Oregon State Bar Bulletin — APRIL 2003

Note: About 12,000 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.

OSB #72118
Public Reprimand

On March 10, 2003, the disciplinary board approved a stipulation publicly reprimanding Sutherlin lawyer Mark Hendershott for violating DR 5-105(E) (current client conflict of interest) and DR 9-101(A) (failure to deposit and maintain client funds in trust).

On Aug. 2, 2000, a brush fire occurred on property rented by two individuals who were interviewed by the fire chief of the local rural fire protection department. On Feb. 6, 2001, one of the renters was arrested on two counts of arson. Hendershott was retained to represent the renter and required a flat fee of $7,500, which he deposited into his lawyer trust account on Feb. 15, 2001. Hendershott had no written fee agreement with the client. On Feb. 16, 2001, Hendershott withdrew $3,000. Shortly thereafter, Hendershott withdrew an additional $4,000. By the time Hendershott had withdrawn the $7,000, he had only done enough work on the case to earn $1,400.

By withdrawing funds before they were earned without a written fee agreement providing that the fee was a flat fee earned upon receipt, Hendershott failed to maintain client funds in his lawyer trust fund in violation of DR 9-101(A).

In March 2001, the client and the other renter received copies of police reports and the fire investigation prepared by the fire chief. The client and the other renter told Hendershott that the chief’s report did not accurately reflect their statements to the chief. Hendershott advised the client and the other renter that he could not challenge the chief’s testimony at trial because he also represented the rural fire protection department.

Hendershott admitted that in representing the fire district at the same time he represented the renter in the criminal matter, he had a conflict of interest once he learned that his client disputed the chief’s statement. Hendershott’s duty to challenge the chief’s report and his credibility as a witness conflicted with his duty to the chief and the fire department. Hendershott admitted this conflict violated DR 5-105(E).

Hendershott was admitted to the bar in 1972, and the stipulation recited that he did not act with a dishonest or selfish motive and fully cooperated in the investigation of his conduct.

OSB #76144
Everett, Wash.
60-day suspension

Effective February 21, 2003, the Oregon Supreme Court suspended Carl J. Gaul III from the practice of law for 60 days, pursuant to BR 3.5 (Reciprocal Discipline). The Supreme Court of Washington had previously imposed the same sanction.

Gaul represented husband and wife in the defense of several lawsuits. Gaul delayed depositing client funds into his lawyer trust account and then refused to release the funds without the clients agreeing to secure his fees. Gaul obtained two trust deeds from his clients as security, but failed to advise his clients to seek independent counsel.

During the representation, Gaul also obtained in his own name an assignment of a judgment that his clients had purchased. Prior to obtaining the assignment, Gaul did not advise his clients as to their adversity of interest or counsel them to seek the advice of independent counsel.

In one of the underlying cases, Gaul filed a third party complaint. The court ruled that the complaint had been filed in bad faith and assessed Gaul monetary sanctions. Gaul failed to advise his clients that he was personally obligated and paid the sanction with client funds.

Finally, the Washington State Bar Association performed an audit of Gaul’s trust account. The audit revealed that Gaul routinely failed to record receipt of client disbursements and deposits, routinely deposited earned and unearned fees into his trust account, and did not routinely balance his trust account statements against individual client summaries.

For engaging in the above referenced misconduct, Gaul was found to have violated Washington Rules of Professional Conduct 1.14(a), 1.14(b), 1.14(b)(2), 1.14(b)(3), 1.14(b)(4), 1.8(a).

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