In Re Complaint as to the Conduct of Ellis

No. 4 February 20, 2015 691

IN THE SUPREME COURT OF THE

STATE OF OREGON

In re Complaint as to the Conduct of

BARNES H. ELLIS,

Accused.

(OSB No. 09-54; SC S061385)

In re Complaint as to the Conduct of

LOIS O. ROSENBAUM,

Accused.

(OSB No. 09-55; SC S061385)

On review of the decision of the trial panel of the

Disciplinary Board.*

Argued and submitted March 4, 2014, at Lewis and Clark

Law School, Portland, Oregon.

W. Michael Gillette, Schwabe Williamson & Wyatt PC,

Portland, argued the cause and filed the briefs for the

Accuseds.

Mary A. Cooper, Assistant Disciplinary Counsel, Tigard,

argued the cause and filed the brief for the Oregon State

Bar.

Before Balmer, Chief Justice, and Walters, Linder,

Landau, Brewer, and Baldwin, Justices.**

PER CURIAM

The amended complaints are dismissed.

______________

**  Trial Panel Opinion May 7, 2013.

**  Kistler, J., did not participate in the consideration or decision of this case.

692 In re Ellis / Rosenbaum

The Oregon State Bar charged the accuseds with violating multiple provi-

sions of the former Code of Professional Responsibility—arising from their repre-

sentation of a public company and several company directors, officers, and man-

agers in various proceedings over several years—including former DR 5-105(C)

(waivable former-client conflicts with insufficient disclosure); former DR 5-105(E)

(nonwaivable current-client conflicts and waivable current-client conflicts with

insufficient disclosure); and former DR 1-102(A)(3) (misrepresentation by omis-

sion). Held: (1) The Bar did not prove by clear and convincing evidence that, at the

outset of an investigation by the Securities and Exchange Commission (SEC), the

interests of the company and the individual clients were adverse under former

DR 5-105(A)(2); the Bar therefore did not prove the existence of a current-client

likely conflict of interest under former DR 5-105(E); (2) The record does not show

that the clients’ interests were adverse during the SEC investigation, including

during the Wells phase (in which the SEC notified several clients of its intent

to pursue civil enforcement actions against them), and therefore did not prove

a current-client likely conflict under former DR 5-105(E); (3) No actual conflict

of interest existed between the company and the individual clients during the

Wells phase under former DR 5-105(A)(1) and former DR 5-105(E); (4) Ellis’s sub-

sequent representation of the company’s general counsel in a lawyer disciplinary

matter did not involve the same or significantly related matter as the SEC pro-

ceeding under former DR 5-105(C)(1), and, therefore, no former-client likely con-

flict existed under former DR 5-105(C); (5) Assuming that, in a limited represen-

tation of the company during a subsequent Department of Justice investigation,

a likely conflict of interest existed between the company and former clients from

the SEC representation, the accuseds sufficiently disclosed that conflict to their

former clients, so as to obtain their consent to the limited representation; and (6)

the Bar did not prove by clear and convincing evidence that the accuseds engaged

in misrepresentation by omission under former DR 1-102(A)(3).

The amended complaints are dismissed.

Cite as 356 691 (2015) 693

PER CURIAM

This lawyer disciplinary proceeding involves sev-

eral allegations under the former Code of Professional

Responsibility.1 The accuseds (also individually referred to

as Ellis or Rosenbaum in this opinion) represented a pub-

lic company involved in various protracted proceedings over

several years and also represented some company directors,

officers, and managers during some of those same proceed-

ings. The Bar charged the accuseds in separate complaints

with multiple violations of several former Disciplinary

Rules, including former DR 5-105(C) (waivable former-client

conflicts with insufficient disclosure); former DR 5-105(E)

(nonwaivable current-client conflicts and waivable current-

client conflicts with insufficient disclosure); and former DR

1-102(A)(3) (misrepresentation by omission). A trial panel of

the Disciplinary Board concluded that, although the Bar had

not proved most of the charged violations, it did sufficiently

prove that some client conflicts of interest had existed, that

the accuseds had made insufficient disclosures as to those

conflicts, and that the accuseds had made related misrep-

resentations by omission in a particular conflict disclosure

letter. The panel determined that a public reprimand was

the appropriate sanction. The accuseds sought review as to

all allegations that the panel determined that the Bar had

proved, and the Bar sought review as to some additional

allegations that the panel determined had not been proved.

For the reasons explained below, we dismiss the amended

complaints.

I. FACTS

We review the record de novo. Bar Rule of Procedure

(BR) 10.6. The Bar must prove its allegations by clear and

convincing evidence. BR 5.2. “Clear and convincing evi-

dence” means that “the truth of the facts asserted is highly

probable.” In re Phinney, 354 Or 329, 330, 311 P3d 517 (2013)

(internal quotation marks omitted). We set out a general fac-

tual summary below and discuss later in this opinion addi-

tional facts that relate to particular issues on review. We

1

The Oregon Rules of Professional Conduct replaced the former Oregon Code

of Professional Responsibility effective January 1, 2005. In re Balocca, 342 Or

279, 281 n 1, 151 P3d 154 (2007).

694 In re Ellis / Rosenbaum

draw all facts from the testimony and record before the trial

panel, and from public court records in related proceedings.2

A.  Company Background, Accounting Issues, and Class

Action Litigation

FLIR Systems, Inc. (FLIR) is a publicly traded

Portland, Oregon, company that manufactures and sells

thermal imaging equipment and broadcast camera systems,

including to governmental entities. In early 2000, key FLIR

directors, officers, and managers included Daltry (Board of

Directors Chair), Wynne (board member), Stringer (President

and Chief Executive Officer (CEO)), Samper (Chief Financial

Officer (CFO)), Martin (Vice President of Sales (Worldwide)),

Fitzhenry (General Counsel), and Eagleburger (Director of

Sales Operations and Senior Vice President for Sales and

Marketing). As CFO, Samper was responsible for FLIR’s

accounting and preparation of its financial statements.

As the 1990s ended, FLIR’s corporate accounting

grew more complicated, in part due to recent mergers and

acquisitions, and installation of a new enterprise reporting

system. In 1999, FLIR had difficulty completing its financial

statements on time. At a February 2000 Board of Directors

meeting, Samper reported that FLIR’s financial statements

again would not be prepared on time. By that point, at least

some board members began to doubt the competency of

management, including Samper’s ability to serve as CFO.

Samper resigned shortly thereafter.

FLIR then discovered several accounting errors,

including improperly claimed revenue in 1998 and 1999

for several transactions that appeared to be without suffi-

cient foundation.3 As a result of that review, FLIR decided

2

We take judicial notice of additional facts drawn from judicial opinions and

court dockets in a related criminal case prosecuted in the United States District

Court, District of Oregon, and appealed to the Ninth Circuit. See In re Fitzhenry,

343 Or 86, 109 n 17, 162 P3d 260 (2007) (taking judicial notice of fact in public

record).

3

In general, the accounting issues concerned FLIR’s “revenue recognition”

practices—that is, the point in time at which FLIR could confirm with cer-

tainty that it could include revenue derived from a particular transaction in its

financial statements. Several transactions later identified as problematic had

involved revenue recognized either prematurely or without sufficient supporting

documentation.

Cite as 356 691 (2015) 695

to restate certain 1998 and 1999 financial statements pre-

viously filed with the Securities and Exchange Commission

(SEC). In doing so, FLIR’s independent auditor instructed

FLIR to apply retroactively to the past 1998 and 1999

transactions a new SEC directive, which dictated a delay

as to when certain revenue could be recognized in a com-

pany’s financial statements. The underlying restatement

calculations, combined with retroactive application of the

new directive, ultimately caused a notable drop in FLIR’s

reported revenue for the identified time frame.

FLIR publicly announced its intent to restate.

FLIR’s stock price dropped, and, in early March 2000,

several shareholders filed class action securities litigation

against FLIR, Stringer, Samper, and eventually Daltry.

Later in March 2000, FLIR retained the accuseds,

both partners at Stoel Rives LLP, in the class action litiga-

tion, and it informed Stringer and Samper that it would pay

for their representation by the accuseds or other counsel.

The accuseds sent engagement letters to FLIR, Stringer,

and Samper, stating that a unified defense was advan-

tageous and that they did not anticipate that any conflict

would arise, but that each individual defendant might

wish to consult with independent counsel for monitoring

purposes; the letter also recommended consultation before

consenting to the joint representation. Stringer declined

and retained outside counsel. Samper already had retained

outside counsel, Glade and Kaner, but decided in consulting

with them to agree to have the accuseds serve as co-counsel.

Glade accepted the joint representation on Samper’s behalf,

noting that—in the unlikely event that an actual conflict

arose—Samper reserved his rights regarding his consent to

the accuseds’ continued representation of FLIR. After Daltry

became a defendant in the class action, he also agreed to the

joint representation, and he signed a similar consent letter.

Fitzhenry consented on FLIR’s behalf. When the accuseds

began representing FLIR, Daltry, and Samper in the class

action, they understood FLIR’s accounting issues to be the

result of possible management competency issues and an

overworked and underesourced accounting staff, but not

fraudulent actions by any FLIR officer or manager.

696 In re Ellis / Rosenbaum

FLIR ultimately filed three SEC restatements

between April 2000 and March 2001. The class action litiga-

tion eventually settled in April 2001, before discovery, with

payment by both FLIR’s insurer and FLIR. No allegations

in this proceeding concern the class action litigation.

At about the time that FLIR retained the accuseds,

FLIR’s board appointed a special committee, which included

Wynne, to examine more closely the 1998 and 1999 finan-

cial misstatements and underlying accounting problems. In

working with a prospective new independent auditor, the

committee determined that it should assess the integrity of

current management, which at that time included Daltry

and Stringer (but not Samper, who had resigned, although

the board had approved retaining him as an independent

consultant to assist with the restatements). The commit-

tee determined that Stringer had engaged in misrepresen-

tations, and the board later decided that he should resign.

Stringer was placed on administrative leave in May 2000

and later terminated; Daltry also resigned. By then, Wynne

had come to question Stringer’s integrity, but not Samper’s;

instead, he continued to view Samper as having competency

issues only, and he did not think at this time that FLIR’s

management had engaged in any fraud.

B.  SEC Investigation

Meanwhile, the SEC had begun investigating

FLIR’s accounting, arising from the same general facts and

issues alleged in the class actions. The SEC began issu-

ing subpoenas to FLIR officers, managers, and employees

in late June 2000. At FLIR’s request, the accuseds’ joint

representation—initially formed for the class action litigation—

expanded to include any current or former FLIR officer,

manager, or employee who received an SEC subpoena

and who consented to be included in the joint representa-

tion. The accuseds continued their joint representation of

FLIR, Daltry (for purposes of his SEC interview only), and

Samper (who also continued to be separately represented

by Glade and Kaner); they also began representing Wynne,

Fitzhenry, and Eagleburger for purposes of the SEC investi-

gation. The accuseds ultimately represented about 35 to 40

Cite as 356 691 (2015) 697

individuals, slightly more than half the witnesses that the

SEC examined.

Although the accuseds represented many individu-

als in the SEC investigation, they sent only eight engagement

letters, directed to the individual clients who they thought

had the greatest potential for future possible conflicts,

including members of the board, Daltry, and Eagleburger.

Those letters requested consent to the joint representation

by using similar wording as the earlier class action letters;

they did not include any new wording relating to the SEC

investigation. The accuseds did not send a letter to Samper,

because he only recently had signed a similar letter in the

class action involving the same facts. For his part, Glade

did not necessarily expect the accuseds to send a separate

engagement letter to Samper, because he assumed that the

SEC representation would proceed in the same fashion as

the class action litigation—that is, he and Kaner would

remain knowledgeable so as to provide independent advice

to Samper and be available to take over responsibility for

him as necessary.4 The accuseds agreed with each other to

watch for emerging conflicts between their clients.

The joint representation strategy in the SEC inves-

tigation was purposeful. According to the testimony of sev-

eral witnesses before the trial panel, rules governing SEC

investigations limit information available to subject compa-

nies and witnesses, while maximizing the SEC’s ability to

acquire information. A lawyer is permitted to attend a wit-

ness interview only if representing the witness, and the abil-

ity to examine transcripts and exhibits shown to witnesses

during interviews is similarly limited. Joint representation

therefore permits the company’s attorneys to act as a central

clearinghouse to obtain, consolidate, and disseminate mate-

rial information—such as subpoenaed documents and the

content of other witness interviews—to the joint clients, so

as to maximize the amount of information flowing to all rep-

resented individuals. That global collection of information,

in turn, helps the company and all involved individuals to

4

The evidence conflicts as to whether the accuseds sent a separate SEC

engagement letter to Fitzhenry. Rosenbaum thought that they had sent him such

a letter, but Ellis recalled that they had not, because they had no expectation that

the SEC investigation posed any risk to him.

698 In re Ellis / Rosenbaum

clarify the nature and focus of the investigation, and to pro-

vide useful information to the SEC. Also, unless the nature

of the investigation lends itself to blame-shifting—such as

cases involving insider trading, embezzlement, or obstruc-

tion of justice—the interests of the company and the vari-

ous witnesses tend to be aligned during the investigation

phase, because both the company and the witnesses seek to

provide the SEC with truthful information so as to under-

stand more fully the scope and direction of the investigation,

and to ameliorate the need for any continued investigation.

Joint representation therefore is a common practice during

the SEC investigation phase, when appropriate under the

circumstances. As part of a joint representation, it also is

common for some individual witnesses to have their own,

independent lawyers, who monitor the proceedings to eval-

uate whether any conflict arises and who later may serve as

lead counsel for their clients if needed.

During the SEC investigation, subpoenaed wit-

nesses typically sent requested documents to Fitzhenry, and

he sent them to the accuseds. The accuseds maintained all

the documents in a room at Stoel Rives in part for SEC staff

review; if SEC staff then marked a document for produc-

tion, Stoel Rives would catalogue the document in a FLIR

database and produce it to the SEC. Also as part of the

joint representation, either Ellis or, more often, Rosenbaum

attended all their clients’ SEC interviews. Rosenbaum took

extensive notes during the interviews that she attended,

and she provided to individual witness clients or the law-

yers of represented witness clients written summaries of

all information that she learned during the interviews that

was relevant to that client. The accuseds also provided sev-

eral interview transcripts to their individual clients or their

lawyers.

Part of the SEC’s investigation explored Samper’s

involvement, as CFO, in FLIR’s accounting problems that had

prompted the restatements. Either Glade and Rosenbaum

or Kaner and Rosenbaum attended all Samper’s SEC inter-

views, and Rosenbaum provided to Glade and Kaner com-

prehensive written summaries of all other witness testi-

mony and other documentation that, in her judgment, was

Cite as 356 691 (2015) 699

material to Samper’s involvement.5 The accuseds, Glade,

and Kaner continuously conferred through the course of the

SEC investigation regarding the transactions at issue and

the SEC’s inquiries touching on Samper. For example, early

in the investigation, a FLIR employee, Chambers, stated

that Samper had directed the destruction of a document that

she had created to track inventory. Rosenbaum, Glade, and

Kaner thereafter provided information to the SEC, through

Samper, showing that Chambers did not have a full under-

standing of the situation and that the destruction request

had been appropriate. By the later part of 2001, Glade and

Kaner continued to think that Samper did not have any con-

flicting interest with FLIR of which the accuseds would have

been aware,6 and they continued to think that Samper’s and

FLIR’s interests aligned.

The SEC focused on numerous specific transac-

tions during its investigation, including a $4.6 million 1999

transaction—the “Swedish Drop Shipment”—that had

prompted FLIR’s second SEC restatement. Samper had men-

tioned that transaction to the SEC, and the SEC questioned

both Samper and Stringer about its underlying entries.

Samper told the SEC that Stringer had directed him to

make certain entries and therefore he had done so, but FLIR

later changed those entries in its second restatement.

Also during the SEC interviews, several of the

accuseds’ individual clients offered statements that argu-

ably could be construed as unfavorable to other clients,

particularly Samper. The accuseds continued to evaluate

whether any conflict among various clients had arisen,

but they determined that their clients’ interests remained

5

The record shows that Rosenbaum sent Glade and Kaner a significant

volume of documentation and also provided their law firm with a copy of Stoel

Rives’s FLIR database.

6

Samper and FLIR had a dispute about the terms of an earlier agreement

between them, concerning Samper’s exercise of stock options following termina-

tion of employment. That dispute prompted Samper to think that his relationship

with FLIR was becoming more adverse through the course of the SEC investiga-

tion. The accuseds were not aware of that issue, however; indeed, Glade testified

that he did not involve Rosenbaum in any options dispute discussion because he

did not want to taint her relationship with Samper or FLIR for purposes of the

SEC investigation. Glade further testified that Samper ultimately decided to con-

tinue the joint representation notwithstanding the options dispute.

