IN THE SUPREME COURT OF IOWA
No. 138 / 06-1394
Filed January 19, 2007
IOWA SUPREME COURT ATTORNEY
DISCIPLINARY BOARD,
Complainant,
vs.
RODNEY H. POWELL,
Respondent.
________________________________________________________________________
On review of the report of the Grievance Commission.
Iowa Supreme Court Grievance Commission recommends a six-month
suspension of respondent’s license to practice law in this state. LICENSE
SUSPENDED.
Charles L. Harrington and David J. Grace, Des Moines, for
complainant.
Mark McCormick of Belin Lamson McCormick Zumbach Flynn, A
Professional Corporation, Des Moines, for respondent.
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WIGGINS, Justice.
On July 28, 2005, the Iowa Supreme Court Attorney Disciplinary
Board filed a complaint against Rodney H. Powell with the Grievance
Commission of the Iowa Supreme Court alleging Powell committed various
violations of the Iowa Code of Professional Responsibility for Lawyers. The
complaint contained three counts arising out of Powell’s representation of
three different clients. The Board amended the complaint to include a
fourth count involving an additional client. The Commission found Powell’s
conduct violated numerous provisions of the Iowa Code of Professional
Responsibility for Lawyers and recommended we suspend Powell’s license to
practice law with no possibility of reinstatement for a period of six months.
The Commission also recommended as a condition of reinstatement that
Powell release the liens he acquired in properties owned by one of his
clients.
Because we agree with the Commission’s finding that Powell’s
conduct violated numerous provisions of the Iowa Code of Professional
Responsibility for Lawyers and its recommendations regarding Powell’s
sanction, we suspend Powell’s license to practice law indefinitely with no
possibility of reinstatement for a period of six months.
I. Scope of Review.
We review attorney disciplinary proceedings of the Commission de
novo. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Walker, 712 N.W.2d 683,
684 (Iowa 2006). The Board must prove ethical violations by a convincing
preponderance of the evidence. Id. “Although we consider the
Commission’s factual findings and discipline recommendations, they do not
bind us.” Id.
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II. Findings of Fact.
On our de novo review of the record, we make the following findings of
fact. We admitted Powell to the Iowa bar in 1973. After graduation from
law school, he entered the Air Force as a JAG officer. There he primarily
prosecuted and defended courts-martial. Powell served as a JAG officer
until 1977. During that period, Powell was admitted to practice in front of
the Air Force courts, as well as the United States Court for Military Appeals.
In 1977 Powell separated from active duty and moved to St. Louis,
Missouri. Powell began working for Missouri Legal Services and was
admitted to the Missouri bar in 1978. Powell was a managing attorney for
the St. Louis County Office for Legal Aid from 1980 to 1988. Powell held a
supervisory position, overseeing the clinical program between legal services
and Washington University in St. Louis School of Law, the family law
department, and the volunteer lawyer program. In addition, Powell created
an ecumenical legal assistance ministry that reached out to impoverished
areas of St. Louis.
Powell left legal services in 1988 to return to Iowa. He entered the
private practice of law as an associate with a Des Moines law firm. He
eventually became a partner in the firm. The firm practiced primarily as a
labor and employment law firm. Powell was hired to handle the firm’s other
caseload. For example, if a client had a family law problem, Powell would
handle the case.
When the firm dissolved in 1996, Powell opened a solo practice in
Norwalk. As his practice grew, Powell hired two additional attorneys to join
his firm. The firm’s practice is a general one; however, Powell has centered
his practice on wills, probate, and real estate matters.
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A. Walton Matter. In November 1991 Malissa Walton hired Powell to
represent her in a dissolution of marriage. Walton’s parents suggested she
retain Powell. Powell and Walton’s parents, the Hinshaws, knew each other
from community activities. Mrs. Hinshaw called Powell and arranged for a
meeting. She and her daughter saw Powell at the Des Moines law firm.
Although a fee arrangement was discussed, nothing was put in
writing. It was understood by both Walton and Powell that Walton’s
mother, Mrs. Hinshaw, would pay for Powell’s services. However, Powell
sent every bill to Walton’s address. Walton claims she only sometimes saw
the billing statements. Mrs. Hinshaw paid Powell approximately $300 from
1991 until 1993. However, both Walton and Powell agree after Walton’s
father passed away in 1996, Mrs. Hinshaw no longer agreed to be
responsible for Powell’s fees.
