Opinion ID: 835026
Heading Depth: 2
Heading Rank: 1

Heading: Ingle Matter

Text: The accused seeks review of the trial panel's decision that he violated DR 5-105(C) and RPC 1.9(a) in the Ingle matter. DR 5-105(C) prohibits an attorney, after representing a former client in a matter, from representing another client in the same or a significantly related matter when the interests of the current and former clients are in actual or likely conflict. RPC 1.9(a) similarly prohibits an attorney, after representing a former client in a matter, from representing another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless each affected client gives informed consent, confirmed in writing. In this case, the Bar has charged that the accused's representation of Hohn, without obtaining informed consent, confirmed in writing, from the estate and Hohn, constituted a former-client conflict of interest in violation of both DR 5-105(C) and RPC 1.9(a). On review, the Bar contends that the accused represented Ingle in a matter and then later represented Hohn in the same or a substantially related matter when Ingle's surviving intrests were materially adverse to Hohn's interests because of their former relationship as debtor and creditor. The accused responds that Ingle had no interests because she was deceased; the debt collection was not the same matter as, or substantially related to, the loan transactions; and Hohn's and Ingle's interests therefore were not materially adverse. We turn to those arguments.
As a threshold matter, we must first determine whether it is possible for an attorney to violate the former-client conflict-of-interest rules when his or her former client is deceased. The accused essentially contends that no violation was possible because Ingle, his former client, is deceased, and, accordingly, cannot have interests adverse to Hohn, and cannot suffer injury from the subsequent representation. The Bar responds that a deceased client's interests survive his or her death. In particular, the Bar contends that, in this case, Ingle's surviving interests are expressly described in her will. This case presents a matter of first impression in Oregon -- that is, whether a former client, now deceased, is protected by the former-client conflict-of-interest rules. Oregon is not alone, as no jurisdiction appears to have directly addressed the issue. At best, a few jurisdictions have addressed the related issue of whether dissolved corporations are clients for purposes of the former-client conflict-of-interest rules. Those jurisdictions are split on the issue. Some jurisdictions hold that, upon a corporation's dissolution, a conflict of interest cannot exist, because the entity is dead, no longer exists, and, accordingly, cannot have interests adverse to the current client. See, e.g. , Bagdan v. Beck , 140 FRD 660, 667 (D NJ 1991) (holding that, because the former client of the accused (the corporation) for all intents and purposes is dead, the former-client conflict rule does not apply). Conversely, other jurisdictions hold that a bankruptcy trustee stands in the shoes of the corporation as former client, and the accused in later litigation may not represent an interest adverse to the successors in interests of the failed corporation. See, e.g. , FDIC v. Berry , No 1-85-62, (ED Tenn, June 10, 1985) (as discussed in Bagdan , 140 FRD at 666, with full opinion attached as Appendix Exhibit 1) (disqualifying counsel for former officers and directors of defunct corporation because those attorneys previously had represented corporation). The other context in which courts have addressed whether a client's interests survive his or her death arises in criminal cases, in which an attorney or firm represents a criminal defendant after having previously represented the victim -- now deceased -- on unrelated criminal charges. See, e.g. , State ex rel S.G. , 175 NJ 132, 134-35, 814 A2d 612, 614 (2003) (holding that a current-client conflict of interest existed when firm represented both the defendant and his victim in unrelated criminal matters, even after the victim's death, during the two-week period before the victim's matter was terminated). (6) The issue in those cases centered on whether the former representation of the victim in the unrelated criminal matter prevented constitutionally adequate representation of the criminal defendant in the subsequent criminal proceeding. That is, the issue was whether a conflict of interest created such a division of loyalty that the attorney could not provide the adequate representation of the current client that the constitution requires. Here, we must determine whether a conflict of interest exists such that the attorney violates a disciplinary rule that protects the interests of the former client. Accordingly, the two contexts are qualitatively distinct, and the former provides little guidance in answering the latter. We thus turn to the former-client conflict-of-interest rules themselves to determine whether those rules' protections extend to former clients who are deceased. In interpreting a disciplinary rule, this court looks to the wording of the rule, read in context. See In re Haws , 310 Or 741, 746-48, 801 P2d 818 (1990) (using