IN THE SUPREME COURT OF IOWA
No. 17–0193
Filed September 15, 2017
IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD,
Complainant,
vs.
LAWRENCE L. LYNCH,
Respondent.
On review of the report of the Iowa Supreme Court Grievance
Commission.
The grievance commission recommends the suspension of an
attorney’s license for violations of ethical rules. LICENSE SUSPENDED.
Tara M. van Brederode and Susan A. Wendel, Des Moines, for
complainant.
Leon F. Spies of Spies, Pavelich & Foley, Iowa City, for respondent.
2
MANSFIELD, Justice.
In an effort to salvage his troubled real estate investments, an
attorney borrowed money from certain longtime clients. The attorney
failed to advise the clients to obtain independent counsel, failed to obtain
their written informed consent, and continued to represent those clients
after borrowing the money. The attorney also did not disclose his
perilous financial situation. The loans eventually totaled $177,000 in
principal amount, none of which has been repaid. The attorney later
self-reported his conduct to the Iowa Supreme Court Attorney
Disciplinary Board (the Board). The Board charged the attorney with
violating Iowa Rules of Professional Conduct 32:1.7(a), 32:1.7(b), and
32:1.8(a).
The parties reached a stipulation concerning the facts and the rule
violations but went to a hearing regarding the appropriate sanction.
After this hearing, the Iowa Supreme Court Grievance Commission (the
commission) recommended suspending the attorney’s license for nine
months. On our review, we agree that the violations occurred and
suspend the attorney’s license to practice law for six months.
I. Background Facts and Proceedings.
Lawrence Lynch was first admitted to the Iowa bar in 1971 and
has practiced law in Iowa City his entire professional career. Lynch
maintains a small general-practice firm where he is the named partner.
Lynch has also invested in real estate and previously owned several
rental properties in Iowa City.
In the early 1980s, Lynch began performing legal services on an
ongoing basis for Darrel Bell, a farmer in Lone Tree, and Darrel’s wife,
Carolyn. Lynch represented Darrel and Carolyn in a variety of business
and personal matters. Around the same time, Lynch also began acting
3
as legal counsel for Darrel’s son and daughter-in-law, Tom and Terri Bell.
Over the years, Lynch formed a close friendship with the Bell family in
addition to a good working relationship. Until 2014, Lynch regularly
provided paid legal services to Darrel, Carolyn, Tom, and Terri.
In October 2008, Lynch was experiencing personal financial
difficulties related to his real estate ventures. He telephoned Darrel and
Carolyn, who were then on vacation in Florida, and asked to borrow
$90,000 from them. Lynch told Darrel and Carolyn he needed the money
the next day. Darrel and Carolyn agreed to lend Lynch the money and
took out a corresponding short-term loan from their own bank. Because
Darrel and Carolyn were in Florida at the time, they overnighted the
check to Lynch the following day. Lynch executed a promissory note for
the $90,000, payable June 1, 2009, with a 7.5% interest rate. The
following month, Lynch prepared and signed a mortgage giving Darrel
and Carolyn a security interest in one of the rental properties Lynch
owned. Lynch did not tell Darrel and Carolyn they should retain
independent counsel in connection with the transaction, nor did he ask
for or receive their informed consent in writing.
In March 2010, Lynch contacted Tom and asked to meet him
personally in Coralville. At that meeting, Lynch sought a personal loan
from Tom and Terri “to put a roof on one of his buildings.” Tom wrote a
check for $17,000 that same day. Lynch signed a promissory note to
repay the loan, with 8% interest, by August 10. Lynch did not provide
any security for the note. Lynch did not tell Tom and Terri they should
retain independent counsel in connection with the transaction, nor did
he ask for or receive their informed consent in writing.
Later that month, Lynch wrote to Darrel and Carolyn stating that
he could not repay their $90,000 promissory note. Lynch explained that
4
he was “in the process of rebuilding two buildings . . . and because [he]
had to evict most of the tenants, it [had] left [him] a little bit shorter than
what [he] had anticipated.” Lynch therefore included with his letter a
written extension to October of the past-due note. He asked Darrel and
Carolyn to sign and drop off the extension. Lynch also enclosed a check
for $3140.50, which amounted to about a third of the accrued and
unpaid interest. Additionally, Lynch prepared and signed a second
promissory note to Darrel and Carolyn for $6000, representing the
balance of the overdue and unpaid interest.
