Committee on Professional Ethics and Conduct of the Iowa State Bar Ass'n v. Baker, 92-1258

• Decision Date: 25 November 1992
• Docket Number: No. 92-1258,92-1258
• Citation: 492 N.W.2d 695
• Parties: The COMMITTEE ON PROFESSIONAL ETHICS AND CONDUCT OF THE IOWA STATE BAR ASSOCIATION, Complainant, v. William D. BAKER, Respondent.
• Court: Iowa Supreme Court

Page 695

492 N.W.2d 695

The COMMITTEE ON PROFESSIONAL ETHICS AND CONDUCT OF THE IOWA STATE BAR ASSOCIATION, Complainant, v. William D. BAKER, Respondent.

No. 92-1258.

Supreme Court of Iowa.

Nov. 25, 1992.

Norman G. Bastemeyer and Charles L. Harrington, Des Moines, for complainant.

William L. Kutmus of Kutmus and Pennington, P.C., Des Moines, and William D. Baker, pro se, for respondent.

Considered by LARSON, P.J., and SCHULTZ, CARTER, LAVORATO, and NEUMAN, JJ.

LAVORATO, Justice.

Before us is a report of the Grievance Commission recommending that attorney William D. Baker be reprimanded.

The commission found that Baker acted unethically in the following ways: aiding the unauthorized practice of law; permitting others to influence his professional judgment in providing legal services to clients referred to him, resulting in conflicts of interest; and accepting improper referrals.

Baker is a sole practitioner and has practiced law in Des Moines since 1967. He focuses primarily on real estate, probate, estate planning, and trusts.

Rex Voegtlin is a certified financial planner and sole shareholder of Diversified Resource Management, Inc., located in West Des Moines. During 1989 and 1990 Voegtlin was presenting seminars in which he touted living trusts as an estate planning device. (Living or loving trusts have been promoted as a way of avoiding probate.) One of Voegtlin's advertisements concerning these seminars is in evidence. The ad urges people to attend and learn "how to avoid probate and minimize estate taxes with an estate plan that includes a living trust." In a newsletter--also in evidence--Voegtlin condemns probate as too expensive and time consuming.

In 1989 James Miller, a lawyer, was a trust officer for Hawkeye Bank and Trust of Des Moines, a former client of Baker's. In the summer of that year Miller attended one of Voegtlin's seminars and met him for the first time. Sometime after that meeting the two agreed to work jointly in putting on Voegtlin's seminars. Miller's reason for doing so was to attract new business for his bank. The two conducted about eight to ten of these joint seminars from October 1989 to May or June 1990 when Miller quit. About 90 to 100 people attended the first three or four of these seminars. From that point on attendance fell to about 50 or 60.

Shortly before Miller agreed to these joint seminars, he and Voegtlin met with Baker in August 1989. Miller knew Baker because Baker had previously done work for the bank. Miller and Voegtlin asked Baker if he would accept referrals from them. Baker said he was interested but wanted to have several questions answered. Partly for that reason, Miller and Baker attended a seminar in Colorado to see how a living trust seminar might work.

Thereafter, Miller, on behalf of the bank, and Voegtlin agreed to cosponsor seminars on living trusts. Baker told the two he would accept referrals from them for the preparation of living trusts and related documents, and he began doing so in the fall of 1989.

After Baker agreed to accept referrals from Voegtlin and Miller, he attended one seminar the two put on in October 1989. The seminar dealt generally with estate planning and more specifically with the use of a living trust as a way to avoid probate.

Over time the seminars and referrals developed this way. Voegtlin would advertise a free seminar in which the benefits of a living trust would be explained. Voegtlin and Miller would divide up the time during which each would speak. Voegtlin would close the seminar by offering free individual consultations. Usually about half of those attending would seek individual consultations. They did so by filling out a form giving their names, addresses, phone numbers, and their desire for the consultation. The forms were left with Voegtlin who would then follow up and arrange the consultations.

Before the consultations, these "clients"--as Voegtlin described them--would complete a general information planning form in which they would list their names, addresses, family members, and assets. At the consultations, which were held in Voegtlin's office, the clients would present the form at which point Voegtlin and Miller would review it as well as the clients' goals. The primary goal was, of course, to avoid probate.

