Court Opinion

ID: 835785
Source: CourtListenerOpinion
Date Created: 2013-03-01 21:12:12.838623+00
Date Added: 2024-06-11T09:05:49.475043
License: Public Domain

FILED:  March 3, 2005
IN THE SUPREME COURT OF THE STATE OF OREGON
In re Complaint as to the Conduct of
NORMAN A. PHILLIPS,
Accused.
(OSB 97-166, 97-167, 98-155; SC S49838)
En Banc
On review of the decision of a trial panel of the
Disciplinary Board.
Argued and submitted January 12, 2004.
Susan D. Isaacs, Beaverton, argued the cause and filed the
briefs for the accused.
Mary Cooper, Assistant Disciplinary Counsel, Lake Oswego,
argued the cause and filed the brief for the Oregon State Bar.
PER CURIAM
The accused is suspended from the practice of law for 36
months, effective 60 days from the date of the filing of this
decision.
PER CURIAM
In this disciplinary proceeding, the Oregon State Bar
alleged that the accused violated the Code of Professional
Responsibility (1) through the conduct of another in violation
of Disciplinary Rule (DR) 1-102(A)(1), made misrepresentations in
violation of DR 1-102(A)(3), disclosed his clients's confidences
or secrets in violation of DR 4-101(B)(1), used his clients'
confidences or secrets for his own or another person's advantage
in violation of DR 4-101(B)(3), aided nonlawyers in the practice
of law in violation of DR 3-101(A), and continued to represent
his clients without disclosing a conflict of interest in
violation of former DR 5-101(A)(1996), renumbered as DR 5-101(A)(1) (1997).  The trial panel found that the accused had not
aided a nonlawyer in the practice of law but that he had violated
the other disciplinary rules.  The trial panel imposed a 24-month
suspension.  On de novo review, we find that the accused violated
three of the six rules and suspend him from the practice of law
for 36 months.
The accused has been a member of the Bar since 1968.  In
1996, he and Cornilles were law partners.  The partnership had
between 1,500 and 2,000 clients and operated under the name of
the Living Trust Law Center (the law firm).  Together, the
accused and Cornilles prepared living trusts for most of their
clients.  Their average client was over 60 years of age and had a
net worth in excess of $300,000.
In February 1996, Wessels of Financial Services Network
(FSN) contacted the law firm and proposed that the firm enter
into a joint venture with FSN.  The law firm had agreed to
provide its clients with free periodic reviews of their living
trusts, and FSN proposed that its licensed insurance agents could
conduct those reviews under the accused and Cornilles'
supervision.  The insurance agents would meet with the law firm's
clients in their homes, review their trusts, and also review the
clients' financial information to ensure that the clients had
funded their trusts properly.
If the insurance agent determined that the trust should be
updated, he or she would note that fact on a form and submit it
to the law firm.  Additionally, the agent would try to sell the
accused's clients insurance products if the agent determined that
the client needed either to replace an existing investment or
purchase a new one.  The agents' only compensation would come
from the commissions on the insurance sales that they made.  A
third of the total commission would go to the agents, a third to
FSN, and a third to the accused and Cornilles.
In late March or early April 1996, the accused and Cornilles
telephoned Moore, a lawyer who specializes in legal ethics, to
discuss FSN's proposal.  In particular, they were concerned that
sharing commissions and disclosing client information might
violate the Code of Professional Responsibility.  The accused and
Cornilles spoke with Moore for approximately 15 minutes.  Their
conversation did not cover the specific terms of the joint
venture but ranged generally over the question whether they could
conduct the type of trust review program that FSN had proposed
without violating their ethical duties as lawyers.  Moore opined
that they could.
The law firm entered a joint venture agreement with FSN and
J.L. Kizer and Associates, Inc.  On April 19, 1996, the accused
and Cornilles sent a letter to 100 of their clients. (2) 
Written on the firm letterhead, the letter told each client that
"[i]t is time to review your Living Trust and to make sure that
your trust is properly funded."  The letter noted that the
clients may need to update their power of attorney, change the
successor trustee, or modify the beneficiaries.  The letter told
the firm's clients that

"we have carefully selected and trained three
individuals: Alan Darby, Lori Guimond, and Mike Oxford
to visit with you in your home.  Beginning the week of
April 29th and May 6th, they will be visiting with
clients."

(Emphasis in original.)
