter identifying ten disciplinary rules, including DR 2-108(B), that she believed "may be implicated" by Bramel's complaint. Cooper enclosed a copy of an article about DR 2-108(B) that had appeared in the Oregon State Bar Bulletin.
On April 21,1994, the accused sent Cooper a lengthy letter that addressed each of the disciplinary rules that Cooper had indicated might be implicated by Bramel's complaint. The letter stated, in part:
"Neither Bill Brandt and I, nor any other attorneys involved in the global settlement negotiations, agreed to work for Mac Tools while the case was still pending. After the settlement was finalized, the attorneys agreed to discuss a retainer with Mac Tools. Representation of Mac Tools did not commence until after the conclusion of the cases, i.e., until after [Bramel] signed the settlement agreement and returned it to Mac Tools."
(Emphasis added.) With respect to DR 2-108(B), the letter stated:
"This rule was not violated. This was one issue which I addressed with George Reimer [sic] during our conversation of January 11,1994.1 was confident after that conversation with Mr. Reimer [sic], my independent research, and the input of other attorneys (including those who participated in the global settlement) that the settlement agreement was within ethical bounds.
"I have reviewed the article written in the April, 1994, Bar Journal by Ms. Marilyn Cohen. None of the examples of inappropriate conduct are similar to the situations here. The settlement agreement: (1) did not prohibit counsel from disclosing names of people who had contacted me, or whom I had represented; (2) did not prohibit counsel from referring clients who have claims against Mac Tools to other attorneys; (3) did not require counsel to turn over files, investigation, or discovery, to defendants; and (4) did not bar me or Bill Brandt, the Braméis, or other clients or prospective clients, from subpoenaing records or using experts, and did not otherwise impede prosecution of future cases. Nor does the agreement impose venue limits upon future claimants against Mac Tools. Although the agreement does contain a confidentiality agreement with respect to the terms of the settlement, such confidentiality agreements are not uncommon and are not prohibited. The fact that claimants against Mac [Tools] and Stanley agreed not to voluntarily cooperate with others in pressing claims against Mac Tools does not prohibit them from testifying in claims against Mac Tools if they are subpoenaed to do so. Such provisions also are not prohibited and are common in complex litigation cases."
The letter did not mention the documents that the accused had signed oh January 11,1994, and had placed in escrow.
The Bar subsequently referred Bramel's complaint to the Multnomah County Local Professional Responsibility Committee (LPRC), which assigned a Portland lawyer, Hankin, to investigate the matter. Hankin interviewed the accused in Griffin's Portland office in March 1995. At that time, Hankin believed that the two most important issues were Bramel's claims of excessive attorney fees and conflict of interest. During the interview, Griffin made available to Hankin his file on Bramel, including the retainer agreements and escrow instructions. Hankin did not look through the'file. Instead, she relied on Griffin to produce documents from the file relevant to topics that Hankin raised during the interview. Griffin drew Hankin's attention to Griffin's notes of his conversation with Riemer, which contained the words "retainer agreement," but Hankin did not ask to see the agreement and did not ask what it meant.
Soon after that interview, Hankin asked to review Brandt's files at his Salem office, and Brandt agreed. Brandt gave Hankin his files on Bramel and Stanley, which contained the retainer agreement, and Hankin reviewed them in Brandt's conference room. Hankin did not contact Riemer or the mediator who served as the escrow agent, although the accused urged her to do so. However, she did interview two of the lawyers for Stanley. Hankin filed a report on April 19, 1995, and, based on her report, the Bar filed formal complaints against the accused.
II. ALLEGED VIOLATIONS
A. DR 2-108(B)
The accused first assign error to the trial panel's finding that they violated DR 2-108(B), which provides:
"In connection with the settlement of a controversy or suit, a lawyer shall not enter into an agreement that restricts the lawyer's right to practice law."
A violation of DR 2-108(B) requires the Bar to prove both that a lawyer entered into an agreement in connection with settlement and that the agreement restricted the lawyer's right to practice law. In its complaint, the Bar alleged:
"Mac Tools' offer to retain the Accused was intended to restrict the Accused's right to bring lawsuits against Mac Tools in the future. Mac Tools conditioned settlement of the Braméis' case upon the Accused's agreement to be retained by Mac Tools.
"The Accused knew that one of the reasons (if not the principal reason) Mac Tools offered to retain [them] was to prevent [them] from representing similarly situated plaintiffs in the future. Nevertheless, the Accused agreed to a settlement which was conditioned upon [their] agreement to restrict [their] practice in the future."
The accused concede, and we agree, that they agreed to the retention of counsel provision in the settlement agreement "[i]n connection with the settlement" of the controversy between Bramel and Mac Tools. However, the accused contend that DR 2-108(B) addresses only agreements that directly prohibit a lawyer from representing certain clients or types of clients. The accused argue that the retainer agreement that they signed with Stanley only indirectly restricted their right to practice law. They contend that, if a retainer agreement merely requires the lawyer to provide valuable legal services, with its concomitant disqualification from representing adverse parties, the agreement does not restrict the lawyer's right to practice law within the meaning of DR 2-108(B). Any ethical issue associated with such agreements, they argue, is governed by different disciplinary rules, such as DR 5-105, which regulates current and former client conflicts of interest, and DR 5-101, which regulates conflicts between clients' and a lawyer's own interest.
