disciplinary handbook: volume v - Supreme Court - State of Ohio

Pheils, Toledo Bar Assn. v.
129 Ohio St.3d 279, 2011-Ohio-2906. Decided 6/23/2011.
Case Summaries- 250
Respondent provided financial assistance to a client and created a conflict of interest by representing two
clients with adverse interests. A client hired respondent to represent him in a civil action. Respondent
negotiated a $20,000 settlement for his client, but advised his client not to sign the agreement, as
respondent believed it imposed obligations on his client to which the parties had not agreed. The client
wanted to sign the agreement, because he needed the money. Respondent, upon the client‘s request, had
his wife loan the client $4000 while respondent continued to argue over the terms of the settlement
agreement. The client signed a promissory note, prepared by respondent acting as his wife‘s
attorney for the loan. Eventually, the client requested another loan of $10,500 as the respondent still
argued over the settlement agreement. Respondent provided his client with a check for $10,450 from
his firm‘s escrow account, but the check contained a notation that it was a loan from his wife. The
client signed a promissory note for $14,500, ostensibly to repay both loans with $50 interest, and
assigned his rights to the settlement to respondent‘s wife. Again, respondent acted as his wife‘s attorney
in the loan transaction. At no time did Respondent advise the client to seek independent counsel, or
obtain his informed consent. The client eventually terminated respondent, obtained a new attorney, and
signed the $20,000 settlement agreement. Respondent, representing his wife, sued the client for
repayment of the loans; this case was dismissed as the debts were repaid. This conduct was found
to have violated Prof.Cond.R. 1.8(e), 8.4(a), 1.7(a), and 1.7(b). The panel found that, although
charged, respondent‘s actions did not violate Prof.Cond.R. 1.8(a), 1.8(i), and 8.1(b). Respondent objected
to a finding of a Prof.Cond.R. 1.8(e) violation; he argued that because his wife loaned the client the
money, it is not a violation of the rules. The Court disagreed; they noted that if respondent had sent his
client to a legitimate financial institution that it would have been one thing, however, here respondent
arranged for someone with whom he has a close relationship to lend money to someone (the client)
whom the wife had never met. The Court stated that the prohibition under this rule is absolute and
that it was clearly violated as a form of maintenance and/or champerty. Respondent also argued that he
did not create a conflict of interest by representing the client and his wife in the loan, as his scope of
representation to the client was only for the civil action. The Court found that, in this instance, the loan
was tied to the representation in the civil action, as the loans were necessary due to the respondent‘s
continued work on the case, and thus the delayed settlement. The board and Court adopted the findings
of fact and conclusions of law. In mitigation, respondent lacked a prior disciplinary record. Respondent
asked that his voluntary retirement from practice warrant only a public reprimand, but the Court rejected
this, as respondent is not officially retired pursuant to Gov.Bar R. VI(6) and thus could resume practice
at any time. In aggravation, respondent committed multiple offenses, did not cooperate in the
disciplinary investigation, engaged in deceptive practices, and refused to acknowledge the wrongful
nature of his conduct. BCGD Proc.Reg. 10(B)(1)(d), (e), (f), and (g). Relying on Podor (2009) and
Newman (2004), the Court adopted the board‘s recommended sanction, and suspended the respondent for
one year with six months stayed on the conditions that respondent complete an additional six hours of
CLE in law office management and that he commit no further misconduct.
Rules Violated: Prof.Cond.R. 1.7(a), 1.7(b), 1.8(e), 8.4(a)
Aggravation: (d), (e), (f), (g)
Mitigation: (a)
Prior Discipline: NO Procedure/ Process Issues: YES Criminal Conduct: NO
Public Official: NO Sanction: One-year suspension, six months stayed