Bristow, In re

• Court: Supreme Court of Oregon
• Writing for the Court: PER CURIAM
• Citation: 301 Or. 194,721 P.2d 437
• Decision Date: 17 June 1986
• Parties: In re Complaint as to the Conduct of Walter S. BRISTOW III, Accused. OSB 82-52; SC S30293. . *

Page 437

721 P.2d 437 301 Or. 194 In re Complaint as to the Conduct of Walter S. BRISTOW III, Accused. OSB 82-52; SC S30293. Supreme Court of Oregon,
In Banc. ^* Submitted on Record and Briefs
Sept. 6, 1984.
Decided June 17, 1986.

[301 Or. 195] David M. Logan, Springfield, submitted a brief for the accused.

Charles G. Duncan, Eugene, submitted a brief as counsel for the Oregon State Bar.

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[301 Or. 196] PER CURIAM.

This is a lawyer discipline proceeding which was instituted by the Oregon State Bar in January 1982, against Walter S. Bristow III. The accused was charged with two violations of the Code of Professional Responsibility alleging a conflict of interest and the failure to preserve the confidences of a client.

The complaint arose out of the accused's relationship with Unlimited Business Exchange (UBE), a barter-trade business. A Mr. Barnes and a Mr. Thomason operated a UBE franchise in Eugene, Oregon. The franchise had been granted to them in April 1979, by Willis L. Wright & Associates, Inc., a Utah corporation. Mr. Wright was the president of the corporation. ¹ In 1980, Barnes and Thomason retained the accused as counsel for their franchise.

In 1981, Barnes and Thomason began having doubts about the stability of their relationship with Wright, and they discussed these concerns with the accused. Evidently, other franchisees had similar doubts, because in June 1981, Wright held a meeting in Salt Lake City with all his franchisees in an attempt to address their concerns. At this meeting Wright indicated that he would take steps to resolve the problems.

Approximately one month after the Salt Lake City meeting, Barnes and Thomason found themselves in a position where they needed to depend upon Wright for protection of their commercial interests. The problem involved a Mr. Welling. Welling was a former UBE franchise operator who had quit his franchise, moved his business to Eugene, and was operating in direct conflict with Barnes and Thomason. Barnes and Thomason believed that this action by Welling was in violation of the no-competition provision of the UBE franchise contract. This provision stated that a franchisee would not compete within 20 miles of another UBE franchise during the life of the former franchise and for five years after its termination.

As a result of their concern about Welling, Barnes [301 Or. 197] and Thomason came to the accused for advice. The accused explained that there were two options available for enforcement of the covenant not to compete. The first was to demand that Wright enforce the covenant; this would require that Wright file an application for certificate of authority in order to qualify to do business in Oregon. The alternative was for Barnes and Thomason to ask Wright to assign his interest in the covenant to Barnes and Thomason so that they could bring the action against Welling.

Barnes and Thomason were reluctant to request the assignment from Wright. Because of their dissatisfaction with Wright and their feelings that he was not working in the best interests of his franchisees, they did not think that Wright would cooperate. However, their feelings were swayed when the accused explained that if he represented Wright's interests in the Welling matter, he would be unable to represent Barnes and Thomason against Wright in the future if a conflict arose between the franchisees and franchisor. Because Barnes, Thomason and the accused recognized the potential for future problems, Barnes and Thomason decided to encourage Wright to pursue the assignment route.

Thomason telephoned Wright to discuss the Welling matter. Thomason told Wright that he had an obligation to protect his franchisees and to enforce the covenant not to compete. Thomason also told Wright that because of the distance involved Barnes and Thomason preferred that a local Oregon lawyer handle the matter. He gave Wright the accused's telephone number.

On August 27, 1981, Wright and the accused spoke on the telephone regarding the Welling matter. The accused explained to

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Wright the alternatives available for enforcing the no-competition provision and the advantages and disadvantages of each to Wright; the accused admitted that he was giving Wright legal advice. There was no discussion of the potential for a future conflict of interest. The accused stated that he avoided such a discussion because he felt that it would have violated a confidence of Barnes and Thomason.

On September 1, 1981, the accused wrote a letter to Wright as a follow-up to the telephone conversation. The letter began:

[301 Or. 198] "Dear Mr. Wright:

"I appreciate the opportunity you have given this office of working with you in protecting your interests and the interests of your franchises in the Pacific Northwest."