The Bar responds that the retainer of counsel provision had the effect of preventing the accused from representing future plaintiffs against Stanley and, consequently, that the agreement violated DR 2-108(B). The Bar relies on several ethics opinions from other jurisdictions holding that both direct and indirect restrictions on the right to practice law violate analogues of DR 2-108(B).
This court has not construed DR 2-108(B) previously. As framed by the parties, the issue is whether a retainer agreement that is entered into in connection with the settlement of a case and that indirectly limits a lawyer's right to practice law, violates DR 2-108(B). We hold that it does.
By its terms, DR 2-108(B) does not prohibit all agreements that restrict the right to practice law. Rather, the rule prohibits agreements that are made "[i]n connection with the settlement" of a case that restrict the lawyer's right to practice law. The rule does not distinguish between direct and indirect restrictions.
An ABA Formal Opinion has explained the policy reasons for DR 2-108(B):
"First, permitting such agreements restricts the access of the public to lawyers who, by virtue of their background and experience, might be the very best available talent to represent these individuals. Second, the use of such agreements may provide clients with rewards that bear less relationship to the merits of their claims than they do to the desire of the defendant to 'buy off plaintiffs' counsel. Third, the offering of such restrictive agreements places the plaintiffs lawyer in a situation where there is conflict between the interests of present clients and those of potential future clients."
ABA Formal Opinion 371 (April 16, 1993). We agree with that analysis. DR 2-108(B) is undermined equally by direct and indirect agreements that restrict a lawyer's right to practice law. Accepting the accused's argument that indirect restrictions on the right" to practice do not violate DR 2-108(B) would put this court's imprimatur on a method of drafting those agreements that would evade the purpose of the rule. We decline to do so.
It is true, as the accused assert, that every retainer agreement restricts a lawyer's right to practice law. It also is true that ethical issues associated with retainer agreements generally are governed by other disciplinary rules, such as DR 5-105 and DR 5-101. However, the fact that retainer agreements are governed by other disciplinary rules does not mean that the specific type of retainer agreement at issue in this proceeding, one made in connection with the settlement of a case, is not governed also by DR 2-108(B).
In this proceeding, no one disputes that one of the reasons that Richards insisted that the retainer of counsel provision be incorporated into the settlement agreement was to prevent the accused from representing other plaintiffs against Stanley in the future. As noted, the accused concede that they entered into the agreement to restrict their right to represent such clients in the future in connection with the settlement of a controversy between former Mac Tools distributors and Stanley. Accordingly, we find that the accused violated DR 2-108(B).
Nonetheless, the accused argue, the Bar should be estopped from charging them with violating DR 2-108(B), because Griffin had consulted Riemer on January 11, 1994, before either he or Brandt had signed retainer agreements with Stanley, and they relied on Riemer's advice that putting the retainer agreements into escrow with the mediator was a way to avoid the prohibition in DR 2-108(B). Even assuming that Griffin fully and accurately informed Riemer about the retainer and escrow arrangement, and that Riemer opined that the arrangement would not violate DR 2-108(B), the accused would not, as a matter of law, be insulated from a determination that they violated DR 2-108(B). Just as favorable advice by the Bar's general counsel does not provide a defense to disciplinary violations, In re Ainsworth, 289 Or 479, 490, 614 P2d 1127 (1980), such advice does not estop the Bar from charging violations with respect to conduct undertaken after obtaining the advice of the Bar's general counsel.
B. DR5-10KA)
The accused next assign error to the trial panel's finding that they violated DR 5-101(A), which provides, in part:
"Except with the consent of the lawyer's client after full disclosure,
"(1) a lawyer shall not accept or continue employment if the exercise of the lawyer's professional judgment on behalf of the lawyer's client will be or reasonably may be affected by the lawyer's own financial, business, property, or personal interests."
DR 10-101(B) addresses the issue of disclosure. It provides:
"(1) 'Full disclosure' means an explanation sufficient to apprise the recipient of the potential adverse impact on the recipient, of the matter to which the recipient is asked to consent.
"(2) As used in DR 5-101 , 'full disclosure' shall also include a recommendation that the recipient seek independent legal advice to determine if consent should be given and shall be contemporaneously confirmed in writing."
In its complaint, the Bar alleged that
"[b]y continuing to represent the Braméis despite the offer of employment by the opposing party and the Accused's eventual acceptance of that offer, the Accused continued employment despite the fact that the exercise of [their] professional judgment on the Braméis' behalf would or would likely be affected by [their] own financial, business, property or personal interests. The Accused's eventual disclosure to the Braméis of Mac Tools' offer was not contemporaneous and also omitted material facts concerning the nature and extent of the Accused['s] adverse interest and/or the potential adverse impact on the Braméis of the matter to which they were asked to consent."
The trial panel rejected the Bar's argument that the retainer offer that Stanley had made in November 1993 created a conflict of interest, and the Bar concedes before this court that no conflict of interest existed in November 1993. However, when the accused signed the retainer and escrow agreements on January 11, 1994, they acquired an interest that did, or reasonably might have, affected the exercise of their professional judgment on behalf of Bramel.