Darrel and Carolyn signed off on the requested extension. As
before, Lynch did not tell them they should retain independent counsel,
nor did he ask for or obtain their written informed consent.
As October approached, Lynch again lacked sufficient funds to
repay Darrel and Carolyn. He sought another extension and, as before,
Darrel and Carolyn agreed. Lynch neither advised Darrel and Carolyn to
get independent counsel nor obtained their informed consent.
In February 2012, Lynch asked Darrel and Carolyn to lend him an
additional $70,000. In this transaction, Lynch executed a promissory
note for $161,000 at 7.5% interest, which covered the $70,000 in new
funds while also replacing the previous notes to Darrel and Carolyn for
$90,000 and $6000. 1 This note was originally payable in full by
October 2013, but repayment was later extended to April 2014. As
previously, Lynch did not advise Darrel and Carolyn on the need for
independent counsel or obtain their informed consent.
1Although the note disclosed a principal amount due of $161,000, Lynch later
stipulated that the note was intended to consolidate all prior debt to Darrel and
Carolyn, with a combined value of $166,000.
5
In 2013, Darrel, Carolyn, Tom, and Terri took a foreign trip
together. During the trip, each of the two couples learned for the first
time that Lynch had borrowed money from the other couple.
On January 30, 2014, Darrel died. Lynch filed a petition in
probate as attorney for Carolyn, the executor of Darrel’s estate. Shortly
after this filing, Lynch requested another extension from Carolyn on the
outstanding note payable to Darrel and her.
During that timeframe, Lynch attempted to sell many of his
properties, including the rental property on which Darrel and Carolyn
held a mortgage. Lynch approached Carolyn and asked her to sign a
release of that mortgage. Carolyn initially declined, and Lynch then sent
her a letter explaining that the mortgage was actually a second mortgage.
After payment of closing costs and fees (including $130,000 in
delinquent taxes), Lynch’s letter explained that the property sale would
not generate enough even to satisfy the first mortgage. Accordingly,
Lynch proposed that in exchange for the release, he would grant Carolyn
a second mortgage on another property. 2 Lynch’s letter continued,
I have no more money to pay other debts that [are] still
associated with this property, but all of the other creditors
have agreed to work with me. This puts me in a much
stronger position to be able to make my payments to you
monthly. If I do not receive your release back in my hands
to present to the other people, the sale will be lost and the
property simply reverts back to the individuals who bought
the back taxes and I will have no equity to pay anyone.
On the advice of her children, Carolyn decided to consult with another
attorney to review the release.
2At the disciplinary hearing, Lynch described the second property as consisting
of “one old house.” Notably, the primary mortgage holder on that property was another
of Lynch’s clients.
6
Lynch also obtained counsel. Soon thereafter, he wrote a letter to
the Board reporting “what [he] now believe[d] to be” several violations of
the Iowa Rules of Professional Conduct related to his dealings with the
Bell family.
Since the events described above, Lynch has made some interest
payments on his notes to the Bell family. However, he has made no
payments of principal.
On May 18, 2016, the Board filed a complaint against Lynch
alleging violations of three Iowa Rules of Professional Conduct: rule
32:1.7(a)(2), rule 32:1.7(b), and rule 32:1.8(a). On October 7, the Board
and Lynch filed a stipulation of agreed-upon facts and rule violations.
The commission held a hearing for the limited purpose of receiving
evidence on the appropriate sanction. Carolyn, Tom, and Terri each
testified. Lynch also testified at the hearing. He accepted responsibility
for the rule violations. Yet, he was adamant that he had orally advised
the Bells that he “could not be their attorney” with respect to the loan
agreements. 3 Lynch maintained he did not realize until 2014, when he
retained his own counsel, that he also should have notified the Bells in
writing of their need to obtain independent counsel before entering into
the loan transactions with him. Lynch added that all but one of the
investment properties had been sold and that his only way of repaying
the Bells would be from future earnings in his law practice.
Lynch further testified that he has been an active member of the
Iowa City community, serving on the Iowa City city council in the early
1980s and as an involved member of the Johnson County Bar
3Telling the Bells he could not be their attorney is not the same as telling them
they should retain outside counsel. Regardless, the commission did not find Lynch’s
testimony in this regard credible.
7
Association. He indicated that he occasionally does pro bono work,
primarily in family law and divorce cases. Lynch has not been the
subject of any prior discipline.
