Appendix — In re Matter of N. P.

7 Supreme Court, U.S.

8 5 ~4 Y 7 2k. &

No. SEP 14 1985

| 1OL, JR,

IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1985

In Re Charges of Unprofessional Conduct Against N.P..

Appellant.

APPENDIX

PATRICK J. FOLEY

608 Building, Suite 565

608-2nd Avenue South

Minneapolis, MN 55402

(612) 339-4511

Attorney for Appellant

RONALD I. MESHBESHER

JACK NORDBY

1616 Park Avenue

Minneapolis, MN 55404

(612) 339-9121

FRANCES §S.P. LI

608-2nd Avenue South, Suite 565

Minneapolis, MN 55402

(612) 339-4511

Of Counsel for Appellant

1985—Northwest Brief Printing Co., 3010 2nd St. No., Minneapolis 55411—588-7506

~ BEST AVAILABLE COPY

—s

ete

ue

APPENDIX INDEX

Page

Minnesota Supreme Court Decision January 25, 1985 A-1

Lawyers Professional Responsibility Board Charges

EE Sick ve ch seccesrcrdease A-20

Notice of Pre-Hearing Meeting ................. A-32

Notice of Panel Assignment ...................- A-33

State Court Order Denying Petition for Re-Hearing,

EE aia cb. G bh oe oan o'4 8 KOA A-34

Notice of Appeal to United States Supreme Court.

gS Se ee rere Terre «|| Peaeee A-35

State Court Order Denying Stay, March 8, 1985 ....A-36

Minnesota Rules on Lawyers Professional Responsi-

ree ee ee A-37

Minnesota Code of Professional Responsibility ..... A-47

Minnesota Court Order Promulgating Rules of Profes-

sional Conduct and Repealing Code of Professional

Responsibility, June 3, 1985, Effective September

De ere ee CU Na ous gies bk ah se A-54

Minnesota Rules of Professional Conduct. Effective

ee a ss wwe 6a ew ew A-55

Affidavit of Stephen S. Eckman, attached to Charges

I as Soni i wig eon boca Pe a ee ks A-64

Affidavit of John Michael Egan, attached to Charges

a ois A 968 eo Gk 400 8 w0 4 A-67_

A-l

APPENDIX

EXHIBIT C

Supreme Court Opinion, January 25, 1985

STATE OF MINNESOTA

IN SUPREME COURT

C4-84-981, C0-84-1223

Supreme Court

Per Curiam

Took no part,

Coyne, J.

Ir re Charges of Unprofessional

Cenduct against N.P.

Endorsed

Filed January 25. 1985

Wayne Tschimperle

Clerk of Appellate Courts

Heard, considered, and decided by the court en banc

OPINION

PER CURIAM.

This case involves two petitions by attorney N. P. (pe-

titioner) for a writ of prohibition, writ of mandamus, or

other relief, one restraining the Director of the Lawyers -

Professional Responsibility Board (director) from enforc-

ing Rule 25, Rules on Lawyers Professional Responsi-

bility. and ordering him to dismiss or limit his disciplinary

-nvestigation of petitioner and the second ordering the

director to revise the charges issued against petitioner and

A-2

dismiss those based upon DR 1-102, DR 2-203, DR 5-105,

and DR 5-106 of the Minnesota Code of Professional Re-

sponsibility. These petitions are considered together for

»urposes of this opinion. :

The facts that form the basis of each case are simila

and involve legal manuevering of a kind that has resulted

in unusually protracted judicial proceedings. In July 1979,

the director began a disciplinary investigation of petitioner

in response to a letter from a Superior, Wisconsin, physician

charging that petitioner’s firm has “flagrantly solicited la-

dies who have had Dalkon shields (sic) inserted for birth

>ontrcl over the past ten years and [has] wrought emo-

ticnal havoc upon them, [Members of the firm] have

flagrantly suggested that they could obtain a cash settle-

ment from Robins Drug Company * * *.™ This complaint

was dismissed on September 28, 1979, with a finding of

no unethical conduct. The director subsequently discovered

evidence to substantiate the complaint, including evidence

that petitioner had allegedly falsified in connection with

the original investigation. Accordingly, on May 6, 1980,

the director informed petitioner that the matter was tu be

reopened.

During 1980, 1981, and 1982, successive grand juries

conducted detailed investigations of alleged wrongdoings

b: petitioner, culminating in his February 16, 1982, in-

Jictment in federal district court for mail fraud. Shortiy

thereafter, the director dismissed two additional com-

plaints involving petitioner’s activities: on April 6, 1982,

"This case does not involve the merits of the celebrated issues concern-

ing the liability of the A. H. Robins Company with respect to the

Dalkon Shield intrauterine device but involves, rather, charges of

overreaching by an attorney in undertaking to obtain a share of the

profits from such litigation. .

A-3

a complaint alleging that petitioner had refused to turn

over the contents of a client file to a successor attorney

and on June 3, 1982, a complaint alleging that petitioner

had refused to turn over a client file after representation.

Both dismissals were limited to the specific complaints

and are unrelated to the matter currently at issue.

Following petitioner’s indictment, the director staved

investigation of the original complaint, primarily to avoid

duplicating the trial court’s efforts and to conserve the

limited resources of his office. Petitioner was tried before

< jury in federal district court and, on November 20,

1982. was acquitted of all charges.

The director then requested access <o trial exhibits that

he believed would aid his disciplinary investigation, but

neither petitioner nor the government would produce them

without court order. Consequently, in January 1983, the

di:ector filed with the federal district court a motior for

release of exhibits, including those presented to the grand

jury. Following objections by petitioner, the director

amended his motion, withdrawing his request for grand

jury exhibits. In his amended motion, the director cited

petitioner’s failure to voluntarily provide the exhibits pur-

suant to Rule 25, which requires that an attorney subiect

tc a disciplinary investigation or proceeding cooperate with

the director by complying with reasonable requests.

As a result of the director’s action, petitioner, on June

13, 1983, moved for an order in Hennepin County Dis- ©

trict Court declaring Rule 25 unconstitutional and enjoin-

ing the director from enforcing it. The district court issued

an order to show cause why the requested relief should

not be granted. In response, the director petitioned this

court for a writ of prohibition, claiming the district court

A-4

lacked jurisdiction. On July 12, 1983, we issued a writ

directing the district court to suspend or dismiss any

further action in N. P. v. Hoover, No. C9-83-870 (Minn.

July 12, 1983).

On June 20, 1982, while his action was still pending in

Hennepin County District Court, petitioner filed a motion

in federal district court likewise requesting an order de-

claring Rule 25 unconstitutional and enjoining its enforce-

ment. The federal court issued an order, filed on September —

19, 1983, refusing at that time to rule on the constitution-

ality of Rule 25 but ordering that the requested exhibits

from petitioner’s mail fraud trial be turned over to the di-

rector, provided the director obtained waivers of confiden-

tiality from individuals whose medical records were in-

cluded in the exhibits. Application of the Director of

Lawyers Professional Responsibility re: N. P. v. United

States of America, Cr. No. 3-82-32 (D. Minn. Sept. 19,

1983).

