Opinion ID: 1304366
Heading Depth: 3
Heading Rank: 2

Heading: The Litchfield Matter

Text: Edward Litchfield had known petitioner for several years before the spring of 1981, at which time he sought petitioner's professional advice in locating a suitable business to purchase. In connection with this representation, Litchfield revealed to petitioner all his financial records. Petitioner advised Litchfield he should attempt to purchase a restaurant which had become available. Petitioner also suggested Litchfield should obtain capital for the investment by refinancing his home. Pursuant to this advice, Litchfield borrowed nearly $25,000 by refinancing an existing second mortgage on his home. However, negotiations for the purchase of the restaurant collapsed on July 2, 1981. The next day petitioner requested that Litchfield loan him some of the money which he had available from refinancing his home. Litchfield agreed, and on July 6, 1981, he delivered to petitioner a check for $10,000. Petitioner promised to repay the money in a few days, but the loan arrangement had no specific terms nor was there any agreement as to the payment of interest. The only evidence of the transaction was a handwritten IOU inscribed on the back of a bank deposit slip. Petitioner did not advise Litchfield to seek the advice of independent counsel regarding the loan. Petitioner never repaid the loan. After several unsuccessful demands for the return of his money, Litchfield instituted a civil action. After trial Litchfield was awarded judgment of $15,000 plus interest. Litchfield's attorney fees in the case amounted to $3,000. Petitioner has yet to pay any portion of the judgment. Petitioner testified his attorney-client relationship with Litchfield had ceased when the restaurant deal fell through and that the loan had been requested and given between the two men as friends. Litchfield testified the attorney-client relationship continued at least until the following September when he conferred with petitioner about the purchase of an ice cream parlor. That transaction also collapsed, in part because of petitioner's failure to repay the $10,000 loan. Litchfield testified petitioner's failure to repay the loan caused him and his family severe financial and emotional distress. The hearing panel concluded that petitioner violated rule 5-101 [8] in requesting and accepting the loan from Litchfield while an attorney-client relationship existed and that the act involved moral turpitude.