Committee on Professional Ethics and Conduct of the Iowa State Bar Ass'n v. Zimmerman

• Decision Date: 23 January 1991
• Docket Number: No. 90-1131,90-1131
• Citation: 465 N.W.2d 288
• Parties: COMMITTEE ON PROFESSIONAL ETHICS AND CONDUCT OF THE IOWA STATE BAR ASSOCIATION, Appellee, v. Carl B. ZIMMERMAN, Appellant.
• Court: Iowa Supreme Court

Page 288

465 N.W.2d 288

COMMITTEE ON PROFESSIONAL ETHICS AND CONDUCT OF THE IOWA STATE BAR ASSOCIATION, Appellee, v. Carl B. ZIMMERMAN, Appellant.

No. 90-1131.

Supreme Court of Iowa.

Jan. 23, 1991.

Max E. Kirk and David W. Stamp of Ball, Kirk, Holm & Nardini, P.C., Waterloo, for appellant.

Charles L. Harrington, Des Moines, for appellee.

Considered by HARRIS, P.J., and SCHULTZ, LAVORATO, NEUMAN, and SNELL, JJ.

NEUMAN, Justice.

This lawyer disciplinary case arises out of charges by the Committee on Professional Ethics and Conduct of the Iowa State Bar Association (Committee) that attorney Carl Zimmerman violated ethical standards by seeking excessive and duplicative fees for work on a conservatorship in which his wife served as conservator. The matter was heard by a division of the Grievance Commission which recommended that Zimmerman's conduct warranted a six-month suspension. On Zimmerman's appeal from the Commission's report, our review is de novo. Iowa S.Ct.R. 118.11. We agree with the substance of the Commission's findings and concur in its recommended sanction.

I. Attorney Carl Zimmerman has been licensed to practice law in this state since 1956. He practices principally in the fields of real property, probate, tax, and estate planning. In 1984, Zimmerman's license was suspended for ninety days upon a finding that he misled a judge with respect to the status of valid default judgments, in violation of DR 1-102(A)(4) and (5). See Committee on Professional Ethics & Conduct v. Zimmerman, 354 N.W.2d 235, 237-38 (Iowa 1984).

The current case arises out of a fee application submitted by Zimmerman in connection with the Earl H. White conservatorship. The conservatorship was established at Zimmerman's urging in April 1986 after he discovered that White's financial affairs were in disarray. White, then approaching his ninetieth birthday, was Zimmerman's former neighbor and longtime client. Acting under a power of attorney previously executed, Zimmerman consolidated over $300,000 of White's investments into one account at a local brokerage firm. He then decided that court supervision of these investments was in order.

White signed a voluntary petition for conservatorship that named Zimmerman's wife, Lou Anne Zimmerman, as conservator. Lou Anne Zimmerman, whose training is in education, had no previous experience in investments or as a fiduciary. When Zimmerman presented the petition to the court for approval, he specifically alerted the court to his relationship with the proposed fiduciary. Judge Joseph Keefe, who presided over the matter, apparently questioned Zimmerman and satisfied himself that there was no impropriety in the appointment so long as it met with the ward's wishes.

Activity in the conservatorship during the first year was complicated by the size of the estate (estimated between $350,000 and $500,000), White's temporary removal to a mental health facility followed by his permanent placement at the nursing home, the need to hire full-time companions to supervise him, and the inventory and sale of White's personal belongings. Clearly Zimmerman took the lead insofar as responsibility for these details is concerned. For the period April 1986 to April 1987, Zimmerman submitted a fee application requesting only $440 for the conservator's services (billed at $15 per hour) but claimed $6745 for his own services at the rate of $80 per hour. The fees were approved without question by the court.

The dispute centers on the application submitted by Zimmerman for the second year of the conservatorship, May 1, 1987 to April 30, 1988. For this reporting period, Zimmerman changed the basis upon which he calculated the fees. For the conservator's fee, he departed from the previous year's hourly rate and adopted a "percentage of assets" method of calculation to justify a claim of $3595.12. The services performed by the conservator were not otherwise itemized. For his own fee for legal services, Zimmerman submitted an itemized statement showing 89.75 hours of work at $90 per hour for a total of $8077.50. In addition, Zimmerman sought the court's ratification of a $300 fee for income tax preparation taken earlier without court order.