After receipt of the trial exhibits, the director continued

his investigation and, on May 8, 1984, issued the follow-

ing charges against petitioner’

Charge [No. 1]

Respondent’s solicitation of cases and payment of re-

ferrai fees violated the discip'inary rules. including but

not limited to, DR 2-103(A)(2) and DR 3-102(A), Min-

nesota Code of Professional Responsibility (MCPR) .Re-

Respondent’s altering of law firm records to hide the pay-

meni of referral fees and respondent’s directions to fan

associate attorney] were attempts to subvert the disci-

plinary investigation and violated the disciplinary rules,

including but not limited to, DR 1-102(A)(2), Dr 1-102

(A)(4). Dr 1-102(A)(5) and DR 1-102(A)(6), MCPR.

xx &

A-5

Charge [No. 2]

Respondent’s payment of monies to [an insurance in-

vestigator] while [the investigator] was an Aetna ad-

juster and negotiating Dalkon Shield claims, undermined

[the investigator’s] loyalty to Aetna. Respondent’s re-

ceipt of confidential information from [the investigator]

to enhance his clients’ cases subverted the adversary sys-

tem. Respondent created serious conflicts ot interest for

[the investigator] and took advantage of them to the

detriment of respondent’s clients, Aetna, A. H. Robins,

ard the legal system. Respondent’s conduct violated the

disciplinary rules, including but not necessarily limited to

DR 1-102(A)(2), DR 1-102(A)(5), Dr 1-102(A)(6), DR

5-101, DR 5-105 and Caron 9, MCPR. °

* kK *

Respondent’s failure to disclose to his clients his em-

p'oyment of [the investigator], breached his fiduciary duty

to his clients. His settlement of Dalkon Shield claims with

[the investigator], or [the investigator’s] co-workers, jeo-

pardized the settlements with Aetna due to [the investiga-

tor’s] role in their settlement. His conduct violated the dis-

d:plinary rules, including but not limited to DR 1-102(A)

(5) ,DR 1-102(A)(6) and DR 7-101(A), MCPR.

* * * *

Charge [No. =]

Respondent’s failure to communicate with his clients

and failure to obtain his clients’ consents for settlement,

some of which were settled in block settlements, violated

the disciplinary rules, including but not limited to DR

1-102(A)(6), DR 5-105(B), DR 5-106 and DR 7-101,

MCPR.

A-6

Charge [No. 4]

Respondent’s failure to maintain in the trust account

monies equal to the monies to be held in trust and failure

to pay clients interest earned on client monies constituted

misappropriation of client monies in violation of the dis-

ciplinary rules, including but not necessarily limited to

DR 9-102.:)(4), MCPR. Respondent’s deposit of firm

funds in the trust account and his failure to remove law

firm monies from the trust account constitutes comming-

ling of client monies with law firm monies and violated the

disciplinary rules, including but not necessarily limited to

DR 9-102, MCPR. Respondent’s failure to maintain prop-

er books and records to determine interest earned on

client monies violated the disciplinary rules, including but

nct necessarily limited to DR 9-102(B)(3) and DR 9-102

(A), MCPR, and Opinion 9 of the Lawyers Professional

Responsibility Board.

** * *

Charge [No. 5]

Respondent’s paying insurance adjusters with whom

the law firm negotiated cases undermined the adjusters’

loyalty to their employers. Respondent created a conflict

of interest for the adjusters and took advantage of them to

the detriment of respondent’s clieuts, the insurance com-

panies, the insureds and the legal system. Respondent’s

conduct violated the disciplinary rules, including but not

limited to, DR 1-102(A)(2), DR 1-102(A)(4), DR 1-102

‘A)(5), DR 1-102(A)(6) and DR 5-101 and Canon 9-

MCPR. Respondent’s charging of clients for expenses not

incurred constituted a conversion of client monies and

vivlated the disciplinary rules, including but not necessarily

limited to DR 1-102(A)(4) and DR 9-102(B)(4), MCPR.

A-7

Pursuant to his authority under Rule 25, the director re-

quested that petitioner provide certain documents and ap-

pear for a deposition on June 14. 1984.* Refusing tu com-

ply with the director’s requests, petitioner, on June 6, filed

his first petition with this court, requesting a writ of pro-

hibition, a writ of mandamus, or other relief. Petitioner

sought an order staying the scheduled deposition pending

determination by the federal district court of the constitu-

tionality of Rule 25 and dismissing charges because the

board had unreasonably delayed its investigation or dis-

missing Charge No. 5 because information supporting it

was obtained using a subpoena that violated the contfiden-

tiality provisions of Rules 9(d) and 20.

On June 19, 1984, the federal district court issued its

determination that it could not rule on the constitutionality

of Rule 25, finding that such a determination should be

made bv this court. This decision has been appealed. Ap-

pl'cation of the Director of Lawyers Professional Responsi-

bility Board re: N. P. v. United States of America Cr.

3-82-32 (D. Minn. June 22, 1984), appeal docketed. No.

84.5123 (8th Cir. June 26, 1984). Thereafter, however,

petitioner requested that this court determine the constitu-

tionality of Rule 25.”

On Julv 9, 1984. petitioner submitted a second peti-

tion for a writ of prohibition, writ of mandamus, or other

relief. In this petition, he objected to the charges filed by

the director, claiming portions were vague. duplicitous, in- ~

*On June 1, 1984, the director served petitioner with a request for ad-

missions pursuant to Rule 9(c). This request was not challenged by

petitioner, although compliance with it has been stayed pending this

decision.

*Petitioner made his request in his reply memorandum in support of his

motion to strike Exhibit 1. attached to the director’s memorandum in

opposition to petitioner's June 6 petition. This court denied petition-

er’s motion on July 6, 1977.

A-8

adequately supported, and based upon unconstitutional

disciplinary rules, specifically DR 1-102, DR 2-203, DR

5-105, and DR 5-106.

We deny both of petitioner’s requests for extraordinary

relief.

1. Initially we note that it is not always clear whether

néetitioner is seeking a writ of prohibition or a writ of man-

damus under each petition, but we find it unnecessary to

clarify that in this particular case. Because this action

arises from the attorney disciplinary process, this court has

original jurisdiction to issue either writ. Although the

specific requirements for the writs differ, both require

that the director’s action or failure to act be improper.

See, e.g., Minn. Stat. § 586.01 (1984); R. Civ. App. P.

120: State ex rel. Anderson v. Bel'ows, 287 Mina. 373,

179 N W.2d 307 (1970); State ex rel. Ryan v. Cahill, 253

Minn. 131, 134, 91 N.W.2d 144, 146 (1958). We find

no merit in petitioner’s claims that the director is acting

wrongfully and need not reach the issue whether the other

r-quirements are met.