The letter also noted that the firm had received many
requests for assistance with financial planning.  It explained
that,

"[i]f you are interested in saving money on either
income or estate taxes, increasing your monthly income,
or protecting yourself against inflation, our
representatives can provide you with valuable
information and services."

Immediately after that paragraph, the letter stated that "[t]here
will be no charge for the trust review unless you need to make
changes in your [legal] documents or execute new [legal]
documents."
The accused and Cornilles knew from the beginning that
the insurance agents' primary purpose was to sell their clients
life insurance products.  The joint venture agreement identified
the sale of insurance products as the joint venture's sole
purpose, (3) and a letter from J.L. Kizer and Associates had
identified April 29 to May 10 -- the same period that the accused
had told his clients the law firm's representatives would be
visiting with them in their homes -- as "[o]ur initial Sales
Thrust Target."  Despite that knowledge, the accused and
Cornilles did not disclose in the April 19 letter that most of
the firm representatives were out-of-state insurance agents, all
were affiliated with FSN, and all were compensated solely by the
commissions that they generated from the sale of insurance
products. (4)  Finally, the letter did not say that the accused
or Cornilles would share in any commissions that the insurance
agents generated.
After sending the letters, the law firm made follow-up
calls to set up the trust reviews with the clients. (5)  The
accused and Cornilles instructed the insurance agents that, on
arriving at a client's home, they should present two business
cards.  The first card contained the law firm's name, the agent's
name, and the law firm's address.  The second card identified the
reviewer as an insurance agent affiliated with FSN.  The accused
and Cornilles also told the agents that they should remind the
clients that they were not lawyers before they began the review.
During the trust review, the agents would examine the
client's trust documents as well as the client's financial
documents.  If the agent determined that the client needed to
replace existing investments or purchase new ones, the agent
would attempt to sell insurance products (typically either fixed
annuities or life insurance) to the client.  The accused and
Cornilles instructed the agents that, if the client decided to
purchase insurance products, the agents should disclose at the
point of sale that the agent and the lawyers would receive a
commission on the sale.
As the agents made their home visits, FSN provided the
law firm with daily sales reports.  The daily sales reports
listed the client's name, whether the agent had made a sale, the
insurance product that the client had purchased, and the premium. 
The daily sales reports also contained a space for the agents'
comments.  Some comments asked either the accused or Cornilles to
contact the client and reaffirm the wisdom of the client's
purchase.  On one report, the agent noted that the client had
purchased an insurance product that generated a $19,000 premium. 
The agent then noted, "Attorney should comment on the very wise
decision the client made in getting out of the stock market." 
Another report lists a $96,000 premium and states, in the comment
section, "Have [Cornilles] comment on how American National is a
very strong company and [how the client will] be better off with
the higher interest rates."
On May 3, 1996, after the insurance agents had begun
conducting the in-home trust reviews, the accused and Cornilles
asked Moore for a written opinion on the ethics of their joint
venture.  Although they supplied Moore with additional
information, significant gaps remained.  Moore understood that
the agents would sell insurance products only infrequently. 
Given that understanding, Moore told the accused and Cornilles
that he did not think that they needed to disclose, in the
initial letter to clients, that they would receive a portion of
any sales commission. (6)  After the joint venture began, the
accused and Cornilles revised the introductory letter.  The
revised letter stated that, "If you [the client] purchase any
investment or other products, we may receive compensation from
the issuing company." (7)  The accused and Cornilles sent the
revised letter to approximately 1,500 clients over approximately
a four-month period. 
Throughout the joint venture, the accused and Cornilles
maintained contact with Moore.  On May 28, 1996, Moore sent a
draft opinion letter to them noting possible problems with the
joint venture under DR 3-101(A) (prohibiting aiding nonlawyers in
unlawful practice of law), DR 3-103(A) (prohibiting nonlawyer
partnership if practice of law is involved), DR 3-102(A)
(prohibiting sharing legal fees with nonlawyers), and DR 2-103(A)
(prohibiting acceptance of referral fees).  Moore, however,
resolved those issues in favor of the trust review program.  In a
July 19, 1996, letter to the accused, Moore concluded that the
disclosure statement in the revised introductory letter was
adequate.
