Court Opinion

ID: 4203787
Source: CourtListenerOpinion
Date Created: 2017-09-15 14:07:23.160693+00
Date Added: 2024-06-11T09:24:14.198285
License: Public Domain

IN THE SUPREME COURT OF IOWA
                             No. 17–0254

                       Filed September 15, 2017

IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD,

      Appellee,

vs.

RODNEY HOWARD POWELL,

      Appellant.

      On appeal from the report of the Iowa Supreme Court Grievance

Commission.

      Grievance commission recommends a suspension of an attorney’s

license to practice law for violations of ethical rules.   LICENSE

SUSPENDED.

      Rodney H. Powell, West Des Moines, pro se.

      Tara van Brederode and Amanda K. Robinson, Des Moines, for

appellee.
                                    2

CADY, Chief Justice.

      The Iowa Supreme Court Attorney Disciplinary Board charged

attorney Rodney Powell with violating the rules of professional conduct

pertaining to conflicts of interest with current clients, using information

obtained in the course of representation against current clients, and

using information obtained in the course of representation against

former clients. The Iowa Supreme Court Grievance Commission found

Powell violated the rules and recommended a six-month suspension.

Upon our de novo review, we find Powell violated the Iowa Rules of

Professional Conduct and impose a two-year suspension.

      I. Background Facts and Proceedings.

      Rodney Powell is seventy years old.       He has been licensed to

practice law in Iowa since 1973. His legal background and disciplinary

history was last documented in an opinion by this court in 2013. See

Iowa Supreme Ct. Att’y Disciplinary Bd. v. Powell (Powell II), 830 N.W.2d

355, 356–57 (Iowa 2013).     At that time, we added to his disciplinary

history by finding he engaged in a series of trust fund violations over a

period of years.   Id. at 357–58.   The violations primarily involved the

premature withdrawal of attorney fees from his trust account. Id. at 357.

We imposed an interim suspension from the practice of law for seven

months followed by an additional suspension of three months.         Id. at

356, 359–60. Powell had been previously suspended from the practice of

law in 2007 for six months after he engaged in a series of unethical

actions over a period of time involving the collection of attorney fees.

Iowa Supreme Ct. Att’y Disciplinary Bd. v. Powell (Powell I), 726 N.W.2d

397, 408 (Iowa 2007). Powell was also privately admonished in 2005 for

charging an excessive fee in a case and was privately admonished in
                                         3

2010 “for failing to make an accounting before withdrawing fees from his

trust account.” Powell II, 830 N.W.2d at 356.

        In this disciplinary action, Powell is accused of obtaining a

$20,000 loan from the administrator of an estate during the time he

served as the designated attorney for the estate in violation of the rules of

professional conduct.       The administrator was the beneficiary of a

$40,000 life insurance policy on the life of the decedent in the estate.

The insurance company paid the insurance proceeds to Powell, and he

deposited them in his law firm trust account. At the request of Powell,

the administrator orally agreed to loan Powell $20,000 of the proceeds.

Powell withdrew the loan proceeds from the trust account before a

written    loan    agreement     was   executed.        The   written   agreement

subsequently prepared by Powell provided for the law firm to repay the

loan in monthly installments at ten percent interest. The amount of each

monthly payment was to be based on an unspecified amount of firm

receipts received during the preceding month. Powell claimed he asked

the administrator if he wished to seek independent counsel before

agreeing to make the loan. The administrator denied any request was

made.

        Powell    subsequently    made       sporadic   and   minimal    monthly

payments.         The administrator eventually filed a breach-of-contract

action.   Powell settled the lawsuit by agreeing to pay $25,000 to the

administrator in monthly installments of $1500.

        The Board charged Powell with violating Iowa Rules of Professional

Conduct 32:1.8(a) (improperly entering into a business transaction with

a client), 32:1.8(b) (using information relating to representation of a

client to the disadvantage of the client), and 32:1.9(c) (using information

relating to the representation of a former client to the disadvantage of the
                                      4

former client).    The commission found Powell violated Iowa Rules of

Professional Conduct 32:1.8(a), 1.8(b), and 1.9(c). It recommended that

Powell’s license to practice law be suspended for six months.          It also

recommended Powell reimburse the administrator’s travel costs to testify

at the hearing.