700 In re Ellis / Rosenbaum

aligned and therefore made no additional disclosures during

the investigation phase.7

As the SEC investigation progressed, Wynne

worked with a new FLIR controller, Muessle, who had

reviewed multiple earlier recorded transactions and deter-

mined that many should not have been entered due to insuf-

ficient supporting documentation. By spring 2001, Wynne

concluded that FLIR’s former management had engaged in

securities fraud. As to Samper specifically, Wynne concluded

that Samper had made entries and submitted financial

statements that contained figures manipulated as a result

of fraud, which, in Wynne’s view, satisfied the definition of

securities fraud, even if Samper himself had not manipu-

lated any figures. The accuseds were unaware until several

years later that Wynne had reached that general conclusion

about Samper.

Meanwhile, in July 2001, Stringer sued FLIR for

wrongful termination, and the accuseds’ firm, Stoel Rives,

represented FLIR in that action. The complaint eventually

was dismissed with prejudice in 2003.

The SEC investigation effectively concluded near

the end of 2001. Typically, at the close of an SEC investi-

gation phase, the SEC decides whether to send a “Wells

Notice” to the company or other individuals. A Wells Notice

is an official notification that outlines the SEC’s potential

case against the recipient, laying the groundwork for a pos-

sible civil enforcement action. During the “Wells phase,”

each Wells Notice recipient typically meets separately with

the SEC to discuss the SEC’s theory of its case against that

recipient. A Wells Notice recipient then may file a “Wells

Submission” that offers a specific response to the Wells

Notice. Often, the Wells process frames ensuing settlement

negotiations between the SEC and a Wells Notice recipient.

7

The SEC interviewed many other witnesses who were not the accuseds’

clients, including Stringer, a previous FLIR controller, the previous and current

FLIR auditors, and a previous FLIR Vice President of Manufacturing, who some

inside FLIR suspected had initiated the SEC investigation. More than half the

SEC’s interview time in its investigation was devoted to witnesses who were not

the accuseds’ clients. Under the SEC’s investigation rules, the accuseds were not

privy to any information provided by witnesses whom they did not represent and

therefore did not know the extent to which those witnesses might have testified

unfavorably as to Samper or their other clients.

Cite as 356 691 (2015) 701

In February 2002, the SEC issued Wells Notices to

FLIR and Samper, indicating its intention to recommend sep-

arate civil enforcement actions against them. The SEC also

issued similar Wells Notices to Fitzhenry and Eagleburger,8

which the accuseds had not anticipated, and to others who

were not the accuseds’ clients, including Stringer; Martin

(FLIR’s former Vice President of Sales (Worldwide), who

effectively had been terminated in spring 2000); and FLIR’s

previous auditor. Ellis immediately advised Fitzhenry and

Eagleburger to obtain independent counsel, and they both

did so. Wilson began representing Fitzhenry, and Neil began

representing Eagleburger; as to both clients, the accuseds

remained available as supporting co-counsel. As to Samper,

Glade and Kaner took the lead in his representation during

the Wells phase, with the accuseds moving to a supporting

co-counsel role as needed. The accuseds continued to repre-

sent FLIR.

In early March 2002, FLIR had its Wells meeting

with the SEC, which included Wynne, the accuseds, and

FLIR’s then-current CEO, Lewis. At that meeting, FLIR

emphasized its remediation efforts. Also at the meeting, SEC

staff questioned both Samper’s and Fitzhenry’s truthfulness,

based on their investigation. After the meeting, Rosenbaum

reported the general discussion to Glade and Kaner, and

also to Neil, once he began representing Eagleburger. Among

other things, Rosenbaum told Kaner that the SEC thought

that Samper had not been forthcoming.

Samper’s Wells meeting was scheduled for the fol-

lowing week. Before that meeting, Ellis left a long voicemail

message for Glade that emphasized the SEC’s strident tone

in FLIR’s Wells meeting; emphasized the SEC’s certitude

that wrongdoing had occurred, including by Samper; and

recommended possible approaches for Samper. Glade and

Kaner—but not the accuseds—attended Samper’s Wells

meeting. Even with Ellis’s forewarning, they were shocked

by the SEC’s tone and negative view of Samper. In the

course of discussing its case against Samper, the SEC told

Glade and Kaner that Rosenbaum had represented most of

8

The SEC issued Eagleburger’s Wells Notice in mid-March 2002, after FLIR

filed its Wells Submission, as described later in the text.

702 In re Ellis / Rosenbaum

the witnesses who purportedly had implicated Samper in

problematic transactions.

Rosenbaum was out of the country during Samper’s

Wells meeting, but she e-mailed Glade afterwards to ask how

it had gone. Glade responded that it was “what you would

expect” and had involved familiar transactions, that the

SEC was relying on FLIR employees who did not have first-

hand knowledge of key events, and that the SEC thought

that Samper had been disingenuous at best. Rosenbaum

and Glade then exchanged thoughts about Samper prepar-

ing a Wells Submission; Glade’s side of the communication

acknowledged that Rosenbaum had been supplying him

with her witness notes all along, suggesting that he already

had been privy to statements about Samper from Stoel

Rives-represented witnesses on which the SEC had relied in

Samper’s Wells meeting.

The accuseds, Wynne, and Fitzhenry drafted

FLIR’s Wells Submission, filed in March 2002. FLIR’s

Wells Submission purposefully focused on current manage-

ment’s remediation efforts since discovery of the 1998 and

1999 accounting issues. FLIR emphasized a near-complete

turnover of management and auditors, and its expansion

and strengthening of its accounting personnel and con-

trols, including removal of senior management responsible

for FLIR’s troubles. FLIR described the earlier account-

ing issues as “errors” or “problems,” not “fraud.” FLIR also

stated that, to the extent that any wrongdoing might have

occurred, FLIR understood that the SEC was “pursuing

fraud claims against one or more individuals who may

have been responsible.” In crafting its Wells Submission,

FLIR intended to refer to only Stringer and Martin as the

senior management who had been “removed” and against

whom the SEC was “pursuing” further action. FLIR’s Wells

Submission did not expressly take any position or make

any characterization about Samper, Daltry, or Eagleburger,

although it did comment favorably on Samper’s coopera-

tion with the SEC; it also included an expressly favorable

statement about Fitzhenry, who was the only member of the

current senior management team who had worked at FLIR

in 1998 and 1999, and so the drafters thought it important

to offer a positive comment about his ongoing employment.

Cite as 356 691 (2015) 703

At the time that FLIR prepared its Wells Submission, the

accuseds had concluded that Stringer and Martin—but not

Samper or any of their other clients—had acted fraudulently

in relation to FLIR’s 1998 and 1999 accounting errors.

Upon receipt of FLIR’s Wells Submission, Glade

reviewed it and construed it as inferentially referring to

Samper as a bad actor. Ellis, however, assured Glade that

FLIR had not intended to identify Samper as a culpable

actor; instead, FLIR’s Wells Submission focused on forward-

looking remediation only. Glade and Kaner continued to rep-

resent Samper through the Wells phase, with the accuseds

continuing as supporting co-counsel, communicating almost

daily with Glade and Kaner. Samper ultimately did not file

a Wells Submission.

Fitzhenry and Eagleburger also each had Wells

meetings with the SEC, attended by their respective inde-

pendent counsel and Ellis. Ellis worked on a draft Wells

Submission for Eagleburger at Neil’s request.

Individual negotiations with the SEC commenced

thereafter, resulting in separate settlement orders, finalized

in judgment form by October 2, 2002, between the SEC and

FLIR, Samper, and Eagleburger; an order as to Fitzhenry

issued later, in November 2002.9 The accuseds represented

9

Among other things, the SEC’s judgment against FLIR set out several

SEC findings of fraud—which FLIR neither admitted nor denied—relating to

FLIR’s revenue recognition practices and other accounting and related activities.

The order included a “cease and desist” provision, respecting future violations

of federal securities law, and, because of the fraud findings, it also removed for

a five-year period FLIR’s “safe harbor” protection under federal securities law.

(Witnesses testified that, when in place and when predicate conditions are met,

the “safe harbor” protection shields a public company from legal actions based

on incorrect financial projections.) As a result of its SEC judgment, FLIR also

was later required to defend against a costly debarment proceeding, which—had

debarment been ordered—would have prohibited FLIR from selling its products

to the federal government, a key customer.

The SEC’s judgment against Samper permanently enjoined him from engag-

ing in several particular actions in violation of federal securities law; imposed

a civil penalty of $110,000 and a disgorgement order of $52,500 plus interest;

and permanently prohibited him from serving as an officer or director of a com-

pany that issued securities or was required to file SEC reports. The SEC’s judg-

ment against Eagleburger contained several injunction provisions similar to

the judgment against Samper and imposed a civil penalty of $25,000. The SEC

order against Fitzhenry precluded him from practicing before the SEC for five

704 In re Ellis / Rosenbaum

FLIR in its negotiations, but did not participate in negoti-

ations involving the three individual clients, who instead

continued to be represented by their respective indepen-

dent counsel. Following finalization of the SEC settlements,

the accuseds considered their representation of Samper,

Fitzhenry, and Eagleburger—and of Daltry, who had not

received a Wells Notice—to be at an end. Stringer did not

settle with the SEC, and the SEC later filed a complaint

against him.

In the same general timeframe as the SEC Wells

process and settlements, FLIR continued to defend against

Stringer’s wrongful termination action. Wynne, who by now

had replaced Fitzhenry as FLIR’s General Counsel, deter-

mined that the SEC’s open Stringer investigation might be

helpful to FLIR in defending against his wrongful termi-

nation action. After the SEC settlements against FLIR and

Samper had been finalized, Wynne reviewed the SEC’s com-

plaint against Stringer and was surprised that it did not

include any allegation about the Swedish Drop Shipment

entry, which Wynne thought was the most egregious exam-

ple of financial irregularity tied directly to Stringer. Wynne

also thought that that entry—which never had identified

either an underlying transaction or product—was criti-

cal to FLIR’s defense against Stringer’s pending wrongful

termination action because it tended to justify Stringer’s

termination. Wynne therefore asked Rosenbaum, in her

capacity as FLIR’s counsel, to contact the SEC and inquire

about the absence of that entry from the SEC’s complaint

against Stringer. At that time, Rosenbaum considered her

representation of all the joint representation clients other

than FLIR to be over; also, both she and Ellis thought that

the Swedish Drop Shipment entry implicated Stringer, but

not Samper, who no longer had a pending action before the

SEC. Rosenbaum called the SEC on October 3, 2002, con-

veying Wynne’s offer that FLIR would assist the SEC in

its case against Stringer and noting Wynne’s surprise that

the SEC’s complaint against Stringer did not mention the

Swedish Drop Shipment.

years. The settlements with all three individual clients incorporated consents to

entry of judgment or order, in which the clients neither admitted nor denied the

allegations in the SEC complaints against them.

Cite as 356 691 (2015) 705

C.  Fitzhenry’s Bar Matter

Also in October 2002, Fitzhenry asked Ellis to

self-report to the Bar on Fitzhenry’s behalf, regarding an

acknowledgment in Fitzhenry’s Wells Submission and SEC

settlement order that he had signed an inaccurate manage-

ment representation letter in 1999, in reliance on prior sig-

natures from Stringer, Samper, and others.10 Ellis notified

the Bar and sent a confirming letter in November 2002,

explaining that Fitzhenry by his signature had intended

to verify only the legal—not accounting—representations

made in the management representation letter and that

he otherwise had relied on FLIR’s CEO (Stringer), CFO

(Samper), and outside auditors for verification that a par-

ticular sale referred to in the letter could be recorded and

that the accounting representations were therefore accu-

rate. The next month, Ellis sent the Bar additional materi-

als and a longer letter that, among other things, reiterated

that Samper, as CFO and also a signatory on the letter, was

a person directly responsible for accounting issues at FLIR

and that Samper had assured Fitzhenry that the represen-

tations in the letter were accurate. The Bar filed a complaint

against Fitzhenry in November 2003, and Ellis thereafter

represented him in his Bar matter. This court ultimately

suspended Fitzhenry for 120 days, for violating former

DR 1-102(A)(3) (conduct involving misrepresentation). In re

Fitzhenry, 343 Or 86, 162 P3d 260 (2007).

D.  Department of Justice Investigation

In January 2003, an Assistant United States

Attorney, Garten, told Ellis that the Department of Justice

(DOJ) was opening a criminal investigation into FLIR’s

accounting. None of the involved lawyers who testified at

the trial panel hearing—including the accuseds—had antic-

ipated a criminal investigation, and they all were surprised

to learn about it.11 Over the next several weeks, Garten and

10

The letter was a negative assurance letter to FLIR’s independent auditor,

intended to represent that its contents—which concerned several transactions—

were accurate to the best of each signatory’s belief. Daltry, Stringer, Samper, and

others had signed the letter before Fitzhenry.

11

According to testimony in the record, in the early 2000s, if the DOJ became

interested in the target of an SEC investigation, then the SEC investigation typ-

ically would be stayed and the DOJ would commence its own investigation. That

706 In re Ellis / Rosenbaum

the accuseds either met or communicated several times, and

the accuseds produced FLIR documents to the DOJ or the

FBI at Garten’s request. As discussed below and later in

this opinion, the nature of the conversations and extent of

the document production underlie some of the Bar’s conflict

of interest and misrepresentation allegations.

Garten initially told the accuseds that he did not

intend to target FLIR, but he pressed for both FLIR and the

accuseds personally to cooperate with the DOJ in building a

case against all potential defendants. In a subsequent meet-

ing that Ellis attended, Lewis assured Garten that FLIR

would cooperate, but the accuseds did not think that they

ethically could assist in a case against their former clients.

Garten later wrote to the accuseds and reiterated

his request that they cooperate; his letter also suggested

that FLIR had requested immunity.12 Garten eventually

withdrew his request for the accuseds’ personal cooperation,

although he continued to request assistance with document

production and witness scheduling. Garten also told the

accuseds in his last meeting with them that, as to Daltry

and Fitzhenry but not Samper, he might not pursue indi-

vidual criminal cases if they cooperated. Garten later sent

a confirming e-mail that continued to request the accuseds’

assistance in witness scheduling and reiterated an earlier

document request. Thereafter, the accuseds had no direct

contact with Garten other than document production—

which by this time was ongoing—and witness scheduling.

On the same day as the accuseds’ last meeting with

Garten, Rosenbaum told Glade—and later confirmed in

writing—that FLIR was not a DOJ target and that Samper

practice began to change after the Enron scandal that began in 2001, with its

ensuing criminal prosecutions that continued for years afterward. Here, unbe-

knownst to the accuseds and other participants in the SEC proceeding, the SEC

and the DOJ had been communicating about the FLIR investigation since sum-

mer 2000.

As to Samper specifically, the accuseds, Glade, and Kaner all thought

throughout the SEC investigation that Samper had not acted fraudulently and

did not think at the time of Samper’s SEC settlement that he would need a crim-

inal attorney.

12

As explained later in this opinion, other evidence in the record—including

testimony from various witnesses and a subsequent declaration from Garten—

showed that the DOJ did not make any immunity arrangement with FLIR.

Cite as 356 691 (2015) 707

and others, including Daltry, Fitzhenry, and Eagleburger,

might need lawyers in connection with the DOJ investi-

gation. Her confirming letter to Glade also stated that the

accuseds expected to continue to assist FLIR with docu-

ment production and witness scheduling. Rosenbaum sent

a similar letter to Eagleburger’s independent counsel, Neil.

Rosenbaum also eventually reached Daltry; on her recom-

mendation, Daltry immediately retained criminal defense

counsel, Myers. Rosenbaum told Myers about Garten’s doc-

ument requests, that FLIR was not a DOJ target, and that

Garten was inclined to give Daltry immunity if he cooper-

ated; Ellis reiterated several of those points to Myers the

next day. By about this time, Stoel Rives had sent numerous

FLIR documents to either the DOJ or the FBI—many were

part of the public record, and many, but not all, had been

produced to the SEC previously.

In late February 2003, after meeting with Garten

to reiterate FLIR’s intent to cooperate, Wynne proposed to

the accuseds that FLIR retain separate counsel as to the

DOJ investigation but that the accuseds continue to produce

FLIR documents as needed and to schedule witness inter-

views.13 The accuseds tentatively agreed and determined

that they were not obligated to make any disclosure about

the arrangement to Daltry, Samper, or Eagleburger. They

nonetheless decided, in the exercise of caution, to send a dis-

closure letter and obtain consent.

On March 3, 2003, Rosenbaum sent a disclosure let-

ter to FLIR and also, in care of their individual counsel, to

Daltry, Samper, and Eagleburger. The letter explained that

FLIR was cooperating with the DOJ and did not expect to be

a defendant; that Stoel Rives had been asked to advise FLIR

and assist in producing documents and scheduling witness

interviews; that the investigation related to the accuseds’

earlier representations of Daltry, Samper, and Eagleburger,

and had potentially adverse consequences to them; and

that Stoel Rives would not voluntarily disclose either client

confidences or information or materials arguably subject

13

The accuseds characterize that arrangement as “Stoel Rives’s ministerial

role.” We refer to the arrangement as the accuseds’ limited representation of

FLIR during the DOJ investigation.