The court finalized Walton’s marriage dissolution in August 1992.
Powell obtained a favorable outcome for Walton. The total legal fees
generated for the dissolution amounted to $2850. Walton or her mother
made small payments toward the bill, totaling a little over $350. Walton did
not pay the balance of her bill. Powell knew from the dissolution, Walton
had three young children, had over $10,000 in debt, and was living on a
limited income.
On almost every billing cycle, Powell charged Walton a finance charge.
From December 13, 1991, until February 17, 1995, Powell charged Walton
an interest rate of 18 percent or 1.5 percent per month on any unpaid
balance. Powell never informed Walton that he would charge her compound
interest. The interest rate then increased to 22 percent or 1.83 percent per
month. He never informed Walton that he had the right to raise the interest
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rate. By March 31, 2003, Walton owed Powell $21,920.50. Of this,
$18,691.27 was attributable to the finance charges.
Powell made several attempts to collect fees from Walton. From 1993
to 1996 Powell sent Walton several letters asking for any payment. In his
first letter, Powell acknowledged Walton was on a very limited income, but
still requested she make regular payments on her bill. He also stated if
Walton made regular payments, he was willing to waive the finance charges
for each month he received a payment.
In 1995 Powell notified Walton he would send her account to a
collection agency if she did not start making payments on the bill. In 1996
Powell sent a letter to Walton encouraging her to work with him to
“negotiate an arrangement which is acceptable to both [Walton] and
[Powell].” After receiving phone calls from Powell’s office, Walton did pay
$10 toward her bill.
By May 1997 now some six years after Powell first represented
Walton, the account remained open and Powell was still sending monthly
bills, but no other exchanges occurred between Powell and Walton. In 2000
Powell once again attempted to collect payment from Walton. This time his
efforts were more aggressive.
On February 28, 2001, Powell sent a letter stating, unless Walton
paid $3250 he would report the discharged debt to the Internal Revenue
Service (IRS) as income and she would be responsible for more than $5000
in taxes because of this discharge. Walton did not pay Powell the $3250.
From February 2000 to February 2002 Powell’s office made over 120 phone
calls in an attempt to collect the debt from Walton.
On June 13, 2002, Powell sent Walton a right to cure notice stating
$21,474.34 would be reported as a discharged debt to the IRS if some
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acceptable payment was not received in twenty days. Walton did not pay
Powell. On November 13, 2002, Powell wrote to Walton and informed her
the debt was discharged and indicated he would be reporting the discharge
as income to the IRS. The letter also included an IRS 1099-MISC form
showing Walton had other income of $21,920.50.
Powell filed the 1099-MISC form with the IRS. Considering this
discharge as other income, the IRS proposed Walton pay $2991 in taxes.
However, after Walton provided further information to the IRS
demonstrating she did not work for Powell, but rather that he discharged a
debt, the IRS no longer required Walton to pay the taxes.
B. Hutchins-Carroll Matter. Sandra Hutchins and Marvin Carroll
hired Powell in May 2000 for help in retrieving personal property Hutchins
left at a home she just sold. Hutchins did not sign a written fee agreement
when she retained Powell. Powell never advised Hutchins or Carroll that he
would charge them finance charges. While Powell was investigating the
property dispute, Hutchins hired him for another matter involving Hutchins’
daughter.
Hutchins generally received Powell’s bills on a monthly basis detailing
her fees. In each bill, it stated, “the monthly finance charge will be at an
ANNUAL PERCENTAGE RATE of 22% (1.83% per month).” Powell charged
Hutchins a total of $2974 for the property matter and $4249 for the matter
involving her daughter. The bill also reflected $1,655.66 in finance charges.
These charges were offset by $858.50 in write-downs and payments of
$1030. By March 2002 Hutchins owed Powell $8,028.29.
On two separate occasions, Hutchins wrote to Powell and complained
about the finance charges. In her first letter, received by Powell on May 21,
2001, she stated, “you are charging a $100 a month finance charge. Now if
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I’m making payments of $40 how could I possibly ever get this paid.” In her
second letter received by Powell on December 1, Hutchins again expressed
her frustration at the finance charges.