2 First Petition

a. Claim of undue delay

Petitioner claims that the director has unreasonabiy de-

layed the investigation for 5 1/2 years and that the in-

vestigation should therefore be dismissed. We calculate that

the actual investigation was commenced 4 years before the

charges were filed—a lapse of time still substantially longer

than the average attorney disciplinary investigation—--dating

from the director’s May 1980 notification to petitioner

that because of new evidence the investigation of the Wis-

A-9

consin physician’s complaint was being reopened. Our

concern, however, is not directed so much at the length

ot the delay itself but at whether the delay has resulted in

prejudice to the attorney being investigated. In re Wil-

liams, 221 Minn. 554, 564, 23 N.W.2d 4, 9 (1946).

A fundamental goal of every disciplinary action is pro-

tection of the public. See, e.g., In re Hansen, 318 N.W.2d

856, 858 (Minn. 1982). Requiring prejudice to an attorney

before dismissing an action for unreasonable delay is con-

sistent with that goal. Unless the attorney has been unfair-

ly prejudiced, it would not be in the public interest to dis-

miss a disciplinary proceeding simply because of a fail-

ure to prosecute promptly. Among the many cases con-

sistently adhering to that principal are Ramirez v. State

Bar of California, 28 Cal.3d 402, 619 P.2d 399, 169

Cal. Rptr. 206 (1980). In re Bossov, 60 I11.2d 439, 328

N.E.2d 309, cert. denied, 423 U.S. 928 (1975); Attorney

Grievance Comm’n v. Kahn, 209 Md. 654, 431 A.2d

1336 (1981); State ex rel. Nebraska State Bar Assn v.

McArthur, 212 Neb. 815, 326 N W.2d 173 (1982); In re

Weinstein, 254 Or. 392, 459 P.2d 548 (1969), cert. de-

nied, 309 U.S. 903 (1970); In re Wright, 131 Vt. 473.

310 A.2d 1 (1973).

We find no merit in this argument for dismissa:. We

add, moreover, that not only has there been no showing

of prejudice but that much of the reason for delay is at-

tr butable to petitioner’s own actions since November 1982 ~

in resisting the director’s investigation.

b. Designating petitioner by name in a subpoena

Petitioner requests that Charge No. 5 be dismissed be-

cause he was designated by name in a subpoena duces

A-10

tecum served upon a banking institution to obtain informa-

tion supporting that charge. Rule 9(d), by express terms,

requires that an attorney under investigation be designated

only by initials.‘ Furthermore, the confidentiality require-

ments expressed in Rule 20 apply to all disciplinary in-

vestigations.

There is no question that the full name designation of

petitioner is a technical violation of Rule 9(d). Nothing in

that rule mandates, however, that the sanction for a vio-

lation be dismissal of the charges under investigation. and

in this case such a sanction would be most inappropriate.

We note at the outset that bank records cannot be ob-

tained without full identification of the bank customer.

More importantly, it was not the subpoena that broke

the seal of confidentiality, for petitioner himself did so by

identifying himself by name in his proceeding in Hennepin

County District Court to halt the director’s investigation.

As we have recognized, rules protecting confidentiality in

disciplinary investigations need not be so strictly enforced

when the one being investigated has exposed the fact of

investigation, such that there is little confidentiality to pro-

tect. See In re Gillard, 271 N.W2d 785, 813 (Minn.

1978).

“Rule 9(d), Rules on Lawyers Professional Responsibility, provides:

(d) Either party may take a deposition as provided by the

Rules of Civil Procedure for the District Courts A deposition under

this Rule may be taken before the pre-hearing meeting or within

ten days thereafter. The District Court of Ramsey County shall

have jurisdiction over issuance of subpoenas and over motions aris-

ing from the deposition. The lawyer shall be denominated by ini-

tials in any District Court proceeding.

Petitioner also alleges that naming him in the subpoena violates the

general confidentiality principles expressed in Rule 20. which in

relevant part states:

(a) The files. records, and proceedings of the District Com-

mittees, the Board. and the Directors, as they may relate to or

arise out of any complaint or charge of unprofessional conduct

against or investigation of » lawyer, shall he deemed confidential

and shall not be disclosed * * *.

A-11

c. Constitutionality of Rule 25

Rule 25, of the Rules on Lawyers Professional Re-

sponsibility, establishes an attorney’s duty to cooperate

with the director during a disciplinary investigation:

(a) It shall be the duty of any lawyer who is the

subject of an investigation or proceeding under these

Rules to cooperate with the District Committee, the

Director or his staff, the Board, or a Panel, by com-

plying with reasonable requests, including requests

to:

(1) Furnish designated papers, documents

or tangible objects;

(2) Furnish in writing a full and complete

explanation covering the matter under consid-

eration;

(3) Appear for conferences and hearings at

the times and places designated.

(b) Violation of this rule is unprofessional con-

duct and shall constitute a ground for discipline.

Petitioner challenges this rule on the ground that it is void

for vagueness.

The director contends, with merit, that this issue may

not appropriately be raised by petitioner since petitioner’s

failure to cooperate has not been used as a ground for dis- -

cipline pursuant to Rule 25, so that irreparable harm

has neither occurred nor is imminent. We nevertheless ad-

dress this issue under the principle that it “will settle a.

rule of practice affecting all litigants,” and is a rule of

“apparent importance to the litigants and to the bench

and bar as a whole.” Lein‘nger v. Swadner, 279 Minn.

A-12

251, 259, 156 N.W.2d 254, 260 (1968) (quoting Ther-

morama, Inc. v. Shiller, 271 Minn. 79, 84 135 N.W.2d

43, 46 (1965)). Because the constitutionality of Rule 25

is certainly important to all litigants and the bencn and

bar as a whole, we think that if the rule is unconstitutional,

extraordinary relief is appropriate.”

There is no question that attorneys subject to discipli-

nary investigations are entitled to due process. In re Ruf-

faio, 390 U.S. 544, 550 (1968). Due process includes

adequate notice of the rules with which attorneys are

expected to comply. A rule, like a statute, is void for

vagueness if it fails to give a person of ordinary intelli-

gence a reasonable opportunity to know what is prohibited

or fails to provide sufficient standards for enforcement.

Grayned v. City of Rockford, 408 U.S. 104, 108-09

(1972). However, as we held in Getter v. Travel Lodge,

250 N.W.2d 177 (Minn. 1977), difficulty in construction

is not in itself sufficient to set aside a rule, and the rule

“should be upheld unless the terms are so uncertain and

indefinite that after exhausting all rules of construction it

is impossible to ascertain legislattive intent.” Jd. at 180

(quoting Anderson v. Burnquist, 216 Minn. 49, 53. 11

N.W.2d 776, 778 (1943)).

The specific contention of petitioner is that Rule 25

dues not define “reasonable requests.” Due process, how-

ever, does not require that a rule contain an explicit defi-

*Consieration of the issue is not foreclosed even though the decision of

the federal district court declining to rule on the issue is currently on

appeal to the Eighth Circuit Court of Appeals. As the United States

Supreme Court held in Middlesex Ethics Comm. v. Garden State Bar

Ass'n. 457 U.S. 423 (1982), federal courts must abstain and allow

state courts to resolve issues in attorney disciplinary actions where

“an adequate state forum for all relevant issues has already been

demonstrated to be available prior to any proceedings on the merits

in fedeal court.” Id. at 437.

