|Oregon State Bar Bulletin AUGUST/SEPTEMBER 2007|
Note: More than 13,000 persons are eligible to practice law in Oregon. Some of them share the same name or similar names. All discipline reports should be read carefully for names, addresses and bar numbers.
On June 19, 2007, the Oregon Supreme Court issued an order imposing reciprocal discipline on Mark Carton, who resides in California, following his suspension in a California disciplinary proceeding. The court suspended Carton for 30 days for violating former DR 1-102(A)(2) (committing a criminal act that reflects adversely on fitness to practice law).
In 2005, Carton pleaded no contest to misdemeanor criminal violations arising from an incident in which Carton went to a client’s place of business, demanded payment for legal services and damaged or destroyed personal property owned by the client. The client also was injured in the confrontation. Carton was under the influence of alcohol and medications at the time of the incident. In May 2006, the California Supreme Court suspended Carton from practice in that state for one year, stayed that suspension and placed Carton on probation for two years with a condition that he actually be suspended for 30 days.
In response to the notice of the California discipline filed by the bar under Oregon’s reciprocal discipline rule, BR 3.5, the Oregon Supreme Court suspended Carton for 30 days, effective 60 days from the date of the court’s order.
KATHRYN E. JACKSON
On May 8, 2007, the disciplinary board approved a stipulation for discipline suspending Salem lawyer Kathryn Jackson from the practice of law for 60 days for violations of DR 1 102(A)(4) (conduct prejudicial to the administration of justice) and DR 6-101(A) (failure to provide competent representation). The suspension was effective June 9, 2007.
Jackson represented a client concerning a personal injury claim. During the representation, she made statements to the court and opposing counsel that were not accurate concerning her communications, including references to letters that were never sent and other documents that did not accurately reflect the dates, methods of delivery or service, and the substance of communications. Jackson failed to adequately review the documents to assure their accuracy before filing and service.
Jackson also: failed to timely communicate with opposing counsel; failed to monitor or calendar the time for responses to discovery requests; failed to accurately monitor or calendar the time for response to a defendant’s motion for summary judgment; failed to address substantive issues in a late response to a motion for summary judgment; and failed to support by affidavit and properly authenticate representations and exhibits attached to the response to the motion for summary judgment.
Jackson was admitted to practice in Oregon in 1987. She had a prior record of formal discipline.
GREGORY L. GUDGER
Effective July 3, 2007, the disciplinary board approved a stipulation for discipline publicly reprimanding Portland lawyer Gregory L. Gudger for violations of DR 9-101(A) (failure to maintain client funds in trust (pre-Jan. 1, 2005)) and RPC 1.5(a) (clearly excessive fee).
Gudger undertook to represent a client in a dissolution proceeding and received a $1,500 retainer to be billed against at the rate of $150 per hour. After the first few months of the representation, Gudger withdrew from the trust $112 more than he had earned on an hourly basis. This excess withdrawal, although inadvertent, violated DR 9-101(A).
Thereafter, Gudger prepared and sent an invoice that billed the client for several additional hours at the rate of $200 per hour, rather than the $150 hourly rate specified by the fee agreement. Because Gudger had not previously notified the client of the increased rate and the client had never consented to it, the invoice charged the client an excessive fee in violation of RPC 1.5(a). This excessive charge was inadvertent and the result of a computer error.
Gudger acted negligently, lacked any selfish motive and his accounting errors did not result in actual injury to the client. However, the sanction was aggravated by Gudger’s substantial experience in the practice of law and a prior disciplinary history.
JASON T. FEHLMAN
Effective July 18, 2007, a trial panel of the disciplinary board suspended Tigard attorney Jason Fehlman from the practice of law for one year for violations of RPC 8.4(a)(2) (criminal conduct reflected adversely on fitness to practice) and ORS 9.527(2) (conviction of misdemeanor involving moral turpitude).
The violations stemmed from Fehlman’s two misdemeanor criminal convictions for public indecency. Upon conviction of the first charge in May 2005, Fehlman was placed on formal probation and required to obtain treatment. Before his treatment program began, however, Fehlman re-offended in June 2005, resulting in a second misdemeanor conviction.