Hutchins also met with Powell’s staff to discuss the growing bill.
Powell gave her various payment options. However, Hutchins did not enter
into any payment agreement at that time. Because no payment agreement
could be reached, Hutchins filed a complaint with the Board.
C. Perkins Matter. Robert Perkins operated Perkins Electric, an
electrical contracting business. Powell represented Perkins primarily for
matters relating to Perkins Electric from 1998 to 2003. During Powell’s
representation of Perkins, they never entered into a written fee agreement.
Instead, Powell simply sent Perkins invoices detailing his charges. Perkins
did not always pay his bill on time. Powell described Perkins as generally
slow in paying his bills, but Powell attempted to be accommodating because
of their ongoing relationship.
Over the period of time Powell represented Perkins, Powell charged
Perkins $66,435 in fees, $1547 in costs, and $7,304.54 in finance charges.
The finance charges included compound monthly interest at the rate of 1.83
percent or 22 percent per annum on all unpaid balances and a $15 late
charge on any unpaid monthly balance. Perkins paid Powell $47,281.01.
Perkins and Powell spoke in November 2002 regarding several issues,
including Perkins’ concerns about the billing arrangements and the finance
charges. Powell followed up on these earlier discussions with a letter,
which in part discussed the finance charges. In his letter, Powell stated:
You have also expressed concern at times relating to our
interest charges. As I may have explained to you, we have
great difficulty operating when we extend credit to clients. We
are not in the lending business, and it is important that we be
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paid every month for the work performed for our clients. Our
hourly rates do not contain any padding for “carrying charges.”
Perkins then wrote to Powell terminating their attorney-client
relationship because of the finance charges. In his letter, Perkins stated,
“[a]s I have tried to communicate to you on various occasions I will NOT
agree to paying finance charges.”
Powell responded to this letter and discussed the issues relating to
the status of his legal representation, the billing invoice, the account
history, the finance charges, and Perkins’ files. In discussing the finance
charges, Powell described the Perkins account as “commercial” and stated,
“there is no requirement that there be any more writing to evidence the
agreement to pay interest charges.”
On January 28, 2004, Powell responded to a letter written by Perkins
in which Perkins stated he considered his account with the Powell office to
be paid in full and he would not be making any further payments on the
account. In his response, Powell stated Perkins never questioned the
accuracy of the invoices. Powell also contended the account was not paid in
full. Further, Powell claimed if he discharged the unpaid balance in the
account, the law required Powell to report the amount discharged to the IRS
as income to Perkins. Unlike the Walton matter, where Powell made a
similar statement, Powell did not file a 1099 form with the IRS.
In the letter, Powell also stated his office had a lien for unpaid fees
against all papers and documents in Perkins’ files. However, Powell never
pursued enforcement of a lien. Finally, Powell offered to negotiate a
settlement of the attorney’s fees through binding arbitration, with the costs
to be paid by the unsuccessful party. Perkins did not respond to this letter.
Instead, Perkins filed a complaint with the Board.
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Finally, Powell testified after this court made its decision in Iowa
Supreme Court Board of Professional Ethics & Conduct v. McKittrick, 683
N.W.2d 554 (Iowa 2004), he “promptly recomputed the invoices from the
beginning, and [he] gave [Perkins] a compound interest credit, taking off all
compound interest amounts, so eventually converting it all to simple
interest.” So, on September 8, 2004, Powell sent a letter and invoice to
Perkins stating he was crediting the Perkins account $1,961.30 for the
compound interest charges. 1 Powell never discharged Perkins of his
remaining debt.
D. Jondall Matter. In fall 2004 Amy Jondall hired Powell to represent
her in her marriage dissolution. At the onset of the representation, Jondall
received the firm’s fee policy and agreement form. In part the agreement
contained: (1) a provision acknowledging if Jondall’s nonpayment of fees
resulted in Powell discharging the fees, he would report the discharge as
income to the IRS; (2) a provision stating if Jondall does not challenge a
charge within ten days from receiving the invoice, she waives any claim to
the accuracy of the bill or the sufficiency of the work done; and (3) a
provision containing an indemnity clause stating any costs arising out of
any complaint made by Jondall against Powell would be paid by Jondall if
the complaint is resolved favorably to Powell. Jondall paid a portion of
Powell’s retainer in three installments.