      II. Violations.

      “A client has a right to expect loyalty and independent judgment

from an attorney.” Iowa Supreme Ct. Att’y Disciplinary Bd. v. Johnston,

732 N.W.2d 448, 455 (Iowa 2007); see also Iowa Supreme Ct. Bd. of Prof’l

Ethics & Conduct v. Fay, 619 N.W.2d 321, 326 (Iowa 2000) (“A person

who seeks legal advice must be able to ‘expect unfettered independence

of professional judgment of a lawyer whose loyalty to that person is

total.’ ” (quoting Comm. on Prof’l Ethics & Conduct v. Oehler, 350 N.W.2d

195, 199 (Iowa 1984))).      This concept is crucial to the client–lawyer

relationship, and thus, it rightfully pervades our rules on conflicts of

interest with clients and the duties owed to them. See Iowa Rs. Prof’l

Conduct 32:1.8–.9.

      “While rule 32:1.8(a) does not prohibit business dealings between a

lawyer and his or her client, it imposes stringent requirements on such a

transaction.”     Iowa Supreme Ct. Att’y Disciplinary Bd. v. Marks, 814

N.W.2d 532, 538 (Iowa 2012).          Of particular importance, the rule

“requires that the client . . . be advised, in writing, of the desirability of

seeking the advice of independent legal counsel,” and “that the client be

given a reasonable opportunity to obtain such advice.”         Iowa R. Prof’l

Conduct 32:1.8 cmt. 2. These requirements “mitigate[] ‘the possibility of

overreaching’ created by an attorney’s ‘legal skill and training, together

with the relationship of trust and confidence between lawyer and

client.’ ” Iowa Supreme Ct. Att’y Disciplinary Bd. v. Pederson, 887 N.W.2d
                                      5

387, 391–92 (Iowa 2016) (quoting Iowa R. Prof’l Conduct 32:1.8 cmt. 1).

In other words, the rule not only discourages fraudulent activity by

attorneys, see, e.g., Comm. on Prof’l Ethics & Conduct v. Yates, 420

N.W.2d 455, 457–58 (Iowa 1988) (noting attorney failed to advise clients

to seek other legal counsel and then successfully converted client funds),

but also helps to ensure well-meaning attorneys do not inadvertently

cause serious harm to their clients, see, e.g., Iowa Supreme Ct. Att’y

Disciplinary Bd. v. Wright, 840 N.W.2d 295, 301–02 (Iowa 2013)

(concluding attorney violated rule requiring disclosures despite attorney’s

belief he was securing a good investment for his clients). Thus, the rule

serves to protect confidence in the attorney–client relationship. To effect

this purpose, it “must be rigidly followed by our bar, and [it] is strictly

enforced.” Fay, 619 N.W.2d at 325 (applying predecessor to rule 32:1.8).

      Powell initially argued he was not subject to the rule because the

administrator was not his client. He claimed he represented the estate,

not the fiduciary.   However, as we have recently held, and as Powell

subsequently acknowledged, an attorney representing an estate can owe

ethical duties to the estate’s fiduciary, particularly if the fiduciary sought

out the lawyer’s services. Pederson, 887 N.W.2d at 392 (“Normally, an

attorney–client relationship exists between the executor of an estate and

the attorney designated by the executor to probate the estate.”).

      The parties do not dispute that a loan is a business transaction.

Iowa Supreme Ct. Att’y Disciplinary Bd. v. Wintroub, 745 N.W.2d 469,

474–75 (Iowa 2008).      The rule prohibits business transactions with

clients, such as a loan, unless

            (1) the transaction and terms on which the lawyer
      acquires the interest are fair and reasonable to the client and
      are fully disclosed and transmitted in writing in a manner
      that can be reasonably understood by the client;
                                     6
            (2) the client is advised in writing of the desirability of
      seeking and is given a reasonable opportunity to seek the
      advice of independent legal counsel on the transaction; and

            (3) the client gives informed consent, in a writing
      signed by the client, to the essential terms of the transaction
      and the lawyer’s role in the transaction, including whether
      the lawyer is representing the client in the transaction.

Iowa R. Prof’l Conduct 32:1.8(a)(1)–(3). In short, the rule requires (1) fair

terms that are fully disclosed, (2) advice on independent counsel and the

opportunity to obtain it, and (3) informed consent. These requirements

must each be evidenced in writing.