The trust reviews began on April 29, 1996, and ended in
the first part of November 1996.  During that roughly six-month
period, the accused, Cornilles, and FSN sent approximately 1,700
letters to the law firm's clients and made approximately 1,143
follow-up telephone calls.  The insurance agents examined
approximately 663 living trusts and sold annuities or life
insurance policies to approximately 160 clients. (8)  During
that six-month period, the agents generated approximately
$810,000 in commissions from the sale of insurance products to
the accused's clients.  The law firm received a third of that
amount or approximately $270,000.
The venture was so successful that the law firm,
primarily working through Cornilles, helped FSN develop and
market a trust review program for other lawyers. (9)  The law
firm developed an 11-item checklist for other lawyers to use to
operate a trust review program.  The ninth item on the checklist
told lawyers that, "[o]n rare occasions, particularly when a
large sale is involved, it may be advisable for you to personally
visit with the client * * * to confirm the credibility of the
agent and reaffirm the advisability of the sale."  The eleventh
item on the checklist told lawyers who implemented a trust review
program to "[s]it back and wait for the checks to roll in."
Some of the firm's clients were dissatisfied with the
insurance agents' actions.  Eight clients testified.  All were
elderly.  Some of them or their spouses were in ill health when
the agents visited them.  Those clients testified that, when the
insurance agents visited their homes, the agents gave them only
the first business card -- the card naming the agent and showing
that he or she was the law firm's representative.  The agents did
not give the clients the second business card, which identified
them as insurance agents affiliated with FSN.  Some of the
clients assumed that the agents were law firm employees and that
the firm was paying them.  They did not realize that either the
agents or the lawyers would receive a commission on the insurance
products that the agents were selling.
The clients testified that, once the insurance agents
got inside the house, the agents reviewed the trust (sometimes
briefly).  They then turned to the clients' assets and the sale
of insurance products.  One woman in her early eighties said
that, when she refused to sign the application for an annuity,
the insurance agent became angry with her.  She agreed initially
to buy a $10,000 annuity because that was all that she and her
husband could afford.  She explained, however, that, by the time
the insurance agent left their home, "he had every bit of our
money [approximately $80,000] that was in the bank."  She was
able to recover their money only after she reported the agent's
actions to a government official.
Another couple had a similar experience.  The wife was
in her mid-seventies and her husband had problems breathing.  The
wife explained that her husband was "so worn down" by the
insurance agent that they finally agreed to go to the bank,
liquidate their savings, and buy an annuity.  Because it was late
in the day, they suggested going to the bank the next morning. 
The insurance agent, however, insisted that they liquidate their
savings that day and drove them to the bank.  When the bank
employee asked the couple about their decision, the insurance
agent interrupted and answered for the couple.  The couple went
through with the transaction but realized, immediately after the
agent left, that they had made a mistake.  They tried
unsuccessfully to get in contact with him.  After several
attempts over the next few days, they finally were able to
rescind the transaction.
A third couple liquidated a $500,000 IRA so that they
could buy a fixed annuity.  After approximately a year, they
became dissatisfied with the annuity and called the issuing
company to ask about cancelling it.  Shortly afterwards, Guimond,
the president of FSN, called to talk them out of cancelling the
annuity.  During that conversation, the couple realized that the
person who had visited with them in their home and who they had
thought was an employee of the law firm in fact had been an
insurance agent affiliated with FSN.
The couple scheduled a meeting with the accused to
discuss their concerns.  Shortly afterwards, Guimond called the
couple and said that she wanted to sit in on their meeting with
the accused.  The couple explained that they wanted to speak with
the accused privately.  Guimond, however, was at the law firm
when the couple arrived for their meeting.  The accused persuaded
the couple to let Guimond participate.  During the meeting,
Guimond argued that the couple should keep the annuity.  Her
efforts proved unsuccessful, and the couple decided that it was
better to incur approximately $45,000 in surrender charges than
keep the annuity.
As noted, the trial panel found that the accused and
Cornilles had violated the Code of Professional Responsibility
through the acts of another, DR 1-102(A)(1), made
misrepresentations, DR 1-102(A)(3), disclosed their clients'
secrets or confidences and used them for their or another's
benefit, DR 4-101(B)(1) and (3), and had a conflict of interest,
former DR 5-101(A) (1996).  The trial panel found, however, that
the accused and Cornilles had not aided a nonlawyer in the
unlawful practice of law, DR 3-101(A).  The trial panel decided
to suspend the accused from the practice of law for 24 months and
to suspend Cornilles for 30 months.  After the trial panel issued
its decision, Cornilles submitted a Form B resignation, and only
the charges against the accused remain on review.