Powell was responsible for drafting Jondall’s consent decree of
dissolution of marriage. After drafting the decree, Powell gave it to Jondall
for her to look over. She approved the decree. Powell then sent the decree
to opposing counsel for Mr. Jondall’s signature.
1 Powell also testified, in light of McKittrick, he made an appropriate credit to all of
his active accounts where he charged compound interest.
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Paragraph twenty-two of the decree contained a clause stating, “all
said attorneys’ fees shall constitute a judgment herein.” Powell never
explained to Jondall that this clause would create a lien on her property if
her attorney’s fees were not paid. Neither Mr. Jondall’s attorney nor the
judge, who signed the decree, raised any issue about paragraph twenty-two.
The court filed the decree on January 31, 2005.
At the time of the dissolution action, Jondall and her soon-to-be ex-
husband owned a home and an acreage. They planned to sell the home and
the acreage. During the pendency of the dissolution proceeding, the
Jondalls sold the acreage. The dissolution decree divided the proceeds from
the acreage sale, awarding Jondall $20,000 of the proceeds, and her former
husband $5000 of the proceeds.
On January 20, 2005, the buyer’s attorney prepared a title opinion
concerning the sale of the acreage. The title opinion did not note the
judgment for attorneys’ fees because the decree was not filed until
January 31. The sale of the acreage closed on or about February 10. The
buyer’s mortgage company distributed the settlement funds without
requiring an updated title opinion. The Jondalls delivered a warranty deed
to the buyer.
At the time the sale of the acreage closed, Jondall had not made any
payments to Powell, other than the three initial payments used to retain
Powell. The highest invoice in the record shows Jondall owed Powell
$7,855.29 in fees. On April 8 Powell’s office contacted Jondall concerning
the nonpayment of her bill. Jondall complained the fees were excessive.
After learning the Jondalls sold the acreage and the mortgage
company disbursed funds to Jondall, Powell sent Jondall a letter requesting
payment of his fees. The letter reaffirmed the existence of Powell’s lien in
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the property. The letter also requested that she pay her fees so Powell
would not have to take action against the buyer.
After receiving this letter and speaking with the staff at the Powell
Law Firm, Jondall took her home off the market because with the attorney’s
lien on the property she felt there was not any way she could give a clean
title to a buyer. Jondall filed a complaint with the Board and requested
Powell release the judgment liens on her properties. As of September 6,
2006, Powell still had not released the liens.
III. Violations.
We have previously discussed the pitfalls an attorney faces when
involved in a fee dispute with a client. McKittrick, 683 N.W.2d at 559-60.
There we said,
Attorneys should avoid fee disputes with clients as much
as possible because the collection of fees by attorneys from
clients can give rise to a host of problems and pitfalls.
Attorneys should aspire to resolve fee disputes amicably, and
sue clients only when necessary “to prevent fraud or gross
imposition by the client.”
While it is not unethical for a lawyer to engage in fee
collection practices against a former client, the practices
employed to enforce collection should be carefully scrutinized.
Illegal, aggressive, and improper collection practices can lead to
disciplinary actions against attorneys, as can the use of
attorney liens and confessions of judgment. Additionally, an
attorney who imposes an unlawful finance charge and
improperly calculates the amount of interest on a fee can
violate the rules of professional ethics.
Id. (internal citations omitted). Based on our review of the record, we find
the Board met its burden and proved Powell violated numerous rules of the
Iowa Code of Professional Responsibility for Lawyers when he utilized the
following practices in charging and collecting his fees.
A. Finance Charges. An attorney cannot assess finance charges
when the attorney collects a fee, unless the client agrees in writing in
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advance to the finance charges imposed. Id. at 561. Additionally, where the
legislature authorizes a finance charge, the legislature does not allow
compounding of the finance charge. Iowa Code § 535.11(6) (1991). In the
Walton, Hutchins-Carroll, and Perkins matters, Powell charged interest
without first entering into a written fee agreement that would allow him to
do so. He also compounded the finance charges.
By charging illegal finance charges, Walton’s $2850 legal service bill
became a $21,920.50 bill. Powell charged Hutchins $1655.66 in finance
charges for $7223 in legal services. Further, Powell charged Perkins
$7,304.54 in finance charges for $66,435.50 in legal services. These fees
are clearly excessive.
