S054585, Opinion — In re Schenck

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Petition for reconsideration allowed; former opinion (345 Or 350, 194 P3d 804)
modified and adhered to as modified January 29, 2009

In re Complaint as to the Conduct of
RONALD D. SCHENCK,
Accused.
(OSB 05-127, 05-128; SC S054585)
202 P3d 165

CJS, Attorney and Client § 88.

# En Banc On petition for reconsideration .*

Ronald D. Schenck, filed the petition for reconsideration
in propria persona.

No appearance contra.

## PER CURIAM

The petition for reconsideration is allowed. The former
opinion is modified and adhered to as modified.

\* 345 Or 350, 194 P3d 804 (2008).

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# PER CURIAM

In In re Schenck, 345 Or 350, 194 P3d 804 (2008),
this court concluded that, in addition to four other discipli-
nary rules, the accused had violated Code of Professional
Responsibility Disciplinary Rule 5-101(A)(1) (representation
of client whose interests conflict with lawyer's self-interest).
As the basis for that violation, this court concluded that the
accused had a personal financial interest that either did or
reasonably may have affected his professional judgment on
behalf of his client. Based on that and the other violations
that this court found the accused to have committed, this
court suspended the accused for one year.

The accused petitioned this court for reconsidera-
tion. We allow the petition for reconsideration to correct a fac-
tual suggestion in the opinion that, we agree, is not sup-
ported by the record, at least not by clear and convincing
evidence. See Bar Rule of Procedure 5.2 (clear and convincing
evidence is the burden of proof). In all other respects, we
adhere to the former opinion. As we explain below, the fac-
tual correction that we make on reconsideration does not
alter our conclusion that the accused violated DR 5-101(A)(1).

The DR 5-101(A)(1) charge against the accused
stemmed from his representation of a client, Stephanie
Holec, in an effort to help her collect a debt owed to her, and
to her sister, Rose Holec, by the Frenches. At the same time
that the accused undertook to assist Stephanie and her sister
to collect that debt, the accused entered into an agreement
with Stephanie to renew a debt that he owed to her. That
agreement provided, among other things, that the accused's
debt to Stephanie would remain unsecured. However, the
accused recommended to Stephanie that she obtain a trust
deed to secure the Frenches' debt. To that end, the accused
drafted a note for the Frenches to sign and a trust deed for
them to sign and file to secure the note. The draft note con-
tained terms requiring the Frenches to pay the sisters $75
per month. The accused also prepared a letter to the
Frenches threatening legal action against them if they did
not execute the note, take the deed to a title company, sign it
in front of a notary, have it recorded in the county records,
and then have the recorded original returned to the accused.

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The accused did not recommend to Stephanie that his debt to
her be similarly secured by a trust deed.

In concluding that the accused had a financial inter-
est under those circumstances that either did or was reason-
ably likely to affect his professional judgment, this court
reasoned:

"Whether the accused violated DR 5-101(A)(1), there-
fore, turns on whether his personal financial interest did or
'reasonably may have affected' his professional judgment
with regard to collecting the debts that were due to
Stephanie. The Bar argues that the accused's professional
judgment was affected by his status as Stephanie's debtor.
More specifically, it argues that '[a] disinterested lawyer in
the position of advising Stephanie and Rose about collect-
ing unpaid debts likely would have addressed the
[a]ccused's debt.' The Bar urges that the accused did not
advise his clients about collecting from him, but, instead,
encouraged them to proceed against the Frenches. Accord-
ing to the Bar, the ultimate resolution of the two debts-i.e.,
both the Frenches and the accused received reduced interest
rates and extended loan terms, but only the Frenches were
required to secure their debt with a trust deed-provides
clear and convincing evidence that the accused's profes-
sional judgment was, in fact, affected. We agree with
the Bar's arguments that the accused's personal financial
interest reasonably may have affected his professional
judgment. The accused therefore was required to obtain
Stephanie's written consent to representation under DR
10-101(B), which included recommending to Stephanie that
she seek independent legal advice in that regard. He did not
do so. The accused violated DR 5-101(A)(1)."

Schenck, 345 Or at 363-64 (emphasis added).

The accused, in his petition for reconsideration,
acknowledges that the record contains evidence that the
Frenches in fact began paying $75 per month, as the note
drafted by the accused would have required them to do. But
the accused maintains that the Frenches did not in fact sign
a note obligating them to make those payments. Neither,
according to the accused, did they secure the debt with a trust
deed. Consequently, the accused urges that this court factu-
ally erred in stating that, "[u]ltimately, the Frenches and the
sisters agreed to a new note in the amount of $8,736 at six

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percent interest, secured by a trust deed on the Frenches'
home." Id. at 354.

We did not understand the accused, in his original
briefing to this court, to take issue with what the Bar had
described as the "ultimate resolution" of the two debts and,
more particularly, with whether the Frenches in fact exe-
cuted a note for the debt and secured it by a trust deed.
Instead, we understood the accused to dispute whether
Stephanie was the accused's client at the time that he
assisted her in collecting the debt from the Frenches. Id. at
362. We also understood the accused to take issue with
whether his financial debt to Stephanie did or was reason-
ably likely to impair his professional judgment in represent-
ing her. Id. at 363-65. The accused did not dispute that he
had threatened the Frenches with litigation if they did not
sign the note and secure it with a trust deed. Neither did the
accused dispute that the Frenches had made payments ($75
per month) consistently with the note that he had drafted.
Thus, for purposes of our analysis, we inferred that the pay-
ments made were pursuant to an executed note secured by a
trust deed.

The accused is correct, however, that the record does
not contain any direct evidence that the Frenches executed
the draft note and secured it with a trust deed. Now that we
better understand the accused's argument in that regard, we
clarify our opinion accordingly. In particular, we make no
finding on whether the draft note or trust deed was ulti-
mately executed by the Frenches. We do not do so, because a
finding on that point is unnecessary to our conclusion that
the accused violated DR 5-101(A)(1). In our original opinion,
our conclusion that the accused committed that violation
rested on the advice that he had provided to Stephanie to
treat the Frenches' debt differently from his own debt. That
advice, not what the Frenches did in response to the
accused's efforts to collect their debt, provides the evidence
from which we conclude that the accused's professional judg-
ment on behalf of Stephanie was or was reasonably likely to
be impaired. We clarify our original opinion accordingly.

The petition for reconsideration is allowed. The for-
mer opinion is modified and adhered to as modified.