Following the hearing, the commission found that Lynch’s conduct
violated rules 32:1.7(a), 32:1.7(b), and 32:1.8(a). In determining an
appropriate sanction, the commission questioned the credibility of
aspects of Lynch’s testimony. It also was “troubled by the fact that
[Lynch] has not even paid all the accrued interest on the money he
borrowed,” and instead “used sale proceeds from real estate and income
from his law practice to retire other personal debt.” The commission
indicated this kind of misconduct “made wholly vulnerable the
relationship between a lawyer and the client” and “warrants a
suspension to serve as a penalty to the lawyer and as a deterrent to
others.” The commission recommended that Lynch’s license be
suspended for nine months.
II. Standard of Review.
“We review attorney disciplinary matters de novo.” Iowa Supreme
Ct. Att’y Disciplinary Bd. v. Pederson, 887 N.W.2d 387, 391 (Iowa 2016);
see Iowa Ct. R. 36.21(1). “The Board must prove attorney misconduct by
a convincing preponderance of the evidence, a burden greater than a
preponderance of the evidence but less than proof beyond a reasonable
doubt.” Iowa Supreme Ct. Att’y Disciplinary Bd. v. Willey, 889 N.W.2d
647, 653 (Iowa 2017) (quoting Iowa Supreme Ct. Att’y Disciplinary Bd. v.
Stoller, 879 N.W.2d 199, 207 (Iowa 2016)). We give the findings and
recommendations of the commission respectful consideration; however,
“we may choose to impose a sanction that is lesser or greater than the
sanction recommended by the commission.” Id.
8
Although stipulations of fact are binding on the parties, Pederson,
887 N.W.2d at 391, “[a]n attorney’s stipulation as to a violation is not
binding on us,” Willey, 889 N.W.2d at 653 (alteration in original) (quoting
Iowa Supreme Ct. Att’y Disciplinary Bd. v. Kingery, 871 N.W.2d 109, 117
(Iowa 2015)). “Even if an attorney’s stipulation concedes a rule violation,
we will only find that a violation occurred if the facts are sufficient to
support the stipulated violation.” Id.
III. Analysis.
A. Rule Violations. We agree that Lynch violated Iowa Rule of
Professional Conduct 32:1.8(a) when he procured personal loans from
Darrel and Carolyn Bell in 2008 and 2012 and from Tom and Terri Bell
in 2010, as well as when he obtained various extensions of those loans.
Rule 32:1.8(a) provides that
[a] lawyer shall not enter into a business transaction with a
client . . . unless:
(1) the transaction and terms on which the lawyer
acquires the interest are fair and reasonable to the client and
are fully disclosed and transmitted in writing in a manner
that can be reasonably understood by the client;
(2) the client is advised in writing of the desirability of
seeking and is given a reasonable opportunity to seek the
advice of independent legal counsel on the transaction; and
(3) the client gives informed consent, in a writing
signed by the client, to the essential terms of the transaction
and the lawyer’s role in the transaction, including whether
the lawyer is representing the client in the transaction.
Iowa R. Prof’l Conduct 32:1.8(a). We have recognized that a personal
loan between an attorney and a client is a “business transaction” within
the meaning of this rule. See Iowa Supreme Ct. Att’y Disciplinary Bd. v.
Dolezal, 841 N.W.2d 114, 122–23 (Iowa 2013) (loan from an attorney to a
client); Iowa Supreme Ct. Att’y Disciplinary Bd. v. Wintroub, 745 N.W.2d
9
469, 475 (Iowa 2008) (loan from a client to an attorney). “While there is
no blanket prohibition on such transactions, our ethical rules in this
area are very demanding.” Wintroub, 745 N.W.2d at 474; see Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Wright, 840 N.W.2d 295, 302 (Iowa
2013) (“[L]awyers engaged in business transactions involving conflicting
interests with clients ‘have a duty to explain carefully, clearly and
cogently why independent legal advice is required.’ ” (quoting Wintroub,
745 N.W.2d at 474)).
There is no dispute that an ongoing attorney–client relationship
existed between Lynch and all four members of the Bell family at the
time the loan agreements were entered into. See Iowa Supreme Ct. Bd. of
Prof’l Ethics & Conduct v. Fay, 619 N.W.2d 321, 325 (Iowa 2000)
(recognizing that a “client” includes a person “who regularly rel[ies] on an
attorney for legal services . . . on an occasional and on-going basis”
(alterations in original) (quoting Comm. on Prof’l Ethics & Conduct v.