      We agree with the findings of the commission that Powell violated

the rule. The terms of the agreement were not fair or fully disclosed and

the critical requirements to enter into the transaction were ignored,

including the duty of documentation. As a result, we find it unnecessary

to consider the companion violations alleged by the Board. Instead, we

turn to sanctions.

      III. Sanctions.

      “Because ‘we strive to achieve consistency in the discipline of Iowa

lawyers who violate our rules of professional conduct,’ our prior cases are

relevant in our determination of the appropriate sanction.”               Iowa

Supreme Ct. Att’y Disciplinary Bd. v. Khowassah, 890 N.W.2d 647, 651

(Iowa 2017) (quoting Powell II, 830 N.W.2d at 358). Powell ignored the

rules governing conflicts of interest with a client.     Our sanctions for

similar conduct have ranged from a public reprimand, see Marks, 814

N.W.2d at 542, to revocation, see Comm. on Prof’l Ethics & Conduct v.

Hall, 463 N.W.2d 30, 36 (Iowa 1990). However, we have typically only

used reprimands in this context if the attorney had already served a time

of suspension for the underlying conduct.       See Marks, 814 N.W.2d at

542; Wintroub, 745 N.W.2d at 477. On the other end of the spectrum, we
                                    7

typically reserve revocation in this context for only the most serious

violations, such as when the attorney actually converted the client’s

property. See Hall, 463 N.W.2d at 36; Yates, 420 N.W.2d at 458. Thus,

suspensions for violating the conflict-of-interest rules ordinarily range

from one month, see Iowa Supreme Ct. Att’y Disciplinary Bd. v. Kaiser,

736 N.W.2d 544, 546 (Iowa 2007); Fay, 619 N.W.2d at 327, to one year,

see Wright, 840 N.W.2d at 304.      We have recently imposed sixty-day

suspensions for violating our conflicts rules. See Iowa Supreme Ct. Att’y

Disciplinary Bd. v. Willey, 889 N.W.2d 647, 658 (Iowa 2017); Pederson,

887 N.W.2d at 395.      In one of these cases, like here, the attorney

obtained a loan from the client without complying with the rules

governing business transactions. See Pederson, 887 N.W.2d at 393. In

another case involving a loan from a client, we noted we would have

required a three- to six-month suspension but for the fact the attorney

already served a suspension for the underlying conduct. See Wintroub,

745 N.W.2d at 477.

      Notwithstanding, we are confronted with a significant aggravating

factor in this case. In addition to client harm, the pattern of unethical

conduct by Powell over the last decade raises a serious and fundamental

question of his fitness to practice law. See Iowa Supreme Ct. Bd. of Prof’l

Ethics & Conduct v. Beckman, 674 N.W.2d 129, 139 (Iowa 2004).          We

begin to lose hope that lawyers will ever understand and meet their

ethical obligations when they repeatedly engage in unethical conduct. Id.

At some point, public protection and the reputation of the profession

justify the revocation of a license to practice law. Powell is approaching

this point. He continues to fail to honor the ethical boundaries of the

profession. However, we have not adopted a three-strikes approach to

revocation.   The current discipline will be the third for Powell, but it
                                     8

involves a single incident. Unlike in Beckman, we are not faced with a

new series of unethical conduct that justifies losing hope that he could

practice law in an ethical manner again.       Cf. id.   His background of

discipline justifies a sanction greater than recommended by the

commission, but not revocation.

      Considering all relevant factors, we suspend Powell’s license to

practice law with no possibility of reinstatement for two years from the

date of this opinion.

      IV. Conclusion.

      We suspend Rodney Powell’s license to practice law in this state

with no possibility of reinstatement for a period of two years from the

date of the filing of this opinion. This suspension shall apply to all facets

of the practice of law. See Iowa Ct. R. 34.23(3). Powell shall comply with

all requirements of the court rules associated with a suspension. See id.

rs. 34.23(1)–(4), .24(1)–(2).   Upon any application for reinstatement,

Powell shall have the burden to show he has not practiced law during the

period of suspension and that he meets the requirements of Iowa Court

Rule 34.25.    He shall also establish he satisfied or discharged the

settlement of the lawsuit brought by the administrator.           See Iowa

Supreme Ct. Att’y Disciplinary Bd. v. Lynch, ___ N.W.2d ___ (Iowa 2017).

The costs of this proceeding, including the administrator’s mileage costs

of $1251 to attend the commission hearing as a witness, are assessed

against Powell.   See Iowa Ct. R. 36.24(1); see also Iowa Code § 625.2

(2017).

