Amended January 24, 2017 Iowa Supreme Court Attorney Disciplinary Board v. Laurie Jean Pederson ( 2016 )

IN THE SUPREME COURT OF IOWA
No. 16–0199
Filed November 10, 2016
Amended January 24, 2017
IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD,
Complainant,
vs.
LAURIE JEAN PEDERSON,
Respondent.
On review of the report of the Grievance Commission of the
Supreme Court of Iowa.
The grievance commission reports the respondent committed
multiple ethical violations and recommends a three-month suspension of
the attorney’s license. LICENSE SUSPENDED.
Tara van Brederode and Amanda K. Robinson, for complainant.
Laurie Jean Pederson, Rockford, pro se.
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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
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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
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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
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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
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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.,
541 N.E.2d 616, 618 (Ohio 1989) (“In probate, the attorney–client
relationship exists between the attorney and the personal representative
of the estate.” (quoting In re Estate of Larson, 694 P.2d 1051, 1054
(Wash. 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.
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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 executor at this time,
and neither had complied with the court order. These circumstances
support a finding that the attorney–client relationship had not ended
when the loan was discussed.
Additionally, in Iowa Supreme Court Board of Professional Ethics &
Conduct v. Walters, we noted the rule of professional conduct governing
business transactions with clients can extend to transactions with
former clients. 603 N.W.2d 772, 775 (Iowa 1999) (citing Iowa Code of
Professional Responsibility for Lawyers DR 5–104(A)). We have found the
rule applies whenever “the attorney has influence arising from a previous
attorney–client relationship and the client is looking to the attorney to
protect the client’s interests.” Id. This approach is also consistent with
the approach taken in other states, “even in the absence of an express
prohibition in the Rules.” See Doug Pessefall, Conflict of Interest -
Business Transactions with Former Clients, 11 Prof. Law., No. 4, Summer
2000, at 17, 18 (“In California, for example, courts will examine the
relationship for signs of a ‘special trust’ that exists after an attorney’s
representation of a client concludes.” (citing Hunniecutt v. State Bar of
Cal., 748 P.2d 1161, 1166 (Cal. 1988))); see also Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Moothart, 860 N.W.2d 598, 609 (Iowa 2015) (applying
Walters approach to the rule governing sexual relations with clients).
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We conclude under these circumstances that rule 32:1.8 applies to
the loan agreement. Pederson violated the rule by failing to comply with
the requirements for the agreement to be fully disclosed in writing, notice
and opportunity to seek independent counsel be provided, and informed
consent be obtained.
With respect to the custody case, the record established Pederson
violated three subsections of rule 32:1.15 by depositing the flat fee into
her office account. See Iowa R. Prof’l Conduct 32:1.15(a), (c), (f). A flat
fee paid in advance of services must nevertheless be deposited into a
trust account and can only be withdrawn as earned. Iowa Supreme Ct.
Att’y Disciplinary Bd. v. Said, 869 N.W.2d 185, 192 (Iowa 2015).
Pederson violated rule 32:1.15(a) and (c), as well as court rule 45.10,
which constituted a violation of rule 32:1.15(f).
Pederson also violated the rule governing the limited scope of
representation. Lawyers may limit their scope of representation if the
limitation is reasonable under the circumstances and the client gives
informed consent. Iowa R. of Prof’l Conduct 32:1.2(c). In this case,
Pederson asserted she only agreed to represent her client on the client’s
claim for temporary custody, not in her claim for primary custody. After
the court issued the temporary custody order, the case sat dormant for a
considerable period of time, and Pederson and her client had no
communication. Her client believed her case had concluded and was
subsequently forced to hire a new attorney to finalize the matter.
Pederson also failed to respond to requests from the new attorney for
documents and an accounting of her fees.
Pederson violated rule 32:1.2(c) by failing to obtain the written,
informed consent of her client to the limited representation. See id.; see
also id. r. 32:1.0(e) (defining “informed consent”). Clearly, none of the
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exceptions to the writing requirement of the rule apply to the facts of this
case. See id. r. 32:1.2(c)(1)(i)–(iii) (identifying exceptions to the writing
requirement). Pederson also violated rule 32:1.4(a)(4) by failing to
respond to the request for information from the new attorney. The rule
requires a lawyer to promptly comply with reasonable requests for
information. Id. r. 32:1.4(a)(4). Requests by the new attorney were
reasonable and were ignored by Pederson.
IV. Sanctions.
In considering the sanction to impose in this case, we begin by
looking at the nature of the violations. In the estate proceeding, the
misconduct by Pederson involved improperly communicating with a
represented party, taking a probate fee before authorized by law, and
improperly entering into a business transaction with the executor. The
improper communication, however, was limited to a single letter.