As noted, Bramel had told the accused in November 1993 that $165,000 was "the bare minimum acceptable" to settle his claims against Stanley. On December 20,1993, the accused agreed to a settlement under which Bramel would receive a gross sum of $133,045.13. When the accused signed the settlement agreement, retainer agreement, and escrow agreements on January 11, 1994 — which was before Bramel had agreed to the proposed settlement of December 20, 1993 — their loyalty became divided, and a conflict of interest existed. DR 5-101(A) required the accused to disclose their conflict of interest to Bramel, and DR 10-101(B) required them to give Bramel an explanation that was sufficient to apprise Bramel of the potential adverse impact of that conflict and to recommend that Bramel seek independent legal advice. DR 10-101(B) also required the accused's "full disclosure" to be confirmed contemporaneously in writing.
There is no dispute that the accused complied with the requirement that they advise Bramel to seek independent legal advice. However, the Bar contends that the disclosure of the conflict that the accused made to Bramel was insufficient to apprise him of the potential adverse impact that the retainer agreement had on him and that the written confirmation did not constitute either a full or a contemporaneous disclosure. The trial panel majority agreed.
We begin with the Bar's contention that the accused did not give Bramel timely written disclosure of their conflict of interest. DR 10-101(B)(2) requires the written disclosure to be made "contemporaneously" with the oral disclosure. The word "contemporaneously" means "at or near the same time." Webster's Third New Int'l Dictionary, 491 (unabridged ed 1993). The question is whether, by their letter of January 17, 1994, the accused "contemporaneously confirmed in writing" Griffin's oral disclosure of the conflict in his telephone call to Bramel on January 13.
After Griffin talked to Bramel on January 13, he and Brandt had to compose a letter confirming in writing what Griffin had said, and the letter had to contain both of their signatures. Brandt and Griffin's offices were in different cities. Two of the days between January 13 and January 17, 1994, were Saturday and Sunday. We reject the Bar's argument that the accused's written disclosure was not made contemporaneously with their oral disclosure.
We turn to the Bar's contention that the disclosure that the accused provided to Bramel was insufficient. As noted, DR 10-101(B)(1) requires "full disclosure," which is "an explanation sufficient to apprise the recipient of the potential adverse impact on the recipient, of the matter to which the recipient is asked to consent."
This court has addressed the meaning of the "full disclosure" requirement in several cases. Inin re Boivin, 271 Or 419, 424, 533 P2d 171 (1975), for example, this court construed a previous iteration of the disciplinary rules that also required full disclosure, explaining:
"To satisfy the requirement of full disclosure by a lawyer before undertaking to represent two conflicting interests, it is not sufficient that both parties be informed of the fact that the lawyer is undertaking to represent both of them, but he must explain to them the nature of the conflict of interest in such detail so that they can understand the reasons why it may be desirable for each to have independent counsel, with undivided loyalty to the interests of each of them."
Similarly, in In re O'Byrne, 298 Or 535, 548-49, 694 P2d 955 (1985), this court held that full disclosure includes "tell[ing] what effects the differing interest may have upon the lawyer's ability to exercise his independent professional judgment."
The current version of DR 10-101(B) was adopted in 1988. Since then, this court has adhered to its prior standards in construing the full disclosure requirement contained in that rule. See In re McKee, 316 Or 114, 128, 849 P2d 509 (1993) (full disclosure under former DR 5-105(0 "requires a full disclosure of the possible effect of multiple representation on the exercise of the lawyer's independent professional judgment on behalf of each client") (emphasis in original).
In this proceeding, the only record of what the accused disclosed to Bramel is their letter of January 17, 1994. DR 10-101(B)(2) requires that an oral disclosure be "confirmed in writing." The word "confirm" means to "give new assurance of the truth or validity of: CORROBORATE." Webster's Third New Int'l Dictionary at 476. Accordingly, we find that the written disclosure that the accused made to Bramel reflected the oral disclosure that Griffin had made four days earlier. As noted, that letter stated that the accused had not entered into a retainer agreement with Stanley until "[a]fter we obtained Mac/Stanley's agreement to resolve our cases for a sum certain," and it stated that Stanley had "made a separate offer" to hire them. Rather than disclosing their conflict of interest, those statements suggested that there was no conflict. The only statements in the letter that arguably could be viewed as disclosing the accused's conflict of interest to Bramel are the following:
"Once we are retained by Mac, we will be unable to pursue claims like yours against Mac/Stanley in the future. We are disclosing this information to you because we feel that we have an obligation to do so[.]
"Because this situation may appear to create a conflict of interest, we recommend that you seek independent legal advice to determine if consent should be given."
Nothing in the accused's letter to Bramel informed him that, on January 11, 1994, the accused had signed retainer agreements with Stanley and placed them in escrow. As explained above, as of January 11 — when the accused agreed to be retained by Stanley before Bramel had agreed to the amount of the settlement that the lawyers had reached on December 20 — the accused's interests were divided between at least one of their current clients, Bramel, and Stanley when it came to recommending whether Bramel should accept the settlement. In other words, beginning on January 11, 1994, it is possible that the accused's relationship with Stanley motivated them to recommend to Bramel a settlement that they would not have recommended — and that was not as favorable to Bramel as it could have been — if their loyalty had not been divided. Nothing in the letter informed Bramel that the accused's retainer agreements with Stanley contained indemnity provisions insuring that the accused would be protected fully by Stanley if Bramel decided to bring a claim against them because of the conflict of interest that they had acquired on January 11. A potential adverse impact of the indemnity provisions on Bramel was that, because of that protection, the accused's interests might be aligned with Stanley, not Bramel, their current client. The letter of January 17, 1994, fell short of the full disclosure required by DR 10-101(B).