that methodology to interpret disciplinary rule, focusing on meaning of rule's key words). DR 5-105(C) provides, in part: Except as permitted by DR 5-105(D), a lawyer who has represented a client in a matter shall not subsequently represent another client in the same or a significantly related matter when the interests of the current and former clients are in actual or likely conflict. (Emphasis added.) DR 5-105(D) provides an exception when both the current client and the former client consent to the representation after full disclosure. RPC 1.9(a) provides: A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless each affected client gives informed consent, confirmed in writing. (Emphasis added.) The wording of those rules focuses on the interests of the former client. That focus supports the Bar's position that, because a client's interests can and often do survive a client's death, the rules' protections extend to a former client even after his or her death. But it is not just any interests of the former client that must survive. In the context of the disciplinary rule, it is the former client's interests that pertain to the matter in which the lawyer previously represented the former client. It is those interests that must survive the former client's death. The rules also require that the former client's interests are in actual or likely conflict with (DR 5-105(C)) or materially adverse to (RPC 1.9(a)) the current client's interests. Accordingly, the attorney must assess whether the pertinent interests of the deceased former client will be adverse to the interests of the subsequent client during the subsequent representation . That is, the proper analysis is not whether the interests of the former and current client were adverse during the former client's lifetime, but whether the surviving interests of the former client are adverse to the current client during the subsequent representation. In sum, we conclude that, pursuant to DR 5-105(C) and RPC 1.9(a), an attorney is prohibited from engaging in a former-client conflict of interest even when the former client is deceased, as long as the former client's interests survive his or her death and are adverse to the current client during the subsequent representation. Having determined that a deceased client may be a former client for purposes of the former-client conflict-of-interest rules, we turn to whether the Bar proved the necessary elements under those rules.
The accused contends that there is no former-client conflict of interest because the loan transaction and the debt collection is not the same or a substantially related matter. The Bar disagrees. According to the Bar, the loan transaction and the debt collection are the same matter because the accused represented Ingle's interests as borrower in entering into various obligations, including promissory notes, with Hohn and then sought to enforce those same obligations, but this time on behalf of Hohn, the lender. Alternatively, the Bar argues that the debt collection is substantially related to the loan transaction. Because, as explained below, we determine on this record that the loan transaction and the debt collection are both significantly and substantially related, we need not determine whether the matters are the same. We first consider whether the loan transactions and debt collection are significantly related under DR 5-105(C). Matters are significantly related for purposes of DR 5-105(C) if either: (1) Representation of the present client in the subsequent matter would, or would likely, inflict injury or damage upon the former client in connection with any proceeding, claim, controversy, transaction, investigation, charge, accusation, arrest or other particular matter in which the lawyer previously represented the former client; or (2) Representation of the former client provided the lawyer with confidences or secrets    the use of which would, or would likely, inflict injury or damage upon the former client in the course of the subsequent matter. DR 5-105(C)(1), (2). This court first defined the term significantly related in In re Brandsness , 299 Or 420, 430-31, 702 P2d 1098 (1985). In Brandsness , this court explained that the principle embodied in the concept of 'significantly related' matters consists of two subtests:
Representation of the present client in the subsequent matter would, or would likely, inflict injury or damage upon the former client in any matter in which the lawyer previously represented the former client; or