708 In re Ellis / Rosenbaum

to confidentiality claims. The former clients all consented.

In the meantime, the accuseds scheduled further witness

interviews and had produced more documents to the DOJ.

For its part, FLIR retained other counsel to represent it in

other aspects of the DOJ investigation.

In September 2003, Stringer, Martin, and Samper

were indicted in United States District Court for criminal

securities violations. They moved to dismiss, asserting viola-

tions of due process and self-incrimination protections stem-

ming from surreptitious cooperation between the SEC and

the DOJ. Samper further argued that the government had

taken unfair advantage of the accuseds’ purported conflict

of interest. The District Court agreed with the defendants’

arguments and dismissed the indictments in 2006, but

the Ninth Circuit vacated the dismissals in 2008.14 United

States v. Stringer, 535 F3d 929, 942 (9th Cir 2008). The

Ninth Circuit decision brought the case to the Bar’s atten-

tion. None of the clients or lawyers involved complained to

the Bar about the accuseds’ conduct.

E.  Bar Complaints and Trial Panel Hearing and Decision

The Bar filed amended complaints against the

accuseds in February 2012, alleging violations of former DR

1-102(A)(3) (misrepresentations by omission) (one cause and

one alternative cause as to each); former DR 5-105(C) (former-

client conflict) (one alternative cause as to each, and one addi-

tional cause as to Ellis); and former DR 5-105(E) (current-

client conflict) (nine causes as to Rosenbaum, and 10 as to

Ellis). The amended complaints were identical, except that

the complaint against Ellis contained two additional allega-

tions concerning his representation of Fitzhenry in the lat-

ter’s Bar matter.

The trial panel conducted a hearing in 2012 and

concluded in 2013 that the Bar had not proved most of the

alleged violations, but had proved some violations, and fur-

ther determined that the appropriate sanction was a public

reprimand. The accuseds requested review of all the panel’s

conclusions that violations had occurred, and the Bar raised

14

The DOJ eventually moved to dismiss most of its charges against Stringer

and Samper, but ultimately obtained one misdemeanor conviction, for receiving

stolen money, as to each of them.

Cite as 356 691 (2015) 709

additional challenges to several panel conclusions that no

violation had occurred. We summarize the panel’s decisions

at issue on review in our discussion below.

II.  DISCIPLINARY RULES

As noted, the Bar’s complaints alleged misconduct

under the former Code of Professional Responsibility.15 Former

DR 5-105 set out the client-conflict rules and provided, in part:

“(A)  Conflict of Interest. A conflict of interest may be

actual or likely.

“(1)  An ‘actual conflict of interest’ exists when the

lawyer has a duty to contend for something on behalf of

one client that the lawyer has a duty to oppose on behalf of

another client.

“(2)  A ‘likely conflict of interest’ exists in all other situ-

ations in which the objective personal, business or property

interests of the client are adverse. A ‘likely conflict of inter-

est’ does not include situations in which the only conflict is

of a general economic or business nature.

“* * * * *

“(B)  Knowledge of Conflict of Interest. For purposes

of determining a lawyer’s knowledge of the existence of a

conflict of interest, all facts which the lawyer knew, or by

the exercise of reasonable care should have known, will be

attributed to the lawyer.

“(C)  Former Client Conflicts—Prohibition. Except as

permitted by [former] DR 5-105(D), a lawyer who has rep-

resented a client in a matter shall not subsequently repre-

sent another client in the same or a significantly related

matter when the interests of the current and former clients

are in actual or likely conflict. Matters are significantly

related if either:

“(1)  Representation of the present client in the subse-

quent matter would, or would likely, inflict injury or dam-

age upon the former client in connection with any proceed-

ing, claim, controversy, transaction, investigation, charge,

15

We quote the former disciplinary rules at issue from the 2000 version of

the former Code of Professional Responsibility. The text from the 2000 versions of

the rules remained the same through 2004, which spans the years of the events

at issue in this case.

710 In re Ellis / Rosenbaum

accusation, arrest or other particular matter in which the

lawyer previously represented the former client; or

“(2)  Representation of the former client provided the

lawyer with confidences or secrets as defined in [former]

DR 4-101(A), the use of which would, or would likely, inflict

injury or damage upon the former client in the course of the

subsequent matter.

“(D)  Former Client Conflicts—Permissive Representa-

tion. A lawyer may represent a client in instances otherwise

prohibited by [former] DR 5-105(C) when both the current

client and the former client consent to the representation

after full disclosure.

“(E)  Current Client Conflicts—Prohibition. Except as

provided in [former] DR 5-105(F), a lawyer shall not rep-

resent multiple current clients in any matters when such

representation would result in an actual or likely conflict.

“(F)  Current Client Conflicts—Permissive Representa-

tion. A lawyer may represent multiple current clients in

instances otherwise prohibited by [former] DR 5-105(E)

when such representation would not result in an actual

conflict and when each client consents to the multiple rep-

resentation after full disclosure * * *.”

Former DR 10-101(B) established the requirements for “full

disclosure” under former DR 5-105; it provided, in part:

“(1)  ‘Full disclosure’ means an explanation sufficient

to apprise the recipient of the potential adverse impact on

the recipient, of the matter to which the recipient is asked

to consent.

“(2)  As used in * * * [former] DR 5-105 * * *, ‘full disclo-

sure’ shall also include a recommendation that the recipi-

ent seek independent legal advice to determine if consent

should be given and shall be contemporaneously confirmed

in writing.”

Finally, former DR 1-102(A) provided, in part:

“(A)  It is professional misconduct for a lawyer to:

“* * * * *

“(3)  Engage in conduct involving dishonesty, fraud,

deceit or misrepresentation.”

Cite as 356 691 (2015) 711

Below, we address each of the trial panel’s conclu-

sions concerning the rules set out above that are at issue on

review. Our discussion is organized in the same chronologi-

cal order in which the underlying events occurred.

III.  FIRST CAUSE—FORMER DR 5-105(E),

CURRENT-CLIENT LIKELY CONFLICTS

AT OUTSET OF SEC INVESTIGATION

A.  Trial Panel Decision, Parties’ Contentions on Review,

and General Discussion

The first cause alleged that the accuseds had vio-

lated former DR 5-105(E) when they agreed to represent

FLIR on the one hand, and Daltry, Samper, Fitzhenry, and

Eagleburger on the other, at the outset of the SEC investi-

gation, with insufficient disclosure and consent concerning

likely conflicts of interest.16 The trial panel concluded that

no likely conflict of interest existed. The Bar challenges

that conclusion on review, arguing in part that the panel

incorrectly applied the “actual conflict” standard under for-

mer DR 5-105(A)(1), instead of the “likely conflict” standard

under former DR 5-105(A)(2). The Bar contends that, under

that latter standard, the interests of FLIR, Daltry, Samper,

Fitzhenry, and Eagleburger were adverse because, although

they all hoped that the SEC would find no misconduct, they

each had an interest in protecting themselves if it did—

including, to the extent necessary, identifying and testifying

against possible wrongdoers in the group. The Bar contin-

ues that the SEC was likely to share its information with

other agencies for use in future criminal, disciplinary, or

other proceedings, in which Fifth Amendment incrimination

implications and professional licenses might have been at

stake. The Bar also asserts that any self-protective step that

an individual client might have taken during the SEC inves-

tigation in turn might have been adverse to FLIR, which

had an interest in setting a cooperative tone with the SEC.

The Bar then argues that the accuseds’ disclosure letters did

16

The complaint alleged additional clients, but we address only those clients

whom the Bar has identified on review. Further, throughout this opinion, we have

addressed only particular current or former clients and particular issues that—

in collective consideration of the complaint allegations, the trial panel’s opinion,

and the parties’ arguments in their briefs—are properly at issue on review.

712 In re Ellis / Rosenbaum

not satisfy the “full disclosure” requirements under former

DR 10-101(B), to ensure informed consent to the joint repre-

sentation, and also that—because they did not send him a

letter—no disclosure at all had been made to Samper.17

The accuseds disagree that FLIR and the identified

individual clients had adverse interests at the outset of the

SEC investigation, and they assert that the trial panel there-

fore correctly determined that no likely conflict of interest

existed. The accuseds point to evidence demonstrating—in

their view—that the Bar’s adversity theories are incorrect

and that, instead, their multiple representation strategy

in the context of the SEC investigation was a common and

widely accepted practice that was both effective and ethical.

The accuseds relatedly argue that, even if any likely conflict

of interest existed, they disclosed all material information

to their clients so as to obtain their informed consent to the

joint representation.

The Bar is correct that its first cause focused on

“likely” current-client conflicts, rather than “actual” con-

flicts, at the outset of the SEC investigation. The Bar is also

correct that the trial panel nonetheless concluded that no

“actual” conflict had existed because the accuseds had no

duty at that point in time to contend for a position on behalf

of one client that they had a duty to oppose on behalf of

another, under former DR 5-105(A)(1). However, the panel

17

The complaints refer in the first cause to alleged conflicts arising only

“[w]hen [the accuseds] undertook to represent” all the clients in the SEC joint

representation and refer in the second cause to further alleged conflicts arising

during the investigation stage, through the course of witness interviews and end-

ing with the Wells phase. The trial panel concluded that the Bar had not proved

the allegations in the first cause, but, in reaching that conclusion, it extensively

addressed facts arising during the SEC investigation up to the Wells phase, not

those in existence at the outset of the investigation. In its brief, the Bar identifies

both the first and second causes as being at issue on review; however, it—like the

panel—primarily treats the first cause as relating to activities during the SEC

investigation up to the Wells phase (with some limited argument about conflicts

at the outset of the representation) and the second cause as concerning the Wells

phase.

Consistently with the amended complaints and the Bar’s identification of

the causes and issues on review, we consider allegations and arguments about

conflicts at the outset of the SEC investigation as part of the first cause, and we

then consider the panel’s determinations relating to ongoing investigation issues

before and during the Wells phase—and the parties’ respective arguments about

those determinations—as part of the second cause.

Cite as 356 691 (2015) 713

also concluded that the interests of FLIR and the individ-

ual clients were not “adverse” or in likely conflict during

the SEC investigation process—amounting to an effective

determination that no such conflict had existed at the outset

of the SEC investigation. We proceed to address the Bar’s

challenge under this cause by determining whether a likely

conflict existed.

Under former DR 5-105(A)(2), a likely conflict exists

when the “objective, personal, business or property interests

of the clients are adverse.” Concerning a multiple client repre-

sentation, the specific question under former DR 5-105(A)(2)

is whether the client interests “are adverse” (emphasis

added) at the time that the lawyer seeks to undertake the

representation, not whether they might be adverse in the

future. See In re Hostetter, 348 Or 574, 594, 238 P3d 13

(2010) (so stating; focus is whether respective interests were

“adverse from the outset,” not whether client injured later as

result of a conflict). Indeed, the fact that a conflict develops

later does not mean that adversity existed at the outset. See

In re Samuels/Weiner, 296 Or 224, 230, 674 P2d 1166 (1983)

(court rejected Bar’s prediction of potential future conflicts

in partnership and reliance on ultimate breakdown of part-

ners’ relationship to support allegations under earlier ver-

sion of former DR 5-105(A)).

Respecting “adverse” interests, this court has noted

under an earlier version of former DR 5-105 that a lawyer’s

independent judgment can be adversely affected when two

or more clients “have differing interests, whether such inter-

ests be conflicting, inconsistent, diverse, or otherwise dis-

cordant.”18 In re Johnson, 300 Or 52, 58 n 4, 707 P2d 573

(1985) (internal quotation marks omitted); see also Webster’s

Third New Int’l Dictionary 31 (unabridged ed 2002) (defin-

ing “adverse,” in part, as “acting against or in a con-

trary direction: OPPOSING * * * : HOSTILE, OPPOSED,

ANTAGONISTIC * * * 2 a : in opposition to one’s interests

: DETRIMENTAL, UNFAVORABLE”). This court has iden-

tified many scenarios involving readily identifiable client

18

Former DR 5-105(B) (1984) provided that “[a] lawyer shall not continue

employment if the exercise of his independent professional judgment in behalf

of a client will be or is likely to be adversely affected by his representation of

another client, except to the extent permitted under DR 5-105(C).”

714 In re Ellis / Rosenbaum

interests that are adverse by their nature, such as debtor-

creditor relationships, Hostetter, 348 Or at 593; spousal and

similar relationships with opposing legal interests, In re

Lawrence, 337 Or 450, 461, 98 P3d 366 (2004) (alleged bat-

terer and victim); In re Cohen, 316 Or 657, 661-62, 853 P2d

286 (1993) (spouses with diverging interests in different

proceedings—criminal mistreatment case for husband,

related juvenile case in which children might be taken from

wife); and criminal coconspirators or codefendants, In re

Jeffery, 321 Or 360, 370-71, 898 P2d 752 (1995); In re O’Neal,

297 Or 258, 260-66, 683 P2d 1352 (1984). In those circum-

stances, the court has explained that the conflicts rules

guard against a lawyer’s impaired judgment or divided loy-

alty arising from differing client interests. See O’Neal, 297

Or at 264 (lawyer who undertakes multiple client represen-

tations involving differing interests must carefully weigh

possibility that the lawyer’s judgment might be impaired or

loyalty divided); In re Porter, 283 Or 517, 521-22, 584 P2d

744 (1978) (to same general effect).

By contrast, this court also has explained that

the interests of multiple clients might be consistent—and

therefore not adverse—at the time that the lawyer seeks to

undertake a new representation. In In re Cobb, 345 Or 106,

190 P3d 1217 (2008), for example, the accused lawyer repre-

sented several investors who were part of investor partner-

ships in a company involved in questionable tax dealings.

The lawyer first represented the investors in “test cases”

against Internal Revenue Service (IRS) personnel and later

represented the investor partnerships in challenging the

disallowance of certain IRS deductions. Id. at 110-11. An

entity associated with the company later filed Chapter 11

bankruptcy, and the investor partnerships retained the

same lawyer to protect their interests—including assets—in

that proceeding. Id. at 111. Unrelated creditors later forced

the entity and the company into Chapter 7 bankruptcy, and

the lawyer represented the debtor company in that proceed-

ing for the sole purpose of raising a jurisdictional defense

that might have resulted in dismissal of the bankruptcy. Id.

at 112. The Bar argued that the lawyer had a current-client

likely conflict of interest when he represented the investor

partnerships in the Chapter 11 proceeding and the company

Cite as 356 691 (2015) 715

in the Chapter 7 proceeding, asserting what the Bar con-

tended were adverse positions. This court disagreed, rea-

soning that the lawyer’s assertions in both proceedings were

consistent with each other.19 Id. at 133 n 18. The court also

explained, in the course of rejecting a related conflicts argu-

ment on the Bar’s part, that the interests of the investor

partnerships and the company were not those of creditor-

debtor at the time in question. Id. at 133.

In sum, our task in determining whether the

accuseds’ clients’ interests were adverse at the outset of the

SEC investigation under former DR 5-105(A)(2) involves

determining from the record whether—at that point in

time—those interests were contrary or in opposition to one

another, or, instead, were consistent or aligned. We now turn

to the record to determine whether the Bar proved by clear

and convincing evidence that the accuseds’ clients’ interests

were adverse at the outset of the SEC investigation.

B.  No Likely Conflicts at Outset of SEC Investigation

Several witnesses testified as to the nature of the

respective clients’ interests at the outset of the multiple rep-

resentation. Ellis, who was experienced in the field, testified

that a public company subject to an SEC investigation has

two principal interests: to move the process along quickly

toward resolution, and to maintain public confidence. The

company’s board has similar interests, plus an additional

interest in assuring itself that current management main-

tains accurate financial statements. Officers—who run the

risk of liability for past conduct—also share the same inter-

ests as the company and have an additional interest in not

being damaged by speculative testimony. Employees have

an interest in avoiding workplace difficulties, such as fear

of retaliation at work or instability of the employer. And, all

witnesses have an interest in avoiding becoming embroiled

in any “process violation” during the investigation, such as

SEC accusations of untruthful testimony, failure to produce

19

According to the court, in the Chapter 11 proceeding, the lawyer had

argued on behalf of the investor partnerships that they had financial means to

maintain the assets and that their continuing payments to the company would

enable the company to meet other obligations. Similarly, in the Chapter 7 pro-

ceeding, the lawyer had taken the position that the investor partnerships’ pay-

ments were made for purposes of preserving the assets. Cobb, 345 Or at 133 n 18.