Carty, 515 N.W.2d 32, 35 (Iowa 1994))).
In this case, all three branches of the rule—subparts (1), (2), and
(3)—were violated. The loan terms were not fair and reasonable. Lynch
went to the Bells because he needed immediate money and could not get
it elsewhere. The interest rates were low for the risk involved, as
subsequent events have proved. 4 We agree with the commission that
Lynch did not advise the Bells orally of the need to obtain independent
counsel, let alone in writing as the rule requires. Informed consent in
writing was not obtained. These rule violations were not just technical.
4Lynch testified he needed the Bells’ money to pay “delinquent taxes.” The Bells’
money “mostly went to taxes.” Once Lynch entered into the loan transactions with the
Bells, he knew he “had to sell properties” because there was “no way” he could make
enough money to repay the loans.
10
The stipulated facts and exhibits and the hearing record leave no doubt
that Lynch did not convey the full extent of his financial distress to the
Bells.
Next, we must determine whether Lynch violated rule 32:1.7,
which generally prohibits a lawyer from representing a client “if the
representation involves a concurrent conflict of interest.” Iowa R. Prof’l
Conduct 32:1.7(a). According to the rule, a concurrent conflict of
interest exists if “there is a significant risk that the representation of one
or more clients will be materially limited by the lawyer’s responsibilities
to another client, a former client, or a third person or by a personal
interest of the lawyer.” Id. r. 32:1.7(a)(2).
We employ a two-step approach to determine whether an attorney
has violated rule 32:1.7. Stoller, 879 N.W.2d at 207–08. First, we
determine whether the attorney’s representation of a client is “affected by
his ‘responsibilities to another client, a former client, or a third person,’ ”
id. at 207 (quoting Iowa R. Prof’l Conduct 32:1.7(a)(2)), or here, “by a
personal interest of a lawyer,” Iowa R. Prof’l Conduct 32:1.7(a)(2).
Second, we consider whether the attorney’s representation was
materially limited by that personal interest. See Stoller, 879 N.W.2d at
208.
The comments to rule 32:1.7 explain that if a lawyer’s personal
financial interests interfere with a client’s interests, “it may be difficult or
impossible for the lawyer to give a client detached advice.” Iowa R. Prof’l
Conduct 32:1.7 cmt. 10. This is especially true when a lawyer and client
enter into a loan agreement and the lawyer then proceeds to advise the
client on other matters. See In re Appeal of Panel’s Affirmance of Dir. of
Prof’l Responsibility’s Admonition in Panel Matter No. 87–22, 425 N.W.2d
824, 826 (Minn. 1988) (per curiam) (recognizing that a debtor–creditor
11
relationship clearly is “an adverse relationship” where the parties have
“differing interests” (quoting In re Conduct of Drake, 642 P.2d 296, 302
(Or. 1982) (en banc))). Once Lynch was in financial difficulty and had
amassed tens of thousands of dollars in debt to the Bells that he could
not repay, this created a conflict of interest for any future representation
of them. See Iowa R. Prof’l Conduct 32:1.7 cmt. 8 (noting that the
“critical questions” under the rule are “the likelihood that a difference in
interests will eventuate and, if it does, whether it will materially interfere
with the lawyer’s independent professional judgment”); see also
Disciplinary Counsel v. Dettinger, 904 N.E.2d 890, 891–92 (Ohio 2009)
(per curiam) (finding a conflict of interest when the attorney borrowed
$25,000 from a client and then “continued to represent [the client] in
various commercial and personal transactions”); In re Conduct of
Germundson, 724 P.2d 793, 795, 796 (Or. 1986) (en banc) (concluding
that “the [attorney’s] personal position as his client’s debtor” for
approximately $44,000 “reasonably might be expected to affect his
professional judgment in handling the client’s financial affairs”); In re
Scott, 694 A.2d 732, 735 (R.I. 1997) (per curiam) (“By assuming personal
responsibility to make the payments on the . . . loan and continuing to
represent all the parties to that transaction, [the attorney] violated Rule
1.7(b) of the Rules of Professional Conduct.”). Yet, Lynch continued to
represent them without a written waiver.