      LICENSE SUSPENDED.

      All justices concur except Wiggins, J., who dissents.
                                       9

                #17–0254, Iowa Supreme Ct. Att’y Disciplinary Bd. v. Powell

WIGGINS, Justice (dissenting).

      I once again dissent to any sanction short of revocation. See Iowa

Supreme Ct. Att’y Disciplinary Bd. v. Powell (Powell II), 830 N.W.2d 355,

360–64 (Iowa 2013) (Wiggins, J., dissenting) (calling for the revocation of

Powell’s license). For the last twelve years, Powell has managed to use

his clients’ funds contrary to our ethical rules. His extensive disciplinary

history is as follows.

      In 2005, Powell received a private admonition for charging an

excessive fee to a client. 1 Powell II, 830 N.W.2d at 356 (majority opinion).

In 2007, we suspended Powell’s license to practice law for six months

because of his numerous and persistent unethical actions involving the

collection of fees from clients. Iowa Supreme Ct. Att’y Disciplinary Bd. v.

Powell (Powell I), 726 N.W.2d 397, 408 (Iowa 2007).            In 2010, Powell

received another private admonition for failing to make an accounting

before withdrawing fees from his trust account. Powell II, 830 N.W.2d at

356. In 2011, we temporarily suspended Powell from practicing law for

seven months and appointed a trustee to take control of his trust

account in response to his various trust violations. Id. at 356, 359–60.
At the time, the trustee determined his trust account was short

approximately $43,000. Id. at 356. In 2013, we imposed a three-month

suspension for the same trust account violations that led to his interim

suspension in 2011. Id. at 359–60.

      Within nine months of his most recent reinstatement, Powell once

again flouted our rules of professional conduct. It is apparent to me that

      1“While    a prior private admonition is not discipline, we consider it an
aggravating factor” in a subsequent disciplinary case.     Iowa Supreme Ct. Att’y
Disciplinary Bd. v. West, ___ N.W.2d ___, ___ (Iowa 2017).
                                     10

Powell’s practice of law does not generate enough income to support his

practice or his lifestyle. This case is similar to Iowa Supreme Court Board

of Professional Ethics & Conduct v. Beckman, 674 N.W.2d 129 (Iowa

2004). There, we said,

              Based on the serious and repetitive nature of
        Beckman’s ethical violations, we think he is not fit to
        practice law. For the same reason, we harbor no hope that
        he will understand and meet his ethical responsibilities in
        the future. Therefore, the only way in which the public can
        be protected is by revocation of his license. This sanction is
        necessary, not only to protect the public, but also to protect
        the reputation of the bar as a whole.

Id. at 139 (citations omitted).
        Here, Powell found a way to use his clients’ assets for personal

gain.    Although he did not convert his clients’ funds, his unethical

conduct allowed him to gain access over the funds.         This conduct is

similar to the conduct for which we previously disciplined him. Despite

the fact that Powell already received discipline, he has continued in his

unethical behavior. I am convinced that mere suspension is not enough

to deter Powell from committing further questionable conduct.

        We revoke an attorney’s license based on the nature and severity of

the attorney’s conduct. See, e.g., Iowa Supreme Ct. Att’y Disciplinary Bd.

v. Green, 888 N.W.2d 398, 405 (Iowa 2016) (revoking the license of an

attorney with no prior violations who misappropriated client funds); Iowa

Supreme Ct. Att’y Disciplinary Bd. v. Crum, 861 N.W.2d 595, 606 (Iowa

2015) (theft of client funds).    Revocation is almost axiomatic when an

attorney converts a client’s funds. Iowa Supreme Ct. Att’y Disciplinary

Bd. v. Thomas, 844 N.W.2d 111, 117 (Iowa 2014). I am not advocating a

three-strike-and-you-are-out rule.        However, Powell’s conduct, the

similarities to his previous violations, and the repetitive nature of his
                                     11

ethical violations, lead me to conclude he is not fit to practice law. Most

important to me is that all of Powell’s violations demonstrate his

recurrent improper use of client funds to sustain his law practice.

Although he did not outright convert his clients’ funds, he found a way

on   three   separate   occasions   to    access    these   funds   unethically.

Furthermore, he appears not to have learned anything from his prior

disciplinary proceedings.     For the protection of the public, and the

integrity of the bar, I would revoke his license.