The accused contend that their disclosure satisfied the requirements of DR 10-101(B), because it led Bramel to believe that his lawyers had "switched sides" and had "betrayed" him during settlement negotiations and that Kuhling then had advised Bramel about the potential adverse effects of the accused's conflict of interest. That argument is without merit. DR 10-101(B) requires the explanation that the lawyer gives to the client to be sufficient to apprise the client of the adverse consequences of the lawyer's conflict. The rule does not direct us to examine the client's subjective understanding of the lawyer's explanation, whether or not enhanced by consultation with an independent lawyer. Additionally, under DR 10-101(B), the issues of the sufficiency of the disclosure and consultation with independent counsel are separate: A lawyer must, when full disclosure is required under DR 5-101(A)(l), provide disclosure sufficient to apprise the client of adverse consequences and advise the client to seek independent counsel. DR 10-101(B) does not provide that advice from independent counsel may serve as a post hoc substitute for the lawyer's own disclosure. Moreover, the disclosure that the lawyer gives the client will affect the ability of independent counsel to assess the conflict and to advise the client. We hold that the accused violated DR 5-101(A) by continuing to represent Bramel after January 11, 1994, without having provided full disclosure to obtain Bramel's consent.
C. DR 1-102(A)(3)
The accused also assign error to the trial panel's finding that they violated DR 1-102(A)(3), which provides:
"(A) It is professional misconduct for a lawyer to:
"(3) Engage in conduct involving dishonesty, fraud, deceit or misrepresentation."
The Bar's complaint alleged that the accused's failure to make full disclosure to Bramel also violated DR 1-102(A)(3) and that their failure to respond fully to the Bar's inquiry violated that rule. The trial panel majority agreed:
"The accused! 1 had a fiduciary relationship with their clients that imposed on them a special duty of candor. The accused! ] breached this duty when they failed to tell the Braméis about all aspects of the settlement. The failure to disclose the information to the Braméis constitutes misrepresentation by omission.
"The majority finds that the accused['s] disclosure to their clients were not ambiguous, but misleading. They would have been ambiguous if the Braméis and the Bar had all the information that the accused! ] did. They are misleading due to the information omitted. Further, the majority finds that they [sic] accused made a misrepresentation to their clients when they stated in their January 17, 1994 letter that the defendants had made to them a separate offer to be retained. The accused knew that the offer was not separate from the settlement, but was in fact a condition of the settlement."
At the outset, we note that DR 1-102(A)(3) sets out different legal theories: dishonesty, fraud, deceit, and misrepresentation. The Bar's third amended complaint does not specify on which of those theories it intended to proceed. Although the better practice is to identify the theory or theories on which the Bar is proceeding, the trial panel resolved the DR 1-102(A)(3) charges on the theory of misrepresentation, and the accused respond to that theory before this court.
This court has held that "misrepresentation" is a broad term that encompasses both affirmative misstatements and the nondisclosure of a material fact. In re Leonard, 308 Or 560, 569, 784 P2d 95 (1989). A fact is "material" if it is information that, if known, would be significant to the recipient. In re Gustafson, 327 Or 636, 649, 968 P2d 367 (1998). The misrepresentation need not be made with the intent to deceive or to commit fraud. In re Hiller, 298 Or 526, 533, 694 P2d 540 (1985).
In this case, the accused's January 17,1994, letter to Bramel stated that Stanley had made a "separate" offer to retain them. The letter did not explain that, on January 11, the accused had signed retainer and escrow agreements.
When Richards proposed adding the retainer provision to the settlement documents, Griffin believed that the parties no longer had a meeting of the minds "and therefore we [didn't] have a settlement agreement." The accused were upset by the proposal to include the retainer provision and understood that Stanley considered that provision to be a condition of the settlement. Nonetheless, they later agreed to that proposal as a part of the global settlement. Their statement to Bramel that Stanley had made a "separate" offer of retention was an affirmative misstatement.
We turn to the accused's omissions. On January 10, Griffin had written to the other plaintiffs' lawyers that he planned to inform a trial court in California about the proposed retainer agreement, which he described as "unethical and illegal" as well as "unacceptable and unenforceable." The accused knew that the retainer proposal created a conflict of interest, and Griffin specifically asked Riemer how much information he and Brandt had to share with their clients about their relationship with Stanley. When the accused signed the retainer and escrow agreements on January 11, they apparently believed that they had discovered a way to avoid the ethical issues associated with the agreement to work for Stanley. However, by failing to inform Bramel that they had signed those documents, the accused gave Bramel an incomplete understanding of the conflict of interest that was created by the retainer provision. Knowing when the accused agreed to work for Stanley was a fact that was material to Bramel's assessment of how he should respond to the conflict of interest and whether he should accept the accused's recommendation that he settle his claim against Stanley for $133,045.31. Knowing that the accused were indemnified fully by Stanley for any claim that Bramel might bring against them was material to Bramel's decision whether he should rely on the accused's advice in recommending that he accept the settlement. The accused violated DR 1-102(A)(3) by not disclosing material facts to Bramel.