A-13

nitior of every term. See, e.g., In re Gillard, 271 N.W.2d

725. 809 (Minn. 1978); Walker v. Corwin, 210 Minn.

337, 340, 300 N.W. 800, 801 (1941). All that is neces-

sury is that the rule prescribe general principles so that

those subject to the rule are reasonably able to determine

what conduct is appropriate. Ex parte Secombe, 60 U.S.

‘19 How.) 9, 14 (1856). Rule’ 25 gives examples of the

types of requests that are considered reasonable, and

other Rules on Lawyers Professional Responsibility,

snecifically Rules 8 (authorizing investigatory subpoenas)

and 9 (governing requests for admissions, depositions,

and evidence admissible at a panel hearing), contain

further examples. Moreover, these rules are applicable to

at‘orneys familiar with the type of cooperation general-

ly expected in adversary matters.

There is merit to petitioner’s concern that the rule does

not in express terms indicate whether good faith chal-

lenges to requests by the director may be deemed a failure

to cooperate sufficient to invoke the sanction of the rule.

A good faith challenge to a particular request will not

be deemed such a failure to cooperate. Moreover. we

hold that the Ramsey County District Court, which, under

Rule 9(d), has jurisdiction over mvtions arising from dep-

Ositions. also has jurisdiction over motions arising from

Rule 25 requests. Such a procedure will provide an ade-

quate safeguard against encroachment on constitutional-

lv protected conduct and against other unreasonable re-

quests. As thus modified, we hold that Rule 25 ade-

quately comports with due process.

A-14

3. Second Petition

a. Challenges to the director's charges

Petitioner, asking this court to order the director to

strike several statements in the charges and make others

more definite, contends that the charges are too vague,

contradictory, duplicitous, and inadequately supported.

It is important to note that we are dealing at this

stage only with charges and not with a formal petition for

discipline. The charges are issued only as part of a pre-

liminary investigation to ascertain if there is probable

~ause for issuance of a formal petition. Cf. Jn re A gerter,

353 N.W.2d 908, 913 (Minn. 1984) (investigation of

judge’s misconduct), Petitioner will have adequate oppor-

tunity to assert such claims if and when the charges ma-

ture into a formal petition.

Given the preliminary nature of the charges issued by

the director, we conclude that they need not comply with

the stricter standard we would apply to charges in a

formal petition but simply must give petitioner a general

idea of what actions are being challenged. In considering

the specific charges being challenged here, we are also

mindful that we are not dealing with “a trap for the un-

wary” but with charges issued after years of investigation

and litigation in related matters. Viewed in light of their

informal nature and the extensive background peculiar to

this case, we find the charges sufficiently specific to satis-

fy due process.

b. Constitutional challenges to disciplinary rules

DR 1-102(A)(5) and (6)

- Subdivisions 5 and 6 of DR 1-102(A) provide:

A-15

(A) A lawyer shall not:

*x*x* *k *

(5) Engage in conduct that is prejudicial to the

administration of justice.

(6) Engage in any other conduct that adversely

reflects on his fitness to practice law.

Petitioner contends that these subdivisions are unconsti-

tutionally vague.

The United States Supreme Court recognized long ago

that “it ‘s difficult, if not impossible, to enumerate and de-

fine, with legal precision, every offense for which an at-

torney or counsellor ought to be removed.” Ex parte Se-

combe, 60 U.S. (19 How.) 9, 14 (1856). We ourselves

ave, in the comparable situation of applying a legislative

standard of judicial conduct, similarly recognized that

“necessarily broad standards of professional conduct” are

constitutionally permissible. Jn re Gillard, 271 N.W.2d

785, 809 n.7 (Minn. 1978).

Disciplinary Rules 1-102(A)(5) and (6) do no more

than reflect the fundamental principle of professional re-

sponsibility that an attorney, as an officer of the court,

has a duty to deal fairly with the court and the client. This

duty embraces all of the ethical strictures of the code of

professional responsibility. Read in conjunction with the

other disciplinary rules, we conclude, as have other courts, -

that these phrases are sufficiently well defined to satisfy

due process. See In re Keiler, 380 A.2d 119, 126 n.7

(D.C. 1977); Committee on Professional Ethics & Conduct

v. Durham, 279 N.W.2d 280, 283 (Iowa 1979); State v.

Nelson, 210 Kan. 637, 639, 504 P.2d 211, 214 (1972);

A-16

Louisiana State Bar Ass'n v. Jacques, 260 La. 803,

823, 257 So.2d 413, 420 (1972); In re Rook, 276 Or.

695, 705-06, 556 P.2d 1351, 1357 (1976); Howell v.

State, 559 S.W.2d 432, 436 (Tex. Civ. App. 1977).

DR 2-103

The provisions of DR 2-103(A) deal with solicitanon of

legal services:

(A) The following prohibitions shall apply to in-

person or telephonic communications, and t.. em-

ployment resulting therefrom, but shall not apply to

advertisement, written.communications or to employ-

ment resulting therefrom, unless the communications

contain false, fraudulent, misleading or deceptive

statements or claims prohibited under DR 2-101.

(1) A lawyer shall not recomment employ-

ment as a private practitioner, of himself oi any-

one associated with him to a non-lawyer who

has not sought his advice regarding employment

of a lawyer.

(2) A lawyer shall not compensate or give

anything of value to any person to recommend

Or secure, or as a reward for having recom-

mended or secured employment by a client of

himself or any lawyer associated with him, with

the exception of public relations or advertising

services.

(3) A lawyer shall not request any person to

recommend employment, as a private practition-

er, of himself or anyone associated with him.

A-17

Petitioner’s claim, that this detailed rule is vague. is

patently without merit. His additional claim that the rule,

on its face, violates petitioner’s right of free speech is no

less without merit in view of the decisions of the United

States Supreme Court in In re Primus, 436 U.S. 412

(1978), and Ohralik v. Ohio State Bar Ass'n, 436 US.

447 (1978), and our own decision in Jn re D’scipline of

Appert, 315 N.W.2d 204, 210-15 (Minn. 1981). The

tasis of these decisions is that because of the potential] for

abuse, the state has a compelling interest in restricting so-

licitation of the kind proscribed by this rule. Whether the

rule, as applied to petitioner, is unconstitutional is not in

issue, for at this stage we do not have before us the evi-

dence upon which the charge is based.

DR 5-105

Under the provisions of DR 5-105(A)-(C):

‘A) A lawyer shall decline proffered employment

if the exercise of his independent professional judg-

ment in behalf of a client will be or is likely to be

adversely affected by the acceptance of the proffered

employment, or if it would be likely to involve him

in representing differing interests, except to the ex-

tent permitted under DR 5-105(C).