Accordingly, Powell’s conduct in charging illegal finance charges
resulting in excessive fees violated DR 1-102(A)(6) (stating “[a] lawyer shall
not [e]ngage in any other conduct that adversely reflects on the fitness to
practice law”) and DR 2-106(A) (stating “[a] lawyer shall not [e]nter into an
agreement for, charge, or collect an illegal or clearly excessive fee”).
B. Reporting Clients’ Discharged Debts to the IRS. Powell contends he
relied on the advice of his accountant and his reading of the tax law before
he reported Walton to the IRS, threatened to report Perkins to the IRS, and
included a paragraph in the Jondall fee agreement requiring her to
acknowledge that if her nonpayment of fees resulted in Powell discharging
the fees, he would report the discharge of the fees as income to the IRS. We
agree with the Commission that Powell’s testimony in this regard is not
credible. Powell presented no evidence other than his statement that his
accountant advised him this conduct was legal.
Under the United States Code, only “applicable entities” are required
to report the discharge of a debt. 26 U.S.C. § 6050P(a) (1999). The only
definition of an applicable entity that could apply to Powell is an
13
organization whose significant trade or business is in the lending of money.
Id. § 6050P(c)(2)(D). Powell acknowledged he was not in the business of
lending money. Therefore, Powell misrepresented the requirements of the
tax code when he threatened to report his clients if he discharged their debt
for legal services and when he reported the discharge of Walton’s legal fees
as income to the IRS.
Powell’s conduct in threatening to report Perkins and Jondall to the
IRS if he discharged their debts and in reporting Walton to the IRS is
conduct involving misrepresentation and adversely reflects on Powell’s
fitness to practice law. See Walker, 712 N.W.2d at 685 (finding DR 1-
102(A)(4), DR 1-102(A)(6), and DR 7-101(A)(3) are violated when an attorney
misrepresents his compliance with the state and federal tax laws to his
client); Office of Disciplinary Counsel v. Kissel, 442 A.2d 217, 220 (Pa. 1982)
(finding the “use of intimidation in an effort to collect [a] disputed bill” for
services is a violation of the ethics rules, including DR 1-102(A)(4), DR 1-
102(A)(6), and DR 7-101(A)(3)). Additionally, by reporting Walton to the IRS,
Powell intentionally damaged a client during the course of his professional
relationship.
Accordingly, Powell’s conduct in threatening to report and reporting
his clients to the IRS violated DR 1-102(A)(4) (stating “[a] lawyer shall not
[e]ngage in conduct involving, dishonesty, fraud, deceit, or
misrepresentation”), DR 1-102(A)(6), and DR 7-101(A)(3) (stating “[a] lawyer
shall not intentionally [p]rejudice or damage a client during the course of
the professional relationship”).
C. Using a Judgment Lien for his Attorney’s Fees. Our rules provide
an attorney may “[a]cquire a lien granted by law to secure a fee.” Iowa Code
of Prof’l Responsibility DR 5-103(A)(1). This rule only applies to liens
“ ‘granted by law.’ ” McKittrick, 683 N.W.2d at 561 (citation omitted). Iowa
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Code section 602.10116 governs liens an attorney may impose for unpaid
fees. Iowa Code § 602.10116. Although section 602.10116 authorizes
placing an attorney’s lien on a judgment, it does not authorize the lien to
attach to real property that was the subject of the litigation. McKittrick, 683
N.W.2d at 561-62. One rationale for not allowing the lien to attach to the
real property is that a lien based on unliquidated and unadjudicated claims
results in a form of economic coercion when the attorney attempts to
enforce the lien to collect the attorney’s fees. Id. at 562.
By placing the unauthorized lien on Jondall’s property, Powell
obtained a proprietary interest in the subject matter of the dissolution
litigation he was conducting for Jondall. See People v. Smith, 830 P.2d
1003, 1005 (Colo. 1992) (finding “[the attorney’s] recordation and
subsequent failure to release the lien violated . . . DR 5-103(A)(1)”). Powell
also engaged in conduct involving dishonesty, fraud, deceit, or
misrepresentation by placing the lien on the property without first
disclosing this fact to Jondall. Additionally, this conduct is prejudicial to
the administration of justice and adversely reflects on his fitness to practice
law. McKittrick, 683 N.W.2d at 562. Moreover, the unauthorized lien on
Jondall’s property intentionally prejudiced and damaged Jondall during the
course of their professional relationship. Jondall was unable to give clear
title on the acreage to her buyer and was forced to remove her home from
the market because of the lien.
