Fake News

The Oregon Supreme Court rejected a split trial panel decision favoring disbarment and imposed a public reprimand for a Rule 4 .3 violation.

In two separate lawyer discipline matters, the Oregon State Bar charged respondent with violating various Rules of Professional Conduct (RPCs) in her dealings with two different clients, Boyce and Andrach. In the first matter, the Bar alleged that respondent failed to protect Boyce’s interests upon terminating her representation of Boyce, RCP 1.16(d), by refusing to surrender documents belonging to the client until her fees were paid. In the second matter, the Bar alleged that, in taking certain actions, respondent assisted Andrach in diverting money from his incapacitated wife’s trust account…

After hearing evidence and argument on the two matters, the trial panel issued a divided decision. A two-member majority concluded that respondent had violated RPC 1.16(d), 1.2(c), 4.3, and 8.4(a)(3), and that the appropriate sanction was disbarment. The single dissenting member opined that the Bar had failed to prove any of the charges and that the complaint should be dismissed. On de novo review, we conclude that the Bar proved a violation of RPC 4.3 (failing to correct unrepresented person’s misunderstanding about lawyer’s role in a matter) but failed to prove the other charged violations by the requisite clear and convincing evidence standard. We further conclude that the appropriate sanction for the violation of RPC 4.3 is a public reprimand.

The court found insufficient evidence of assisting the client’s fraud

In its complaint, the Bar alleged that, in a number of different incidents, respondent assisted her client, Andrach, in his efforts to fraudulently or illegally appropriate money belonging to Wells or the Wells Trust. Although the Bar has abandoned some of those claims, four incidents are still in contention. Before turning to those four incidents, we pause to note that the Bar’s burden in proving these claims was particularly difficult to meet in light of several circumstances. First, to prove that respondent knowingly assisted Andrach in illegal or fraudulent conduct, the Bar first had to prove that Andrach’s conduct was, in fact, illegal or fraudulent. No court had made that determination, so the Bar had to adduce that evidence in this proceeding. Second, the circumstances were such that it was particularly difficult for the Bar to prove both that Andrach’s conduct was fraudulent or illegal, and that respondent knew that when she assisted. Wells and Andrach, two persons who presumably had knowledge about money due to Andrach and whether Andrach acted fraudulently in seeking repayment, were not available to testify in the Bar proceeding: Wells was arguably too incapacitated to provide testimony and, in any event, died before the trial. Andrach had left the area by that time; only his deposition testimony in the dissolution proceeding was available to the trial panel.

The court analyzed the four incidents in detail and rejected the assisting fraud charges as to each.

In the Boyce matter, the court found she could properly assert a lien against the client file. 

Although there may be grounds to dispute the amount that respondent claimed as reasonable compensation, the issue here is only whether she had some right to reasonable compensation that would justify her assertion of a lien on Boyce’s papers and property under ORS 87.430. We conclude that respondent did have such a right.  Because her retention of Boyce’s records was permitted under “other law,” i.e., ORS 87.430, that conduct did not violate RCP 1.16(d).

The Bend (Oregon) Bulletin reported on the bar hearing

An attorney who practiced in Bend and Redmond is facing disbarment following claims she conspired with a boyfriend to defraud his older wife of her trust.

A three-person panel employed by the Oregon State Bar to review its findings found many of the bar’s allegations credible and in a Feb. 28 decision recommended disbarment for Lisa Klemp, who is also a former member of the Redmond School Board.

The panel confirmed the bar’s allegations that Klemp engaged in a romantic relationship with a client, Ted Andrach. Andrach was married to a much older woman, Lauren Wells, who was the benefactor of a trust.

The bar and panel found that Klemp and Andrach tried to fool Wells into thinking Klemp was representing her and the interests of her trust, when in actuality she was representing her own interests and those of Andrach. It’s alleged that the two defrauded Wells and used the trust to fund their lifestyle together, and for Andrach to pay for things such as court-ordered counseling following a domestic violence conviction against Wells, as well as a Match.com membership.

“Both Andrach and Klemp attempted, and succeeded, in using Wells’ money and property to their own benefit, and to the detriment of Wells,” the panel’s majority opinion states.

When reached Tuesday, Klemp maintained her innocence, and said the panel “completely and wholly fabricated events.”

Klemp now has until May 1 to file an appeal with the Oregon Supreme Court or the matter is final. If Klemp appeals, the Supreme Court will hear arguments from her representative and the bar. If the court upholds the panel’s opinion, Klemp has one last shot at filing a request for reconsideration.