Representation of the former client provided the lawyer with confidential information the use of which would, or would likely, inflict injury or damage upon the former client in the subsequent matter. Id. (emphasis in original). This court clarified that matter-specific conflicts are keyed to a particular matter, while information-specific conflicts are based on particular information. Id. at 431. When DR 5-105(C) was later promulgated, it largely codified the definition of significantly related that this court had formulated in Brandsness . In re McKee , 316 Or 114, 129, 849 P2d 509 (1993) ([t]he new rules codified this court's holding in In re Brandsness ); see also Kidney Association of Oregon v. Ferguson , 315 Or 135, 140 n 7, 145 n 13, 843 P2d 442 (1992) (observing that DR 5-105 since has been amended, but its effect essentially is the same, and that changes in DR 5-105 reflect an evolution of terminology rather than substance). Accordingly, this court's definition of significantly related in Brandsness is relevant to this court's interpretation of that term under DR 5-105(C). The Bar contends that the matters in this case are significantly related because the accused engaged in a matter-specific conflict under DR 5-105(C)(1). That is, according to the Bar, [t]o the extent there was, or even could have been, a dispute    as to the validity of the loans or the amounts due, the [a]ccused's pursuit of Hohn's interests would, or would likely, inflict injury or damage upon Ingle. (7) In several cases decided before Brandsness , this court consistently held that a former-client conflict of interest exists when an attorney represents a former client in a transaction and then subsequently represents another client in enforcing his or her rights arising out of that same transaction. See In re Holmes , 290 Or 173, 182-84, 619 P2d 1284 (1980) (improper for attorney to represent former client in negotiating settlement of debt, and then represent subsequent client in suing former client to collect that same debt); In re Brownstein , 288 Or 83, 87, 602 P2d 655 (1980) (an attorney cannot represent a former client in a transaction and then subsequently represent another client in an attempt to enforce his or her rights arising out of that same transaction); In re Mumford , 285 Or 559, 561-62, 591 P2d 1377 (1979) (patent conflict of interest existed when attorneys represented husband in divorce and then, on behalf of wife's new spouse, sought to collect against husband the payments under the settlement that had been negotiated while the attorneys represented him). In articulating the test for significantly related matters in Brandsness , this court described those cases as such egregious conflicts that we could decide them without searching for the boundary between the acceptable and unacceptable that closer cases    require us to locate. 299 Or at 430. Later, after DR 5-105(C) was promulgated, this court reaffirmed that, under the matter-specific-conflict subtest for significantly related matters, an attorney who represented a former client in a transaction may not then represent another client in enforcing his rights arising out of that same transaction. McKee , 316 Or at 129-30 (relying on DR 5-105(C)(1), slander of title action was significantly related to earlier dissolution proceeding because the accused attempted to enforce provisions of dissolution judgment that he drafted on behalf of former client). Against that backdrop, we have no trouble concluding that the accused engaged in a matter-specific conflict in this case and, thus, the matters are significantly related for purposes of DR 5-105(C)(1). Here, the accused, in the loan transactions, drafted several promissory notes and mortgages on behalf of Ingle in obtaining loans from Hohn. He then, in the debt collection, subsequently represented Hohn in enforcing his rights arising out of those same documents. Such an egregious conflict leaves us with no doubt that the accused's representation of Hohn in the debt collection would, or would likely inflict injury or damage upon Ingle in connection with the loan transactions. The accused nonetheless argues that the matters are not significantly related, reasoning that Ingle could not be injured or damaged by the subsequent representation, because she was deceased. As noted, matters are significantly related under DR 5-105(C)(1) when, as pertinent here, representation of the present client in the subsequent matter would, or would likely, inflict injury or damage upon the former client [.] (Emphasis added.) The wording of that portion of the rule focuses on the former client , and not on the interests of the former client. That focus -- at first blush -- could support the accused's contention that, once a client is deceased, he or she could not be injured or damaged and, thus, matters could not be significantly related under DR 5-105(C). However, that definitional provision must be understood in the context of the prohibition itself, which arises when, in connection with the subsequent representation, the interests of the current and former client are in actual or likely conflict. Given that context, the injury or damage to the former client to which the definition necessarily refers is injury or damage to the former client's interests. Indeed, we can conceive of no other way a lawyer's representation may injure a former client than through his or her interests . That is, conflict of interest rules are just that -- they protect the client's interests ; they do not intend to protect clients from, for example, physical injury or assault. Accordingly, a deceased client may be injured within the meaning of the rule if, as previously noted, his or her surviving interests may be harmed by the subsequent representation. In this case, Ingle's interests in the loan transactions were those of a debtor -- to minimize her legal debt as much as possible as is reasonable within