On review, the parties do not challenge two of the
trial panel's findings.  The Bar does not challenge the trial
panel's finding that accused did not aid the insurance agents in
the unlawful practice of law in violation of DR 3-101(A).  The
accused, for his part, concedes that the trial panel correctly
found that he had a conflict of interest in violation of former
DR 5-101(A) (1996).  Two issues remain on review.  The first is
whether the accused made misrepresentations.  The second is
whether he disclosed or used his clients' confidences or secrets.
On the first issue, the trial panel found that the
accused made five misrepresentations in violation of DR 1-102(A)(3):

"1.  The Accused misled [his] clients by having
trust reviewers present [law firm] business cards
without clearly disclosing that the reviewers were also
insurance salespersons and agents of [FSN].
"2.  The Accused failed to fully disclose the
purpose of the trust reviewer's contact with the
clients.
"3.  The Accused failed to disclose to [his]
clients the affiliation of the Accused with [FSN].
"4.  The Accused, through [his] agents who
conducted trust reviews, participated in a scheme that
collected a client's financial information for one
purpose (to conduct a trust review) without fully
disclosing that the Accused would, in addition, use
that same information for an entirely different purpose
(in an attempt to sell insurance products).
"5.  The Accused failed to disclose to some
clients and failed to make timely (pre-purchase)
disclosure to other clients of the financial interest
of the Accused in the clients' purchase of insurance
products." (10)

DR 1-102(A)(3) provides that "[i]t is professional
misconduct for a lawyer to * * * [e]ngage in conduct involving  
* * * misrepresentation."  To establish that the accused made a
misrepresentation, the Bar must prove by clear and convincing
evidence that the misrepresentation was "knowing, false, and
material in the sense that the misrepresentatio[n] would or could
significantly influence the hearer's decision-making process." 
In re Eadie, 333 Or 42, 53, 36 P3d 468 (2001).  A lawyer makes a
misrepresentation "either when the lawyer makes an affirmative
false statement or when the lawyer remains silent despite having
a duty to speak."  In re Lawrence, 337 Or 450, 464, 98 P3d 366
(2004).
With that background in mind, we turn to the trial
panel's findings.  The trial panel found initially that the
accused violated DR 1-102(A)(3) because the insurance agents
presented only one of two business cards when they met the
accused's clients; that is, the agents gave the accused's clients
a card stating that they were from the accused's law firm but did
not give them a second card stating that they were insurance
agents affiliated with FSN.  The accused argues that, even if
insurance agents misrepresented their status by not presenting
both cards, it does not follow that he violated DR 1-102(A)(3). 
The accused contends that he may be held accountable for the
insurance agents' failure to disclose their true status only if
he knew of the misrepresentation.
DR 1-102(A)(1) defines when, as a general rule, a
lawyer is responsible under the Code of Professional
Responsibility for another person's acts or omissions.  It
provides that it is "professional misconduct for a lawyer to * *
* [v]iolate these disciplinary rules, knowingly assist or induce
another to do so, or do so through the acts of another."  DR 1-102(A)(1).  Under the terms of that rule, the accused is
responsible for the insurance agents' misrepresentations only if
he knowingly assists or induces them to make misrepresentations
or knows that they are doing so.  See In re Ositis, 333 Or 366,
373-74, 40 P3d 500 (2002) (holding lawyer responsible under DR 1-102(A)(1) for another person's misrepresentation when lawyer
"understood [other person's] intentions and attached his own set
of directions to the task"). (11)
Here, the record shows that the accused told the
insurance agents to present both cards when they visited the 
clients in their homes.  Although eight persons testified that
agents presented only the first card to them, none of those
witnesses testified that they reported that omission to the
accused or his law firm. (12)  The accused may have been
negligent in implementing a system that permitted the insurance
agents to present only one of two business cards to his clients. 
He also may have been negligent in supervising the agents'
actions, but the Bar failed to prove by clear and convincing
evidence that the accused knew that the insurance agents were
misrepresenting their status by presenting only one of the two
business cards.
The remaining four allegations concern, in one form or
another, the accused's failure to disclose the nature and purpose
of the insurance agents' home visits.  We begin with the trial
panel's last finding because it puts the other three findings in
context.  The trial panel found that the accused failed to
disclose, in a timely fashion, that he and his law partner had a
financial interest in the agents' sale of any insurance products.