716 In re Ellis / Rosenbaum

requested documentation, or obstruction of justice. Ellis con-

tinued that all those identified interests are served by encour-

aging truthful, nonspeculative testimony and cooperation

with the investigation. Ellis rejected the notion—advanced

by the Bar—that FLIR had an interest in restricting the

flow of information to the SEC, which would have invited a

process violation accusation and could have breached FLIR’s

fiduciary duties as a public company; instead, FLIR, like the

other clients, had an interest in fully cooperating.

Ellis further testified that individual clients did not

have the same risks, at the outset of this SEC investigation,

that they might have in other litigation contexts. For exam-

ple, under federal law, potential SEC enforcement defen-

dants at that time were not subject to cross-claims for con-

tribution or other proportionate fault sharing arguments.

And, insurance in the SEC investigation context typically

covered defense costs for both the company and the individ-

ual directors and officers, but not settlement costs, so the

clients had no conflicting settlement interests in a common

insurance fund.

Both Ellis and Rosenbaum (also experienced in the

field) explained that an SEC investigation differs from pri-

vate securities litigation in other ways, in that (1) no formal

charges or allegations have been made; (2) the investigation

is factual only—here, to determine if FLIR’s restatements

were due to innocent errors or fraud—and witnesses are

expected only to answer questions to the best of their abil-

ity, with no cross-examination; (3) lawyers serve as counsel

for witnesses to prepare for and attend interviews, but do

not sponsor the witnesses as a lawyer would in trial; and

(4) lawyers do not advocate in any way for any client.

Relatedly, it was not in any client’s interest to project blame

on other clients during the SEC investigation stage. As Ellis

put it, in the context of an investigation concerning account-

ing irregularities, a securities violation either occurred or

did not occur, and no client has an interest in encouraging

the SEC to pursue any particular individual.

Finally, Ellis and Rosenbaum both testified that

each of their clients had an interest in learning as much

as possible about the SEC’s investigation, which the joint

Cite as 356 691 (2015) 717

representation—as arranged at the outset—permitted them

to do. By responding to document requests, attending wit-

ness interviews, and reviewing related documentation, the

accuseds were able to alert each client to particular trans-

actions at issue and witness testimony relevant to their own

interview preparation, so that they in turn could provide more

refreshed, forthright, and honest testimony. The Bar did not

effectively counter any of the above-summarized testimony.

As to the individual clients, Glade and Kaner con-

firmed that the accuseds’ joint representation was advanta-

geous to Samper and that, at the outset of the SEC investi-

gation, Samper’s interests were aligned with—not adverse

to—FLIR’s interests. Glade also agreed that Samper’s pri-

mary interest in testifying was to be truthful with the SEC,

and Kaner agreed that all participants had an interest in

cooperating. Glade did not recall thinking that the accuseds

had any conflict of interest with Samper during the course

of the SEC investigation, and Kaner also never concluded

that any conflict existed.20 Wynne and Fitzhenry similarly

testified that FLIR had no interest during the SEC investi-

gation in projecting blame on Samper or others.

The accuseds also presented the testimony of an

expert witness, Maletta, who was a former SEC lawyer

with extensive experience in securities enforcement and

governmental investigations, and who had authored part

of a leading text that included discussion of ethical issues

involved in SEC joint representations. Maletta testified

generally about accepted and common practices during an

SEC investigation, including a joint representation similar

to that arranged here, which can be very advantageous in

certain circumstances and was the presumptively preferred

approach of many who practiced in the field. Specifically,

Maletta testified that it was common practice for a single

firm to individually represent the company and subpoe-

naed company officers and employees, provided that no

20

In other parts of this opinion, we similarly observe that independent coun-

sel for certain clients, with knowledge of the key facts, did not think that any

conflict of interest existed as various events unfolded. Although another lawyer’s

assessment of the existence of a conflict is of course not dispositive, we find such

assessments here—made by several experienced lawyers—to be a useful compo-

nent for our consideration of the Bar’s alleged rule violations.

718 In re Ellis / Rosenbaum

identifiable conflicts of interest exist and the company sup-

ports the individuals’ positions.21 Maletta explained that

the interests of all such individuals are typically aligned

because they share an interest in ensuring that no enforce-

ment action is brought against anyone in the group. Maletta

testified, similarly to the testimony of the accuseds, that all

individuals involved typically have the same objectives, such

as cooperating, testifying truthfully, and being forthcoming

with the SEC. Maletta added that it is important in the rep-

resentation to prevent projecting blame, which is counter-

productive and not a useful strategy during the investi-

gation stage, when there are no formal defendants, sub-

jects, or targets. Maletta also confirmed the testimony of

the accuseds, Glade, and Kaner that the principal benefit

of joint representation is that each client obtains access to

information that otherwise would not be available because

the SEC has no obligation to share it. To be sure, Maletta

agreed with the Bar that joint representation can present

potential perils for clients, depending on the circumstances,

and that joint representation of a company and its man-

agers and employees can involve tensions at the outset—

particularly if intentional wrongdoing appears to have

occurred. As noted, however, Maletta also generally testified

about the advantages of joint representation and that the

company’s and represented individuals’ interests frequently

are aligned at the outset and during the investigation phase

in the manner that he described.22

21

Maletta contrasted the type of investigation at issue here—in which,

he explained, the interests of the company and individual clients tend to be

aligned—with an investigation that by its nature would typically involve inten-

tional wrongdoing by one or more persons, such as one involving insider trading,

embezzlement, or obstruction of justice.

22

In addition to Maletta’s general testimony about accepted and common

practices during an SEC investigation, the accuseds sought to introduce addi-

tional testimony from Maletta to the effect that the joint representation in this

case was consistent with general practice and that FLIR’s and the individual

clients’ interests had been aligned at the outset of the SEC investigation. The

Bar objected, and the trial panel ruled that Maletta could testify only in the

abstract as to SEC defense work generally, relying on In re Leonard, 308 Or 560,

570, 784 P2d 95 (1989). The accuseds filed an offer of proof containing Maletta’s

opinions on case-specific issues and contend on review that the panel’s ruling in

that regard was incorrect.

In light of our ultimate conclusion, after reviewing the evidence in the record

that the trial panel admitted, that the Bar did not prove by clear and convincing

Cite as 356 691 (2015) 719

The testimony summarized above comprises the

essential evidence in the record concerning the propriety of

the accuseds’ joint representation at the outset of the SEC

investigation. The Bar presented no contrary testimony—

expert or otherwise—detracting from the evidence showing

that joint representation was a common practice in SEC

investigations of this kind, that the clients’ interests at the

outset of such a representation tend to be aligned, and that

the joint representation in the context of the SEC’s investi-

gation here was appropriate under the circumstances.

Further, although the Bar raises several arguments

purporting to show why the accuseds’ clients’ interests were

adverse, those arguments effectively focus on the potential

for adversity to arise; they do not point to evidence in the

record showing that the clients’ interests were adverse at

the outset. For example, the Bar argues that the interests

of FLIR, Daltry, Samper, Fitzhenry, and Eagleburger were

adverse because they each had an interest in protecting

themselves if the SEC eventually found misconduct to have

occurred, including, to the extent necessary, identifying and

testifying against each other. As summarized earlier, how-

ever, the evidence showed that no client had any interest at

the outset of the SEC investigation in projecting blame on

others. The Bar also did not prove that the SEC was likely

to share its information in this case with other agencies for

use in future criminal, disciplinary, or other proceedings:

Although the Bar did show that the lawyers and witnesses

knew that the SEC was permitted to share its information

with other agencies, none of the involved lawyers had any

reasonable expectation that the DOJ would involve itself in

this particular investigation. The record further shows that,

at that point in time, the DOJ typically did not have a sig-

nificant level of involvement in ongoing SEC investigations,

unless it chose to actively step in and stay the SEC proceed-

ing. Finally, the Bar did not present evidence to support its

argument that any particular client’s hypothetical efforts to

take self-protective steps during the SEC investigation in

turn might have been adverse to FLIR.

evidence the violations alleged in this cause, it is not necessary to address the

accuseds’ contention on review that the panel erred in rejecting Maletta’s case-

specific testimony.

720 In re Ellis / Rosenbaum

We conclude that the Bar did not prove by clear

and convincing evidence that the interests of FLIR and the

accuseds’ individual clients Daltry, Samper, Fitzhenry, and

Eagleburger were adverse at the outset of the SEC investiga-

tion and therefore did not prove the existence of any current-

client likely conflict of interest at that time under former DR

5-105(A)(2) and former DR 5-105(E). Because we conclude

that the Bar did not prove the existence of such a conflict, we

need not decide whether the accuseds made sufficient dis-

closures so as to obtain consent to the joint representation

under former DR 5-105(F) and former DR 10-101(B).23

IV.  SECOND CAUSE—FORMER DR 5-105(E),

CURRENT-CLIENT ACTUAL AND LIKELY

CONFLICTS DURING SEC INVESTIGATION,

INCLUDING WELLS PHASE

A.  Trial Panel Decision and Parties’ Contentions on Review

The second cause alleged that the accuseds had

violated former DR 5-105(E) when they continued to repre-

sent FLIR on the one hand, and Daltry, Samper, Fitzhenry,

and Eagleburger on the other, during the SEC investiga-

tion, once it became apparent that actual or likely conflicts

had arisen. The Bar’s allegations under this cause gener-

ally refer to SEC witness interviews and also to the Wells

phase. The trial panel rejected several Bar theories under

this cause and specifically disagreed with the Bar that

any actual conflict of interest arose before the Wells phase,

which the Bar challenges on review. The panel did, however,

determine that the Bar proved its allegations of likely con-

flicts of interest and insufficient disclosure under this cause

in two respects.

First, the trial panel determined that FLIR’s state-

ment in its Wells Submission that referred to the SEC “pur-

suing fraud claims against one or more individuals who may

have been responsible” for the accounting errors, “to the

extent that wrong-doing may have occurred,” established

that FLIR’s interest in the SEC representation was adverse

23

We generally note, however, that a lawyer taking on a similar joint repre-

sentation should—in the exercise of caution—consider following applicable full

disclosure rules as to the key participants.

Cite as 356 691 (2015) 721

to those of Samper, Fitzhenry, and Eagleburger. In the panel’s

view, that statement told the SEC that FLIR had concluded

that wrongdoing had occurred and that fraud claims per-

haps were appropriate as to those individual clients—who

all ultimately had received Wells Notices and who each had

an interest in having FLIR refrain from acknowledging that

any wrongdoing had occurred. Because the accuseds did not

make full disclosure to or obtain consent from those clients

as to continuing the joint representation, the panel con-

cluded that the accuseds had violated former DR 5-105(E).

The accuseds challenge that conclusion on review.

Second, the trial panel determined that Rosenbaum

had violated former DR 5-105(E) when she called the SEC

on October 3, 2002, to inquire about the lack of reference to

the Swedish Drop Shipment in the SEC complaint against

Stringer. According to the panel, that phone call—made in

behalf of FLIR and Wynne—had been adverse to Samper’s

interests. The panel analyzed the phone call under the Bar’s

sixth cause, which more generally had alleged a current-

client conflict between Wynne and Samper (and others), and

did not specifically mention the phone call. On review, the

Bar contends that Rosenbaum’s October 3, 2002, phone call

to the SEC fell within its general allegations under the sec-

ond cause and that the panel’s conclusion was correct under

that cause. The accuseds, for their part, challenge on review

any determination that a rule violation occurred based on

Rosenbaum’s phone call to the SEC.

We address the parties’ arguments under this cause

in three parts: the SEC investigation leading up to the Wells

phase; the Wells phase; and Rosenbaum’s October 3, 2002,

phone call to the SEC.

B.  No Current-Client Likely Conflicts During Pre-Wells Phase

In disagreeing with the trial panel’s conclusion that

the Bar did not prove any likely conflict of interest during

the SEC investigation up to the Wells phase, the Bar argues

that (1) as witnesses provided information to the SEC, likely

conflicts of interest under former DR 5-105(A)(2) arose

between FLIR and the individual clients; (2) during that

time, any self-protective step that any individual client took

722 In re Ellis / Rosenbaum

was arguably adverse to other clients and to FLIR, which

had an interest in setting a cooperative tone with the SEC;

and (3) as the investigation progressed, FLIR’s interest in

remediation grew stronger, which in turn was adverse to

certain individual clients’ interests in remaining employed

and in preserving favorable professional reputations. In

response, the accuseds point to evidence in the record that

they assert supports the panel’s conclusion that no likely

conflicts arose in this time frame.

As with our earlier discussion about alleged con-

flicts at the outset of the SEC investigation, the Bar bears

the burden of proving by clear and convincing evidence

that the accuseds’ clients’ “objective personal, business or

property interests [were] adverse” at the time in question.

Former DR 5-105(A)(2). Also as part of our analysis, we con-

sider former DR 5-105(B), which provided that, “[f]or pur-

poses of determining a lawyer’s knowledge of the existence

of a conflict of interest, all facts which the lawyer knew, or

by the exercise of reasonable care should have known, will

be attributed to the lawyer.” Again, on de novo review of the

record, we conclude that the Bar did not prove the existence

of any likely conflict of interest up to the Wells phase. We

address the Bar’s arguments in turn, below.

Regarding witness testimony, the Bar in particular

cites SEC interviews of Fitzhenry, Wynne, Muessle (FLIR’s

then-current controller), and Chambers (the employee who

testified about document destruction), and argues that those

witnesses offered testimony that was adverse to Samper’s

interests. We consider four aspects of that testimony and,

as did the trial panel, conclude that the Bar did not show

that the testimony demonstrated the existence of any likely

conflict of interest.24

24

We focus on the four topic areas addressed in greatest detail at the trial

panel hearing. In the facts section of its brief, the Bar generally states that sev-

eral clients commented unfavorably on the credibility of others during their SEC

interviews and lists isolated factual assertions from several witnesses’ inter-

views, including witnesses other than the four mentioned in the text above. In

the argument section of its brief, however, the Bar states only very generally that

the accuseds heard all those witnesses offer SEC testimony that was adverse to

Samper, with no elaboration. The record in this case—which includes lengthy

excerpts from several SEC transcripts—is almost 12,800 pages long. We decline

to examine each isolated, separate factual statement set out in the Bar’s brief

Cite as 356 691 (2015) 723

As to Fitzhenry, the SEC asked him about the 1999

management representation letter that he and Samper

(and others) had signed, which had served to confirm the

accuracy of certain 1999 FLIR quarterly results. The letter

had confirmed that FLIR had recognized certain revenue

properly, but that representation later was determined to

be incorrect. Fitzhenry’s practice had been to sign such let-

ters, based on representations from Samper or the former

FLIR controller that the accounting representations made

therein were true. Fitzhenry told the SEC in at least one

interview that he did not recall having any particular con-

versation with Samper about the letter at issue—concern-

ing the specific accounting-related content in the letter or

otherwise—other than Samper asking him to sign it. In

response to questions about conversations with Samper

about the letter, Fitzhenry stated in that interview that

“the discussions that I would have had were more general

in nature, * * * representations from either [Samper] or [the

former controller], * * * someone who was [also] a signatory

of the letter, that the representations were true. * * * [B]ased

on those representations, generally, I signed the letter as

well.” For his part, Samper did not recall any particular con-

versation with Fitzhenry about the letter.25 In the Bar’s view,

Fitzhenry’s SEC testimony showed an adversity of interest

between Fitzhenry and Samper, based on Fitzhenry’s reli-

ance on Samper’s general assurance that the contents of the

letter had been accurate.

We disagree. First, the record shows that Samper

reasonably would have expected Fitzhenry to rely on his

assurances about accounting representations in the letter

because Samper, as CFO, accepted responsibility for FLIR’s

accounting. Nothing about Fitzhenry’s stated reliance on

without further explication from the Bar, such as providing context or a pur-

ported link between each statement and the existence of a current-client likely

conflict.

25

Fitzhenry later testified at his own trial panel matter, as well as to the

trial panel below, that he recalled generally asking Samper if the contents of the

letter were accurate, and Samper indicated that they were. Fitzhenry’s SEC tes-

timony in the record that the Bar cites does not include that specific recollection

on his part. And, in any event, Fitzhenry emphasized in both his Bar matter and

in this proceeding that Samper had a different recollection, in that he did not

recall any particular conversation about the contents of the letter.