the bounds of the law. Those interests survived Ingle's death and were represented by her personal representative. See ORS 114.265 (personal representative has fiduciary duty to preserve estate with as little sacrifice of value as is reasonable under the circumstances). Ingle's will also expressly stated that she would fully pay her just debts. On the other hand, as the accused himself acknowledged, Hohn's goal in the debt collection was to collect as much as possible pursuant to the promissory notes and even some loans under which there were no notes[.] Thus, the accused's representation of Hohn would, or would likely injure or damage Ingle's surviving interests in the loan transactions in violation of DR 5-105(C). We turn to whether the matters are substantially related pursuant to RPC 1.9(a). Whether the analysis under RPC 1.9(a) differs from DR 5-105(C) depends on whether the term substantially related differs in meaning from significantly related. At the time of the accused's conduct, RPC 1.9(a) provided no definition of substantially related. RPC 1.9 (2005). (8) The new rule thus did not contain the definition previously set out in DR 5-105(C). The term was changed from significantly related to substantially related when the Oregon Rules of Professional Conduct were adopted on December 1, 2004, effective January 1, 2005. Order Adopting the Oregon Rules of Professional Conduct, Chief Justice Order No. 04-44 (Dec 1, 2004), Oregon Appellate Advance Sheets No. 1 (Jan 3, 2005) at A-3, A-16. Although RPC 1.9 (2005) provides no commentary to explain why the term was changed from significantly related to substantially related, the wording tracks that of ABA Model Rule 1.9(a). See ABA Model Rule 1.9(a) (2002) (former-client conflict of interest exists when matters are the same or substantially related and the interests of the former and current client are materially adverse). Before the adoption of the RPCs, Oregon's former-client conflict-of-interest rule was distinct from both the ABA Model Rule and the rule adopted in many states because it used the term significantly related rather than substantially related, and it used an actual and likely conflict paradigm rather than requiring that the interests be materially adverse. American Bar Association and Bureau of National Affairs, Inc., ABA/BNA Lawyers' Manual on Professional Conduct § 51:205 (2002) (Oregon's ethics code has a unique provision on former-client conflicts because it uses the term significantly related and an actual/likely conflict paradigm). However, after the RPC was adopted, Oregon's rule became nearly identical to ABA Model Rule 1.9(a). (9) Because RPC 1.9(a) (2005) does not define the term substantially related, and because it tracks the text of the ABA Model Rule, we look to the commentary of the ABA Model Rules for guidance. In particular, Comment [3] to ABA Model Rule 1.9(a) (2002) provides a definition of substantially related for purposes of that rule: Matters are 'substantially related' for purposes of this Rule if they involve the same transaction or legal dispute or if there otherwise is a substantial risk that confidential factual information as would normally have been obtained in the prior representation would materially advance the client's position in the subsequent matter. That definition is not binding on this court, but we consider it for its persuasive value. The substantial relationship test from the ABA Model Rule can be broken down into two subtests: (1) whether the matters involve the same transaction or legal dispute; or (2) whether there otherwise is a substantial risk that confidential factual information as would normally have been obtained in the prior representation would materially advance the client's position in the subsequent matter. (Emphasis added.) In a sense, the ABA Model Rule can be characterized as dealing with matter-specific conflicts and information-specific conflicts, as did DR 5-105(C). Yet, each subtest under the ABA Model Rule appears to be broader than the subtests under DR 5-105(C). Unlike DR 5-105(C)(1), to constitute a matter-specific conflict under ABA Model Rule 1.9(a), a risk of injury is not required; rather the matters must merely involve the same transaction or legal dispute. The main concern appears to be disloyalty to the former client. ABA/BNA Lawyers' Manual on Professional Conduct § 51:226. It is generally if not universally accepted that a current representation adverse to a former client is substantially related to the earlier representation if it involves the lawyer's own work for the former client -- especially an attack on that work. Id. ; see also Restatement of Law Governing Lawyers § 132(1) (2000) (a current matter is substantially related to an earlier matter if the current matter involves the work the lawyer performed for the former client). To constitute an information-specific conflict under ABA Model Rule 1.9(a), unlike DR 5-105(C)(2), actual possession of client confidences is not necessary. See discussion ___ Or at ___ n 7 (slip op at 14-15 n 7) (explaining that DR 5-105(C)(2) requires actual possession of client confidences). Rather, it is enough if there is a substantial risk that confidential factual information