Opinion ID: 2132250
Heading Depth: 1
Heading Rank: 2

Heading: Conflict of Interest; Neglect of a Legal Matter

Text: In the fall of 1980, Pinckard approached respondent in an effort to obtain financing for repairs to a building Pinckard owned in the Hyde Park area of Chicago. In a series of conversations, respondent and Khalifa discussed the possibility of Khalifa's loaning $18,000 to Pinckard so he could undertake to repair his building. Eventually, Khalifa agreed to lend $18,000 to Pinckard. Khalifa would receive 20% interest on the loan, or $4,000 if the property were sold within six months. Khalifa was also to have a security interest in the property. Respondent, Pinckard and Khalifa met on October 15, 1980, in respondent's office to consummate the loan transaction. Khalifa produced a cashier's check payable to himself in the amount of $18,000. Respondent affixed on the check a restrictive endorsement that read as follows: pay to the order of Brian J. Demuth escrow account. According to respondent, this was done at Pinckard's request because Pinckard did not have a bank account and had no convenient means of negotiating the check. Khalifa endorsed the check at respondent's request and then returned the check to respondent. Pinckard testified that he did not see or receive the check. At the meeting, Pinckard executed a promissory note. Respondent deposited the cashier's check into his escrow account on or about October 15. On October 15, 1980, respondent told Khalifa that respondent would prepare and file the security documents on Pinckard's property to secure Khalifa's loan. Respondent drafted mortgage documents and had them executed by Pinckard and Khalifa on October 15, 1980. However, these and other documents necessary to create a security interest for Khalifa were never filed. Also on October 15, 1980, Khalifa asked respondent what respondent was getting out of the loan transaction; respondent replied that he would receive a few hundred dollars from Pinckard. Ultimately, Pinckard received from respondent $16,000 in a series of payments as proceeds of the loan. Pinckard testified that respondent charged him $2,000 as a finder's fee. He also testified that any funds he received from respondent were proceeds of the loan from Khalifa and that he never received a personal loan from respondent. Respondent concedes he retained $2,000. He maintains, however, that he only received a few hundred dollars for his work on the loan transaction. During oral argument before this court, his counsel asserted that the balance of the $2,000 was money respondent was entitled to in repayment of loans he had made to Pinckard. Khalifa and Pinckard each testified that respondent was acting as his attorney regarding the loan transaction. In 1982, respondent discovered that the documents necessary to perfect Khalifa's security interest had never been filed; he promptly informed Khalifa. Thereafter, apparently in an attempt to remedy this situation, respondent suggested a transaction between Pinckard and Dennis Jenkins. Jenkins was a contractor who had an interest in the property, and was a client of respondent. Khalifa consented to respondent's suggestion. Respondent prepared an agreement which was executed by Pinckard and Jenkins. The property was deeded out of the land trust and into Jenkins' name, and Jenkins applied for a $70,000 loan. The money was to be applied to real estate taxes on the property and to repay the Khalifa loan. The loan was made and the real estate taxes were paid, but for reasons that are unclear, Khalifa did not receive any of the proceeds. Pinckard never repaid the Khalifa loan. In 1985, Khalifa obtained a judgment against Pinckard, but has been unable to collect.