In imposing a one-year suspension, the trial panel found that Fehlman acted knowingly and intentionally and caused actual and potential serious injury to his victims for his own gratification. In addition, Fehlman’s conduct was aggravated by a selfish motive, multiple offenses, a pattern of misconduct and particularly, the illegality of the conduct. In mitigation, Fehlman had no prior disciplinary record. The panel declined to credit Fehlman’s claimed mental disability as a mitigating factor, finding that he did not meet the criteria for the application of that factor.
JAMES A. FITZHENRY
Effective July 11, 2007, the Oregon Supreme Court suspended Wilsonville lawyer James A. Fitzhenry from the practice of law for 120 days for violating DR 1-102(A)(3) (conduct involving misrepresentation).
Fitzhenry was general counsel for FLIR Systems, Inc., a Portland based company whose stock is traded on NASDAQ. He was also senior vice president of that company, with management responsibility for the export licensing process.
In 1999, Fitzhenry was one of several FLIR executives who signed a seven-page management representation ("MR") letter confirming, to the best of the signer’s individual knowledge, assertions made therein concerning FLIR’s 1998 business activities. One of these assertions was that as of the end of 1998, a buyer had made a fixed commitment to purchase $4.1 million worth of FLIR’s products. Based on management’s assertions, the independent auditor approved FLIR’s 1998 financial statements in which the purported $4.1 million sale was treated as received income.
In fact, the purported buyer had not made a fixed commitment for the $4.1 million sale and as a result, FLIR’s 1998 financial statements significantly overstated its revenue. The state supreme court found that when Fitzhenry signed the letter, he knew — from his own recent negotiations with the purported purchaser’s attorney — that the purported purchaser adamantly disavowed a binding commitment to buy. The court disbelieved Fitzhenry’s assertions that he did not have this fact in mind when he signed the MR letter and that he did not notice the reference to this sale in the letter because he mistakenly considered the paragraph in which it was found to relate to accounting matters and therefore did not fully review it.
The court also rejected Fitzhenry’s argument that the false statement in the MR letter was not material. Had the auditors known what Fitzhenry knew — that there was no binding commitment to purchase — they would have either insisted that the $4.1 million sale be removed from FLIR’s 1998 books or would have issued an unfavorable audit opinion. Because Fitzhenry knew the audit could not be concluded favorably unless he signed the MR letter, he was therefore aware of the materiality of the letter’s misstatements. Accordingly, although the bar did not charge Fitzhenry with criminal securities fraud, his act of knowingly confirming a false representation violated DR 1-102(A)(3).
In considering a sanction, the court noted that Fitzhenry’s misconduct caused both actual injury to FLIR’s shareholders and significant potential injury to the shareholders and the public more generally. FLIR’s improper revenue-booking maneuvers — of which the misrepresentative MR letter was only one — ultimately necessitated a recall and restatement of its 1998 financial statements. This caused the price of FLIR’s shares to plummet and resulted in an SEC investigation. The court also noted that independent audits of financial statements filed with the SEC by publicly traded corporations are among the most important features of the SEC’s regulatory oversight of those corporations. By calling the reliability of audited statements into question, Fitzhenry’s misconduct potentially eroded investor confidence in the integrity of he system. Although Fitzhenry did not act alone to causwhat ultimately became FLIR’s financial scandal, his status as a lawyer imposed upon him a higher standard of integrity.
STUART A. SUGARMAN
On July 19, 2007, the disciplinary board approved a stipulation for discipline reprimanding Portland lawyer Stuart A. Sugarman for violating RPC 8.1(a)(2) (failing to respond to a disciplinary inquiry).
During the course of an investigation of a complaint concerning his conduct, Sugarman did not respond to some inquiries from the bar, and he failed to substantively address the issues raised in other such inquiries. As a result, a referral to a local professional responsibility committee became necessary. Sugarman cooperated with the local committee investigation. He had no prior record of discipline.