as would normally have been obtained in the prior representation would materially advance the client's position in the subsequent matter. The ABA Model Rule protects the former client from having to reveal the confidential information learned by the lawyer. The focus thus is on the risk of information gained based on the nature of the services the lawyer provided the former client and information that would in ordinary practice be learned by a lawyer providing such services. Comment [3] to ABA Model Rule 1.9(a); see also Richard E. Flamm, Lawyer Disqualification: Conflicts of Interest and Other Bases § 8.4, 148 (2003) (policy against requiring former client to show precisely what confidences were used against her includes avoiding extensive inquiries into privileged areas). As previously noted, the Bar did not argue that the accused came into actual possession of client confidences. Neither did it argue that the accused's conduct created a substantial risk that confidential factual information as would normally have been obtained in the prior representation would materially advance Hohn's position in the subsequent representation. We thus confine our focus on whether the matters are substantially related under RPC 1.9(a) based on whether the accused engaged in a matter-specific conflict. We conclude that they are. The debt collection and loan transactions certainly involved the same transaction -- the underlying loan documents that the accused drafted on behalf of Ingle. The accused's representation of Hohn involved his own work that he had completed on behalf of Ingle and, in that regard, the matters are substantially related. (10) We therefore determine that the accused engaged in a matter-specific conflict in violation of RPC 1.9(a).
A conflict of interest exists under RPC 1.9(a) when the current client's interests are materially adverse to the interests of the former client. A conflict of interest exists under DR 5-105(C) when the interests of the current and former clients are in actual or likely conflict. An actual conflict of interest exists when the lawyer has a duty to contend for something on behalf of one client that the lawyer has a duty to oppose on behalf of another client. DR 5-105(A)(1). A 'likely conflict of interest' exists in all other situations in which the objective personal, business or property interests of the clients are adverse. DR 5-105(A)(2). A 'likely conflict of interest' does not include situations in which the only conflict is of a general economic or business nature. Id. So framed, the analysis under RPC 1.9(a) and DR 5-105(C) is not materially distinct. The Bar contends that Ingle's surviving interests and Hohn's interests were per se materially adverse and patently in conflict due to their former relationship as debtor and creditor. We agree. As previously discussed, Ingle's interests in the loan transactions as debtor -- i.e. , to minimize her legal debt as much as reasonably possible within the bounds of the law -- survived Ingle's death and were represented by her personal representative. ___ Or at ___ (slip op at 17-18). On the other hand, Hohn's interests as creditor in the debt collection were to maximize the amount that Ingle owed under the loans as much as was reasonable within the bounds of the law and to collect as much of that amount as possible. Those interests are different and adverse. See In re Wittemyer , 328 Or 448, 455, 980 P2d 148 (1999) (conflict of interest existed when a lawyer represented both the lender and borrower in a loan transaction); In re Moore , 299 Or 496, 506, 703 P2d 961 (1985) (debtor and creditor had different interests). Thus, Ingle's surviving interests and Hohn's interests were in likely conflict and materially adverse during the subsequent representation. The accused disagrees, contending that Ingle's and Hohn's interests were not adverse because the Bar failed to prove that Hohn actually sought to collect on any loans that were not just. According to the accused, the Bar's assertions that Hohn sought to collect on undocumented loans or loans beyond the statute of limitations are not supported by the record. The accused conflates adversity with injury. The rules against conflicts of interest require an attorney to assess whether the interests of the former and prospective new client are adverse at the time the attorney seeks to undertake the subsequent representation. Ingle's surviving interests and Hohn's interests as debtor and creditor were adverse from the outset. Whether the subsequent representation ultimately caused actual injury to Ingle is an inquiry relevant to sanctions, and not to whether Ingle and Hohn's interests are adverse or in conflict. See American Bar Association's Standards for Imposing Lawyer Sanctions 7 (1991) (amended 1992) (ABA Standards) (defining actual and potential injury for purposes of sanctions). In sum, we find that the debt collection was significantly and substantially related to the loan transactions and Hohn's interests were in likely conflict with and materially adverse to Ingle's surviving interests during the subsequent representation. We therefore conclude that the accused violated both DR 5-105(C) and RPC 1.9(a) in the Ingle matter.