We turn to the accused's argument that the trial panel erred in finding that they violated DR 1-102(A)(3) in their letter of April 21,1994, to Bar counsel Cooper responding to Bramel's complaint. In its complaint, the Bar alleged:
"The Accused made the following affirmative misrepresentations of fact to the Bar:
"a) That [they] had not agreed to work for Mac Tools while the Braméis' case was still pending;
"b) That a retainer with Mac Tools had not been discussed until the settlement of the Braméis' case was finalized; and
"c) . That the Braméis had been fully advised of all aspects of the settlement negotiations with Mac Tools."
The trial panel majority concluded that the accused violated DR 1-102(A)(3) in those respects.
The accused's April 21 letter to Cooper stated, in part, that they had apprised Bramel of the status of his case throughout the global settlement negotiations and that Stanley did not offer to retain plaintiffs' counsel until "after the settlement was finalized." The letter also stated that,
"[p]rior to finalizing the settlement, all plaintiffs [sic] counsel embarked on significant research into potential ethical problems. This research included a call by me to bar counsel, George Reimer, [sic] on January 11, 1994. During that discussion, I specifically spoke with Mr. Reimer [sic] about Disciplinary Rules 5-107, 5-110(A) and lO-lOl(B). All plaintiffs' counsel were careful in structuring a settlement which would maximize benefit to our clients and avoid ethical violations. It was only after much discussion among counsel that the structure of the agreement was reached. All counsel was [sic] confident, based upon independent research and input from other attorneys, that the settlement structure met ethical standards."
According to the accused, the allegations in the second cause of complaint are based on statements in their April 21 letter that have been taken out of context. We have reviewed their letter and disagree. The accused's letter to Cooper stated unequivocally that they did not agree to work for Stanley until "after" the settlement was finalized and that Stanley did not offer to retain the plaintiffs' counsel until after the settlement had been finalized. Those statements would have been true if the plaintiffs' claims against Mac Tools had been settled on December 20, 1993. However, as noted, the December .20 agreement was subject to the approval of the individual plaintiffs. When Griffin received Richards' retainer proposal on January 6, 1994, he believed that there no longer was a "meeting of the minds" among the lawyers. Griffin also believed that Richards was proposing that the retainer provision was a condition of settlement, and he believed that the provision was both unethical and illegal. Brandt attended an emergency meeting in Chicago on January 11 to resolve whether and how to incorporate the retainer provision into the settlement agreement. The accused did not send a copy of the proposed settlement to Bramel until January 17, and Bramel did not sign it until January 28. The accused's statements to Cooper that they did not agree to work for Stanley while Bramel's case still was pending and that Stanley did not offer to retain them until after the settlement had been finalized simply were not true. The accused's assertion in their letter that they had kept Bramel "fully advised of all aspects of the settlement negotiations" with Stanley also was not true. The accused did not tell Bramel that, on January 6, 1994, Stanley had proposed adding a retainer provision to the settlement agreement and that that provision was a condition of the settlement. Neither did the accused tell Bramel that, on January 11, before the settlement agreement had been signed by all their clients, the accused had signed retainer and escrow agreements. All three statements that form the basis of the Bar's complaint were factual misrepresentations. All three statements were material to the Bar's inquiry into Bramel's complaint and whether to proceed with a formal investigation. The accused violated DR 1-102(A)(3) by making affirmative misrepresentations of material fact to the Bar in their letter of April 21, 1994.
D. DR 1-103(0
Finally, the accused assign error to the trial panel's finding that they violated DR 1-103(C), which 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."
The Bar's complaint alleges that "the Accused failed to respond truthfully to inquiries from authorities empowered to investigate or act upon the conduct of lawyers." Specifically, the Bar charges that the accused did not respond fully and truthfully to the inquiries of Hankin, the LPRC investigator. The trial panel reasoned that the accused had violated the rule, because the rule "places the burden on the accused to provide information, not the Bar to ferret it out."
The gravamen of the Bar's allegation is that the accused failed to disclose to Hankin the January 11, 1994, retainer agreement and escrow arrangements which, the Bar contends, the accused knew "were, at best, questionable." According to the Bar, "it is questionable whether the Accused ever actually made their documents physically available to Hankin." We conclude that the Bar has failed to establish by clear and convincing evidence that the accused failed to make the retainer agreement and escrow instructions of January 11 available to Hankin.
As noted, Griffin gave his file on Bramel to Hankin when he and Brandt met with Hankin in Griffin's office in March 1995. Hankin did not look through it. Neither did she examine Bramel's file that Brandt had made available to her when she met with him in Salem. When Hankin met with the accused, she had a copy of the settlement document that contained paragraph 7 regarding retention of counsel. However, she did not ask the accused about the retainer provision. Hankin testified that, at that time, her investigation focused mostly on Bramel's complaint about the amount of the accused's fee and their alleged conflict of interest.
By its terms, DR 1-103(C) requires an accused to "respond fully and truthfully to inquiries." We disagree with the trial panel's view that the rule "places the burden on the accused to provide information, not the Bar to ferret it out." Rather, the rule requires an accused to respond "fully and truthfully" to inquiries. Hankin never inquired about the retainer agreements and the escrow arrangement. The accused made their files on Bramel, which contained copies of those documents, available to Hankin. In addition the accused suggested that Hankin contact Riemer, the mediator who served as the escrow agent, and counsel for Stanley. Hankin did not look through the files that the accused provided her. Neither did she contact Riemer or the mediator. On this record, we conclude that the Bar has not met its burden of proving by clear and convincing evidence that the accused violated DR 1-103(C).