724 In re Ellis / Rosenbaum

Samper established an adversity of interests between the

two clients. Second, we do not read Fitzhenry’s testimony—

as does the Bar—to have stated that he recalled having had

a specific conversation with Samper about the 1999 manage-

ment representation letter in which Samper assured him as

to its accuracy; instead, Fitzhenry only generally described

the process that typically occurred when he was presented

with such letters. And, even if we read Fitzhenry’s testimony

to mean that he had asked Samper for general accounting

assurances relating to that particular letter, when Samper

did not recall a similar conversation, such a scenario does

not prove by clear and convincing evidence that an adver-

sity of interest existed. The record shows—through tes-

timony from both the accuseds and their expert witness,

Maletta—that differing recollections are common during

the SEC interview phase. It also shows that Fitzhenry and

Samper shared the objective of providing truthful testimony

about their respective recollections. Finally, it shows that

the accuseds sent a transcript of Fitzhenry’s SEC testimony

to Glade and Kaner, and they did not think that Fitzhenry’s

testimony demonstrated any conflict with Samper.26 In short,

Fitzhenry’s SEC testimony did not establish by clear and

convincing evidence that a likely conflict of interest existed

between either FLIR or Fitzhenry and Samper during the

SEC interview phase.

As to Wynne, the Bar first focuses on Wynne’s SEC

testimony that FLIR’s new independent auditor had con-

cluded that a high percentage of FLIR’s accounting entries

had been erroneous and had observed that, in Wynne’s

words, “it’s hard to imagine that you could get more trans-

actions wrong than you got right.” The Bar reads that tes-

timony as an inference by the auditor that some intentional

wrongdoing had occurred, perhaps on Samper’s part, but

Wynne denied in that same interview that the auditor ever

had communicated to FLIR any conclusion about inten-

tional wrongdoing. And, when viewed in context, Wynne’s

testimony about the high percentage of errors related to

26

Fitzhenry testified in October 2000, and the transcript was sent to Kaner

in April 2001. Both Glade and Kaner generally testified that they did not think,

through the entry of the SEC settlements in September 2002, that any conflict

existed between any of the accuseds’ clients and Samper.

Cite as 356 691 (2015) 725

Stringer, not Samper; he specifically identified the auditor’s

assessment as a contributing factor in FLIR’s decision to

ask Stringer to resign.27 That testimony therefore does not

provide a basis for concluding by clear and convincing evi-

dence that a likely conflict of interest existed between FLIR

and Samper during the SEC interview phase.

The Bar also emphasizes Wynne’s trial panel testi-

mony about his ultimate conclusion—while the SEC inves-

tigation was ongoing—that Samper’s actions had amounted

to securities fraud. Specifically, by spring 2001, Wynne had

concluded that Samper had made entries and submitted

financial statements that contained figures manipulated as

a result of fraud; that is, that Samper had filed financial

statements with the SEC based on entries that Samper by his

own admission either knew to be inaccurate or did not know

their accuracy. In Wynne’s view, that conduct amounted to

securities fraud as legally defined, even though Wynne had

not necessarily concluded that Samper himself had manip-

ulated any figures. The record shows that Wynne offered

that testimony carefully, so as not to assert any belief on his

part that Samper had engaged in intentional wrongdoing.28

And, in any event, neither accused learned until several

years later that Wynne had reached that general conclusion.

Nothing about that testimony from Wynne demonstrated

that FLIR had an interest adverse to Samper’s of which

either accused reasonably would or should have been aware

during the interview phase of the SEC investigation. See

former DR 5-105(B) (for purposes of determining lawyer’s

knowledge of existence of conflict of interest, all facts that

lawyer knew or by exercise of reasonable care should have

known are attributed to lawyer).

27

We further note that, the day after Wynne’s SEC interview, the accuseds

had a conversation with Glade in which Ellis generally described Wynne’s testi-

mony, including other testimony that the FLIR board’s concerns about Samper

had involved competence, not any integrity or honesty problem.

28

The Bar also points to Wynne’s trial panel testimony as to his belief that

Samper had “manufactured” the $4.6 million figure reflected by the Swedish

Drop Shipment. Wynne later elaborated on that comment, however, testifying to

his understanding that Samper’s figures had originated with Stringer and that

he had assessed Samper as having engaged in securities fraud based on Samper’s

entry of Stringer’s figures into FLIR’s books, made while in his capacity as CFO,

when he might not have known with certainty whether an underlying transac-

tion had occurred or whether sufficient documentation supported such an entry.

726 In re Ellis / Rosenbaum

As to Muessle, the Bar states that he identified in

an evaluation for FLIR and FLIR’s new independent auditor

questionable transactions that implicated Samper in wrong-

doing, which FLIR—through the accuseds—sent on to the

SEC. Muessle testified at the trial panel hearing about

his evaluation, which had explained to FLIR’s auditor why

certain transactions had been restated due to lack of sup-

porting documentation and also discussed other problem-

atic transaction reviews. None of Muessle’s evaluation doc-

umentation in the record mentioned Samper in a negative

light, and none of Muessle’s panel testimony suggests that

he ever thought that Samper had engaged in intentional

wrongdoing. Notably, also during the SEC interview phase,

Rosenbaum provided similar documentation on Muessle’s

transaction reviews to Glade and Kaner; as noted above,

Glade and Kaner never concluded during the course of the

SEC investigation—based on information that they received

from the accuseds on an ongoing basis—that Samper’s

interests were adverse to FLIR’s. The Muessle testimony

and evaluation documentation did not establish by clear and

convincing evidence that any adverse interest arose between

FLIR and Samper during the SEC interview phase.

As to Chambers, the Bar focuses on her testimony

about document destruction and other questionable repre-

sentations on Samper’s part about shipped inventory, which

the Bar views as having implicated Samper in wrongdo-

ing. The record shows, however, that Chambers was a low-

er-level employee without sufficient understanding of all

the detail surrounding FLIR’s shipping arrangements and

accounting processes, and so her testimony did not demon-

strate adversity with Samper in the manner that the Bar

contends. Indeed, Kaner testified that she and Glade had

discussed the possibility that Chambers’s testimony demon-

strated a conflict, but they agreed that a conflict had not

arisen and that the interests of FLIR and Samper remained

aligned. In that regard, we agree with the accuseds that

Chambers’s testimony illustrated a benefit of the joint repre-

sentation: Because Rosenbaum represented both Chambers

and Samper for purposes of the SEC interview phase, she

was present for Chambers’s interview and then was able

to confer with Glade and Samper, and adequately prepare

Cite as 356 691 (2015) 727

Samper, so as to provide the SEC with explanations about

issues arising from Chambers’s testimony—particularly

concerning circumstances about which Chambers had been

unaware. We disagree with the Bar that Chambers’s testi-

mony showed an adverse interest between FLIR and Samper

during the SEC interview phase.

The Bar next contends that self-protective actions

taken by individual clients during the SEC interview phase

showed that those clients had interests adverse to FLIR’s.

The Bar cites two examples, both of which appear from the

record to have been joint tactical recommendations made

to Samper by Glade, Kaner, and the accuseds: (1) Samper

participating in the SEC interviews instead of asserting

his Fifth Amendment privilege against self-incrimination;

and (2) Samper testifying early in the proceedings, to clar-

ify some SEC factual misunderstandings and to further

the joint strategy of showing that only innocent errors, not

intentional wrongdoing, had occurred.

In the Bar’s view, the lawyers’ Fifth Amendment

waiver advice showed that Samper had individual consid-

erations that were adverse to FLIR’s. The record estab-

lishes, however, that the four lawyers agreed that it was

in Samper’s best interest to cooperate with SEC interview

requests and that none of the lawyers reasonably could have

anticipated, during the SEC interview phase, that a DOJ

investigation was forthcoming. As to the lawyers’ early tes-

timony advice, the Bar asserts that that decision harmed

Samper in the ensuing DOJ investigation because the SEC

viewed him critically before all documentation was in order,

later giving the impression that he had not been honest. The

record does show that, in the end, the SEC determined that

Samper had been disingenuous at best and had been trying

to either mislead the SEC or distract from the full truth of

what had occurred. During the SEC interview phase, how-

ever, Glade and Kaner continued to think that cooperation

and forthcoming testimony was in Samper’s best interests,

and both had concurred in the decision to have Samper tes-

tify early.29 We disagree that those two tactical decisions

29

The Bar cites a letter that Kaner wrote to the accuseds several years later,

noting that Samper’s early testimony—intended to comply with FLIR’s efforts to

cooperate with the SEC—had put him on the spot before the documentation was

728 In re Ellis / Rosenbaum

showed an adversity of interests between Samper and FLIR,

and the Bar points to no other evidence of individual cli-

ents’ self-protective steps that might have showed such an

adversity.30

The Bar also argues that FLIR’s interest in adopt-

ing a remediation strategy grew as the pre-Wells investiga-

tion phase progressed, which was adverse to the individual

clients’ interests in remaining employed and preserving a

sound professional reputation.31 The Bar further asserts

that FLIR positioned itself during the investigation to seek

favorable treatment at the expense of individual clients

Daltry, Samper, and Eagleburger. The record shows, how-

ever, that FLIR’s general strategy during the SEC inter-

view phase remained the same all along—that is, to coop-

erate; to not admit that either FLIR or any of the accuseds’

individual clients had engaged in fraud; and, eventually, to

focus the SEC on FLIR’s remediation improvements since

the 1998 and 1999 accounting errors. Although, again, the

potential for adversity existed, the record does not show that

the clients’ interests were adverse during the SEC interview

phase and therefore does not establish that any current-

client likely conflict of interest existed.

complete and gave the impression that he had not acted honestly, which may have

contributed to his criminal indictment. The question under former DR 5-105(A)(2),

however, is whether the accused lawyer reasonably knew that the clients’ inter-

ests were adverse at the time in question. Kaner’s hindsight observation, follow-

ing several years’ worth of additional developments including a criminal prose-

cution, does not amount to clear and convincing evidence that the accuseds knew

that any actual adversity existed during the SEC interview phase. At that time,

the possibility continued that FLIR’s and Samper’s interests might diverge, but,

as explained above, none of Samper’s four lawyers ever concluded during that

period in time that any adversity in fact had arisen, and nothing in the record

counters that assessment.

30

The Bar cites Am. Bar Ass’n, Section of Bus. Law, The Securities

Enforcement Manual 477 (1997), for the proposition that company officers, direc-

tors, and employees involved in an SEC investigation have an opportunity to

limit individual exposure if they cooperate with the SEC. However, the Bar

cites to no evidence in the record—other than that discussed above—showing

that any of the accuseds’ clients in this case took any self-protective step that

established by clear and convincing evidence that their interests were adverse to

FLIR’s.

31

The Bar again cites The Securities Enforcement Manual at 477: “Corpo-

rations may avoid or lessen liability by taking prompt action to replace wrong-

doers and showing that the wrong was a matter of individual not corporate fault.

These possibilities create considerable room for conflicts to develop.”

Cite as 356 691 (2015) 729

C.  No Current-Client Actual or Likely Conflicts of Interest

During Wells Phase

1.  General Discussion

The trial panel concluded that a single statement in

FLIR’s Wells Submission—that FLIR understood that the

SEC was pursuing fraud claims against one or more people

responsible for its accounting issues—established a current-

client likely conflict of interest between FLIR and Samper,

Fitzhenry, and Eagleburger, all of whom received Wells

Notices, and that the accuseds did not disclose that conflict.

On review, the accuseds challenge that conclusion, arguing

that FLIR’s interests were not adverse to those three indi-

vidual clients during the Wells phase. The Bar, for its part,

contends that various parts of FLIR’s Wells Submission

showed that current-client actual conflicts of interest arose

during the Wells phase between FLIR and the identified cli-

ents, and those actual conflicts could not be waived, even

following full disclosure, under former DR 5-105(F).32

The following facts are important to fully address

the parties’ arguments. The SEC issued Wells Notices to

four of the accuseds’ clients—FLIR, Samper, Fitzhenry,

and Eagleburger—and also to Stringer and Martin (and

others). Upon receipt of Samper’s Wells Notice, Glade and

Kaner transitioned to lead counsel during the Wells phase

and ensuing negotiations, and the accuseds transitioned

to a supporting role. Upon receipt of Fitzhenry’s and, later,

Eagleburger’s Wells Notices,33 Ellis conferred with each of

those clients, told them that they immediately needed to

retain independent counsel, and then offered to serve as

supporting co-counsel as needed—ultimately providing

some support for both clients based on requests from their

individual lawyers. As for FLIR, the accuseds (mostly Ellis),

Wynne, and Fitzhenry worked on FLIR’s Wells Submission,

32

We note that the trial panel specifically found that the identified statement

in FLIR’s Wells Submission amounted to a conflict of interest between FLIR and

several of the accuseds’ individual clients. The Bar clarifies—and we agree—that

the question is not whether that statement itself constituted a conflict, but, rather,

whether that statement provided persuasive evidence that a conflict existed.

33

Eagleburger’s Wells Notice was not received until after FLIR had filed its

Wells Submission.

730 In re Ellis / Rosenbaum

which FLIR filed with the SEC without first sending to the

accuseds’ other clients for review.

FLIR’s Wells Submission focused on FLIR’s remedi-

ation efforts and stated that it had “removed” those “senior

managers who were responsible for the accounting errors

and the management problems, including the President and

CEO, Stringer.” It next referred by position (not by name)

to other former management personnel no longer with the

company, including Daltry and Samper (both identified as

having resigned earlier), and Eagleburger and Martin (both

identified as having been terminated). It continued that,

“[h]aving satisfied itself that it had identified and removed

all those in senior management who were responsible for

the Company’s troubles, the Board immediately turned its

attention to assisting remaining management in rescuing

and then improving the Company.” FLIR’s Wells Submission

later stated, under “Remediation,” that “[t]he individuals

who were responsible for the accounting errors have been

terminated, and the Company is under new executive and

financial management.” In its final, “Offer of Settlement”

section, FLIR’s Wells Submission stated that, “to the extent

wrong-doing may have occurred, we understand that the

SEC is pursuing fraud claims against one or more individu-

als who may have been responsible,” inferentially intended

to refer to Stringer and Martin. Throughout, FLIR’s Wells

Submission described the 1998 and 1999 accounting issues

as “errors” or “problems,” not “fraud,” which carried a criti-

cal distinction in the securities context.

The record shows that, in drafting and filing FLIR’s

Wells Submission, the accuseds and FLIR did not seek to cast

a negative light on either Samper or Eagleburger, and FLIR’s

Wells Submission objectively did not expressly take any par-

ticular position or make any characterization about either of

them, other than noting the former CFO’s (Samper’s) coop-

eration with the SEC investigation. It included one express

favorable reference to Fitzhenry, in an effort to confirm his

positive participation as part of the new management team.

At the time that FLIR prepared its Wells submission, the

accuseds had concluded that only Stringer and Martin had

acted fraudulently. Also at that time, Eagleburger had not

Cite as 356 691 (2015) 731

yet received a Wells Notice. And, although Glade initially

thought that FLIR’s Wells Submission reflected poorly on

Samper, he and Kaner continued to communicate regularly

with the accuseds as Samper’s co-counsel and also continued

to think that FLIR’s and Samper’s interests were aligned

for purposes of the SEC proceeding. During the Wells phase,

the accuseds and the other individual lawyers reasonably—

but, as it turns out, incorrectly—anticipated that no crimi-

nal investigation would occur.

2.  No Current-Client Actual Conflict

The Bar first contends that the statement in FLIR’s

Wells Submission about the SEC pursuing fraud claims

against those responsible for the accounting issues—

particularly when considered with other components of

FLIR’s Wells Submission discussed above—demonstrated

an actual, nonwaivable conflict of interest under former DR

5-105(A)(1) between FLIR and the accuseds’ individual clients

Daltry, Samper, and Eagleburger. See former DR 5-105(F)

(only current-client likely conflicts can be waived by client

consent after full disclosure). The Bar thinks it significant

that, when the SEC sent the individual Wells Notices, the

accuseds learned who the SEC considered to be wrongdoers,

giving weight to the argument that FLIR itself should not

be punished. At that point, the Bar continues, the accuseds’

duty to FLIR to admit misconduct by Daltry, Samper, and

also Eagleburger (who received a Wells Notice later) became

irreconcilable with their duty to refrain from accusing those

three individual clients of wrongdoing. Nonetheless, the

accuseds then prepared and filed FLIR’s Wells Submission,

which—in the Bar’s view—inferentially referred to Daltry,

Samper, and Eagleburger as wrongdoers.34

Former DR 5-105(A)(1) defines an actual conflict for

purposes of former DR 5-105(E) as a scenario in which a

34

The Bar also contends on review that an actual conflict of interest existed

when the accuseds negotiated FLIR’s SEC settlement, which resulted in a judg-

ment that included—without admitting or denying—a finding of fraud by prior

management. However, the Bar’s allegations in the second cause end with the

filing of FLIR’s Wells Submission and do not mention FLIR’s settlement negotia-

tions, and no other allegation refers to FLIR’s settlement negotiations. We there-

fore do not discuss any Bar argument relating to those negotiations or the final

SEC judgment against FLIR.

