Iowa Supreme Court Attorney Disciplinary Bd. v. Pederson

• Decision Date: 10 November 2016
• Docket Number: No. 16–0199.,16–0199.
• Citation: 887 N.W.2d 387
• Parties: IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant, v. Laurie Jean PEDERSON, Respondent.
• Court: Iowa Supreme Court

887 N.W.2d 387

IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant,

v.Laurie Jean PEDERSON, Respondent.

No. 16–0199.

Supreme Court of Iowa.

Nov. 10, 2016.

Tara van Brederode and Amanda K. Robinson, for complainant.

Laurie Jean Pederson, Rockford, pro se.

CADY, Chief Justice.

The Iowa Supreme Court Attorney Disciplinary Board charged attorney Laurie Jean Pederson with violating various rules of professional conduct, including the rules governing communications with a represented party, taking a probate fee, business transactions with a client, trust account requirements and advance fees, and limited representation of a client. The Grievance Commission of the Supreme Court of Iowa found Pederson violated several rules and recommended a three-month suspension. Upon our review, we find Pederson violated the Iowa Rules of Professional Conduct and impose a sixty-day suspension.

I. Background Facts and Proceedings.

Laurie Jean Pederson is an Iowa lawyer. She was admitted to practice law in Iowa in 2001 and has worked as a sole practitioner in Rockford, Iowa, throughout her career. Pederson has been publicly reprimanded in the past.

The disciplinary proceedings against Pederson involve her conduct as an attorney in an estate proceeding and her representation of a client in a child custody case. The facts were presented to the commission pursuant to a stipulation.

In the estate proceeding, Pederson served as the attorney for the estate. The executor was a beneficiary, together with her two siblings. A Mason City attorney represented the two other beneficiaries. Pederson was aware they were represented parties in the proceeding.

During the probate of the estate, Pederson sought and received the second half of her requested attorney fees prior to filing the final report. She also communicated directly with the two beneficiaries represented by counsel. She wrote a letter to them requesting waiver of the hearing on the final report. Pederson had calculated her attorney fees, as well as the executor fees, to be each nearly $29,000. Like Pederson, the executor received the second half of her fee prior to the filing of the final report. The district court removed Pederson as the attorney for the executor after it discovered the attorney fees had been miscalculated and the second half of the fees were prematurely received. The district court also removed the executor. The court then ordered Pederson and the executor to return all fees. Pederson, however, did not have sufficient funds at the time to return her attorney fees. She sought and received a loan from the former executor, who then returned all fees previously paid to the executor and Pederson, totaling nearly $58,000, to the estate. Pederson and the executor did not execute a written loan agreement, and Pederson did not advise the executor to seek independent counsel. Furthermore, Pederson did not obtain informed consent from the executor. The district court eventually ordered Pederson to reimburse the executor, which she has not done.

In the child custody proceeding, Pederson agreed to represent the mother of the child who was the subject of the proceedings. Pederson charged and received a flat fee of $1200 in advance of her services. She deposited the fee into her personal account and never provided her client with an itemization of services. After receiving the fee, Pederson filed a petition for temporary and permanent custody on behalf of her client and eventually secured a temporary custody order. The case then sat dormant for close to a year, and Pederson had no contact with her client. The client believed the entire case had been completed. Pederson maintained she only represented the client for the limited purpose of securing an order for temporary custody. Notwithstanding, Pederson did not file and serve a notice of a limited appearance in the case and never informed the court her appearance was limited. The client subsequently obtained new counsel, and Pederson failed to respond to the new counsel's request for documents and an accounting of services.

For her conduct in the estate proceeding, the Board charged Pederson with violating Iowa Rules of Professional Conduct 32:4.2(a) (communicating with a represented party), 32:1.5(a) (collecting a fee in violation of restrictions imposed by law), and 32:1.8(a) (improperly entering into a business transaction with a client). For her conduct in the child custody proceeding, the Board charged Pederson with violating rules 32:1.15(a) (failing to hold fees in a trust account separate from the lawyer's account), 32:1.15(c) (withdrawing fees from the trust account before earned), 32:1.15(f) (violating court rules governing trust accounts), 32:1.5(b) (failing to communicate the scope of representation with a client), 32:1.2(c) (failing to obtain informed consent to limit the scope of representation), 32:1.4(a) (failing to maintain communication with a client), and 32:1.4(b) (failing to communicate with a client to allow informed decisions about new representation). The commission found Pederson violated the Iowa Rules of Professional Conduct. It recommended the court suspend Pederson's license to practice law for three months.