Rule 32:1.7(b)(4) requires that “each affected client give[ ] informed
consent, confirmed in writing,” to the conflict of interest. Iowa R. Prof’l
Conduct 32:1.7(b)(4). Not only did Lynch fail to obtain written informed
consent from the Bells before entering into the loan transactions with
them, he also failed to obtain written informed consent when he
continued to do legal work for them. See Iowa R. Prof’l
12
Conduct 32:1.0(b), (e) (defining “confirmed in writing” and “informed
consent”). We therefore agree with the commission that Lynch violated
rule 32:1.7.
B. Sanction. We must now determine the appropriate sanction
for Lynch’s misconduct. “We seek to ‘achieve consistency with prior
cases when determining the proper sanction.’ ” Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Crotty, 891 N.W.2d 455, 466 (Iowa 2017) (quoting
Iowa Supreme Ct. Att’y Disciplinary Bd. v. Templeton, 784 N.W.2d 761,
769 (Iowa 2010)). Nevertheless, “[a]lthough we consider our prior cases
instructive when we determine a proper sanction, ‘[t]here is no standard
sanction for [any] particular type of misconduct.’ ” Willey, 889 N.W.2d at
657 (second and third alterations in original) (quoting Stoller, 879 N.W.2d
at 218). Instead, “[w]e determine the appropriate sanction for a violation
of our rules based on the particular circumstances of each case.” Id.
When crafting a sanction, we consider the nature of
the violations, the attorney’s fitness to continue in the
practice of law, the protection of society from those unfit to
practice law, the need to uphold public confidence in the
justice system, deterrence, maintenance of the reputation of
the bar as a whole, and any aggravating or mitigating
circumstances.
Id. (quoting Stoller, 879 N.W.2d at 219). “Generally, sanctions in cases
involving improper business transactions between lawyers and clients
range from a public reprimand to revocation.” Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Johnston, 732 N.W.2d 448, 456 (Iowa 2007); accord
Fay, 619 N.W.2d at 326.
Lynch argues the nine-month suspension recommended by the
commission is excessive, urging instead that the facts warrant only a
thirty-day suspension. Lynch points out that we have imposed sanctions
13
of far less than a nine-month suspension in other attorney–client
business transaction cases.
For instance, in Wintroub—a case Lynch cites—an attorney had
engaged in two separate business transactions with the same client. 745
N.W.2d at 474. Wintroub and the client “were close personal friends for
many years before the two entered into an attorney–client relationship.”
Id. at 472. In the first transaction, Wintroub sold the client several
shares of stock in a company the attorney had formed. Id. In the
second, the attorney procured an unsecured, zero-percent interest loan
in the amount of $275,000. Id. Although the attorney made “significant
material disclosures” in connection with the transactions, it was
undisputed that the attorney did not advise the client of the need to
obtain independent counsel. Id. at 474–75. Once the client put pressure
on Wintroub to begin paying back the loan, the attorney was unable to
do so. Id. at 472. To make matters worse, the attorney then filed for
bankruptcy, so the client was not repaid the loan amount. See id. at
472.
In determining that only a public reprimand was needed, we
pointed out that Wintroub had already served a two-year suspension
imposed by the Nebraska Supreme Court for misconduct occurring
around the same time as the violations in our case. Id. at 477; see State
ex rel. Counsel for Discipline v. Wintroub, 678 N.W.2d 103, 113–14 (Neb.
2004). We emphasized that “[w]ithout this history, Wintroub’s ethical
violations would require suspension of his license for a three- to six-
month period of time.” Wintroub, 745 N.W.2d at 477. Accordingly, we
cautioned,
We are confident that this additional sanction in light of the
unusual historical circumstances of this file will not be
interpreted as a relaxation of our approach to situations
14
where attorneys engage in business relations with clients,
which remain subject to the strictest scrutiny, or to the need
for attorneys to return client property.
Id.
Just recently, in Pederson, we suspended an attorney’s license for
sixty days when, among other things, the attorney violated rule 32:1.8 in
obtaining a $29,000 loan from a client. 887 N.W.2d at 390, 393, 395.
The attorney needed the funds to repay fees a court had ordered her to
repay. Id. at 390. As here, the client loan was still outstanding at the
time of the hearing. Id. There were other significant violations. Id. at
391–93.