III. SANCTION
Having determined that the accused violated DR 2-108(B), DR 5-101(A)(l), and DR 1-102(A)(3), we turn to the question of the appropriate sanction. The trial panel recommended that each of the accused be suspended for six months. The Bar requests that this court suspend each of the accused for at least one year. The accused argue that no sanction or, at most, a reprimand, is warranted in this case.
This court refers to the American Bar Association's Standards for Imposing Lawyer Sanctions (1991) (amended 1992) (ABA Standards) for guidance in determining the appropriate sanction for lawyer misconduct. In re Schaffner, 323 Or 472, 918 P2d 803 (1996). According to the ABA Standards,
"The purpose of lawyer discipline proceedings is to protect the public and the administration of justice from lawyers who have not discharged, will not discharge, or are unlikely properly to discharge their professional duties to clients, the public, the legal system, and the legal profession."
ABA Standard 1.1; see In re Huffman, 328 Or 567, 587, 983 P2d 534 (1999) (noting agreement with statement).
This court first considers three factors to determine the appropriate sanction: the duty violated; the accused lawyer's mental state; and the actual or potential injury caused by the accused lawyer's misconduct. ABA Standard 3.0. We then examine any aggravating or mitigating circumstances to determine if the sanction should be adjusted. In re Devers, 328 Or 230, 241, 974 P2d 191 (1999); ABA Standard 3.0. Finally, we look to Oregon case law. Devers, 328 Or at 241.
In this case, the accused violated their duty to their client by failing to avoid conflicts of interest, ABA Standard 4.3, and by lacking candor in their dealings with their client, ABA Standard 4.6; The accused also failed to maintain their personal integrity by making misrepresentations to their client and to the Bar. ABA Standard 5.1.
As to the accused's mental state, the Bar contends that all the accused's acts were intentional, that is, all were done with a "conscious objective or purpose to accomplish a particular result." ABA Standards at 7 (defining "intent"). According to the Bar,
"the Accused intentionally provided their clients with untimely, incomplete and misleading information, hoping to push the settlement through while at the same time disguising their own unethical conduct. When their client! ] complained to the Bar, the Accused intentionally provided incomplete and misleading information to Bar investigators in the hopes of persuading the Bar to dismiss the Braméis' complaint."
We agree that the accused acted intentionally. When the accused signed the retainer and escrow agreements on January 11, they created a conflict of interest that they had a duty to disclose fully to Bramel. They also had a duty to apprise Bramel of the potential adverse impact that the conflict could have on him. However, beginning on January 11, 1994, the accused's loyalty was divided between Bramel and Stanley, they intentionally misrepresented facts and withheld information from Bramel to mask their conflict of interest. When Bramel complained to the Bar, the accused made intentional misrepresentations in response to Cooper's letter of inquiry. The accused intended their misrepresentations to persuade the Bar not to conduct an investigation of any alleged ethical misconduct.
We turn to whether the accused's conduct caused injury. "Injury" includes actual or potential harm to a client, the public, the legal system, or the legal profession. ABA Standards at 6-7. The Bar has not demonstrated that the accused caused actual harm to Bramel by securing for him a settlement amount that was less than Bramel would have received if the accused had not agreed to work for Stanley in connection with the global settlement. However, there is the potential for considerable harm when a lawyer violates DR 2-108(B) by agreeing to work for the opposing side in connection with the settlement of a case, because such an agreement creates the possibility that the lawyer's professional judgment will be affected and that the lawyer's loyalty to the current client will be impaired. Such an agreement also creates the possibility that the settlement of the current case does not reflect the value of the claims at issue in that case. That is, parties might be willing to pay more, or to accept less, to settle a case if the settlement includes an agreement that all lawyers involved will work for the same side in the future.
The accused's letter to Cooper of April 21, 1994, caused both actual and potential harm to the legal system. The effectiveness of the Bar's disciplinary system, and public confidence in it, assume that lawyers do not make factual misrepresentations in response to Bar inquiries. Cooper was entitled to rely on the accused's response to her inquiry in deciding whether to dismiss Bramel's complaint or to have the complaint investigated. If the accused's misrepresentations had persuaded Cooper to dismiss Bramel's complaint, the lawyer discipline system would have been compromised. The accused's misrepresentations of material facts also made Hankin's task more difficult, because she was unsure what she was looking for in her investigation.
The accused's misconduct implicates several ABA Standards. ABA Standard 4.31 provides:
"Disbarment is generally appropriate when a lawyer, without the informed consent of [a] client:
"(a) engages in representation of a client knowing that the lawyer's interests are adverse to the client's with the intent to benefit the lawyer or another, and causes serious or potentially serious injury to the client."
ABA Standard 4.32 provides:
"Suspension is generally appropriate when a lawyer knows of a conflict of interest and does not fully disclose to a client the possible effect of that conflict, and causes injury or potential injury to a client[.]"
ABA Standard 4.61 provides:
"Disbarment is generally appropriate when a lawyer knowingly deceives a client with the intent to benefit the lawyer or another, and causes serious injury or potential serious injury to a client."
ABA Standard 4.62 provides:
"Suspension is generally appropriate when a lawyer knowingly deceives a client, and causes injury or potential injury to the client."