II. Scope of Review.

We review attorney disciplinary matters de novo. Iowa Ct. R. 36.21(1) ( “Upon submission, the supreme court will proceed to review de novo the record....”); Iowa Supreme Ct. Att'y Disciplinary Bd. v. Lubinus, 869 N.W.2d 546, 549 (Iowa 2015). Attorney misconduct must be proven by a convincing preponderance of the evidence. Iowa Supreme Ct. Att'y Disciplinary Bd. v. Haskovec, 869 N.W.2d 554, 557 (Iowa 2015). Stipulations of fact are binding on the parties. Iowa Supreme Ct. Att'y Disciplinary Bd. v. Clarity, 838 N.W.2d 648, 651 (Iowa 2013). “We respectfully consider the commission's findings and recommendations, but they do not bind us.” Iowa Supreme Ct. Att'y Disciplinary Bd. v. Wheeler, 824 N.W.2d 505, 509 (Iowa 2012).

III. Violations.

With respect to the estate matter, the stipulated record establishes that Pederson communicated with represented parties in the estate in violation of rule 32:4.2(a). See Iowa Supreme Ct. Att'y Disciplinary Bd. v. Schmidt, 796 N.W.2d 33, 39–40 (Iowa 2011). She had knowledge the two beneficiaries of the estate were represented by counsel and communicated with them by mail to request their signatures on several documents, including a waiver of the final hearing.

Pederson also violated rule 32:1.5(a) by taking the second half of the probate fee prior to the filing of the final report. See Iowa Code §§ 633.197, .198 (2013); Iowa Ct. R. 7.2(4) ; see also Iowa Supreme Ct. Att'y Disciplinary Bd. v. Casey, 761 N.W.2d 53, 61 (Iowa 2009). It is well-established that the attorney may not take the second half of a probate fee until the final report has been filed. See Iowa Supreme Ct. Att'y Disciplinary Bd. v. Morris, 847 N.W.2d 428, 433 (Iowa 2014).

We next consider the charge that Pederson improperly entered into a business transaction with a client. Rule 32:1.8(a) provides that “[a] lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security, or other pecuniary interest adverse to a client unless” the transaction is fair and fully disclosed in writing, the client is given notice and opportunity to seek independent counsel, and the client gives informed consent. Iowa R. Prof'l Conduct 32:1.8(a)(1)–(3). The rule mitigates “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.” Id. cmt. 1.

Normally, an attorney-client relationship exists between the executor of an estate and the attorney designated by the executor to probate the estate. See Sabin v. Ackerman, 846 N.W.2d 835, 842 (Iowa 2014) (citing Restatement (Third) of the Law Governing Lawyers § 14(1)(b), at 125 (Am. Law Inst. 2000) [hereinafter Restatement] ). We have previously recognized a breach of professional ethics by an attorney for an estate who also represented his parents in the purchase of a home from the estate and failed to “advise the executors to seek independent counsel.” See Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Honken, 688 N.W.2d 812, 818 (Iowa 2004) ; see also Elam v. Hyatt Legal Servs., 44 Ohio St.3d 175, 541 N.E.2d 616, 618 (1989) (“In probate, the attorney-client relationship exists between the attorney and the personal representative of the estate.” (quoting In re Estate of Larson, 103 Wash.2d 517, 694 P.2d 1051, 1054 (1985) (en banc))). Thus, we conclude Pederson maintained an attorney-client relationship with the executor in this case, and rule 32:1.8 governing business transactions between an attorney and client applies to the relationship. We proceed to consider if the rule continued to apply once the court removed Pederson as the estate attorney.

The district court removed Pederson as the estate attorney prior to the time the loan agreement was negotiated. We have adopted the approach taken by the Restatement in considering when an attorney-client relationship has ended. See Iowa Supreme Ct. Att'y Disciplinary Bd. v. Netti, 797 N.W.2d 591, 599 (Iowa 2011) (citing Restatement § 31(2)(e), at 220). “[A] lawyer's actual authority to represent a client ends when ... the lawyer ... is ordered by a tribunal to cease representing a client....” Restatement § 31(2)(d), at 220.

Notwithstanding, Pederson does not argue rule 32:1.8 did not apply to the loan transaction because the attorney-client relationship had ended. Furthermore, the stipulated facts make it difficult to determine the precise point in time when the attorney-client relationship terminated. Yet, the discussion about the loan between Pederson and the executor occurred very close in time after the hearing when they were removed from participating in the estate and ordered to return the fees. Pederson continued to exercise influence over the...