Also, we recently suspended an attorney’s license for sixty days
based on his facilitation of an ill-fated loan transaction between two
clients. See Willey, 889 N.W.2d at 650, 658. In Willey, the attorney had
been working closely with a “client and business partner” in connection
with a business for which the attorney was the registered agent. Id. at
650. Willey advised a second client that the business was looking for
investors and suggested that the client could invest in the company for
$100,000, a transaction which would be structured as a loan. Id. The
attorney did not obtain informed consent in writing from this second
client and did not recommend the client consult with independent
counsel prior to advancing the funds in this high-risk transaction. Id. at
651. Nearly two years later, the client had not been repaid his $100,000
“investment.” Id. at 651–52. On review, we found violations of rules
32:1.7(a)(2) (concurrent conflict of interest) and 32:1.7(b)(4) (informed
consent). Id. at 656.
In determining that a two-month suspension was appropriate in
Willey, we recognized as an aggravating circumstance the harm to the
client, i.e., a loss of $100,000. Id. at 658 (“To this day, the [client has]
15
not received any money for the[ ] investment.”). We also noted that the
client was not “a sophisticated or wealthy business person who was in a
position to lose his and his wife’s money.” Id. We cited repeated
instances of the attorney reassuring the client that the money would be
coming “soon”—in total, the attorney “continued to tell [the client] the
payment would be coming ‘just next week’ for nearly two years.” Id. We
said these and other aggravating circumstances “weigh[ed] in favor of a
longer period of suspension.” Id.
Earlier, in Committee on Professional Ethics & Conduct v. Hall, we
went so far as to revoke an attorney’s license for improper client business
transactions. 463 N.W.2d 30, 36 (Iowa 1990). In that case, the attorney
entered into numerous business transactions and joint ventures with a
client. Id. at 33–35. After several of these ventures failed, the attorney
found himself “in severe financial difficulty” and contacted the client
about his outstanding debts. Id. at 34. The attorney requested that the
client cosign a note to pay off a $200,000 debt and personally advance
an additional $81,500 to satisfy a second debt. Id. The attorney did not
advise the client to obtain independent counsel but instead indicated
“that the situation regarding the debts was urgent.” Id. The client
agreed and the attorney prepared a document reflecting the agreement,
including a provision that released the attorney from “any and all claims”
the client may pursue against the attorney or his law firm in the future.
Id. Ultimately, however, the attorney’s financial problems did not
improve, and the client was forced to pay most of the money owed on the
debts. Id.
We revoked the attorney’s license to practice law. Id. at 36. The
attorney in that case had committed several other serious rule violations.
Id. at 32–35. There was a separate docket involving the attorney’s acts of
16
bank fraud. Id. at 32–33. The attorney also gave false testimony in a
sworn deposition. Id. at 35. Still, we also took note of the severity of the
violations surrounding the attorney’s financial dealings with his client.
Id. at 36. We pointed out that the attorney “did not enter into a one time
transaction with [the client] but, rather, a series of transactions
occurring over a four year period.” Id. We recognized these transactions
ended up costing the client “several hundred thousand dollars,” and
“[s]ome of the transactions were solely for the benefit of [the attorney].”
Id.
Several aggravating circumstances exist in the present case. 5
Lynch repeatedly went to the Bell family to borrow money over a period of
several years. We have emphasized that “[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.” Pederson, 887 N.W.2d at 394; accord Hall, 463 N.W.2d
at 36 (taking into account the number of transactions between attorney
and client as well as the relevant time period).
Lynch’s misconduct resulted in serious economic harm to the
Bells. “Generally, ‘more severe discipline is warranted when the ethical
violations cause harm to clients.’ ” Wright, 840 N.W.2d at 303 (quoting
Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Jay, 606 N.W.2d 1, 4
5The parties have stipulated as to various aggravating and mitigating factors. To
the extent the parties have stipulated to facts (e.g., that Lynch has done work within the
community, including serving on the city council), those facts are binding on us. See,
e.g., Iowa Supreme Ct. Att’y Disciplinary Bd. v. Waterman, 890 N.W.2d 327, 331 (Iowa
2017). Stipulations of law (e.g., that community service can be considered a mitigating
factor) are not. See, e.g., State v. Mary, 368 N.W.2d 166, 170 (Iowa 1985) (determining
that the parties’ stipulation of the applicability of a law was nonbinding in a criminal
case). Nevertheless, we generally agree with the parties’ views as to the respective
aggravating and mitigating factors.
17
(Iowa 2000)); see Willey, 889 N.W.2d at 658 (“We consider harm to a
client an aggravating factor.”). In Wright, we suspended the attorney’s
license for twelve months, due in part to the fact that the attorney had
facilitated numerous loans from five different clients in the total amount
of $236,500. See 840 N.W.2d at 297–98, 304. Here, Lynch’s conduct
has caused the Bell family to lose $177,000 in principal that was
advanced to Lynch. The Bells have also spent over $13,000 in attorney
fees attempting to collect the still unpaid loans.