As the accused does not dispute, he had a duty to
disclose that potential conflict of interest before his clients
met with the insurance agents.  See former DR 5-105(A) (1996)
(prohibiting continued employment when lawyer's financial
interest in transaction could affect lawyer's professional
judgment unless lawyer obtains client's consent after full
disclosure).  There is also no dispute that the first 200 letters
that the accused sent to his clients did not satisfy that duty. 
Those letters failed to mention either the accused's or his
partner's financial interest in any insurance sales. (13)
That omission left the false impression that the
accused was acting solely in his clients' interests in providing
for trust reviews.  If the accused's clients had known of his
financial interest in the matter, they might not have agreed to
the trust reviews that the accused recommended.  The omission of
any mention in the introductory letter of the accused's financial
interest in any sale of insurance products was material, knowing,
and a misrepresentation.
For similar reasons, we agree that the accused's
failure to disclose, in the introductory letter to his clients,
that the persons coming to the clients' homes were insurance
agents (the trial panel's second finding), that the insurance
agents were associated with FSN (the trial panel's third
finding), and that the insurance agents would use the information
they gained in reviewing the clients' trust to attempt to sell
them insurance products (the trial panel's fourth finding) were
also misrepresentations.  The omission of that information left a
false impression and was material.  As the accused acknowledged,
if his clients had known the agents' status and role, they might
not have agreed to meet with them or disclose their financial
information to them.  Finally, the omission was knowing.  In sum,
the introductory letter that the accused sent to his clients
contained four misrepresentations.
In support of its second cause of complaint, the Bar
proved that the accused disclosed his clients' names, addresses,
and the fact that they had a living trust to the insurance agents
so that they could review the clients' trusts and sell them
insurance products.  The Bar contends that that disclosure
violated two subsections of DR 4-101(B), which provides, in part:

"Except when permitted under DR 4-101(C), a lawyer
shall not knowingly:
"(1) Reveal a confidence or secret of the lawyer's
client.
"* * * * *
"(3) Use a confidence or secret of the lawyer's
client for the advantage of the lawyer or of a third
person, unless the client consents after full
disclosure."

On review, the accused argues that the information that
he disclosed to the insurance agents was neither a confidence nor
a secret.  Alternatively, he argues that, because the insurance
agents were acting as agents of the law firm, he did not reveal
information to them in violation of DR 4-101(B)(1). (14) 
Because we find that the information that the accused disclosed
constituted, under the circumstances of this proceeding, a client
secret, we need not decide whether it was a client confidence.
DR 4-101(A) defines a secret, in part, as "information
[other than a confidence] gained in a current or former
professional relationship * * * the disclosure of which * * *
would be likely to be detrimental to the client."  By its terms,
that rule focuses on the source of the information disclosed and
the likely effect of the disclosure.  Here, there is no question
about the source of the information that the accused disclosed. 
He learned it from his clients in the course of representing
them.  The question instead is whether disclosing the information
to the insurance agents was "likely to be detrimental to the
[accused's] client[s]."
Five facts bear on that question.  First, the accused
held the agents out as representatives of the firm, erroneously
suggesting that the agents would be acting in a fiduciary
capacity. (15)  Second, the accused did not disclose in the
introductory letters that either he or the agents would receive
any commission from any sale that occurred -- an omission that
also would cause the clients to place greater trust in the
agent's recommendations. (16)  Third, during the home visits,
the accused's elderly clients disclosed their confidential
financial information to the insurance agents as part of the
trust review process.  Fourth, most of the insurance agents came
from other states, none had an ongoing relationship with the
accused's clients, and all received no compensation for their
work in Oregon other than the commissions that they generated. 
Fifth, the accused's clients were, on average, affluent, elderly,
and, as his law partner testified, more susceptible to
salespeople.  
In light of the false impression that the accused
created that the agents would be acting in a fiduciary capacity,
the agents' lack of an ongoing relationship with the accused's
clients, the compensation structure, and the accused's clients'
vulnerable status, we find that the disclosure was likely to
result in this instance in the agents selling a substantial
number of the accused's clients unnecessary insurance products,
with the attendant transaction costs.  As the record discloses,
those costs were not insubstantial.  The agents generated
approximately $810,000 in commissions over a six-month period
from the sale of insurance products to the accused's elderly
clients.  We conclude that, under the circumstances present here,
the information that the accused disclosed was "likely to be
detrimental" to his clients and thus a client secret within the
meaning of DR 4-101(A).