ABA Standard 5.11 provides, in part:
"Disbarment is generally appropriate when:
"(b) a lawyer engages in intentional conduct involving misrepresentation that seriously adversely reflects on the lawyer's fitness to practice."
ABA Standard 5.13 provides:
"Reprimand is generally appropriate when a lawyer knowingly engages in conduct that involves misrepresentation and that adversely reflects on the lawyer's fitness to practice law."
Drawing together the factors of duty violated, mental state of the accused, and injury caused, either a suspension or disbarment could be appropriate in this case. However, because the Bar has failed to establish that the accused's misconduct caused actual harm to Bramel, we make an initial determination that a lengthy suspension is the appropriate sanction in this case. We turn to the fourth factor, aggravating and mitigating circumstances.
Several aggravating factors are present. In misrepresenting facts to Bramel and to the Bar, the accused acted with a dishonest or selfish motive, namely, not wanting to advise Bramel of their conflict of interest and not wanting the Bar to pursue an investigation in response to Bramel's complaint. ABA Standard 9.22(b). The accused engaged in a pattern of misconduct in their incomplete disclosures to both Bramel and to the Bar. ABA Standard 9.22(c). The accused committed multiple offenses, ABA Standard 9.22(d), and they refuse to acknowledge the wrongful nature of their conduct, ABA Standard 9.22(g). Both the accused have substantial experience in the practice of law. ABA Standard 9.22(i). Finally, Brandt has a prior disciplinary offense consisting of a letter of admonition in 1993 for a former client conflict of interest and continuing to represent a party without making full written disclosures to each client. ABA Standard 9.22(a). We discuss the significance of that letter later in this opinion.
The only mitigating factor in this case is that Griffin has no prior disciplinary record. ABA Standard 9.32(a).
We next consider this court's case law. All the ethical violations in this case stem from the accused's violation of DR 2-108(B). As noted, whether DR 2-108(B) is violated when a lawyer agrees, in connection with the settlement of a case, to "indirect" restrictions on the future practice of law was a question of first impression in this case. If that were the sole issue here, we might hold that, because this was the first time that the issue has been litigated in a disciplinary case, the appropriate sanction would be a public reprimand. See In re Banks, 283 Or 459, 482, 584 P2d 284 (1978) (because novel aspect of case required court to "plow some new ground," public reprimand was appropriate sanction). However, having violated DR 2-108, the accused then attempted to disguise and to justify that violation, resulting in violations of the full disclosure requirement of DR 5-101(A) and misrepresentations of material fact both to Bramel and to the Bar, in violation of DR 1-102(A)(3).
This court has distinguished between cases in which the lawyer is guilty only of a conflict of interest and cases in which the conflict is aggravated by fraud, dishonesty, or misappropriation of funds, or there are many aggravating factors. See In re Moore, 299 Or 496, 510, 703 P2d 961 (1985) (drawing that distinction). In the former category of cases, the sanctions have ranged from a public reprimand to a suspension of less than one year. Id. However, when the lawyer's conflict of interest has been aggravated by fraud, dishonesty, or misappropriation of funds, or there were many aggravating factors, the sanction always has involved at least a suspension. Some suspensions have exceeded one year and, in one case, this court disbarred the lawyer. See In re O'Byrne, 298 Or 535, 551, 694 P2d 955 (1985) (so stating); see also In re Wittemyer, 328 Or 448, 462, 980 P2d 148 (1999) (providing additional examples of sanctions imposed for violation of conflict-of-interest rules aggravated by other circumstances). However, this court has rejected the argument that there is a "minimum period of suspension" that always is appropriate in the latter category of cases. Wittemyer, 328 Or at 462. Rather, the appropriate sanction in each case depends on individual facts and circumstances. Id.
As noted, in this case, the accused acted intentionally when they violated DR 2-108(B) by entering into the retainer agreement in connection with the settlement of Bramel's claim against Stanley. They compounded that violation by not disclosing fully their conflict of interest to Bramel and by making material misrepresentations of fact both to Bramel and to the Bar, in violation of DR 1-102(A)(3).
In addition, this case involves several aggravating factors, and the sole mitigating factor affects only Griffin. The aggravating factors heavily outweigh Griffin's one mitigating factor. Cf. In re Morris, 326 Or 493, 505-06, 953 P2d 387 (1998) (four-month suspension for violation of conflict-of-interest rule where mitigating factors outweighed aggravating factors). Our prior case law confirms that a lengthy suspension is warranted. We conclude that Griffin should be suspended for 12 months.
With respect to Brandt, we conclude that a longer period of suspension is warranted. This court has held that, if the misconduct that gave rise to an earlier letter of admonition involved the same or similar type of misconduct at issue in the present case, then it is appropriate to consider the letter in determining an appropriate sanction. In re Cohen, 330 Or 489, 500, 8 P3d 953, 959 (2000). As noted, in 1993, Brandt received a letter of admonition for a former client conflict of interest and continuing to represent a party without making full written disclosures to each client. This case involves a current client conflict of interest and failure to make full disclosure, which is sufficiently similar in nature that we consider it as an aggravating factor in this case. Id. at 501. Brandt's 1993 letter of admonition is his sole past instance of misconduct. However, he became involved in the conflict of interest that is at the core of this proceeding in January 1994, soon after having been warned against engaging in behavior that creates a conflict of interest. See In re Jones, 326 Or 195, 200, 951 P2d 149 (1997) (relative recency of prior instance of misconduct and timing of current offense in relation to prior offense important in determining significance of prior misconduct). The recent admonition to avoid client conflicts and to make full disclosures apparently did not deter Brandt from becoming involved in the conflict of interest that is at the core of the other disciplinary violations that are at issue in this case. See In re Bridges, 302 Or 250, 254-55, 728 P2d 863 (1986) (one purpose of sanction is to deter misconduct). Under those circumstances, Brandt's prior letter of admonition is an aggravating factor that warrants a longer period of suspension than the suspension that we have imposed on Griffin. We conclude that Brandt should be suspended from the practice of law for 13 months.
