Opinion ID: 1454365
Heading Depth: 1
Heading Rank: 14

Heading: thirty-sixth cause of complaint

Text: In this cause the Bar alleged that Griffith violated former disciplinary rules DR 1-102(A)(2) and (6) and DR 5-104(A), all supra, because of the following conduct: The formation and incorporation of First Northwest was a business transaction between Griffith, Wolf, Brookens and Hardy. Between 1978 and 1983 First Northwest, Brookens and Hardy engaged in substantial business operations at the direction of Griffith and Wolf who were legal counsel for the corporation. Brookens and Hardy relied on Griffith and Wolf for professional advice regarding First Northwest's business operations and affairs. Griffith's interests differed from those of Brookens and Hardy regarding First Northwest business operations and affairs. Griffith did not make the required ethical disclosures to or obtain the informed consent of Brookens and Hardy prior to engaging in business with them. Griffith's answer to this cause was a general denial. The Trial Panel found Griffith not guilty of this cause. It used a two-part analysis. (1) At the time First Northwest was formed, Griffith, Wolf, Brookens and Hardy had the same interests in the transaction that the company undertook. Brookens and Hardy, the non-lawyer shareholders, were relatively sophisticated businessmen and based upon In re Samuels and Weiner, 296 Or. 224, 674 P.2d 1166 (1983), Griffith did not violate former DR 5-104(A). (2) Beginning in the Fall of 1982, the interests of the shareholders became adverse and Griffith should not have continued to represent First Northwest without the express consent of Brookens and Hardy. Therefore it is possible that Griffith did violate former DR 5-105(B), supra, but the Bar did charge a violation of that rule. In this alleged conflicts of interest situation it is important to recognize the distinction between former DR 5-104(A) and former DR 5-105(B). The former concerns the conflict of interest between a lawyer and his client who may have differing financial, business property or personal interests. The latter concerns the conflict of interest between two or more clients. See discussion in the 29th cause, supra. We hold that the Bar alleged there was a conflict of interest between Griffith as a shareholder and Brookens and Hardy as shareholders. It did not allege there was a conflict between two clients  that is, between First Northwest on one hand and Brookens and Hardy on the other. We agree with the Trial Panel that at first the shareholders all had the same interest in the transactions that First Northwest undertook but that by the Fall of 1982, the interests of the shareholders had become adverse and therefore Griffith should not have continued to represent First Northwest without the written consent of Brookens and Hardy. In the case of In re Moore, 299 Or. 496, 507, 703 P.2d 961 (1985), we considered a similar problem in regard to former DR 5-101(A), supra: Moore argues that the allegations in the Bar's charges contained in the fourth and fifth causes of complaint read in terms of accepting and `continuing employment' while DR 5-101(A) speaks only to the acceptance of employment. (Emphasis in Moore's brief in this court.) Moore correctly refers to the wording of the rule. However, under Canon Five (A Lawyer Should Exercise Independent Professional Judgment on Behalf of a Client) the Ethical Considerations in part provide: `EC 5-2    After accepting employment, a lawyer carefully should refrain from acquiring a property right or assuming a position that would tend to make his judgment less protective of the interests of his client. `EC 5-3    After accepting employment, a lawyer should not acquire property rights that would adversely affect his professional judgment in the representation of his client.   .' We recognize that Ethical Considerations are not a part of the Disciplinary Rules and that a lawyer cannot be disciplined for violating them. In re Tonkon, 292 Or 660, 664, 642 P2d 660 (1982). However, they are available to aid us in determining the intent of the rules. In re Brown, 298 Or 285, 291, 692 P2d 107 (1984). We hold that DR 5-101(A) includes continued as well as initial acceptance of employment if the exercise of the lawyer's professional judgment on behalf of the client will be or reasonably may be affected by the lawyer's own financial, business, property, or personal interests. We hold that by clear and convincing evidence Griffith violated former DR 5-104(A). Under the In re Magar, supra , rule Griffith also violated former DR 1-102(A)(6). Former DR 1-102(A)(2) does not apply.