Accordingly, Powell’s conduct in placing the lien in the dissolution
decree on property his client was awarded under the decree violated DR 1-
102(A)(4), DR 1-102(A)(5) (stating “[a] lawyer shall not [e]ngage in conduct
that is prejudicial to the administration of justice”), DR 1-102(A)(6), DR 5-
103(A) (stating “[a] lawyer shall not acquire a proprietary interest in the
15
cause of action or subject matter of litigation being conducted for a client,”
except in a few limited circumstances) and DR 7-101(A)(3).
D. Fee Agreement Provisions. Jondall’s fee agreement contained the
following provisions:
9. MONTHLY INVOICE.
...
If you have any questions concerning the monthly invoice, you
agree to contact the finance manager for The POWELL LAW
FIRM, P.C. within ten (10) days of the date of the invoice. If
you do not contact the finance manager within ten (10) days,
you will be deemed to have agreed that the invoice is accurate
and valid, and to have waived any claims as to the accuracy or
sufficiency of the work performed on your behalf.
...
15. COLLECTION EXPENSES.
You agree to pay all expenses and attorney’s fees, including
those of The Powell Law Firm, P.C. proceeding pro se, relating
to collection of amounts due under this agreement. Such
collection shall include any and all judicial proceedings,
arbitrations, and mediations as may be necessary to enforce or
defend payment of amounts due hereunder. Said collection
expenses shall also include any and all attorneys fees and
expenses relating to the defense by The Powell Law Firm, P.C.,
of any complaints caused by client relating to the services
performed by The Powell Law Firm, P.C. before any agency,
department, court or branch of any government, or any bar
association which renders a decision favorable to The Powell
Law Firm, P.C.
The Iowa Code of Professional Responsibility for Lawyers prohibits a
lawyer from limiting the attorney’s liability to a client for legal negligence.
Iowa Code of Prof’l Responsibility DR 6-102(A). The reason for the rule is
that
[a] lawyer who handles the affairs of a client properly has no
need to attempt to limit liability for professional activities and
one who does not handle the affairs of a client properly should
not be permitted to do so.
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Iowa Code of Prof’l Responsibility EC 6-6. DR 6-102(A) applies to any
agreement that would limit an attorney’s future liability. See Comm. on
Prof’l Ethics & Conduct v. Hall, 463 N.W.2d 30, 36 (Iowa 1990) (holding an
agreement containing a provision releasing the attorney and his law firm
from any and all claims the client might pursue in the future against the
attorney or his law firm violated DR 6-102(A)). Both provisions included in
Jondall’s fee agreement attempted to limit Powell’s liability for future legal
negligence.
The ten-day provision substantially limits the time in which a client
can bring a legal negligence action against Powell. We have found,
normally, when the relationship between the attorney and the client is
“ ‘founded on unwritten contracts’ ” or if it is an action “ ‘brought for
injuries to property,’ ” Iowa Code section 614.1(4) governs the statute of
limitations for legal negligence claims. Venard v. Winter, 524 N.W.2d 163,
166 (Iowa 1994) (citation omitted); see also Iowa Code § 614.1(4) (setting the
statute of limitations at five years). Additionally, the discovery rule applies
to statute of limitations questions in legal negligence actions. Millwright v.
Romer, 322 N.W.2d 30, 32-33 (Iowa 1982). Our rules do not allow Powell to
limit his future liability by reducing the time within which his clients can
file a legal negligence claim against him.
The indemnity provision contained in the contract also limits a
client’s ability to bring an action by exposing the client to a substantial
financial burden if a client brings a legal negligence claim and loses. The
law in this jurisdiction is well settled; unless authorized by statute or
contract, a court does not have the inherent power to include the expenses
of litigation and attorney’s fees in a damage award. Harris v. Short, 253
Iowa 1206, 1208-09, 115 N.W.2d 865, 866-67 (1962). One of the reasons
17
for the rule is that “[people] might be unjustly discouraged from instituting
an action to vindicate their rights if the penalty for losing included the fees
of their opponents’ counsel.” Fleischmann Distilling Corp. v. Maier Brewing
Co., 386 U.S. 714, 718, 87 S. Ct. 1404, 1407, 18 L. Ed. 2d 475, 478 (1967).