Voegtlin and Miller would then talk about the various estate planning options the clients had. They would discuss the living trust in a general way--what it can do and what it cannot do. Voegtlin would diagram on a blackboard how a living trust works. The use of marital trusts, family trusts, and generation-skipping trusts was explained--how they worked and how they fit into an estate plan. The diagram would be individualized to include the clients' beneficiaries by name and the names of the trustees.

Voegtlin would also diagram how a will works so the clients could understand the difference between a living trust and a will. Voegtlin would then take a Polaroid picture of the diagrams and give it to the clients. Miller would talk about the duties of a bank trustee and what a bank does on a day-to-day basis when acting as a trustee.

Eventually during the consultations, Voegtlin, Miller, and the clients would reach a consensus as to which estate plan was best for the clients. By this time Voegtlin and Miller had made a determination as to which documents would be necessary to carry out the estate plan.

At this point Voegtlin and Miller would tell the clients that the clients needed to employ a licensed attorney to prepare the documents. If the clients had an attorney, the two would suggest that the clients' attorney be employed. If the clients had no attorney, the two would give the clients a list of attorneys to consider. Baker was among those attorneys listed. The two told the clients that most clients chose Baker because he was a competent attorney, his fees were reasonable, and he was prompt. The evidence shows that from October 1989 through October 1991, Baker accepted about 100 of these referrals. Fewer than ten were received by other attorneys.

Frequently Voegtlin would telephone Baker during the consultations. Voegtlin would tell him that the clients who were there wanted to proceed with the living trust and wanted him to do the legal work. Voegtlin would use a speaker phone so that the clients could also talk to Baker. Voegtlin would remain and listen to the conversation.

Sometimes Voegtlin would not follow this procedure. Instead Voegtlin or Miller would bring the materials discussed at the consultations to Baker and ask if he would accept the referral. A few times clients themselves would go to Baker's office with the materials. The materials would include (1) a copy of the financial form, (2) a general outline of the terms to be included in the clients' living trust, and (3) a description of other necessary documents.

Baker would then call the clients to go over their materials and discuss any questions that either he or they might have. Baker would ask if they were still interested. Some were; others were not. If the clients expressed an interest in proceeding, Baker would tell them that he would prepare a draft of what they wanted and send the draft to them for their review. If the clients did not proceed, Baker would not charge them for any work he might have done for them.

If the clients wanted to proceed, Baker would tell them to bring the trust documents to a meeting at Voegtlin's office. At the meeting Baker would go through the documents and explain them to the clients. Voegtlin was often, but not always, at these meetings. The clients executed the documents at these meetings unless corrections were necessary. If corrections were necessary, the corrections were made and the documents were either executed then or later.

There were times when the clients met Baker at his office. Those times occurred when the clients did not want to involve Voegtlin or the bank.

Not surprisingly, the documents frequently named Voegtlin or Diversified as the person to fund the trust. Voegtlin's wife--also a certified financial planner--usually performed this task. Funding the trust simply means having the clients sign whatever forms or documents that are necessary to transfer personal property from the clients' names to the living trust. Voegtlin's fee for funding the trust and financial advice related to this task was $1000. The advice, for example, might include recommending exchanging a low-interest producing asset for a higher-interest producing one.

In May 1990 Voegtlin asked Baker to furnish him with a sample living trust and accompanying documents that Baker was using for the clients Voegtlin and Miller were referring to him. Voegtlin told Baker he wanted sample documents to show clients who were interested in seeing what Baker's trust looked like. Voegtlin apparently used these documents in his seminars.

The sample living trust and the accompanying documents are in evidence. The accompanying documents included a "Declaration of Trust Ownership," a "Power of Attorney," a "Special Power of Attorney," an "Anatomical Gift," a "Declaration Relating to [the] Use of Life-Sustaining Procedures," a "Petition for Appointment of Guardian (Standby)," a "Declaration of Gift Memorandum," and a "Supplemental Financial Planning Letter." Miller's bank is named in the power of attorney form. The special power of attorney form designates Voegtlin as the attorney-in-fact. The supplemental financial planning letter contains, among other provisions, the following:

Financial Planner: This document and related instruments were recommended by Mr. Rex Voegtlin, Certified Financial Planner and Registered Investment Adviser. He was instrumental in developing a financial and investment framework for my living will as well as death estate. Since Mr. Voegtlin is familiar with my financial planning goals, it is my wish that you notify him upon my demise to help coordinate a smooth financial...