The letter then proceeded to discuss that the responsibility for payment of attorney fees and costs was to be borne by Wright. The accused again reviewed the alternative theories available to Wright. He also enclosed an application for certificate of authority if Wright chose to bring an action in his own name and an assignment to be completed if Wright instead chose to have Barnes and Thomason bring the action.

The letter encouraged Wright to act quickly "to prevent Mr. Welling from severely damaging [Wright's] operations." The letter did not discuss the potential for future conflicts nor did the accused indicate that Wright should retain his own counsel. The accused simply indicated that Wright should make the choice between legal alternatives and return the documents to the accused. Additionally, the accused suggested that in order to prosecute the Welling matter successfully the accused would require a thorough understanding of UBE operations. At some point Wright responded that the accused should familiarize himself with the operations manual in the possession of Barnes and Thomason.

On September 2, 1981, the accused wrote a memorandum to the file of Wright detailing his concerns about a potential conflict of interest between Wright, and Barnes and Thomason. The memorandum indicated that the accused and his law partners had determined that if Wright agreed to the assignment it would avoid the creation of an lawyer-client relationship with Wright and avoid any potential conflict of interest. When Wright subsequently signed the assignment and mailed $150 in costs, the accused felt that he had protected himself.

Subsequently, the UBE franchisees became increasingly dissatisfied with Wright. In late September 1981, after the assignment but before the filing of the Welling action, Barnes and Thomason asked the accused to determine the legal theories available to void the franchise agreement with Wright. In October 1981, the accused attended a meeting [301 Or. 199] in Eugene of the UBE franchisees at which the legal problems and potential solutions of all the franchisees were discussed.

On November 4, 1981, the accused filed an action against Welling, with Barnes and Thomason as plaintiffs. On November 19, 1981, the accused filed an action in behalf of Barnes and his wife against Wright praying for declarations by the court that: (1) the franchise agreements should be rescinded; (2) the no-competition agreement was unenforceable against plaintiffs; (3) any trade secrets acquired after entering the agreement were unenforceable against plaintiffs; and (4) Wright's sale of the franchise was in violation of Oregon Securities Law. The complaint also asked for punitive damages.

When Wright was served with summons in the latter case, he sent a letter to the accused. The letter asserted that the accused could not represent Barnes and Thomason because the accused had been retained by Wright in the Welling matter and that it would be a conflict of interest to proceed in an action against Wright. The letter also noted that Wright had already made $1,617.38 in payment to the accused in the Welling matter in response to the accused's payment requests. Wright stated that a copy of the letter was sent to the Oregon State Bar, although such a copy apparently never was received. The letter,

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other exhibits and testimony disclosed that the accused would send a statement for services rendered to the UBE franchise of Barnes and Thomason. Barnes and Thomason, in turn, would debit its barter credit account with Wright. Barnes and Thomason would then credit the barter account of the accused.

On December 3, 1981, the accused, in response to Wright's letter, wrote to the Bar. The accused explained the situation and requested an opinion as to whether he was violating the Code of Professional Responsibility. An investigation was undertaken. The accused withdrew from representation in both matters and fully cooperated with the Bar.

The Bar's investigation resulted in the issuance of a complaint alleging a violation of DR 5-105(A), concerning conflicts of interest, and a violation of DR 4-101(B), concerning the use of confidential information. The Trial Board found a "technical" violation of DR 5-105(A), but no violation of DR [301 Or. 200] 4-101(B). The Trial Board recommended against formal discipline and suggested that a private letter of admonition should be issued to the accused. The Disciplinary Review Board agreed with the findings of fact, but concluded that the conduct of the accused was more than a "technical" violation. The Review Board recommended a public reprimand.

This court reviews discipline proceedings under the procedures in effect at the time that the formal complaint was served. ² In this case, the applicable statutes provided that after the Disciplinary Review Board files its decision and recommendation, this court may "adopt, modify or reject the same, in whole or in part, and thereupon shall make an appropriate order." Former ORS 9.535(3). We make an independent review of the facts. In re Thorp, 296 Or. 666, 668, 679 P.2d 857 (1984).

I. DR 5-105

The accused was charged...