Finally, we consider the fact that Lynch has over forty years of
experience as a licensed attorney in Iowa. See Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Bartley, 860 N.W.2d 331, 339 (Iowa 2015) (noting that
an attorney’s “experience should have guided her away from the
violations that occurred in th[at] case”). At the hearing, Lynch testified
he was unaware that he needed to advise the Bells in writing that they
should seek independent counsel or that he should have obtained their
written informed consent. The commission did not find this testimony
credible; nor do we. An attorney with Lynch’s experience would know
better.
Several mitigating circumstances are also present. Lynch has not
been the subject of prior discipline. See Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Qualley, 828 N.W.2d 282, 294 (Iowa 2013)
(recognizing as a mitigating factor that “the record does not disclose any
prior disciplinary action”). He has a lengthy history of serving his
community. See Willey, 889 N.W.2d at 658 (“Willey has engaged in
extensive community service, which we also consider a mitigating
factor.”). Lynch also performs pro bono legal representation, primarily in
family law and divorce cases. See Iowa Supreme Ct. Att’y Disciplinary Bd.
v. Waterman, 890 N.W.2d 327, 332 (Iowa 2017) (recognizing pro bono
18
work as a mitigating factor). In addition, Lynch has self-reported his
misconduct, generally taken responsibility for that misconduct, and
cooperated with the investigation. See id. (noting these mitigating
factors). Having said that, Lynch did not self-report until June 2014,
after he knew the Bells had sought out independent counsel. See
Bartley, 860 N.W.2d at 339 (recognizing that self-reporting is a mitigating
factor but may be “lessened somewhat” depending on the
circumstances).
We conclude that Lynch’s license should be suspended indefinitely
without possibility of reinstatement for six months. The misconduct here
was more serious than that involved in Pederson and Willey. To bail out
his collapsing real estate investments, Lynch turned to his longstanding
clients, serially obtaining loans that undoubtedly no commercial lender
would have made. Lynch provided no meaningful disclosures to his
clients of the sort a commercial lender would have required and instead
told them he needed the money right away. If Lynch had done even part
of what rule 32:1.8 requires, in all likelihood the loans would never have
occurred. Through his ethical violations, Lynch took advantage of his
clients for his personal benefit. As the commission put it, “Respondent’s
misconduct has made wholly vulnerable the relationship between the
lawyer and the client.”
Still, the Board does not contend, nor has it attempted to prove,
that Lynch engaged in fraud. The violations, although serious and
recurring, had a single starting-point and were “uncharacteristic” when
measured against the attorney’s lengthy legal career. See Bartley, 860
N.W.2d at 337, 339 (imposing a six-month suspension on an attorney for
neglect and improper fee payment compounded by “a series of knowing
misrepresentations to her law firm and the court” and “fraudulently
19
prepared documents”). Wintroub therefore appears to us to be a relevant
precedent. 745 N.W.2d at 474. For these reasons, and after taking into
account all the matters relevant to sanction described above, we impose
a six-month suspension.
IV. Conclusion.
For the reasons stated, we suspend Lynch from the practice of law
with no possibility of reinstatement for six months. This suspension
applies to all facets of ordinary law practice. See Iowa Ct. R. 34.23.
Lynch must timely notify his clients in all pending matters pursuant to
Iowa Court Rule 34.24(1). At the conclusion of the suspension, Lynch
will be required to file a written application for reinstatement. See id.
r. 34.23(1).
To establish his eligibility for reinstatement, Lynch must also
demonstrate that he has either repaid the Bell loans, entered into
agreed-upon plans with the Bells for repaying the loans (and be current
on those plans), or filed bankruptcy in order to discharge or restructure
the loans. See Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Walters,
603 N.W.2d 772, 778 (Iowa 1999) (conditioning reinstatement on the
attorney repaying a judgment relating to a loan transaction with a former
client); see also Iowa Supreme Ct. Att’y Disciplinary Bd. v. Ries, 812
N.W.2d 594, 600 (Iowa 2012) (conditioning reinstatement on repayment
of a small claims judgment owed to former clients).
Lynch is assessed the costs of this action. See Iowa Ct.
R. 36.24(1).
LICENSE SUSPENDED.