Having concluded that the information that the accused
disclosed was a secret, we turn to the question whether the
accused knowingly disclosed that secret in violation of DR 4-101(B)(1) or knowingly used it for his own or another's advantage
in violation of DR 4-101(B)(3).  Regarding DR 4-101(B)(1), the
accused argues that the persons to whom he revealed the
information were the law firm's agents for the purposes of
conducting the trust review.  He argues that disclosing client
secrets to law firm agents did not violate DR 4-101(B)(1) because
the information disclosed was reasonably related to the agency. 
The Bar does not dispute either of the accused's propositions but
contends that, even if the accused did not violate DR 4-101(B)(1), he still violated DR 4-101(B)(3).
We agree with the Bar that the accused violated DR 4-101(B)(3). (17)  That rule prohibits lawyers from knowingly
using their clients' confidences and secrets for their own or
another person's advantage.  In determining whether the accused
violated that rule, there is little dispute that the accused
disclosed his clients' names and addresses to FSN for his own or
another's advantage.  The disclosure resulted in approximately
$810,000 in commissions for the accused, Cornilles, FSN, and its
agents.  The dispute centers instead on whether the accused acted
knowingly; that is, did the accused know that the information he
disclosed was "likely to be detrimental" to his clients and thus
was a secret?
On that point, the accused sent out batches of letters
to his clients, beginning on April 19, 1996, and ending on
October 25, 1996. (18)  Even if the accused were not aware that
the disclosure was likely to be detrimental when he sent out the
first letters, that conclusion became inescapable as the accused
and Cornilles began receiving a staggeringly large amount of
sales commissions.  The amount of those commissions -- standing
alone -- leads us to conclude that the accused knew that it was
likely that the agents were persuading the accused's elderly
clients to make unnecessary purchases.  Additionally, the accused
had actual notice of some problems.  For instance, Cornilles and,
we infer, the accused knew in July 1996 that a client cancelled
an earlier decision to sell her existing investments and buy an
annuity when she discovered certain transaction costs that the
agent had not mentioned.  Similarly, Cornilles reported to the
accused on September 16, 1996, that the daughter of another one
of their clients was concerned "about [the agent] pressuring her
mother." (19)  We find that, at least by October, the accused
was aware that the disclosure of his clients' names and addresses
was likely to be detrimental, and yet he continued to disclose
that information to FSN during the month of October in violation
of DR 4-101(B)(3).
In its fifth cause of complaint, the Bar focused on one
couple whom the accused represented, the Martindells.  The Bar
alleged that the accused, both as a result of his own conduct and
as a result of an insurance agent's conduct, violated the same
disciplinary rules that we have discussed.  Our conclusions
regarding the Martindells mirror the conclusions stated above,
with one exception.  Because the Martindells were among the first
clients whom the insurance agents contacted, the Bar has not
persuaded us that the accused violated DR 4-101(B)(3) in regard
to them.  However, the Bar has proved that the accused's other
actions regarding the Martindells violated DR 1-102(A)(3) and
former DR 5-101(A) (1996). 
Having concluded that the accused violated DR 1-102(A)(3), DR 4-101(B)(3), and former DR 5-101(A) (1996), we turn
to the appropriate sanction.  We first consider:  (1) the duty
violated; (2) the accused's mental state; and (3) the actual or
potential injury caused by the accused's conduct.  In re Kluge,
332 Or 251, 259, 27 P3d 102 (2001); American Bar Association's
Standards for Imposing Lawyer Sanctions 3.0 (1991) (amended 1992)
(ABA Standards).  We next decide whether any aggravating or
mitigating circumstances exist.  Kluge, 332 Or at 259; ABA
Standards 3.0.  Finally, we consider the appropriate sanction in
light of the court's case law.  Kluge, 332 Or at 259.
The accused violated three duties that he owed his
clients.  He knowingly violated his duty to preserve his clients'
secrets.  ABA Standards 4.2.  He knowingly violated his duty of
candor to his clients.  ABA Standards 4.6.  Finally, the accused
knowingly violated his duty to avoid conflicts of interest.  ABA
Standards 4.3.  Regarding the actual or potential injury, some of
the accused's clients sustained actual injury as a result of his
violations.  As noted, one couple had to pay a surrender fee of
over $45,000 to cancel an investment.  Others had to undertake
substantial steps to avoid the investments that the insurance
agents pressured them into purchasing.  Still others faced the
risk that the agents would pressure them into unnecessarily
selling their existing investments and purchasing insurance
products with, as the record shows, substantial transaction
costs.