(B) A lawyer shall not continue multiple em-

plovment if the exercise of his independent profession- ~

al judgment in behalf of a client will be or is likely

to be adversely affected by his representation of

another client, or if it would be likely to involve him

in representing differing interests. except to. the ex-

tent permitted under DR 5-105(C).

A-18

(C) Inthe situations covered by DR 5-105(A) and

(B), a lawyer may represent multiple clients if it is

obvious that he can adequately represent the interest

of each and if each consents to the representation

after full disclosure of the possible effect of such rep-

resentation on the exercise of his independent pro-

fessional judgment on behalf of each.

Petitioner does not contest the well-settled principle that

an attorney, like other fiduciaries, must avoid being

placed in a position of conflicting interests. He bases his

vagueness claim primarily upon the rule’s failure to pro-

vide an objective standard for when “the exercise of his

independent professional judgment * * * will be or is like-

lv to be adversely affected,” id., by multiple represen-

tation

The specific situations that would violate this rule as

nuted with respect to other rules, cannot be cataloged in

detail. The words of the rule “will or is likely to be ad-

versely affected” indicate that an attorney sensitive to

fiduciary obligations will err, if at all, on the side of re-

jecting questionable employment.

Therefore the rule is not facially defective. A determin-

ation whether, as applied to petitioner, it violates due

process must await introduction of evidence.

DR 5-106

Under the provisions of DR 5-106:

(A) A lawyer who represents two or more clients

shall not make or participate in the making of an

aggregate settlement of the claims of or against

his clients, unless each client has consented to the

A-19

settlement after being advised of the existence and

nature of all the claims involved in the proposed

settlement, of the total amount of the settlement, and

of the participation of each person in the settlement.

Petitioner, noting that the charge refers to the making

of “block” settlements rather than “aggregate” settlements,

contends that the rule is impermissibly vague. Petitioner

does not suggest that there is a difference between the

two phrases but suggests only that the director’s ircon-

sistency indicates a vagueness in the phrase used in the

rule.

Particularly when viewed in the general context in which

the rule was invoked, we find it most difficult to see how

petitioner was misled or misinformed. In any event, the

conplete text of the rule needs no parsing of words and

phrases to clearly inform an attorney as to the kind of con-

duct that is prohibited.”

The petitions for extraordinary relief are denied.

COYNE, J., took no part in the consideration or decision

of this case.

*Petitioner protests the charge of violating Canon 9, which states, “A

LAWYER SHOULD AVOID EVEN THE APPEARANCE OF PRO.-

FESSIONAL IMPROPRIETY,” on the ground that canons themselves

cannot form the basis of a disciplinary action. Whether or not this

canon, standing alone. may in any context be a basis for discipline

need not be decided now, for it is clear that petitioner is not in this

case burdened by the recital of the canon.

A-20

EXHIBIT F

THE CHARGES

STATE OF MINNESOTA

LAWYERS PROFESSIONAL

RESPONSIBILITY BOARD

In Re Charges of Unprofessional Conduct Against N. P.,

Respondent.

DIRECTOR’S CHARGES OF UNPROFESSIONAL

CONDUCT, NOTICE OF PREHEARING AND NO-

TICE OF PANEL ASSIGNMENT

TO THE LAWYERS PROFESSIONAL RESPONSIBIL-

ITY BOARD:

Respondent is, and has been since December 5, 1949,

licensed to practice law in Minnesota. Respondent cur-

rently practices law in Minneapolis, Minnesota.

Pursuant to Rule 8 (c) (4) (i), Rules on Lawyers Pro-

fessional Responsibility (RLPR), the Director of Lawyers

Professional Responsibility (Director) submits to a Law-

yers Professional Responsibility Board Panel (panel) these

charges of unprofessional conduct for its determination

of whether probable cause exists to believe public disci-

pline of respondent is warranted.

A-21

INTRODUCTION

Identifications.

1. Willard F. Browne, hereinafter “Browne”.

Until November, 1979, Browne was the primary ad-

juster for Aetna Life and Casualty Company (Aetna) on

Dalkon Shicld claims. He handled at least 174 Dalkon

Shield claims with respondent. Respondent’s law firm

pxid Browne over $40,000 during the time respondent

was negotiating Dalkon Shield cases with Browne.

2. Margaret Hartman, hereinafter “Hartman”.

Respondent’s Dalkon Shield client and a friend of Or-

vil Heil, respondent’s investigator. Respondent paid her

fer soliciting Dalkon Shield clients in the Duluth-Superior

area

3. Richard Hunegs, Esq., hereinajter “Hunegs’’.

A Minnesota lawyer who along with respondent was

the majority shareholder and managing partner of De-

Parcq, Anderson, Perl, Hunegs, and Rudquist, Ltd. (law

firm) at all relevant times. The law firm’s practice is and

has been almost exclusively plaintiff’s personal injury.

4. Norman Perl, Esq., herein “respondent.

Respondent has been president of the law firm since

1973. He and Hunegs were primariiy responsible for all -

otfice management decisions, including the handling of

client monies and the payment of monies to insurance ad-

justers and persons soliciting cases for the law firm.

5. Nancy Pouchnik, hereinafter “Pouchnik’”.

A bookkeeper in respondent’s law firm from January

24 1975, through November 21, 1979.

A-22

6. Dalkon Shield.

An intra-uterine device (IUD) manufactured by A.H.

Robins Company from 1971 through 1974. Since 1975,

approximately 3,000 claims have been brought against

Robins in Minnesota for injuries allegedly resulting

from use of the Dalkon Shield.

7. AH. Robins Company, hereinafter “Robins”.

Manufacturer of the Dalkon Shield.

8. Aetna Life and Casualty Company, hereinafter

Insurer for Robins for Dalkon Shield. Browne’s em-

ployer.

9. Investigation Services Inc. fund, hereinafter “ISI”.

Fund maintained by the law firm for paying insurance

adjusters with whom the law firm negotiated cases.

10. Federal Employers Liability Act (FELA) cases.

Respendent’s law firm is the designated counsel for the

Brotherhood Railway Carmen of the United States and

Canada (Carmen).

1. RESPONDENT SOLICITED DALKON SHIELD

CLIENTS AND ALTERED REFERRAL RECORDS

TO SUBVERT THE DISCIPLINARY INVESTIGA-

TION.

Respondent paid employees a fee for each case reterred

to the firm. Respondent paid clients and non-employees

for soliciting clients. Margaret Hartman was a Dalkon

Shield client of respondent. With brochures and retainer

agreements for respondent’s law firm she solicited over

30 Dalkon Shield clients in the Duluth/Superior area for

A-23

respondent, Respondent paid Hartman $1,700 for this so-

licitation and referral. Bookkeeper Pouchnik recorded the

referral fee paid Hartman on the expense sheet for each

Dalkon Shield client referred by Hartman.

On March 21, 1979, Robert Sellers, M.D., complained

to the Director regarding respondent’s solicitation of

Dalkon Shield clients in the Superior, Wisconsin, area.

