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Cite as In re Eichelberger, 19 DB Rptr 329 (2005)
6.
In February 2001, the Accused and his law office manager formed a company
called Freedom Investments (hereinafter “Freedom”). Shortly thereafter, Freedom
contracted with Harris, ECH, and CDC for the purchase of five lots and the
construction of seven houses thereupon. Between February 2001 and October 2003,
Freedom purchased five properties from CDC and contracted with ECH for building
services in connection with seven of those properties (all properties hereinafter
“projects”). Five of the lots were located in the Glen Eden IV subdivision. The
Accused drafted financing agreements for Freedom and used between Freedom and
ECH in connection with three of the Glen Eden IV projects, which were presold to
purchasers.
7.
The Accused and Harris (as buyer and seller, owner and contractor) had
differing interests in the projects. The exercise of the Accused’s professional
judgment as lawyer for Harris, ECH, and CDC was or could reasonably have been
affected by his own financial, business, property, or personal interests as a principal
of Freedom doing business with Harris, ECH, and CDC. Although the Accused wrote
and discussed the concept of conflicts with Harris, he did not specifically identify the
ways in which their interests might be adverse or explain to Harris the ways in which
Accused’s professional advice might be impaired by the Accused’s own interests.
Furthermore, while the Accused identified for Harris in a fax that Harris would need
to obtain new counsel if a legal dispute arose in connection with the projects, the
Accused did not advise Harris to obtain independent legal advice as to whether to
enter into these projects with the Accused, as required by DR 10-101(B).
8.
Freedom realized profits from the sale of two of the homes. However, when
three of the latter projects were not completed by the time contracted, and were not
likely to be completed by Harris, the Accused came to realize that his interests in the
projects created an actual conflict of interest between himself and Harris.
Accordingly, in late August 2003, the Accused began rejecting representation of
Harris and his companies in selected new legal matters. In mid-September, 2003, the
Accused formally withdrew from all cases in which he represented Harris or his
companies, and resigned as the registered agent for CDC and ECH.
9.
Around this same time, the buyers of one of the pre-sold projects (hereinafter
“the Fletchers”) defaulted on their promissory note to ECH which had been
transferred to Freedom in conjunction with Freedom’s financing agreement. In late
September 2003, the Accused brought an action on behalf of Freedom against the
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