The Limits Of Friendship

The Iowa Supreme Court has reprimanded an attorney for violations of the business transaction and substantial gifts from a client rules.

Lipton and Ranniger had a long relationship. Lipton first met Ranniger when Lipton brought in some legal work for his mother. Then, for approximately twenty years, Ranniger performed legal work for Lipton without charging him. For example, Ranniger defended Lipton against nuisance claims by the city of Manilla. Ranniger also assisted Lipton in obtaining VA benefits. And Ranniger served as Lipton’s power of attorney both for financial and medical purposes. Ranniger and Lipton were also friends. They ate lunch together often; Ranniger always paid. They also had dinner together around holidays, although they never exchanged holiday gifts.

The opinion offers important guidance to Rules 1.8(a) and (c). 

The court rejected the position that fairness is the only requirement of a business transaction with a client and that the comment allowing transactions in which the client regularly engages applied in these circumstances

But the record doesn’t show that  [deceased client] Lipton generally marketed vehicles, farm equipment, or land to others. See Iowa Rule Prof’l Conduct 32:1.8 cmt. [1]. Rather, the record shows only that Lipton sold personal possessions to Ranniger when Lipton needed money. These were individualized sales, not “standard commercial transactions.” So, the comment 1 exception does not apply.

As to the writing his son into the client’s will and the meaning of “substantial gift” 

Applying these concepts here, we think Nathan received a “substantial” gift. Nathan received almost all of Lipton’s property. This included not only significant personal property, like vehicles, but also land. We recognize the land came with special expenses, such as the need to address Manilla’s nuisance concerns. But even after factoring in these expenses—and even after considering Lipton’s funeral expenses and the inheritance tax—Nathan still received a net gift that was worth well over $5,000. And under any relevant definition, we believe five thousand dollars is a “substantial” amount—and a “substantial gift.

The “close familial relationship” exception

Following our de novo review, we recognize that Ranniger and Lipton had a long attorney–client relationship and a long friendship. And we believe their relationship is properly described as “close.” They ate lunch together regularly. They enjoyed each other’s company. And Ranniger made gifts to Lipton, such as paying for Lipton’s lunch. Ranniger also provided legal services to Lipton without charge. Plus, as explained, Ranniger bought items from Lipton when Lipton needed money. And Ranniger served as Lipton’s power of attorney.

Even so, we do not believe their relationship was “familial.” Although their friendship was close, their relationship was not “suggestive of . . . family.” Familial, Merriam-Webster. Ranniger and Lipton did not raise children together. See Family, Merriam-Webster, http://www.merriam-webster.com/ dictionary/family [https://perma.cc/4H3V-9CPF] (noting “family” can mean “the basic unit in society traditionally consisting of two parents rearing their children” as well as “any of various social units differing from but regarded as equivalent to the traditional family,” such as “a single-parent family” (emphasis omitted)). Ranniger and Lipton did not share a parent or stepparent as siblings and stepsiblings do. See id. Ranniger and Lipton were not married—and their relationship was not suggestive of a marriage. See id. (noting “family” can mean one’s “spouse and children,” as in the sentence “I ‘want to spend more time with my family.’ ”). Nor did Ranniger and Lipton live together in a household. Id. (noting “family” can mean “a group of individuals living under one roof and usually under one head,” as in the term “household”). Finally, although Ranniger
treated Lipton with kindness and even charity, Ranniger and Lipton did not treat each other the way they treated their families.

Sanction

this case involves isolated transgressions by an attorney who was apparently trying to help out his longstanding client but who nevertheless failed to comply with two important ethical rules. We believe a public reprimand is warranted.

(Mike Frisch)