After respondent was notified of the complaint, he di-

rected Pouchnik to delete referral payments to Hartman

from client expense ledgers and to put them on Hartman’s

client ledger as loans to Hartman. Hartman did not receive

any loans from respondent. See Exhibit 1.

After Sellers’ complaint, respondent twice directed as-

sociate attorney Stephen Eckman to go to the Duluth/

Superior area to have each Dalkon Shield client sign a

document denying respondent’s solicitation. See Exhibit 2.

Charge

Respondent’s solicitation of cases and payment of re-

ferral fees violated the disciplinary rules, including but

not limited to, DR 2-103 (A) (2) and DR 3-102 (A), Min-

nesota Code of Professional Responsibility (MCPR). Re-

spondent’s altering of law firm records to hide the pay-

ment of referral fees and respondent’s directions to Eckman

were attempts to subvert the disciplinary investigation and

vivlated the disciplinary rules, including but not limited to,

DR 1-102 (A) (2), DR 1-102(A) (4), DR 1-102 (A) —

(5) and DR 1-102 (A) (6), MCPR.

A-24

2. UNDERMINING OF ADVERSARY SYSTEM

A. Simultaneous Employment of Browne

Respondent handled 318 Dalkon Shield claims against

Aetna, 174 of which were settled for Aetna by Browne.

Until terminated by Aetna on November 15, 1979,

Browne was employed full-time as the senior claims repre-

sentative for Dalkon Shield claims filed with the Minne-

polis Aetna office. Browne, a thirty-five year employee of

Aetna, handled more Dalkon Shield claims than any

other claims representative in the United States. Browne

was privy to confidential information and legal opinions

regarding the defense of Dalkon Shield cases. Browne at-

tended dr received information on national defense strategy

meetings. Browne helped set the reserve amount which is

the insurer’s assessment of the value of the personal in-

jury and determines the settlement limits for the company.

Between 1976 and November 15, 1979, respondent’s

firm paid Browne the following sums for work Browne al-

legedly did for respondent’s law firm while he was em-

ployed simultaneously by Aetna:

1976 ‘ $7,505.00

1977 $2,500.00

1978 $11,115.00

1979 $21,496.00

See Exhibit 3.

Respundent directed Pouchnik to spread Browne’s pay-

ments over the FELA files in alphabetical order in $75,

$100 o: $125 increments. Pouchnik had no substantia-

tien of Browne’s work on any of the files for which

she was charging a payment to Browne. See Exhibit 4.

A-25

While employed by Aetna and respondent, Browne re-

viewed respondent’s Dalkon Shield files. Browne regular-

lv advised respondent as to additional work needed on

these files to enhance the value of the claims. See Ex-

hibit 5.

Charge

Respondent’s payment of monies to Browne while

Browne was an Aetna adjuster and negotiating Dal-

kon Shield claims, undermined Browne’s loyalty to Aetna.

Respondent’s receipt of confidential information from

Browne to enhance his clients’ cases subverted the adver-

sary system. Respondent created serious conflicts of in-

terest for Browne and took advantage of them to the

detriment of respondent’s clients, Aetna, A.H. Robins,

and the legal system. Respondent’s conduct violated the

disciplinary rules, including but not necessarily limited to

DR 1-102 (A) (2), DR 1-102 (A) (5), DR 1-102 A) (6),

DR 5-101, DR 5-105 and Canon 9, MCPR.

B. Failure to Disclose

Respondent had a duty to disclose to his Dalkon Shield

clients the existence of his non-adversarial relationship

with Browne:

The existence of the “business relationship” created,

at the very least, a substantial appearance uf im-

propriety with respect to Perl, and a serious con- .

flict of interest for Browne. A reasonable client

would certainly wish to know, and has a right to this

information, before proceeding with settlement nego-

tions. If Rice had known, she could have decided to

engage another attorney to represent her, or might

A-26

have decided not to go forward at all. The potential

risks to her could be serious. If Aetna later rescinded

the agreement, Rice’s reputation might suffer simply

from having been a party, albeit an innocent party,

to this arrangement. She was unfairly put in some

jeopardy by her fiduciary. An attorney has an ob-

ligation to prevent placing his client in a position

which might well taint a settlement transaction. The

profession’s standards of integrity demand no less.

Rice v. Perl, Browne and Aetna, 320 N.W.2d 407, 411

(Minn. 1982).

Respondent failed to disclose to his Dalkon Shield

clients his relationship with Browne, including that re-

spondent and Browne had a working relationship while

Browne was settling Dalkon Shield claims for Aetna.

Charge

Respondent’s failure to disclose to his clients his em-

oloyment of Browne, breached his fiduciary duty to his

clients. His settlement of Dalken Shield claims with

Browne, or Browne’s co-workers, jeopardized the settle-

ments with Aetna due to Browne’s role in their settlement.

His conduct violated the disciplinary rules, including but

not limited to DR 1-102(A) (5), DR 1-102 (A) (6) and

DR 7-101 (A), MCPR.

3. INADEQUATE REPRESENTATION

Most of respondent’s 318 Dalkon Shield clients had

li‘tle or no contact with respondent and knew nothing

about che negotiation or settlement of their claims. Many

of these clients never consulted with, spoke to, or even

A-27.

met respondent. Many clients’ only contact was to sign a

retainer agreement and receive a check. For example, on

May 31. 1979, at least 26 clients went to the Duluth

Radisson to pick up settlement checks. Some had not even

consented to settlement before receiving their checks.

Several claims were settled as part of five block settle-

ments. In four of these respondent and Browne agreed

on a single settlement amount for several client claims

and respondent had total discretion to distribute the pro-

ceeds among the individual clients. The fifth block settle-

ment was between respondent and Aetna adjuster Speltz.

Respondent entered into block settlements without the

clients’ knowledge or consent. See Exhibits 9-13.

Charge

Respondent’s failure to communicate with his clients

and failure to obtain his clients’ consents for settlement,

scme of which were settled in block settlements, violated

the disciplinary rules, including but not limited to DR

1-102 (A) (6), DR 5-105 (B), DR 5-106 and DR 7-101

(A), MCPR.

4. MISAPPROPRIATION, COMMINGLING, AND

OTHER TRUST ACCOUNT IMPROPRIETIES

Respondent commingled large amounts of law firm

monies with client money in the trust account. The com- |

ingled funds were regularly taken out of the trust account,

invested and returned to the trust account. Interest earned

was retained by the law firm. The law firm did not main-

tain books and records to identify client monies.

A-28

A. Misappropriation

The law firm maintained a trust checking account at

Marquette National Bank, Account #1004-5144. Respond-

ent directed the management of monies held in the trust

account. In fiscal years 1979 and 1980 the average month

end balance in the account was $162,000. Monies in the

account sometimes were as high as $5,000,000.