Judge Dennis Damsgaard, presiding at "order hour" when Zimmerman presented these applications, made a cursory review of the itemized statement and immediately noted that some services for which Zimmerman sought legal fees appeared to be actions which would customarily be performed by the conservator and included in her fee. For example, Zimmerman's billable time included attending Mr. White's birthday party, conferences regarding clothing and toiletry needs, a trip to a funeral home to "view and discuss prices of caskets, vaults, etc.," depositing checks, and writing personal letters on the ward's behalf. Concerned about possible duplication in the fee applications for the conservator and her attorney, the judge set the matter for hearing.

On the day of the hearing, Zimmerman filed amended fee applications in which he reduced his own claim for services to $3350, and slightly reduced the conservator's fee to $3421.45. The amended statement for legal fees showed 19.5 hours for Zimmerman's legal representation at $90 per hour and 39.85 hours of paralegal services at $40 per hour. Zimmerman testified that he had "misprepared" the earlier application by failing to omit from his own bill those services logically covered in the "percentage of assets" fee submitted on behalf of the conservator. He also acknowledged that there had been less activity with respect to the conservatorship than in the previous year.

Judge William Klotzbach presided at the hearing. He questioned Mrs. Zimmerman at length about her services as guardian and conservator. She testified about the ward's care at the nursing facility but displayed no familiarity whatsoever with respect to the ward's other financial obligations or investments. It was apparent that the bulk of the bookkeeping was handled by Zimmerman's office staff and that Mr. White's investments were handled by Zimmerman and a broker. Mrs. Zimmerman also appeared discomforted by her role in the matter. At the close of the hearing, she tendered her resignation as conservator.

Based on the evidence presented at the hearing, Judge Klotzbach concluded that Mrs. Zimmerman had not substantially performed the duties contemplated by a conservator under the probate code. The court also noted that the conservator had failed to itemize her services as required by Iowa Code section 633.200 (1989). The sum of $250 was ordered as her fee and the court directed that her resignation be on file within the week.

As for Zimmerman's legal fees, the court concluded that it had no authority to ratify the $300 previously taken by him for tax preparation without court authorization. The court then concluded that Zimmerman was entitled to the sum of $2670.75 in legal fees for the one-year period.

Finally, the court directed that a transcript of the proceedings be furnished to the Committee on Professional Ethics and Conduct "for any action they deem appropriate." Further facts will be detailed as they pertain to the matters on appeal.

II. The Committee charged Zimmerman with violating the following canons of the Iowa Code of Professional Responsibility: EC 1-5, DR 1-102(A)(1), (4), (5) and (6) (requiring a lawyer to maintain high standards of professional conduct and prohibiting conduct that involves misrepresentation, prejudices the administration of justice, or adversely reflects on fitness to practice law); EC 2-8, EC 2-19, DR 2-106(A), (B)(3) (requiring that lawyers subordinate every consideration of personal advantage to the client's interest and welfare, and prohibiting the collection of fees that are unreasonable or in excess of fees customarily charged in the locality for similar legal services); and DR 5-101(A), EC 9-2, EC 9-6 (prohibiting a lawyer from accepting employment that may be adversely affected by the lawyer's own financial and personal interests, thereby avoiding even the appearance of impropriety and upholding the integrity of the legal profession).

Following hearing, the Grievance Commission found by a convincing preponderance of the evidence that the Committee had proved its charges against Zimmerman. See Committee on Professional Ethics & Conduct v. Freed, 341 N.W.2d 757, 759 (Iowa 1983) (Committee bears burden of proving ethical misconduct by requisite quantum of proof). Specifically, it found Zimmerman guilty of ethical misconduct by (1) securing the appointment of his wife as conservator at a time when the ward's judgment in such matters was impaired; (2) requesting conservator's fees for services Zimmerman knew had not been performed by the conservator, and seeking legal fees for services that were either nonlegal or duplicated those submitted by the conservator; and (3) failing to itemize the fiduciary's services in accordance with Iowa Code section 633.200. Because our review is de novo, we give these findings respectful consideration but we are not bound by them. Zimmerman, 354 N.W.2d at 236.

On appeal, Zimmerman contends that the appointment of his wife as conservator was proper. He further argues that the Commission's findings are not supported by the record and that it was error for the Commission to premise its findings of ethical misconduct on the mere application for a fee award that was subsequently amended and eventually reduced by the court. We shall consider the arguments in turn.

A. Conservator's fees. Given the relationship between Zimmerman and his wife, the Commission viewed Lou Anne Zimmerman's appointment as conservator with considerable skepticism. It noted the fact that (1) she was neither a close nor trusted friend of the ward, (2) she replaced the corporate executor named in White's will only after his removal to a nursing home, and (3) because it was the ward's confused mental state that led to the opening...