The ABA Standards establish, as a preliminary matter,
that suspension is the appropriate sanction for each of the three
violations.  They provide that "[s]uspension is generally
appropriate when a lawyer knowingly deceives a client, and causes
injury or potential injury to the client."  ABA Standards 4.62. 
Similarly, "[s]uspension is generally appropriate when a lawyer
knowingly reveals information relating to the representation of a
client not otherwise lawfully permitted to be disclosed, and this
disclosure causes injury or potential injury to a client."  ABA
Standards 4.22.  Finally, "[s]uspension is generally appropriate
when a lawyer knows of a conflict of interest and does not fully
disclose to a client the possible effect of that conflict, and
causes injury or potential injury to a client."  ABA Standards
4.32.
Having made a preliminary determination concerning the
sanction, we next consider any aggravating and mitigating
circumstances.  We find three aggravating circumstances.  First,
the accused had a selfish motive.  ABA Standards 9.22(b).  The
accused repeatedly put his own interest in receiving commissions
from the sale of insurance products above his clients' interests. 
Second, the accused committed three interrelated violations and
did so multiple times.  ABA Standards 9.22(d).  Finally, the
accused's elderly clients were particularly vulnerable.  ABA
Standards 9.22(h).  The record discloses that the accused's
clients trusted their lawyer and believed that they could trust
the persons whom he had sent to help them.
The accused identifies two mitigating circumstances: 
the absence of a prior disciplinary record and his reliance on
Moore's ethics advice.  We agree that the accused has no prior
disciplinary record.  ABA Standard 9.32(a).  We also have
observed that reliance on timely ethics advice may provide
mitigation.  In re Benett, 331 Or 270, 281, 14 P3d 66 (2000); see
ABA Standards 9.31 (defining "mitigating circumstances" generally
as "any considerations or factors that may justify a reduction in
the degree of discipline to be imposed").  We give that factor
little weight here, however.  The accused and Cornilles entered
into the joint venture with FSN before providing the details of
that venture to Moore.  Even when they later provided additional
information to Moore, they failed to disclose a critical fact. 
Cornilles told Moore that the trust reviewers would sell
insurance products to the accused's clients "in only a minority
of cases."  Indeed, Moore understood that the likelihood of a
sale was so remote that the possibility of the accused's receipt
of a commission from a sale created only a possible conflict of
interest.
As the amount of the commissions that the agents
generated suggests, the likelihood of a sale was greater than
Moore understood.  Had Moore had accurate information regarding
the joint venture, he might have concluded, as we do, that the
accused used client secrets for his own advantage, failed to
disclose a conflict of interest, and made misrepresentations to
his clients.  In these circumstances, we give only little weight
to the accused and Cornilles' reliance on Moore's advice. (20) 
Having considered the aggravating and mitigating factors, we
conclude that, although the accused had no prior disciplinary
record and did consult an ethics lawyer, his selfish motive, the
number of violations, and the heightened vulnerability of some of
his clients substantially outweigh the mitigating factors.
Finally, we turn to this court's case law for guidance. 
Relying on In re Morin, 319 Or 547, 878 P2d 393 (1994), the Bar
argues that disbarment is the appropriate sanction.  In Morin,
the lawyer intentionally and repeatedly directed his staff to
certify falsely that they had witnessed his clients sign
documents.  He intentionally lied to the Bar when asked about
that practice, and he assisted his staff in unlawfully practicing
law.  Finally, as this court found, the lawyer committed theft by
deception.  In this proceeding, the accused's conduct was not
criminal, and the intentional disregard for the clients'
interests that was present in Morin is absent here.
We do not mean to minimize the accused's actions.  He
effectively sold his client list to insurance agents for a cut of
the commission.  He withheld information from potentially
vulnerable clients in order to permit those agents to gain access
to them in their homes, and he failed to provide a timely
disclosure of his conflict of interest.  Given the scale of the
accused's misrepresentations and conflicts of interest, coupled
with his selfish motive for committing the misconduct and the
actual and potential injury involved in his misconduct, we
determine that the accused should be suspended from the practice
of law for 36 months.
The accused is suspended from the practice of law for
36 months, effective 60 days from the date of the filing of this
decision.

