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

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).