Opinion ID: 1224859
Heading Depth: 1
Heading Rank: 8

Heading: Violations Found by Trial Panel

Text: The accused does not dispute that he violated DR 9-101(A) [5] by failing to deposit the $321.34 check, which was the final payment to Benston from a contract sale of her Florence property, into his client trust account. We find that the Bar proved that the accused is guilty of that violation. Neither does the accused dispute that he violated DR 5-101(A)(1) [6] and DR 5-104(A) [7] by failing to make full disclosure to Benston of the possible conflict of interest in assigning Benston's trust deed on the Florence property to himself. We find that the Bar proved that the accused is guilty of those violations as well. The accused argues that the trial panel erred in concluding that he violated DR 9-101(C)(3) [8] by failing to inventory Benston's personal property either before or in connection with the garage sale. The accused argues that Stillman was responsible for the garage sale and that, if anyone should have conducted an inventory, it was Stillman. The accused further argues that, with respect to that matter, he acted in his personal capacity, not pursuant to a lawyer/client relationship, and therefore was not obligated to inventory the property. The accused's arguments are unpersuasive. This situation exemplifies the dangers inherent in providing legal representation to a friend. In matters where the client/friend's legal and financial interests are concerned, a lawyer runs the risk that he or she will be deemed to have acted in the lawyer's professional capacity. In considering whether a lawyer's services were provided in a personal or professional capacity, the accused mistakenly assumes that his belief with respect to the nature of those services is dispositive. That is incorrect. Rather, it is the client's reasonable expectations that are the dispositive consideration. In In re Harrington, 301 Or. 18, 718 P.2d 725 (1986), this court was required to determine whether a lawyer had acted in his professional or personal capacity in a transaction involving a client. The lawyer represented an elderly woman in her legal matters and became a close friend and confidant as well. During one of their many visits, the lawyer mentioned that he was in need of $5,000 and indicated that he might have to sell some of his stock to get it. The friend offered to loan him the money; the lawyer drafted the documents that memorialized the transaction. The lawyer was charged with violating former DR 5-104(A) (business relations with a client); he defended against the charge by arguing that the loan arose out of his friendship with the client and that he acted in his personal capacity with respect to it. This court disagreed, finding that the lawyer had acted in his professional capacity. In so holding, the court relied on the following passage from In re Montgomery, 292 Or. 796, 804, 643 P.2d 338 (1982), quoted in Harrington, 301 Or. at 25, 718 P.2d 725: `[W]hen a lawyer seeks to borrow money from a nonlawyer client   , the lawyer must assume, in the absence of contrary expression by the client, that the client is relying on the lawyer for professional judgment to the same extent that the client would rely on the lawyer for advice had the client consulted the lawyer concerning such a loan to a third person.' Although this case involves the sale of a client's personal possessions rather than a loan, we believe that the same analysis applies. Just as in Harrington, the client's financial interest was at stake, and the lawyer had provided professional services with respect to numerous other financial matters of the client. In the absence of evidence that Benston did not rely on the accused in his professional capacity, she is deemed to have done so. Because no such evidence has been presented, the accused cannot avoid the requirements of DR 9-101(C)(3) by asserting that he was acting in his personal capacity, and not as her lawyer, with respect to the transfer, storage, and sale of Benston's possessions. Neither can the accused argue that Stillman, not the accused, was responsible for making the inventory. As the lawyer for Benston, the ultimate responsibility for carrying out an inventory rested with the accused. The failure of Stillman to make an inventory at the time of moving the personal property to Eugene, or at the time of the garage sale, does not absolve the accused from his ultimate responsibility. Finally, the accused argues that DR 9-101(C)(3) does not require an accounting, unless there has been a request for one from the client. The accused is mistaken. DR 9-101(C)(3) provides that a lawyer not only shall maintain complete records of all funds, securities and other properties of a client coming into possession of the lawyer, but also render appropriate accounts to the lawyer's client regarding them. The text makes clear that a lawyer must render all appropriate accounts. That requirement, by its terms, is not preconditioned on a client's first asking for an accounting. In contrast, the immediately following provision, DR 9-101(C)(4), expressly requires that a lawyer promptly pay or deliver to a client funds or property of the client, as requested by the client. We think that the term, appropriate, unambiguously refers to the form of the account that must be rendered, not to whether it must be rendered at all. [9] We find that the Bar proved that the accused violated DR 9-101(C)(3) when he failed to render any accounting to his client. [10] The foregoing discussion encompasses all the violations of the disciplinary rules that were found by the trial panel. We turn now to a determination whether, as the Bar argues, the accused should be found guilty of additional violations.