Additionally, the basis for the fee violation was that the fee was taken
before the time permitted by the rule and was not deposited in a trust
account. There was no associated claim that Pederson did not have a
colorable right to the fee or that the miscalculation of the amount was
the result of misrepresentation or fraud. With respect to the improper
loan from the executor, Pederson believed the fee matter would be
promptly sorted out and resolved and the executor would be promptly
paid. The arrangement violated the rule because the proper procedure
for a lawyer to enter into such an arrangement was not followed.
Furthermore, this conduct was exacerbated by the large sum of money
involved.
In the custody proceeding, Pederson followed the same course of
action pursued in the estate matter. She took a careless and casual
approach to matters that require thoughtful consideration. She failed to
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comply with the trust account rules, ignored the rules governing limited
representation, and totally mismanaged the essential communication
needed between a lawyer and a client. Yet, as with the estate case, there
was no claim that she was without a colorable right to a fee.
Additionally, there was no claim that she could not have limited her
representation in the custody matter if properly communicated and
documented.
Our prior cases generally reveal that the violations by Pederson fall
within a range of a public reprimand to a suspension. See Iowa Supreme
Ct. Att’y Disciplinary Bd. v. Nelson, 838 N.W.2d 528, 544–45 (Iowa 2013)
(indicating violations involving the failure to communicate with a client
and neglect of a client matter warrant sanctions ranging from a public
reprimand to suspension); Iowa Supreme Ct. Att’y Disciplinary Bd. v.
Stowers, 823 N.W.2d 1, 16 (Iowa 2012) (indicating the unauthorized
communication with a represented party normally warrants a public
reprimand); Iowa Supreme Ct. Att’y Disciplinary Bd. v. Piazza, 756
N.W.2d 690, 699 (2008) (indicating trust account violations involving fees
subsequently earned normally warrant a public reprimand, with more
severe sanctions when accompanied by aggravating circumstances); Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Johnston, 732 N.W.2d 448, 456
(Iowa 2007) (indicating sanctions for engaging in improper business
transactions of a minor nature fall within a range of a public reprimand
to suspension); Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Jones,
606 N.W.2d 5, 9 (Iowa 2000) (imposing two-month suspension for
persuading a former client to loan money to a current client); Iowa
Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Smith, 569 N.W.2d 499, 503
(Iowa 1997) (indicating the taking of an excessive and premature probate
fee warranted a thirty-day suspension). In considering the precise
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sanction to impose, we also look to the presence of mitigating and
aggravating factors. In this case, Pederson had experienced some
personal hardships during the relevant time periods. She was also
cooperative with the Board throughout the proceedings. On the other
hand, Pederson has been publicly reprimanded in the past for conduct
similar to the conduct in this case.
Considering all relevant factors, we conclude the conduct engaged
in by Pederson in this matter warrants a suspension from the practice of
law for a period of sixty days. Most of the individual violations in the
case were not serious, but the collective and repetitive nature of her
conduct is alarming. Pederson cannot continue to practice law in the
future with the cavalier approach to our rules of professional conduct
she has followed in the past. A lawyer who engages in a pattern of
repeated offenses, even those of minor significance when considered
separately, can project indifference to the legal obligations of the
profession. Iowa R. Prof’l Conduct 32:8.4 cmt. 2. Lawyers are obligated
to thoroughly consider their conduct in relationship to the rules of
professional conduct and project the honor and integrity of the
profession in the work they perform and in the manner they interact with
others.
V. Conclusion.
We suspend Laurie Jean Pederson’s license to practice law in this
state for a period of sixty days from the date of the filing of this opinion.
This suspension shall apply to all facets of the practice of law. Pederson
shall comply with all requirements of the court rules associated with a
suspension. See Iowa Ct. Rs. 34.23(1)–(4), .24(1)–(2). Pederson shall
automatically be reinstated to the practice of law pursuant to rule
34.23(2) the day after the suspension period has expired unless the
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Board files an objection indicating the loan Pederson received from the
executor of the John Wihlm Estate, Shirley Campbell, has not been paid,
or otherwise objects to the reinstatement. The costs of this proceeding
are assessed against Pederson. See id. r. 36.24(1).
LICENSE SUSPENDED.
All justices concur except Wiggins, J., who concurs in part and
dissents in part.
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#16–0199, Iowa Supreme Ct. Att’y Disciplinary Bd. v. Pederson
WIGGINS, Justice (concurring in part and dissenting in part).
I agree with the part of the majority decision finding a violation of
our rules. However, I dissent as to the sanction for not using the
objective criteria of the ABA’s Standards for Imposing Lawyer Sanctions
(1992). See Iowa Supreme Ct. Att’y Disciplinary Bd. v. Morse, 887 N.W.2d
131, 148–52 (Iowa 2016) (Wiggins, J., concurring in part and dissenting
in part).