732 In re Ellis / Rosenbaum

lawyer “has a duty to contend for something on behalf of

one client that the lawyer has a duty to oppose on behalf

of another client.” Similarly to our earlier discussion about

likely conflicts of interest, such conflicting obligations often

are readily apparent from the nature of the representations

and client interests involved. See In re Bristow, 301 Or 194,

204, 721 P2d 437 (1986) (actual conflict of interest when

lawyer represented one client in action to enforce franchise

agreement while simultaneously representing other client

in action seeking to hold same agreement invalid; citing

cases for same proposition). The court also has explained,

however, that the clients’ underlying objective interests at

the time in question determine the nature of any obligation

on the lawyer’s part to contend for or oppose a particular

legal position on each client’s behalf. See Cobb, 345 Or at 133

(lawyer represented both investor partnerships and entity

related to company in which they had invested in complex

bankruptcy proceedings; at time in question, investor part-

nerships not necessarily entity’s creditors, and all parties

shared goal of dismissal; no actual conflict); Cohen, 316 Or

at 662 (whether actual conflict exists depends on clients’

objective interests).

Here, the record does not establish the existence of

conflicting duties relating to the accuseds’ representation

and protection of their respective clients’ objective inter-

ests during the Wells phase. The fact that Wells Notices

had issued and the clients then considered and developed

responses to them did not, standing alone, mean that the

accuseds had a duty to contend for a particular position on

FLIR’s behalf that they had a duty to oppose on behalf of

Daltry, Samper, or Eagleburger. Indeed, the record shows

that FLIR would have been responsible for fraud committed

by its officers, managers, and employees, in the context of

the SEC’s investigation.35

As to FLIR’s particular Wells strategy, the record

shows that FLIR had an objective interest in convincing

the SEC of the sincerity and significance of its remediation

35

As noted earlier, see 356 Or at ___ n 9, the findings of fraud in the SEC’s

ultimate judgment against FLIR—based on various individual personnel

actions—resulted in FLIR losing its safe harbor protections under federal securi-

ties law.

Cite as 356 691 (2015) 733

efforts, including its transition to new management. Nothing

about that interest obligated the accuseds to assert on FLIR’s

behalf a position that they were obligated to oppose in rep-

resenting the interests of Daltry, Samper, or Eagleburger—

such as, as the Bar contends, asserting that one or more of

those clients had engaged in intentional wrongdoing. And,

although FLIR’s new management did not include Daltry,

Samper, or Eagleburger, the accuseds were not obligated on

behalf of those clients to oppose FLIR’s focus on its remedi-

ation strategy. Indeed, expert testimony in the record estab-

lished that a remediation defense, not unusual in an SEC

proceeding of this kind, focuses on the future as opposed

to any action that occurred in the past. And finally, none of

the lawyers involved—including the independent lawyers—

thought that a conflict existed; as to Samper specifically,

Glade continued to think that no conflict existed even after

he had reviewed and considered FLIR’s Wells Submission.

The trial panel correctly determined that no actual conflict

of interest existed between FLIR and the accuseds’ indi-

vidual clients Daltry, Samper, and Eagleburger during the

Wells phase.

3.  No Current-Client Likely Conflict

Next, the accuseds contend that the trial panel erred

in concluding that the statement in FLIR’s Wells Submission

about pursuit of fraud claims against responsible individ-

uals established an adversity of interests, and therefore a

likely conflict, between FLIR and individual clients Samper,

Fitzhenry, and Eagleburger. The accuseds specifically argue

that that statement did not suggest or imply that those indi-

vidual clients had committed fraud or encouraged the SEC

to act against any client; instead, FLIR’s Wells Submission

identified only Stringer and, inferentially, Martin, as indi-

viduals who had been “removed” from employment and

(again, inferentially) were presently the subject of SEC fraud

claims. Otherwise, FLIR framed its response in light of

remediation, which accused no client of earlier wrongdoing.

The accuseds also emphasize that FLIR’s Wells Submission

labeled FLIR’s 1998 and 1999 accounting issues as “errors”

and “problems”—words that objectively and understandably

did not admit, indicate, or imply fraud on the part of anyone

734 In re Ellis / Rosenbaum

at FLIR. The Bar, as noted (and rejected) above, responds

by contending that FLIR’s Wells Submission showed an

actual conflict of interest between FLIR on the one hand,

and Samper and Eagleburger on the other. Here, we con-

sider the Bar’s underlying arguments about an actual con-

flict of interest to determine whether the Bar proved a likely

conflict of interest as to the three clients that the panel iden-

tified (Samper, Fitzhenry, and Eagleburger).

As already explained, a likely conflict of interest

existed if the “objective personal, business or property

interests” of FLIR and the accuseds’ individual clients “[we]

re adverse,” former DR 5-105(A)(2)—that is, if their objec-

tive interests were contrary or in opposition to one another

at the time in question. This court has explained that the

representation of multiple clients embroiled in the same

action often gives rise to likely (and sometimes actual) con-

flicts, due to the clients’ adversity of interests. In the crim-

inal context, for example, such an arrangement typically

results in an actual or likely conflict, due to the potential

interest of one client in obtaining a favorable outcome in

exchange for testifying or offering evidence against another

client. Jeffery, 321 Or at 370-71; see also id. at 372-73 (state-

ments to police by one client that implicated another cli-

ent amounted to actual or likely conflict); O’Neal, 297 Or

at 260-66 (likely conflict when representing criminal code-

fendants, even where lawyer limited representation to

negotiating pleas). Adverse interests of course can arise in

other contexts, as well. See In re Barber, 322 Or 194, 200,

904 P2d 620 (1995) (under earlier version of former DR

5-105, likely conflict when lawyer represented two parties

injured in same motor vehicle accident, where insurance

proceeds insufficient to cover injuries of both). In determin-

ing whether the Bar proved that a likely conflict existed at

the time in question, we must identify, based on evidence

in the record, the objective interests involved. See Cohen,

316 Or at 661-62 (in determining that husband and wife

had adverse interests in husband’s criminal mistreatment

proceeding and wife’s pending juvenile proceeding, court

identified objective personal interests of each at the time in

question, notwithstanding earlier client declarations that

they shared a common goal).

Cite as 356 691 (2015) 735

As noted earlier, the record shows that FLIR’s objec-

tive interest during the Wells phase was to persuade the SEC

that, from a forward-looking perspective based on multiple

changes that had been made, FLIR should not be subject

to any SEC enforcement action. FLIR’s actions in crafting

its Wells Submission advanced that interest; specifically, it

sought to frame the accounting events in a neutral manner

and then to focus the SEC on its remediation efforts—such

as new management, a larger, professional accounting staff,

a new independent auditor, and clean audits following the

years in question. By contrast, FLIR did not have any objec-

tive interest in focusing on past liability or engaging the

SEC in any factual argument about events underlying the

1998 and 1999 accounting issues; the record shows that it

would have been counterproductive during the Wells phase

for FLIR to argue about those events. Additionally, as noted

earlier, FLIR had no interest in seeing any officer, manager,

or employee accused of fraud, for which FLIR ultimately

would have been responsible.

Like FLIR, clients Samper, Fitzhenry, and

Eagleburger each shared an objective interest during the

Wells phase in mitigating against a negative individual out-

come from the SEC proceedings, including an interest in

avoiding ancillary and collateral consequences that might

apply to them as individuals, but not to the company. For

example, in addition to a separate SEC enforcement action,

Samper was potentially subject to disgorgement penalties,

and Fitzhenry was potentially subject to a sanction that

would have prevented him from practicing before the SEC.36

Also, as part of their individual defenses, the clients—like

FLIR—had an interest in convincing the SEC that they had

not engaged in fraud. As the Bar argues (and the accuseds

do not disagree), those three clients also shared a general

interest in not having FLIR accuse them of wrongdoing.

We conclude that the Bar did not prove by clear and

convincing evidence that FLIR’s interests were adverse to

those of Samper, Fitzhenry, or Eagleburger during the Wells

phase. As explained, all the clients shared an interest in

36

In that regard, we note that concerns that might have arisen in the civil

action context—such as joint and several liability, cross-claims, or competing

interests in insurance proceeds—did not apply in the SEC context.

736 In re Ellis / Rosenbaum

mitigating against a negative outcome in the SEC investiga-

tion. The fact that different consequences could flow from neg-

ative outcomes—for example, to FLIR as a company, to Samper

as a former officer, or to Fitzhenry as General Counsel—does

not mean that the respective clients’ interests were neces-

sarily adverse to each other. And, as discussed above, the

record shows that none of the lawyers or individuals involved

anticipated, during the Wells phase, that any DOJ investiga-

tion—which certainly carried at least the potential for future

adverse conflicts of interest—might be forthcoming. See for-

mer DR 5-105(B) (when determining lawyer’s knowledge of

existence of conflict, all facts that lawyer knew or reasonably

should have known are attributed to lawyer).37

As to FLIR’s prospective remediation defense spe-

cifically, expert testimony established that it was a rec-

ognized strategy in SEC investigations of this kind, even

where joint representation had occurred. Although isolated

statements in FLIR’s Wells Submission arguably could be

read to inferentially cast a negative light on Samper or

Eagleburger, other evidence in the record provides contrary

context to those statements, regarding FLIR’s remediation

defense and its objective interest in persuading the SEC to

look forward, not backward. For example, expert testimony

showed that a remediation defense typically involves differ-

ing arguments for the company than for individuals, but that

does not necessarily mean that their interests are adverse.

Indeed, joint representation in SEC proceedings often con-

tinues in the same fashion that it did here—with the com-

pany’s lawyers continuing to represent individual clients in

a supporting role during the Wells phase—because the cli-

ents’ various defenses can be synthesized with each other,

even if they are not identical. That is essentially what trans-

pired here. FLIR had an objective interest in focusing the

SEC on remediation, and FLIR’s Wells Submission therefore

did not engage the SEC about the earlier accounting issues;

instead, it focused on prospective remediation. By contrast,

37

Additionally, unlike the Bar and the trial panel, we read the statement in

FLIR’s Wells Submission about the SEC “pursuing fraud claims against one or

more individuals who may have been responsible” as a factual observation about

actions that the SEC had taken, not as a recommendation on FLIR’s part that the

SEC should pursue a fraud claim against any particular individual.

Cite as 356 691 (2015) 737

the individual clients each defended their own interests,

some by focusing on earlier events as needed.38 The record

does not clearly and convincingly support the Bar’s theory

that FLIR and the individual clients had objective interests

during the Wells phase that were adverse to each other.39

D.  Rosenbaum’s Phone Call to SEC Concerning Swedish

Drop Shipment Not Within Scope of Second Cause

The trial panel concluded that Rosenbaum’s October

3, 2002, phone call to the SEC to inquire about the Swedish

Drop Shipment entry demonstrated the existence of either

an actual or likely conflict under former DR 5-105(E)

between FLIR and Wynne on the one hand, and Samper

on the other, that Rosenbaum did not disclose. As noted,

the panel found that to be a violation under the sixth cause,

which had alleged current-client actual or likely conflicts

between Wynne and Samper.40 The Bar asserts on review

that Rosenbaum’s phone call to the SEC fell under its second

cause, which alleged similar conflicts between FLIR and the

accuseds’ individual clients, including Samper, during the

SEC investigation through the Wells phase. The accuseds

disagree that Rosenbaum’s phone call fell within the scope

of any allegation and contend that the panel erred in deter-

mining that any violation had occurred. As explained below,

we agree with the accuseds.

38

Fitzhenry’s Wells Submissions engaged the SEC about past events relat-

ing to his signature on the 1999 management representation letter. Samper,

for his part, opted not to file a Wells Submission at all, and Eagleburger’s

Wells Submission does not appear to be in the record. Nothing in FLIR’s Wells

Submission was inconsistent with the individual clients’ objective interests in

convincing the SEC that they each had not engaged in any intentional wrong-

doing or in mitigating against negative outcomes.

39

The Bar also argues that FLIR’s Wells Submission contained statements

that showed adverse interests between FLIR and Daltry. Daltry did not receive a

Wells Notice, however, and so the accuseds’ representation of him effectively had

ended when he completed his SEC testimony. The Bar did not prove any current-

client conflict of interest between FLIR and Daltry during the Wells phase.

40

The Bar’s sixth cause alleged that Wynne’s SEC testimony had implicated

Daltry and Samper as responsible for FLIR’s 1998 and 1999 financial misstate-

ments and accounting errors; however, Rosenbaum’s phone call did not pertain

to Wynne’s testimony. The trial panel acknowledged that the Bar did not specif-

ically allege wrongdoing on Rosenbaum’s part regarding the information con-

veyed to the SEC in her phone call but invoked ORCP 23 B in determining that a

violation had occurred. See ORCP 23 B (when issues not raised by pleadings are

tried by parties’ express or implied consent, those issues shall be treated as if

they had been raised in the pleadings).

738 In re Ellis / Rosenbaum

An accused lawyer must be put on notice “of the

conduct constituting the violation,” as well as the rule viola-

tion at issue. In re Magar, 296 Or 799, 806 n 3, 681 P2d 93

(1984). In that regard, BR 4.1(c) provides, in part:

“A formal complaint shall * * * set forth succinctly the

acts or omissions of the accused, including the specific

statutes or disciplinary rules violated, so as to enable the

accused to know the nature of the charge or charges against

the accused. “

That rule “does not obligate the Bar to plead any fact regard-

ing a charge * * * beyond those that the * * * [former] dis-

ciplinary rules identify.” In re Kluge, 332 Or 251, 262, 27

P3d 102 (2001). The Bar must, however, sufficiently allege

facts in connection with the charged allegation. Compare

In re Albrecht, 333 Or 520, 544, 544 n 20, 42 P3d 887 (2002)

(rejecting argument that complaint insufficiently alleged

conversion for lawyer’s own use because one aspect of alle-

gation described and alleged that type of conversion), with

In re Spencer, 355 Or 679, 689, 30 P3d 538 (2014) (court did

not address theory of “personal interest” not alleged as con-

flict of interest violation), and Magar, 296 Or at 803, 806 n 3

(Disciplinary Board erred in basing rule violation on cer-

tain aspects of problematic client representation not alleged

or described in complaint), and In re Lasswell, 296 Or 121,

128, 673 P2d 855 (1983) (Disciplinary Board erred in basing

rule violation concerning prosecutor’s extrajudicial state-

ments on particular events not charged in complaint; only

factual event described in complaint provided basis to ana-

lyze alleged rule violation). See also State ex rel Currin v.

Comm’n on Judicial Fitness, 311 Or 530, 533, 815 P2d 212

(1991) (adequate notice is necessary component of due pro-

cess); In re Chambers, 292 Or 670, 676, 642 P2d 286 (1982)

(trial panel erred in reaching guilt determination as to mis-

representation; although proof supported panel’s determina-

tion, complaint contained no allegation putting lawyer on

notice that being charged with misrepresentation).

As discussed earlier, in this case, the Bar’s second

cause alleged conflicts of interest among the accuseds’ cur-

rent clients during the SEC investigation. That cause con-

tained one allegation that—in isolation—arguably could be

Cite as 356 691 (2015) 739

read to encompass Rosenbaum’s October 3, 2002, phone call

to the SEC:

“Represented by [Rosenbaum] and Ellis, FLIR agreed

to cooperate fully with the SEC in its investigation and

revealed to the SEC information that implicated *  * *

Samper * * * as responsible for the misstatement of FLIR’s

1998 and 1999 financial status and for FLIR’s accounting,

record-keeping, and financial reporting practices in 1998

and 1999.”

(Emphasis added.) When read in its entirety, however, the

unmistakable purpose of the second cause was to allege mis-

conduct—including FLIR’s alleged revealing to the SEC of

information unfavorable to Samper and others—occurring

within a particular time frame that began with the spe-

cial committee’s determinations by summer 2000, contin-

ued through the SEC investigation and interviews in 2000

and 2001, and ended in March 2002 with FLIR’s filing of

its Wells Submission. Rosenbaum’s phone call to the SEC

occurred on October 3, 2002, after the SEC’s judgments

against FLIR and Samper had been entered, and well after

the time frame referred to in the Bar’s second cause. That

cause therefore did not sufficiently allege facts to permit

Rosenbaum “to know the nature of the charge * * * against

[her],” BR 4.1(c), respecting any implication flowing from

her phone call to the SEC. The trial panel erred in conclud-

ing otherwise.41

V.  TENTH CAUSE (ELLIS ONLY)—FORMER

DR 5-105(C), FORMER-CLIENT LIKELY CONFLICT

DURING FITZHENRY BAR MATTER

A.  Trial Panel Decision and Parties’ Contentions on Review

The tenth cause against Ellis alleged that Ellis’s rep-

resentation of Fitzhenry in his Bar matter after the Daltry

41

As noted earlier, 356 Or at ___ n 40, the trial panel invoked ORCP 23 B

in determining that Rosenbaum’s October 3, 2002, phone call to the SEC showed

that a likely conflict of interest existed between FLIR and Wynne, and Samper.

