Supreme Court Atty. Disc. Bd. v. Clauss
| Decision Date | 29 March 2006 |
| Docket Number | No. 05-1133.,05-1133. |
| Citation | 711 N.W.2d 1 |
| Parties | IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Appellee, v. Robert CLAUSS, Jr., Appellant. |
| Court | Iowa Supreme Court |
Michael J. Carroll of Babich, Goldman, Cashatt & Renzo, P.C., Des Moines, for appellant.
Charles L. Harrington and Wendell Harms, Des Moines, for appellee.
Robert Clauss, Jr., was cited by our attorney disciplinary board for violations of our code of professional ethics in two respects: his notarization of documents without a valid notary commission and attempting to simultaneously represent two clients with potentially adverse interests. The Grievance Commission of this court concluded that the violations were established by the board and recommended suspension of Clauss's license for not less than ninety days. We affirm the findings of code violations, but increase the suspension to a minimum of six months.
The board charged that Clauss notarized nine documents between 1996 and 2000 while his notary commission was expired. The commission concluded that the board proved this charge and that this conduct amounted to misrepresentation under DR 1-102(A)(6) (). The commission concluded, however, that his conduct was not intentional, that real estate transactions were not involved, and that no party had been harmed. It recommended a public reprimand for this violation. We agree that the board proved this violation and consider that along with the conflict-of-interest violations in imposing discipline.
The second count of the board's complaint involved a tale of two clients — both of them represented by Clauss despite their conflicting interests. The first client was National Management Corporation, which retained Clauss to collect past-due rental payments from Clauss's second client, Kay Clark.
Clauss called Clark to try to arrange payment of her debt to National. In the course of their conversation, Clark told Clauss she had problems of her own: she had breached a covenant not to compete with a previous employer and had been enjoined from running her competing professional recruitment business. As a result of the conversation, it was decided that Clauss could possibly represent Clark in attempting to get the injunction lifted. That way Clark could operate her business and generate income to apply toward National's judgment against her.1
Although the plan appeared to be beneficial to all involved, Clauss saw, with good reason, that problems could arise from this dual representation. He contacted a lawyer more experienced in ethics cases to inquire about whether to proceed and, if so, how to avoid ethical problems. That attorney advised Clauss that he could, consistently with our ethics rules, represent both Clark and National, provided he obtained waivers from both of them. Clauss wrote a letter to Clark concerning a possible waiver:
I am asking you to waive any conflict I may have in representing you in your covenant not to compete case and National Mgt. Corp. at the same time when you are a debtor of National Mgt. Corp. Ethically, I simply wanted to bring this matter to your attention by way of full disclosure. I spoke with Jerry Woods [acting on behalf of National] and he has no problems under these circumstances. I am sending Jerry an identical letter.
Clauss wrote a similar, but not identical, letter to National, stating:
Per our telephone conversation, I am asking that you waive any conflict I may have in representing you and Kay Clark. . . at the same time who is a debtor of National Mgt. Corp. Ethically, I simply wanted to bring this matter to your attention by way of full disclosure. I spoke with Kay Clark and she has no problems under these circumstances. I am sending her an identical letter.
Both National and Clark agreed to waive any conflict, pursuant to Clauss's suggestion.
Despite Clauss's efforts to obtain valid waivers, they were insufficient under our rules. Our disciplinary rules are quite clear on a lawyer's responsibilities under these circumstances:
A lawyer shall decline proffered employment if the exercise of independent professional judgment on behalf of a client will be or is likely to be adversely affected by the acceptance of the proffered employment, except to the extent permitted under DR 5-105(D).
DR 5-105(B). A waiver of a conflict of interest is not valid unless the attorney has made a full disclosure of the possible consequences of dual representation.
In the situations covered by DR 5-105(B). . ., a lawyer may represent multiple clients if it is obvious that the lawyer can adequately represent the interest of each and if each consents to the representation after full disclosure of the possible effect of such representation on the exercise of the lawyer's independent professional judgment on behalf of each.
DR 5-105(D) (emphasis added).
This is a poster case for the introductory rule to DR 5, which is aimed at preventing a lawyer from accepting employment if it puts his own financial interests in conflict with his client's. Entitled "Refusing Employment When the Interests of the Lawyer May Impair the Lawyer's Independent Professional Judgment," that rule provides:
Except with the consent of the client after full disclosure, a lawyer shall not accept employment if the exercise of the lawyer's professional judgment on behalf of the client will be or reasonably may be affected by the lawyer's own financial, business, property, or personal interests.
DR 5-101(A) (emphasis added).
An unconflicted lawyer working on behalf of National would have discovered, perhaps through a debtor's examination, where Clark had deposits or accounts receivable that could be subjected to payment on National's judgment. Clauss did not do that. In fact, as of the time of the commission hearing, he had not remitted any funds to National from Clark, despite the fact he had collected substantial sums for Clark by pursuing claims for her against other parties and had received attorney fees for himself on those collections.
This respondent was required to do more than simply warn his clients that there were potential conflicts and ask them to waive those conflicts. His actions involved conflicts between his clients, prohibited by DR 5-105(B), (C), and (D), and he undertook representation of both clients without making "full disclosure of the possible effect of such representation on the exercise of the lawyer's independent professional judgment on behalf of each," as required by DR 5-105(D). We have said,
[i]n a dual representation situation, it is not enough for a lawyer simply to inform the client that the lawyer is representing both sides. Full disclosure under DR 5-105(D) requires the
attorney not only to inform the prospective client of the attorney's relationship with the [other client], but also to explain in detail the pitfalls that may arise in the course of the transaction which would make it desirable that the [prospective client] obtain independent counsel.
Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Wagner, 599 N.W.2d 721, 728 (Iowa 1999) (quoting In re Dolan, 76 N.J. 1, 384 A.2d 1076, 1080 (1978)).
We conclude the respondent violated DR 5-101(A) (); DR 5-105(C) (); and DR 5-105(D) ().
IV. Discipline.
We note, as an aggravating factor in determining the discipline to be imposed, that National was harmed financially because apparently it did not ever get any of the money that Clauss ultimately collected for Clark in other cases in which Clauss represented her. Presumably, National did not obtain another attorney to act for it because Clauss had preempted that responsibility. See Wagner, 599 N.W.2d at 730 (); Comm. on Prof'l Ethics & Conduct v. Baker, 269 N.W.2d 463, 466 (Iowa 1978) (same).
We also consider prior discipline. Wagner, 599 N.W.2d at 730; Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Clauss, 530 N.W.2d 453, 455 (Iowa 1995). In 1989 Clauss was suspended for six months for income tax violations, making false statements to our client security commission, failing to properly monitor a client's trust account, and commingling his clients' money...
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