Griffin is suspended from the practice of law for 12 months, and Brandt is suspended from the practice of law for 13 months. The suspensions shall commence 60 days from the filing of this decision.
The parties use the term "plaintiffs" even though not all the clients had filed complaints against Mac Tools or Stanley. We follow that practice for convenience in this opinion.
The parties refer to Mac Tools, Mac Tools, Inc., The Stanley Works, and Stanley interchangeably to refer to The Stanley Works, which is the parent company of Mac Tools, Inc. Henceforth, we use the term "Stanley."
For the accused's clients, the settlement reflected approximately 80 percent of their latest demand. As noted, on November 2, 1993, Bramel had reduced his demand to $165,000. Under the terms of the proposed settlement, Bramel would receive $133,045.31, and Mac Tools would forgive the sum of $6,300 that it claimed Bramel owed it. After deducting the accused's attorney fees of approximately $29,900 each, Bramel would net approximately $73,000 from the settlement.
Justice Riggs apparently believes that the settlement became final on December 20 and that neither the accused nor any of the other plaintiffs' lawyers had to obtain their clients' consent to the amount of the settlement. See 331 Or at 172.
We agree with Justice Kulongoski that Bramel knew of the amount of the proposed settlement before January 17, because Bramel contacted another lawyer, Kuhling, on January 18, 1994, to discuss the terms of the settlement agreement with him.
Justice Kulongoski surmises that Bramel must have agreed orally to accept $133,045.31 in settlement of his claims on or before January 11,1994. That premise is central to Justice Kulongoski's conclusion that the accused did not violate DR 5-101(A)(l) or DR 1-102(A)(3), because the retainer agreement was a matter separate from the settlement of Bramel's claims. We do not dispute that Griffin may have received oral consent to the amount of the settlement from some other clients before January 11, but that is not the issue in this proceeding. The issue here is whether Bramel agreed to the amount of the settlement before the accused entered into an agreement with Mac Tools that created a conflict of interest. The record does not support Justice Kulongoski's belief that Bramel had consented orally to the settlement by January 11.
On January 19 and 20,1994, Brandt signed similar retainer agreements, providing that he would be paid $5,000 and $125 per hour for services in 1994. The retainer agreements did not contain indemnification clauses. On January 24,1994, he signed a retainer agreement that contained an indemnification clause.
Because Bramel had not accepted Griffin's offer to reduce his attorney fee in the amount of $5,000 by 11:00 a.m. on January 28, the full 45 percent contingent fee was deducted from Bramel's share of the settlement.
The Bar filed identical complaints against the accused.
The trial panel concluded, and the Bar argues on review, that the agreement was a "condition" of settlement. We need not determine whether the retainer agreement was a condition of settlement to be able to conclude that the accused violated DR 2-108(B). A violation of that rule occurs if an agreement is made in connection with settlement; it is not necessary to establish that the agreement was a condition of settlement.
An example of a "direct restriction" is,
"In exchange for the sum $25,000,1 would agree not to pursue any employment claim not currently filed; nor would I render any assistance to other persons/ attorneys making such claims."
In Re Vanagas, 8 DB Rptr 185 (1994).
We have examined the opinions from other jurisdictions that both sides rely on in this dispute. Those decisions are distinguishable factually and do not aid either side or our analysis.
The accused argue that the following quotation from a leading treatise on legal ethics regarding ABA Model Rule 5.6, which is similar to DR 2-108(B), assists their position:
"rTlhe defendant could retain the plaintiffs lawyer, after the settlement, as consulting counsel on any claims arising out of the same transaction. By operation of the conflict of interest rules, that arrangement would preclude the lawyer from representing any new plaintiffs in such cases."
Geoffrey C. Hazard, Jr. & W. William Hodes, 2 The Law of Lawyering § 5.6:301 (Supp 1997) (emphasis added). The emphasized phrase in that treatise makes clear that the circumstances under which a retainer agreement is entered into is a critical factor under DR 2-108ÍB).
Griffin wrote another letter to Cooper on June 15, 1994, which Brandt "joined" by reference in a letter to Cooper on June 16. Those letters responded to a letter that Bramel had written to Cooper on May 30, 1994, in response to the accused's letter of April 21. Griffin's June 15 letter reiterated matters he had discussed in his April 21 letter, and emphasteed that, in Griffin's view, he and Brandt had "met the disclosure requirements of DR 10-101 and other ethical requirements." For purposes of our analysis whether the accused violated DR 1-102(A)(3) by making affirmative misrepresentations of fact, we focus only on the letter of April 21, 1994. The letters of June 15 and 16 contain neither additional misrepresentations of material fact nor retractions of any statement that was made in the April 21 letter.