1. The Oregon Rules of Professional Conduct became
effective January 1, 2005.  Because the conduct at issue here
occurred before that date, the Code of Professional
Responsibility applies.
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2. The accused and Cornilles later mailed the same letter
to another 100 clients.
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3. The joint venture agreement states that its purpose is
"to solicit insurance sales utilizing [J.L. Kizer and
Associates]/FSN marketing agreements and soliciting agents and
directed to the client data base of [the law firm]."
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4. The accused and Cornilles later explained that they did
not identify the insurance agents as such because they were
concerned that their clients would not agree to meet with the
agents if they knew their true status.  
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5. The law firm made the first 100 follow-up telephone
calls.  After that, the firm turned the task of making follow-up
telephone calls over to FSN.
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6. Moore explained that, in his view, the accused and
Cornilles had only a possible conflict, not a likely one. 
Accordingly, he did not see the need for an earlier disclosure.
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7. Although Moore had told the accused and Cornilles that
they need not disclose any conflict of interest to their clients
before the sale, they modified the letter after reviewing a
letter from a Colorado lawyer involved in a similar joint
venture.
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8. Although 160 clients purchased insurance products, 54
clients cancelled their purchases.  Cornilles testified that the
sales were cancelled for a variety of reasons, including the
client's failure to qualify for the product, "buyer[']s remorse,"
and the client's decision not to incur the possibility of
penalties if they later cancelled the purchase.  As a result,
only 106 of the original 160 sales actually resulted in a client
purchasing and receiving an insurance product. 
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9. In June 1996, FSN approached the law firm about
marketing the trust review program to other lawyers.  FSN and the
law firm apparently entered into an agreement to that effect and
by August had entered into marketing agreements with law firms in
other states.
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10. The Bar does not contend on review that the accused
made additional misrepresentations.
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11. As Ositis makes clear, the adverb "knowingly" modifies
the verb "do" as well as the verbs "assist" and "induce."  The
decision in In re Morin, 319 Or 547, 878 P2d 393 (1994), does not
point in a different direction.  The court held in that case that
a lawyer who gave his paralegals "too much freedom in dealing
with clients, thereby allowing [the paralegals] to provide legal
advice to those clients" violated DR 3-101(A).  Id. at 564.  The
rule at issue in that case provides that "[a] lawyer shall not
aid a nonlawyer in unlawful the practice of law" and does not
contain the requirement -- present in the rule at issue here --
that the lawyer's conduct be knowing.  
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12. The Martindells reported the agent's conduct to the
accused a year after the agent met with them in their home, long
after the trust review program had ended.
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13. Although the accused had instructed the insurance
agents to disclose his interest after the client had agreed to
the sale, that disclosure comes too late to cure the earlier
omission.
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14. The accused does not contend that his actions came
within one of the exceptions to the rule set out in DR 4-101(C),
nor does he argue that his clients consented to his using their
confidential or secret information after full disclosure.  
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15. Both the introductory letter that the accused sent and
the first business card held out the insurance agents as the
firm's representatives.  Even if the  agents handed out a second
business showing their affiliation with FSN, both the letter and
the first business card left the erroneous impression that the
agents would be acting as fiduciaries.
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16. The agents were supposed to disclose at the point of
sale that the accused and Cornilles would receive a portion of
the commission.  Even if the agents disclosed that fact, and we
find that many did not, the disclosure came too late.  The agents
did not make the disclosure until after the client had agreed to
buy the insurance products.
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17. In view of the Bar's apparent concession on DR 4-101(B)(1), we decline to find that the accused violated that
rule.
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18. The accused's employee explained:

"The first group of letters was sent on approximately
April 10, 1996, with subsequent mailings made on
approximately May 13, June 5, June 13, June 19, July
12, July 17, July 18, July 19, July 29, October 2 and
October 25, [1996]."

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19. Cornilles responded to the daughter's concerns by
directing the agent not to meet with the mother any more and by
telling the accused, who was going to be meeting with the mother,
that "this sale can be saved with proper handling and reassurance
from you that this is a good move for her."
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20. The accused also contends that delay in the
disciplinary proceedings is a mitigating factor.  ABA Standards
9.32(j) (amended 1992).  The accused, however, does not provide
any facts or argument to support this contention.  We note that,
although this proceeding has taken a substantial amount of time
to litigate, the case is factually complex and was hard fought. 
In the absence of any showing that the Bar took an unreasonably
long period of time to pursue this matter, we do not give this
factor any weight.
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