By shifting the burden of litigation costs and attorney’s fees to his clients,
Powell limited his future liability to only those clients who can afford to bear
these costs if they bring suit and lose.
Accordingly, Powell’s conduct in placing provisions in his attorney fee
contract requiring a client to contest the sufficiency of his work within ten
days and providing him indemnity when a client loses a legal negligence
claim the client might bring because of his representation violated DR 1-
102(A)(5), DR 1-102(A)(6), DR 2-106(A), and DR 6-102(A) (stating “[a] lawyer
shall not attempt to be exonerated from or limit liability to a client for
personal malpractice”).
IV. Sanction.
In determining the sanction a lawyer must face as a result of his or
her misconduct, we have stated:
“The goal of the Code of Professional Responsibility is ‘to
maintain public confidence in the legal profession as well as to
provide a policing mechanism for poor lawyering.’ When
deciding on an appropriate sanction for an attorney’s
misconduct, we consider ‘the nature of the violations,
protection of the public, deterrence of similar misconduct by
others, the lawyer’s fitness to practice, and [the court’s] duty to
uphold the integrity of the profession in the eyes of the public.’
We also consider aggravating and mitigating circumstances
present in the disciplinary action.”
Iowa Supreme. Ct. Att’y Disciplinary Bd. v. Iversen, 723 N.W.2d 806, 810
(Iowa 2006) (citation omitted) (alterations in original).
Powell’s conduct in causing actual harm to his clients is an
aggravating factor. In the Walton matter, he harmed his client by filing the
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1099 form with the IRS. In the Jondall matter, he harmed his client by
attaching a lien to her real property in the dissolution decree. Another
aggravating factor to consider is that Powell’s conduct was not an isolated
incident. Powell admitted to sending ten to fifteen 1099 forms to other
clients. He also admitted he obtained the same type of judgment lien as he
used in the Jondall matter with an additional ten to fifteen clients.
Powell’s lack of prior disciplinary violations is a mitigating factor.
Additionally, the affidavits filed on his behalf indicate he is a highly
respected member of the bar and the community. Another mitigating factor
is that none of his clients complained about the quality of his
representation. The complaints only concerned the manner in which he
billed and collected his fees.
We have previously suspended an attorney’s license for three months
for compounding interest, imposing an unauthorized lien on her client’s
property for her attorney’s fees, and neglecting a client’s case leading to
potential prejudice to a client. McKittrick, 683 N.W.2d at 563-64. Although
Powell’s conduct did not involve neglect, Powell’s violations are more serious
than McKittrick’s because of the deceit involved when he did not disclose to
Jondall the lien he inserted in her dissolution decree and the intimidation
he used by threatening to file the 1099 forms. Another difference between
McKittrick’s conduct and Powell’s conduct is that Powell directed his
actions against multiple clients, while McKittrick’s conduct only involved
one client.
Considering the nature of the violations, the protection of the public,
deterrence of similar misconduct by others, Powell’s fitness to practice, our
duty to uphold the integrity of the profession in the eyes of the public,
aggravating circumstances, mitigating circumstances, and the sanction we
19
have given in a similar case, we agree with the Commission that the
appropriate sanction for Powell’s conduct is a six-month suspension of his
license to practice law.
V. Disposition.
In light of the above facts and circumstances surrounding Powell’s
conduct, we suspend Powell’s license to practice law in this state
indefinitely with no possibility of reinstatement for six months. Upon any
application for reinstatement, Powell must establish he has not practiced
law during the suspension period and he has complied in all ways with the
requirements of Iowa Court Rule 35.13. Powell also must comply with the
notification requirements of Iowa Court Rule 35.21. Additionally, Powell
must provide satisfactory evidence that he released the liens he acquired
against Jondall’s real property. Finally, we tax the costs of this action
against Powell pursuant to Iowa Court Rule 35.25.
LICENSE SUSPENDED.