Respondent failed to maintain client monies in the

client trust account. The amount in the trust account on a

daily or month-end basis was less than the amount of

client monies to be held in trust. Although the bank covered

shortages, the account sometimes on a daily or month-

| end basis was overdrawn. In November, 1979, the ac-

count was overdrawn $147,295 at the end of the month.

Respondent invested monies from the trust checking ac-

count in high return short-term investments. These invest-

ments were made frequently, sometimes eight or ten times

in a month. The amount of monév ifivésted in each trans-

action was often several hundred thousand dollars to a

million dollars. Respondent did not obtain client consent

for investment of trust monies, identify interest accruing

tu clients or pay the interest to the clients. Respondent

directed that the law firm misappropriate to its own bene-

fit all interest earned on trust checking monies invested.

See Exhibit 14.

B. Commingling

Hundreds of thousands of dollars of law firm money

from the general account regularly were deposited in the

client trust checking account with client monies. Respond-

end regularly left law firm monies in the trust account

after distribution of settlement proceeds. Respondent reg-

=

A-29

ularly moved firm and client funds from the trust checking

account to the trust savings account, general account, or

into investments. See Exhibit 7.

C. Books and Records

Respondent failed to maintain client subsidiary ledg-

ers or other books and records which would identify client

monies held in trust. Respondent maintained a monthly

due client list which allegedly identified client monies

held in trust. However, the amount due a client often in-

cluded the law firm’s fees earned but not withdrawn.

Therefore, the due client list did not identify client monies

held in trust. Respondent failed to reconcile the client

cash balance in the account. Because respondent failed to

maintain the proper books and records the law firm was

unable to determine client monies held in trust, invested

or interest earned on client monies.

Charge

Respondent’s failure to maintain in the trust account

monies equal to the monies to be held in trust and failure

to pay clients interest earned on client monies constituted

misappropriation of client monies in violation of the dis-

ciplinary rules, including but not necessarily limited to

DR 9-102 (A) (4), MCPR. Respondent’s deposit of firm

funds in the trust account and his failure to remove law

firm monies from the trust account constitutes comming-

ling of client monies with law firm monies and violated

the disciplinary rules, including but not necessarily limited

t» DR 9-102, MCPR. Respondent’s failure to maintain

proper books and records to determine interest earned

or client monies violated the disciplinary rules, including

A-30

but not necessarily limited to DR 9-102 (B) (3) and DR

9-102 (A), MCPR, and Opinion 9 of the Lawyers Profes-

sional Responsibility Board.

5. ISI ACCOUNT—LAW FIRM ACCOUNT USED

FOR PAYMENT TO INSURANCE ADJUSTERS

In 1971, respondent’s law firm incorporated Investiga-

tion Services Inc. (ISI). An ISI checking account has been

maintained at Marquette National Bank since 1971, ac-

count number 10059772.

The {SI account was funded by client monies. When

files were closed, Pouchnik prepared closing statements

for review by respondent or Hunegs. For personal injury

cases in which the client paid expenses, respondent and/or

Hunegs added on an arbitrary ISI expense ranging from

$10 to $2,300. See Exhibit 4.

At settlement, monies for client expenses, including

ISI, were deposited in the general account. The ISI ex-

peuses were segregated and deposited monthly in the ISI

account Average monthly ISI deposits were $800 to

$3,000.

The ISI monies purportedly were segregated to pay

costs of investigation from a separate account. However,

all costs of investigation other than some photographs

were paid out of the general account. Further, the ISI

payments were not directly related to any expense for

the client’s case.

Respondent directed payment of ISI monies to pay in-

surance adjusters with whom the law firm negotiated

cases. Respondent paid Browne on one occasion with a

check drawn on the ISI account. The adjusters did not sub-

mit any time records or statements to substantiate the pay-

ments.

A-31

Charge

Respondent’s paying insurance adjusters with whom

the law firm negotiated cases undermined the adjusters’

loyalty to their employers. Respondent created a conflict

of interest for the adjusters and tuok advantage of them

to the detriment of respondent’s clients, the insurance

companies, the insureds and the legal system. Respond-

ent’s conduct violated the disciplinary rules, including but

not limited to, DR 1-102(A) (2), DR 1-102 (A) (4), DR

1-102(A) (5) DR 1-102 (A) (6) and DR 5-101 and

Canon 9, MCPR. Respondent’s charging of clients for

expenses not incurred constituted a conversion of client

monies and violated the disciplinary rules, including but

not necessarily limited to DR 1-102 (A) (4) and DR

9-102(B) (4), MCPR.

WHEREFORE, the Director prays that the panel find

probable cause to believe public discipline is warranted

and instruct the Director to file a petition for public dis-

cipline.

Dated: May 8, 1984.

/s/ Michael J. Hoover

MICHAEL J. HOOVER

DIRECTOR OF LAWYERS PROFESSIONAL

RESPONSIBILITY

444 Lafayette Road - 4th floor

St. Paul, MN 55101

(612) 296-3952

and

/s/ Janet Dolan

JANET DOLAN

ASSISTANT DIRECTOR

A-32

NOTICE OF PRE-HEARING MEETING

A pre-hearing meeting concerning the above Director’s

Charges of Unprofessional Conduct will be scheduled for

a future date in the Director’s office, 444 Lafayette Road,

Fourth Floor, St. Paul, Minnesota 55101.

You and your counsel, if any, must attend the meeting.

The purposes of the meeting are to obtain a response to

each allegation in the charges, to exchange witness lists,

to mark and exchange exhibits, and to plan the efficient

use of the panel’s time. See Rule 9 (e), RLPR.

Please bring the original and one copy of each exhibit

you will offer at the hearing.

Failure to attend the meeting may be a separate ground

for disciplinary action. See Rule 25, RLPR.

If you cannot attend the meeting as scheduled, im-

mediately notify the undersigned.

A-33

NOTICE OF PANEL ASSIGNMENT

The above Director’s Charges of Unprofessional Con-

duct have been assigned to a panel. The name, address,

and telephone number of the Panel chairman and vice-

chairman are:

Chairman

Mr. Ronald P. Smith

313 Degree of Honor Building

St. Paul, MN 55101

(412) 227-6301

Vice-Chairman

Mr. George O. Ludcke

2318 Parkwoods Road

St. Louis Park, MN 55416

(612) 922-7592

MICHAEL J. HOOVER

DIRECTOR OF LAWYERS PROFESSIONAL

RESPONSIBILITY

By /s/ Janet Dolan

Janet Dolan

Attorney

444 Lafayette Road - 4th floor

St. Paul, MN 55101

(612) 296-3952

A-34

EXHIBIT A

Order denying Petition for Rehearing

July 17, 1985

OFFICE OF THE CLERK OF THE APPELLATE

COURTS

STATE CAPITOL, ST. PAUL

C4-84-981

C0-84-1223

Date: July 17, i985

In Re Charges of Unprofessional Conduct against N.P.

Please take notice that on this date the following order

was entered in the above entitled cause:

ORDERED, that the petition for reargument herein be

and the same hereby is denied and stay vacated.