This court never has concluded that ORCP 23 B applies in Bar proceedings, and

nothing in the Bar Rules of Procedure suggests that application of ORCP 23 B is

permitted or appropriate. By contrast, as explained above, the Bar Rules require

that the complaint notify the accused lawyer of the alleged misconduct at issue.

740 In re Ellis / Rosenbaum

and Samper SEC representations had ended—including

continuing to assert on Fitzhenry’s behalf that he had relied

on Daltry’s and Samper’s assurances when signing the 1999

management representation letter that also had been at

issue in the SEC proceeding—amounted to a former-client

conflict of interest under former DR 5-105(C) that Ellis had

been obligated to disclose to both Daltry and Samper, so as

to obtain their consent to his representation of Fitzhenry.

The trial panel concluded that the Bar did not prove that

Ellis’s representation of Fitzhenry was or was likely to be

adverse to Daltry’s or Samper’s interests in the DOJ inves-

tigation, and, therefore, no conflict existed. The Bar chal-

lenges that conclusion on review. Ellis first responds by

emphasizing that the Bar’s allegation focuses on Fitzhenry’s

trial panel hearing and review in this court, which occurred

after the Rules of Professional Conduct replaced the for-

mer Code of Professional Responsibility. Fitzhenry, 343 Or

at 88 n 1. Because the Bar charged only violations under

the former Code of Professional Responsibility, Ellis argues

that we should dismiss the allegations under this cause.

Alternatively, Ellis argues that the Bar failed to prove that

any former-client likely conflict of interest existed under for-

mer DR 5-105(C) because it failed to prove that the SEC and

Bar matters were significantly related or that the interests

of the various clients were adverse.42

B.  Adoption of Oregon Rules of Professional Conduct in

2005 Narrowed Scope of Misconduct Alleged Under

Tenth Cause

We begin with Ellis’s argument about the scope

of the Bar’s allegations under the former rules. We agree

that former DR 5-105(C) did not apply to misconduct alleged

to have occurred on or after January 1, 2005, the effective

date for the Oregon Rules of Professional Conduct. See In re

42

The Bar’s complaint had alleged an “actual or likely” former-client conflict

under this cause. The trial panel determined that the Bar did not prove that

Ellis’s representation of Fitzhenry in the Bar matter “was or was likely to be

adverse to the objective interests of Samper and Daltry” in the DOJ investiga-

tion. On review, the Bar asserts the existence of a “conflict.” Because the Bar’s

argument is limited to the question of adversity and does not mention any obli-

gation on Ellis’s part to contend for competing client positions, we analyze only

whether a likely conflict of interest existed.

Cite as 356 691 (2015) 741

Hartfield, 349 Or 108, 115 n 4, 239 P3d 992 (2010) (although

accused lawyer began representing client in 2003, before

effective date of Rules of Professional Conduct, misconduct

at issue occurred after that date, so new rules applied);

Hostetter, 348 Or at 576 n 1 (alleged misconduct occurred

both before and after January 1, 2005; former disciplinary

rules applied to conduct alleged before the date, and new

rules applied to conduct alleged on or after that date). We

disagree, however, that the entirety of the tenth cause

alleged misconduct occurring only after the effective date of

the new rules.

The ninth cause against Ellis—which is not at issue

here—alleged current-client conflicts between Fitzhenry, on

the one hand, and Daltry and Samper on the other, arising

from Ellis’s representation of Fitzhenry in his Bar matter

from July 2002 up to the issuance of this court’s decision in

Fitzhenry, 343 Or 86, in 2007. That cause included an alle-

gation that, as part of Fitzhenry’s defense, Ellis knowingly

made representations on Fitzhenry’s behalf that conflicted

with the interests of former clients Daltry and Samper.

The tenth cause realleged and incorporated by reference

those same facts and then further alleged that (1) after late

September 2002, the accuseds’ representation of Daltry and

Samper ended, but Ellis continued to represent Fitzhenry in

the Bar matter; (2) from the formal prehearing phase through

the appellate review proceedings—which all occurred after

January 1, 2005—Ellis knowingly made representations on

Fitzhenry’s behalf that conflicted his former clients’ inter-

ests; and (3) throughout Ellis’s continuing representation of

Fitzhenry once Daltry and Samper became former clients, a

former-client conflict existed. Collectively, those allegations

in the tenth cause asserted continuing misconduct through-

out the entirety of the Fitzhenry Bar representation once

Daltry and Samper became former clients; the allegations

were not limited to Ellis’s work relating to the trial panel

hearing and appellate review that occurred after January 1,

2005. We therefore must determine whether the Bar proved

by clear and convincing evidence that Ellis’s representa-

tion of Fitzhenry in the Bar matter before that date posed

a likely conflict of interest with former clients Daltry and

Samper under former DR 5-105(C).

742 In re Ellis / Rosenbaum

C.  No Former-Client Likely Conflict of Interest During

Fitzhenry Bar Matter

The central facts predating January 1, 2005, are as

follows. In late November 2002, at Fitzhenry’s request, Ellis

wrote to the Bar, sending Fitzhenry’s SEC settlement order

and reiterating Fitzhenry’s position that he had relied on

FLIR’s CEO (Stringer) and CFO (Samper) in signing the

1999 management representation letter. Ellis wrote the Bar

again in December 2002, responding to a Bar inquiry and

sending additional materials, including Fitzhenry’s Wells

Submission and SEC interview transcripts; that letter reit-

erated that Fitzhenry had intended to confirm only the legal

representations in the 1999 management representation let-

ter and inferred that he had relied on Samper and others as

to the accounting representations. That second letter to the

Bar also stated that, before signing the 1999 management

representation letter, Fitzhenry specifically had confirmed

with Samper that the information in the letter was accu-

rate. At the time that Ellis sent those letters, the SEC set-

tlements had been finalized, and Ellis had no knowledge of

any pending DOJ investigation.

Former DR 5-105(C) prohibited representation of a

new client “in the same or a significantly related matter”

when the interests of the new client and a former client

“are in actual or likely conflict,” unless consent is obtained

after full disclosure. As to the first requirement, a matter

is “significantly related” if representation of the new cli-

ent “would, or would likely, inflict injury or damage upon

the former client in connection with any proceeding, claim,

controversy, * * * investigation, charge, accusation, * * * or

other particular matter in which the lawyer previously rep-

resented the former client[.]” Former DR 5-105(C)(1).43 As

to the second requirement, as discussed earlier, former DR

5-105(A)(2) defined a likely conflict as a situation in which

43

The quoted definition refers to a “matter-specific” conflict. Hostetter, 348

Or at 586. Former DR 5-105(C)(2) alternatively defined a “significantly related

matter” in terms of being “information-specific,” that is, that the former client

representation provided the lawyer with confidences or secrets, the use of which

“would, or would likely, inflict injury or damage upon the former client in the

course of the subsequent matter.” See Hostetter, 348 Or at 586 (so identifying that

type of conflict). Here, the Bar argues only that a matter-specific conflict existed.

Cite as 356 691 (2015) 743

the current and former clients’ objective personal, business,

or property interests “are adverse.”44 Here, the Bar asserts

that it satisfied the “same or significantly related matter”

requirement because the Fitzhenry Bar matter arose out of

the same facts and circumstances as those at issue in the

SEC proceeding, regarding the 1999 management represen-

tation letter. Ellis disagrees that the Bar satisfied either the

“same or significantly related matter” requirement or the

separate “adversity” requirement.

We agree with Ellis that the Bar did not prove by

clear and convincing evidence that the “significantly related

matter” requirement of former DR 5-105(C)(1) was satisfied

and, therefore, did not prove that the former-client conflicts

prohibition set out in former DR 5-105(C) applied to Ellis’s

representation of Fitzhenry in the Bar matter. On that

point, the question is not whether Fitzhenry’s Bar matter

involved many of the same facts as the SEC investigation;

it indisputably did. Rather, the question is whether Ellis’s

representation of Fitzhenry in the Bar matter would or

would likely have inflicted injury or damage on Daltry’s or

Samper’s interests in connection with the SEC investigation.

See Hostetter, 348 Or at 588 (“significantly related” require-

ment focuses on injury or damage to former client’s interests

in connection with earlier representation, not injury to for-

mer client in abstract sense).

Three factors prompt us to conclude that no such

likelihood existed here. First, at the time when Ellis wrote

his letters to the Bar on Fitzhenry’s behalf, the SEC inves-

tigation had ended, and Samper’s settlement and the SEC’s

judgment against him—which had incorporated Samper’s

execution of a Consent to Entry of Judgment that included

SEC findings of fraud—had been entered; Daltry, mean-

while, had no need to settle with the SEC, because he had

not been the subject of a civil enforcement action. Nothing

in the record supports a determination that Ellis’s repre-

sentation of Fitzhenry in the Bar matter—which concerned

44

We note that former DR 5-105(C) particularly frames the former-client con-

flict inquiry in terms of whether “the interests of the current and former clients

are in actual or likely conflict” (emphasis added), whereas former DR 5-105(A)(2)

served to define a “likely conflict of interest” in terms of a scenario in which the

objective interests of the clients “are adverse.”

744 In re Ellis / Rosenbaum

solely a professional licensing consequence for Fitzhenry,

relating to his conduct as FLIR’s General Counsel, and

had no implications for either Samper or Daltry—would or

would likely have inflicted injury or damage on those for-

mer clients in connection with an SEC investigation that

had ended. Second, Ellis’s letters to the Bar asserted a gen-

eral position on Fitzhenry’s behalf that was consistent with

Samper’s own SEC testimony, in that Samper had acknowl-

edged to the SEC that he as CFO had been responsible for

FLIR’s accounting; that position therefore was not likely to

inflict on Samper any injury or damage in connection with

the SEC proceeding in any event. And third, Kaner testified

that it was customary and expected for General Counsel

such as Fitzhenry to rely on the representations of others—

including the CFO—in signing management representation

letters and that Kaner never had concluded that Ellis’s rep-

resentation of Fitzhenry in the Bar matter had inflicted any

injury on Samper’s interests. No countering evidence in the

record persuades us that Ellis’s representation of Fitzhenry

in his Bar matter would or would likely have inflicted injury

or damage on either Samper’s or Daltry’s interests in con-

nection with the SEC investigation. It follows that, because

Fitzhenry’s Bar matter did not involve “the same or signifi-

cantly related matter” as defined in former DR 5-105(C)(1),

the trial panel correctly determined that no former-client

likely conflict of interest existed under former DR 5-105(C).

VI.  TENTH AND TWELFTH CAUSES—FORMER

DR 5-105(C) AND FORMER DR 1-102(A)(3),

FORMER-CLIENT LIKELY CONFLICTS AND

MISREPRESENTATION BY OMISSION

DURING DOJ REPRESENTATION

A.  Former-Client Likely Conflicts of Interest

1.  Additional Facts

The Bar’s tenth (Rosenbaum) and twelfth (Ellis)

causes alleged conflicts between FLIR on the one hand, and

Daltry and Samper on the other, during the DOJ investiga-

tion. To more fully understand the parties’ arguments and

the trial panel’s decision under those causes, we first provide

a more detailed summary of the underlying facts.

Cite as 356 691 (2015) 745

Shortly after learning about the DOJ investigation,

the accuseds met with Assistant United States Attorney

Garten on January 30, 2003. Garten told the accuseds that

he did not intend to target FLIR; he also gave them a DOJ

memorandum that, among other things, noted that com-

pany cooperation with the DOJ was one of many factors for

the DOJ to consider in deciding whether to seek corporate

fraud charges. The accuseds had told Glade, Kaner, and

Neil about the meeting beforehand; the day after the meet-

ing, the accuseds relayed the meeting discussion to Kaner,

and Rosenbaum faxed the DOJ memorandum to Kaner. The

accuseds attempted to contact Daltry but were unable to

reach him until late February.

The DOJ began requesting FLIR documents imme-

diately. On January 31, 2003, at FLIR’s direction, Stoel Rives

sent to the FBI redacted documentation relating to the 2000

FLIR special committee investigation, which previously had

been provided to the SEC. Stoel Rives sent a second group

of related documents two weeks later that contained the

redacted material, which—consistently with Wynne’s testi-

mony in the SEC investigation—had characterized FLIR’s

accounting errors as involving some competence issues on

Samper’s part, but not fraud.

On February 4, 2003, Garten and Rosenbaum met

by phone. Garten identified Stringer, Samper, Eagleburger,

and Martin as potential criminal defendants. Rosenbaum

relayed that conversation to Glade and Kaner. The follow-

ing week, in a meeting involving Garten, Ellis, Wynne,

and Lewis, Lewis told Garten that FLIR would cooperate

with the criminal investigation. In addition to FLIR’s coop-

eration, however, Garten wanted the accuseds to help him

develop evidence against individual potential defendants.

Afterwards, Ellis told Wynne and Lewis that Stoel Rives

ethically could not cooperate in the manner that Garten had

requested.

On February 14, 2003, Garten wrote to the accuseds,

requesting that FLIR provide its annual reports, certain

SEC filings, bank documents, and compensation history for

certain individuals, and also requesting that FLIR coordi-

nate DOJ interviews of current and former FLIR personnel.

746 In re Ellis / Rosenbaum

Garten’s letter also stated, consistently with the DOJ memo-

randum, that the DOJ’s “assessment of the extent of [FLIR’s]

cooperation will be a function, in part, of how proactive [the

accuseds] are in assisting us with our proof against the for-

mer employees identified in the SEC complaint.”45 That part

of the letter distressed both accuseds, because they under-

stood it to expressly request their personal assistance in

developing a criminal case against former clients. They theo-

rized that Garten’s request ultimately might harm Garten’s

position because, if such a course were pursued, the federal

prosecution could be tainted due to attorney-client privilege

and fiduciary obligation violations. Rosenbaum wrote to

Garten, stating that the accuseds’ earlier client represen-

tations limited their potential actions in the DOJ investi-

gation. The accuseds did not send a copy of either Garten’s

letter or Rosenbaum’s response to Daltry, Samper, Glade, or

Kaner, because they did not intend to assist in the manner

requested, although they did send Garten’s letter to FLIR

and began collecting the requested documentation.

The accuseds met with Garten on February 19,

2003. Garten now acknowledged that the accuseds’ earlier

representations limited their ability to cooperate. Garten

also stated that he might not pursue a case against Daltry

or Fitzhenry if they cooperated, but the same was not true

for Samper. He also stated that Stringer, Martin, Samper,

Fitzhenry, and Eagleburger all would need lawyers, although

45

Garten’s February 14, 2003, letter further stated that, “[i]n this case,

[FLIR] seeks immunity from prosecution.” At the trial panel hearing, however,

the accuseds introduced an April 2011 declaration from Garten clarifying that

that statement was meant to express Garten’s understanding from Wynne that

FLIR had been willing at the outset to cooperate with the criminal investigation.

Garten’s declaration also stated that, to the best of his recollection, the issue of

FLIR seeking immunity never arose and was not discussed either formally or

informally.

We note that, generally speaking, an immunity or nonprosecution agree-

ment involves a promise that the defendant will be immune from prosecution

“in exchange for providing information or otherwise assisting the government.”

Nancy Hollander, Barbara E. Bergman, and Melissa Stephenson, 1 Wharton’s

Criminal Procedure § 1:8 n 1 (14th ed 2010). Such an arrangement is not the

same as a decision on the prosecution’s part not to prosecute a particular poten-

tial defendant; instead, the former requires a meeting of the minds between the

parties. Cf. United States v. Wilson, 392 F3d 1055, 1059-60 (9th Cir 2004) (con-

tract principles apply to claimed immunity agreements, including requirement

that prosecution objectively offered or promised immunity in exchange for some

consideration).

Cite as 356 691 (2015) 747

he did not yet know about Daltry. In discussing what FLIR

could tell its customers, Garten stated that they could be told

that the DOJ was focusing on individuals involved in the 1998

and 1999 accounting issues, and that FLIR had been assured

that—provided that it cooperated—it would not be subject to

criminal prosecution. Neither accused understood that state-

ment to mean that FLIR effectively had promised cooper-

ation in exchange for immunity from prosecution; instead,

they understood it to be a direction from Garten about

what customers could be told.46 Garten sent the accuseds

a confirming e-mail later that day, essentially stating that

he was abandoning his request for their personal coopera-

tion because upcoming witness interviews might implicate

their former clients Daltry, Samper, and Eagleburger. His

e-mail also requested the accuseds’ assistance in schedul-

ing witness interviews and reiterated his earlier document

production request. Thereafter, the accuseds had no direct

contact with Garten or any involvement in the criminal case

other than document production and witness scheduling.

Rosenbaum told Glade about their meeting with Garten that

same day. Also on that date, Stoel Rives sent a third group

of documents to the DOJ, consisting of pleadings from the

public record in the class action litigation.

The next day, Rosenbaum wrote to Glade, con-

firming that FLIR was not a DOJ target and that Samper

and others, including Daltry, Fitzhenry, and Eagleburger,

might need criminal lawyers. The letter also stated that the

accuseds expected to continue to assist FLIR with document

production and to make witnesses available for interviews.