“It’s relatively rare for a case to be reversed on a reconsideration request,” said Kateri Walsh, spokeswoman for the bar.

The panel was made up of attorney David Coughlin, of Baker City; attorney Max Taggart, of Ontario; and William Olsen, a member of the public. Olsen and Coughlin wrote the majority opinion, while Taggart produced a dissenting opinion claiming the bar did not prove its claim and that the case should be dismissed.

Klemp said Taggart got it right.

“It’s apparent that he was actually paying attention to the proceedings, and that he reviewed the record in its entirety, and he analyzed the allegations and the entire facts,” Klemp said.

Wells and Andrach were married in 2004, the day after the two signed a prenuptial agreement, the opinion states. According to Taggart’s dissent, it was agreed that Andrach wouldn’t work and would receive an allowance of $1,000 per month, a home with paid utilities, food, clothing, a vehicle and fuel allowance, maintenance and insurance, and other benefits a working spouse would provide a stay-at-home spouse. Andrach was to provide companionship as compensation.

The relationship seemingly went as planned until 2012, when Wells left Bend following a fifth DUII conviction, the opinion states. She was found as a fugitive in California and was extradited to the Deschutes County jail.

In September 2012, Andrach used Klemp to gain power of attorney from his incarcerated wife so he could make financial decisions on behalf of the trust, the opinion states. Klemp visited Wells at the jail several times that month trying to get Wells to sign over power of attorney. She did not tell Wells that she was representing Andrach, and that Wells was not being represented by anyone during their conversations, the opinion states.

During the final September visit, Wells signed power of attorney over to her husband, with Klemp acting on his behalf.

Klemp disputed this claim and said Wells knew she was acting on behalf of Andrach.

In July 2013, Klemp and Andrach approached Samantha Vinson, who was renting a home owned by the trust, with a new lease agreement, the opinion states. Under the new agreement, Vinson’s rent was would be paid to Klemp and Andrach, rather than to Linda Jordan, who is Wells’ sister, according to testimony Vinson gave to the panel. Vinson said she didn’t ask questions because Klemp was an attorney, and the two told Vinson that Jordan was planning to evict her anyway.

Klemp also sent a $53,500 check from the trust to Andrach, which at the time was claimed to be reimbursement for money he loaned the trust. In actuality, the panel and bar found, the money was to reimburse Andrach for personal expenses, such as domestic violence counseling and a polygraph test directly related to his domestic violence conviction.

“They did not benefit Wells in any manner,” the opinion states.

The bar also found a $9,500 check from the trust to TLA Properties LLC. This was an entity set up by Klemp, with “TLA” believed to stand for “Ted and Lisa Andrach.” The company was used to purchase a home the two shared.

Klemp said this allegation is an example of fabrications the panel majority made.

“None of that ever happened at all,” she said.

Wells filed for divorce from Andrach in 2013, and the divorce was finalized in 2014.

Wells died in August 2015, Klemp said.

While the majority opinion spends the bulk of its 18 pages detailing the vindictive behavior of Klemp and Andrach in an attempt to defraud Wells, it also found Klemp in violation of ethics relating to a dealing with a former associate.

Klemp worked with Kathleen Boyce at Bryant, Emerson & Fitch in Redmond. Klemp left on her own, while Boyce was fired for pretending to be a lawyer when in fact she had merely taken paralegal classes, Taggart’s dissent claims. After the two left the firm, they occupied a building together, though they did not work together.

Klemp began representing Boyce in a claim stemming from the death of Boyce’s mother at a care facility. The two had a falling out, and Boyce hired a new attorney. Klemp allegedly refused to return medical records, claiming she needed to be compensated for her work. However, the bar and panel found the two never had a compensation agreement for the work done and that Klemp should have turned over the papers.

For each allegation the panel found credible, it suggested an imposed suspension of Klemp’s ability to practice law. However, it said given the entirety and audacity of the claims, the proper consequence is disbarment.

Klemp said the process has been oppressive and that she plans to appeal the panel’s opinion.

The Bulletin also reported on the attorney’s response to the bar complaint, which was filed by Wells’s counsel.

The court noted the paucity of Rule 4.3 cases

The case law supports our initial conclusion that the proper sanction for respondent’s violation of RPC 4.3 is a reprimand. Accordingly, we impose that sanction.

(Mike Frisch)