In re Spencer

A lawyer, acting as a real estate broker and lawyer for his client, violates RCP 1.8(a) if he does not advise his client to seek outside legal advice about the problems of dual representation, and does not obtain written consent.

Spencer’s client (client) met with him to file Chapter 13 bankruptcy. In their discussion, Spencer leaned client had funds that could be used to purchase real property, which would put her in a better position entering the bankruptcy proceedings. Spencer arranged the purchase of land and received around $5,000 as commission from his client. Spencer withdrew from representation after being confronted by another lawyer about his involvement in the real estate transaction; Spencer had not advised client to get independent legal counsel regarding dual representation, nor did Spencer obtain written consent. The Oregon State Bar accused Spencer of violating RPC 1.7(a) and 1.8(a), which deal with conflict of interest based on risk that the lawyer’s personal interest will materially limit representation, and the prohibition on entering a business transaction with a client, respectively. A panel found he had violated both rules and sanctioned him with a 60-day suspension. On appeal, the Court found Spencer had violated RCP 1.8(a), but not 1.7(a). The Court did not find that there was a significant risk of this real estate transaction materially limiting the client’s representation. The Court concluded by emphasizing the importance of the advice and consent requirements of these rules. Spencer was suspended for 30 days, commencing from 60 days after the filing of this decision.