Rosenbaum sent a similar letter to Eagleburger’s lawyer,

Neil, the next day. The record contains no indication that

Glade, Kaner, or Neil objected to the accuseds’ ongoing doc-

ument production and assistance with witness scheduling.

The following day, Stoel Rives provided Muessle’s

evaluation documentation to the DOJ (previously provided

to the SEC), as well as hundreds of other documents, which

appear to have consisted entirely of public FLIR securities

filings. And, a few days later, Rosenbaum sent Garten the

46

As noted above, Garten’s April 2011 declaration similarly confirmed that

Garten had no understanding in 2003 that the DOJ had discussed any formal or

informal immunity arrangement for FLIR.

748 In re Ellis / Rosenbaum

requested compensation data for Daltry and Fitzhenry,

obtained from certain public FLIR filings. At some point,

after coordinating with Rosenbaum, Muessle also sent

Garten the requested compensation data for Samper, which

Muessle had separately compiled. It appears from the record

that, although the compensation data for certain directors

and officers other than Samper had been publicly avail-

able, none of the compensation information transmitted to

Garten previously had been produced to the SEC by FLIR.

The record also shows, however, that Glade and Kaner pre-

viously had submitted Samper’s compensation information

to the SEC in response to a subpoena directed to Samper.

Meanwhile, Rosenbaum had been trying for sev-

eral weeks to reach Daltry. Rosenbaum and Daltry spoke

on February 24, 2003, and she recommended that he retain

criminal defense counsel. Daltry immediately retained

Myers, and Rosenbaum then told Myers that Garten was

requesting FLIR documents from the dates pertaining to

the SEC investigation, that some documents were beyond

the scope of the SEC investigation,47 that Garten did not

intend to charge FLIR, and that Garten was inclined to

give Daltry immunity if he cooperated. The next day, Ellis

reiterated to Myers that Garten had asked FLIR to produce

documents, and Myers understood that the documents were

being produced accordingly. Myers did not object to the doc-

ument production.

In late February 2003, Wynne met separately with

Garten, in part to reiterate FLIR’s intent to cooperate.

Afterwards, Wynne proposed to the accuseds that FLIR

retain separate counsel as to the DOJ investigation but that

the accuseds continue to serve as FLIR’s document depos-

itory and to schedule witnesses. In proposing that limited

representation, which Garten had approved, Wynne rea-

soned that the accuseds were the most familiar with all the

pertinent documentation and witness contact information,

and that FLIR could leverage Stoel Rives’s extensive prior

cataloging of FLIR’s documents—as well as its FLIR docu-

ment database—relating to the SEC investigation, thereby

47

Myers testified that, although he could not specifically recall, Rosenbaum

also may have told him that requested documents already had been provided to

the DOJ.

Cite as 356 691 (2015) 749

significantly reducing the cost to FLIR and ensuring a more

timely and efficient response to the DOJ.

The accuseds asked a partner and in-house ethics

expert whether Wynne’s request for limited representation

required consent from their former clients. The three deter-

mined that consent was unnecessary because the arrange-

ment did not involve any conflict of interest that must be

disclosed, but the partner nonetheless suggested that the

accuseds seek consent. Rosenbaum drafted a disclosure and

consent letter, incorporating some input from the partner;

Ellis also reviewed and approved the letter.

Rosenbaum sent the disclosure letter, dated March 3,

2003, to FLIR and to Daltry, Samper, and Eagleburger, in

care of their individual counsel and also Samper’s separately

retained criminal defense counsel. The letter explained:

• FLIR had been told that it was not the DOJ’s

focus and did not expect to be a defendant,

and it had waived its attorney-client privilege

with Stoel Rives for an identified time period;

• Stoel Rives had been asked to advise FLIR,

which was cooperating with the DOJ investiga-

tion, and to assist FLIR in producing documents

and arranging for witnesses to be interviewed;

• The criminal investigation related to the accuseds’

earlier representations of Daltry, Samper, and

Eagleburger, and had potentially adverse conse-

quences to them;

• The accuseds had informed FLIR and the DOJ

that Stoel Rives could cooperate only to the

extent consistent with obligations arising from

their past representations;

• The accuseds had met with an Assistant United

States Attorney but did not intend to have fur-

ther contact, other than facilitating document

production and interview scheduling;

• The accuseds would not voluntarily disclose cli-

ent confidences or affirmatively assist the DOJ in

developing its case;

750 In re Ellis / Rosenbaum

• Stoel Rives would not voluntarily produce infor-

mation or materials arguably subject to claims of

confidentiality, and Stoel Rives would inform the

recipient’s counsel of any DOJ request for such

materials so that counsel could object if desired;

• In deciding whether to consent, the recipients

should consider how the accuseds’ representation

of FLIR respecting the DOJ investigation would

affect them;

• In the accuseds’ assessment, the risk to the recip-

ients from their limited representation of FLIR

was “very small”; and

• Each recipient each should “review these matters

carefully and for yourself” and seek advice from

independent counsel to assist in determining

whether to consent to the limited representation.

Daltry consented after consulting with Myers,

conditioned on Myers’s understanding that the accuseds

would only produce documents and arrange interviews.48

Eagleburger also consented, and Samper consented after

consulting counsel, although six weeks elapsed between the

date of Rosenbaum’s letter and receipt of Samper’s returned

letter, signed by Samper and confirmed by Glade. In confirm-

ing Samper’s consent, Glade further confirmed his under-

standing that Stoel Rives already was producing documents

to the DOJ. In the meantime, the accuseds arranged for fur-

ther witness interviews and produced more documents. For

its part, FLIR retained other counsel to represent it in other

aspects of the DOJ investigation—specifically, FLIR’s ongo-

ing cooperation therewith.

2.  Trial Panel Decision and Parties’ Contentions

In the ninth (Rosenbaum) and eleventh (Ellis) causes,

the complaints alleged violations of former DR 5-105(E)

48

Myers expressly had conditioned Daltry’s consent because he wanted to

confirm that the representation would be narrow, limited to document produc-

tion and witness scheduling only. In that regard, the Bar raises issues on review

about the note in Rosenbaum’ s letter that the accuseds would be “advising”

FLIR. On review of the record as a whole, however, we find that the accuseds’

limited representation of FLIR during the DOJ investigation was intended to—

and did—extend to document production and witness scheduling only.

Cite as 356 691 (2015) 751

(current-client conflicts), arising from the accuseds’ limited

representation of FLIR during the DOJ investigation. The

complaints alternatively alleged, in the tenth (Rosenbaum)

and twelfth (Ellis) causes, that the same conduct violated

former DR 5-105(C) (former-client conflicts). Specifically, the

complaints alleged that FLIR’s interests at that time con-

flicted with the interests of current or former clients Daltry

and Samper, and that Rosenbaum’s March 3, 2003, letter

insufficiently disclosed the nature of those conflicting inter-

ests in seeking consent to the limited representation.49

The trial panel addressed the identified conflict alle-

gations primarily under former DR 5-105(E) (current clients),

as set out in the ninth and eleventh causes. The panel did

not determine whether “actual,” as opposed to “likely,” con-

flicts existed and instead identified the question as whether

“an actual or likely conflict” existed that required full dis-

closure under former DR 10-101(B). The panel ultimately

determined that the accuseds had not made full disclosure

to Daltry and Samper in Rosenbaum’s March 3, 2003, letter

so as to obtain those former clients’ informed consent to the

accuseds’ representation of FLIR in the DOJ investigation.

The panel expressly identified certain information that—in

its view—the accuseds should have disclosed; we discuss

that determination in greater detail later in this opinion. In

the panel’s view, the accuseds’ failure to disclose the identi-

fied information violated former DR 5-105(E) (current-client

likely conflicts, insufficient disclosure). The panel similarly

and briefly determined that the Bar also had proved the

alternatively alleged tenth and twelfth causes under former

DR 5-105(C) (former-client conflicts).

On review, the accuseds first argue that the trial

panel erroneously concluded that they should have dis-

closed certain information that the Bar did not identify in

its complaints. Otherwise, the accuseds argue that—given

the limited nature of their representation of FLIR during

the DOJ investigation—no conflict of interest existed that

required any disclosure and, alternatively, even if a conflict

49

All those same causes further alleged that Rosenbaum’s letter violated for-

mer DR 1-102(A)(3) (misrepresentation by omission), which we briefly discuss in

the next section of the opinion.

752 In re Ellis / Rosenbaum

did exist, their disclosure in Rosenbaum’s March 3, 2003,

letter was sufficient. For its part, the Bar agrees with the

panel about the insufficient disclosure; it also more fully

argues why the accuseds’ limited representation of FLIR

triggered the former-client likely conflict prohibition in for-

mer DR 5-105(C) as to Daltry and Samper, as alleged in the

tenth and twelfth causes. (The Bar raises no current-client

conflict allegations on review.)

3. Assessment of Former-Client Likely Conflict

Arising From Limited Representation During DOJ

Investigation

We begin with the threshold question whether for-

mer DR 5-105(C) applied to the accuseds’ limited represen-

tation of FLIR in the DOJ investigation, so as to trigger the

“full disclosure” and consent requirements of former DR

5-105(D) and former DR 10-101(B).50 As explained earlier,

among other things, former DR 5-105(C) prohibits a lawyer

who previously represented a former client from represent-

ing a new client when (1) the new representation involves

a “significantly related matter;” and (2) the current and

former clients’ interests are in likely conflict. Here, the

accuseds do not dispute that their limited representation of

FLIR in the DOJ investigation likely satisfied the “signifi-

cantly related matter” requirement; indeed, their March 3,

2003, letter acknowledged as much.51 Instead, they argue

that the Bar did not satisfy the second requirement—that

is, the Bar did not show that the interests of FLIR and for-

mer clients Daltry and Samper were in likely conflict at the

outset of the limited representation. As to that question, the

Bar was required to prove that the objective personal, busi-

ness, or property interests of FLIR, on the one hand, and

Daltry and Samper on the other, were adverse at the time in

question. Former DR 5-105(A)(2).

50

As the accuseds note on review, the trial panel did not make any express

finding about the existence of a prohibited former-client conflict under former DR

5-105(C). Instead, the panel focused on the accuseds’ March 3, 2003, disclosure

letter and determined that the accuseds had violated former DR 5-105(C) because

the consent that they obtained under former DR 5-105(D), which permitted the

representation, was invalid due to lack of full disclosure.

51

We accept the accuseds’ concession and do not separately analyze whether

the Bar satisfied the “significantly related matter” requirement under former DR

5-105(C).

Cite as 356 691 (2015) 753

In the context of assessing whether a former-client

likely conflict exists under former DR 5-105(C), this court

has set out the following analysis. First, a lawyer faced with

a potential conflict must assess “the former client’s interests

that pertain to the matter in which the lawyer previously rep-

resented the former client.” Hostetter, 348 Or at 584 (empha-

sis added). After identifying the former clients’ interests

as described, the lawyer must determine whether—at the

time of seeking to undertake the new representation—the

former client’s interests “are adverse to the current client

during the subsequent representation.” Id. at 594. That is,

the question is not whether the former client has a current,

independent interest that is adverse to the current client’s

interest in the new representation; instead, the question is

whether the former client’s interest in relation to the earlier

representation is adverse to the current client’s interest in

the new representation.

This court’s case law illustrates application of

that framework. For example, in Hostetter, 348 Or 574, the

accused lawyer had drafted loan documents for a former cli-

ent. The former client later died, and the lawyer then rep-

resented the lender in a claim against the former client’s

estate. Id. at 577. The central question as to adversity was

whether the former client’s “interest” had survived her

death, so as to establish a likely conflict under former DR

5-105(C). Id. at 581-82. After determining that the former

client’s interest did survive, the court identified her interest

in the earlier representation as being one of a debtor, with

an interest in minimizing her legal debt to the extent legally

possible and reasonable. By contrast, the lender’s interest in

the new representation was to collect as much as possible

from the estate. Id. at 593. By their nature, those interests

were “different” and “adverse,” and therefore amounted to a

likely conflict of interest. Id.

Similarly, in In re Brandsness, 299 Or 420, 702 P2d

1098 (1985), the lawyer previously had represented a hus-

band and wife in a business venture and also had drafted

their wills. After both the venture and the marriage soured,

the wife rewrote her will with the assistance of a different

lawyer and also hired her own business lawyer. The husband

754 In re Ellis / Rosenbaum

subsequently asked the original lawyer to represent him in

a dissolution proceeding, in which the use and division of

assets and liabilities from the business were at issue. Id. at

422-23. The court assessed the wife’s interest in the context

of the earlier business representation and determined that

the dissolution proceeding—in which the necessary “focal

point” had been the couple’s business—”created an adverse

relationship” between the former and present clients. Id. at

429; see also Cobb, 345 Or at 133-34 (investor clients’ inter-

ests not adverse to principal company’s interest at point in

time when all parties sought to dismiss underlying bank-

ruptcy proceeding to protect certain assets in which all

shared an interest; interests diverged later, when it became

clear that investors—now former clients—would become

company’s creditors in bankruptcy).

Applying that framework to the Bar’s allegations

here, we begin by identifying the interests of the accuseds’

former clients Daltry and Samper in relation to the accuseds’

earlier representation of them during the SEC investigation.

Daltry’s and Samper’s most pressing interests during the

SEC investigation had been to avoid individual process vio-

lations, to avoid individual SEC civil enforcement actions,

and—as to Samper once the SEC filed an enforcement action

against him—to mitigate the potential negative results

of that action. Daltry and Samper also shared an inter-

est in having the accuseds protect their client confidences

obtained during the course of the earlier representation.

Additionally, Daltry and Samper had an interest during the

course of the SEC investigation to minimize other potential

negative consequences that might flow to them as a result of

the investigation.

Next, we identify the interest of FLIR in the new,

limited representation in the DOJ investigation. As noted,

Garten told the accuseds at the outset that he did not

intend to target FLIR but instead was focused on potential

charges against several individuals, including Samper and

perhaps Daltry. In general, then, FLIR’s role at the outset

of that representation was to serve as a potential govern-

mental witness in a criminal investigation. In the context of

the accuseds’ agreed-upon limited representation, however,

Cite as 356 691 (2015) 755

FLIR’s interest was narrow: Essentially, FLIR had an inter-

est in demonstrating its willingness to cooperate with the

DOJ investigation by responding quickly and accurately to

documentation requests and efficiently assisting with sched-

uling witness interviews. Relatedly, FLIR had an interest in

controlling its cost of cooperating by having lawyers famil-

iar with FLIR’s extensive SEC documentation and Stoel

Rives’s FLIR document database facilitate the DOJ docu-

ment production.52

Having identified the client interests involved, we

now discuss whether those interests were adverse when the

accuseds agreed to undertake the limited representation of

FLIR during the DOJ investigation. On one hand—unlike

the factual scenarios in Hostetter and Brandsness—Daltry’s

and Samper’s self-protective interests in relation to the ear-

lier representation effectively had ended, because the new

representation commenced after the SEC proceeding had

ended and the ensuing judgments entered, thereby resolv-

ing Daltry’s and Samper’s interests in avoiding process vio-

lation charges and SEC enforcement actions. And, nothing

about FLIR’s narrow interest in cooperating with DOJ doc-

ument requests and witness interview scheduling, or in con-

trolling its costs, was adverse to those particular interests of

Daltry and Samper in the earlier SEC representation.53

The same cannot necessarily be said, however, as to

Daltry’s and Samper’s interests during the SEC investigation

52

As part of identifying the client interests at stake, the Bar thinks it sig-

nificant that FLIR had secured some sort of immunity arrangement—even if

informal—with the DOJ, such that the DOJ would not prosecute FLIR so long as

it cooperated in the investigation. The Bar did not prove by clear and convincing

evidence, however, that any such arrangement was made. See 356 Or at ___ n 45

(noting requirements for immunity or nonprosecution agreement). Indeed, the

evidence shows that Garten had told FLIR at the outset that it was not a target,

and Garten later attested that no formal or informal immunity arrangement had

been discussed. See id. (discussing contents of Garten declaration about nature

of discussions with FLIR).

53

As noted, Daltry and Samper also each had an interest in protecting pre-

viously disclosed client confidences, which continued to exist at the time of the

accuseds’ limited representation of FLIR. The Bar did not prove, however, that

any aspect of that personal interest was adverse to FLIR’s interest in the con-

text of the accuseds’ new limited representation of FLIR. Indeed, the accuseds

expressly told the former clients in Rosenbaum’s March 3, 2003, letter that under

no circumstances would the limited representation involve voluntary disclosure

of former client confidences.

756 In re Ellis / Rosenbaum

in mitigating against generally negative outcomes, such as

the future criminal investigation that materialized later

based on the same general facts. That particula

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