‘\

IT IS FURTHER ‘QRDERED, that respondent, Direc-

tcr of Lawyéss Professional Responsibility is awardec at-

torney fees in Yke amount of $250.00 pursuant to Minn.

R. Civ. App. 140.03. .

‘

Pespectfully .

Wiyne Tschimperle

Clerk of the Appellate Courts

A-35

STATE OF MINNESOTA

IN SUPREME COURT

C4-84-981, CO-84-1223

In Re Charges of Unprofessional

Conduct against N.P.

NOTICE OF APPEAL TO THE UNITED STATES

SUPREME COURT

TO: Director, Minnesota Lawyers Professional Responsi-

bility Board, 444 Lafayette Road, 4th Floor, St.

Paul, MN 55101 and

The Honorable Hubert H. Humphrey, III, State At-

torney General, 102 State Capitol, St. Paul, MN

55155

NOTICE IS HEREBY GIVEN that N.P., Petitioner in

the above-entitled matters, hereby appeals to the Supreme

Court of the United States from the Order dismissing N.P.’s

petitions entered in this action on January 25, 1985 and

the Order denying Petitioner’s Petition for Re-Hearing,

entered on July 17, 1985.

This appeal is taken pursuant to Title 28, United States

Code, Section 1257.

A-36

Dated: August 1, 1985.

By: /s/ PATRICK J. FOLEY

FRANCES §S. P. LI

608-2nd Avenue South, Suite 565

Minneapolis, MN 55402

(612) 339-4511

and

RONALD MESHBESHER

JACK NORDBY

1616 Park Avenue

Minneapolis, MN 55404

(612) 339-9121

Attorneys for Appeilant

EXHIBIT B

March 8, 1985 Order denying the Stay

STATE OF MINNESOTA

IN SUPREME COURT

C4-84-981

In Re Charges of Unprofessional

Conduct against N.P.

ORDER

Based upon all the files, records, and proceedings herein,

IT IS HEREBY ORDERED that the application of

N.P. for a stay of ail proceedings now pending before the

I awyers Professional Responsibility Board until such time

as a petition for rehearing filed in this court has been de-

cided and thereafter until disposition of a timely petition,

if any, for a writ of certiorari to the United States Su-

A-37

preme. Court is granted only for the period necessary for

the disposition of the petition for rehearing by this court.

Thereafter, any application for a further stay shall be

directed to the United States Supreme Court.

Dated: March 8, 1985.

BY THE COURT:

Chief Justice

EXHIBIT D

Minnesota Rules on Lawyers Professional Responsibility

(Excerpts)

RULE2. PURPOSE

It is of primary importance to the public and to the

members of the Bar that cases of lawyers’ alleged disability

or unprofessional conduct be promptly investigated and

disposed of and that disability or disciplinary proceedings

be commenced in those cases where investigation discloses

they are warranted. Such investigations and proceedings

shall be conducted in accordance with these rules.

RULE 4. LAWYERS PROFESSIONAL RESPONSI-

BILITY BOARD

(a) Composition. The Board shall consist of:

(1) A Chairman appointed by this Court for such time

as it designates and serving at the pleasure of this Court

but not more than six years as Chairman; and

(2) (a) Twelve lawyers having their principal offices in

this state, six of whom the Minnesota State Bar Associa-

ber ee TT Ne ie

A-38

tion may nominate, and nine nonlawyers resident in this

State. all appointed by this Court to three-year terms ex-

cept that shorter terms shall be used where necessary to

assure that as nearly as may be one-third of all terms ex-

pire each February 1. No person may serve more than two

three-year terms, in addition to any additional shorter term

for which he was originally appointed and any period

served as Chairman.

(b) Compensation. The Chairman, other Board mem-

bers, and other panel members shall serve without com-

pensation, but shall be paid their reasonable and necessary

expenses incurred in the performance of their duties.

(c) Duties. The Board shall have general supervisory

anthority over the administration of these Rules, shall ad-

vise and assist the Director in the performance of his du-

ties, and may, from time to time, issue opinions on ques-

tions of professional conduct. The Board may elect a

Vice-chairman and specify his duties, and may elect an

Executive Committee and authorize it to perform specified

duties of the Board between Board meetings.

(d) Panels. The Chairman shall divide the Board

into Panels, each consisting of not less than three Board

embers and at least one of whom is a nonlawyer, and

shal! designate a Chairman and a Vice-Chairman for each

Panel The Board’s Chairman or the Vice-Chairman is a

Panel member at any Panel proceeding he attends. Three

Panel members, at least one of whom is a lawyer, shall

constitute a quorum. The Board’s Chairman or the Vice-

Chairman may designate substitute Panel members from

current or former Board members or current or former Dis-

trict Cummittee members for the particular matter, pro-

A-39

vided, that any panel with other than current Board mem-

bers must include at least one current lawyer Board mem-

ber. A panel may refer any matters before it to the full

Beard.

(e) Assignment to Panels. The Director shall assign

matters to Panels in rotation.

(f) Approval of petitions. Except as provided in these

Rules or ordered by this Court, no petition for disciplinary

action shall be filed with this Court without the approval

of a Panel or the Board.

RULE 9. PANEL PROCEEDINGS

(a) Charges; setting pre-hearing meeting If the matter

is to be submitted to a Panel, the Director shall prepare

charges of unprofessional conduct, assign them to a Panel

by rotation, schedule a pre-hearing meeting, and notify the

lawyer of:

(1) The charges;

(2) The name, address, and telephone number of the

Panel chairman and vice-chairman;

(3) The time and place of the pre-hearing meeting;

and

(4) The lawyer’s obligation to appear at the time set

unless the meeting is rescheduled by agreement of the

parties or by order of the Panel chairman or vice-chair:

man.

(b) Admission of charges. The lawyer may, if he de-

sires: o ,

(1) Admit some or all charges; or

A-40

(2) Tender an admission of some or all charges con-

ditioned upon a stated disposition.

If a lawyer makes such an admission or tender, the Director

may proceed under Rule 10(b).

(c) Request for admission. Either party may serve

upon the other a request for admission. The request shall be

made before the pre-hearing meeting or within ten days

thereafter. The Rules of Procedure for the District Courts

applicable to requests for admissions, govern except that

the time for answers or objections is ten days and the panel

chairman or vice-chairman shall rule upon any selections.

If a party fails to admit, the Panel may award expenses as

permitted by the Rules of Civil Procedure for the District

Courts.

(d) Deposition. Either party may take a deposition

as provided by the Rules of Civil Procedure for District

Courts. A deposition under this Rule shall be taken before

the pre-hearing meeting or within ten days thereafter. The

District Court of Ramsey County shall have jurisdiction

over issuance of subpoenas and over motions arising from

the deposition. The lawyer shall be denominated by panels

in any District Court proceeding.

(e) Pre-hearing meeting. The Director and the lawyer

shall attend a pre-hearing meeting. At the meeting:

(1) The parties shall endeavor to formulate stipu-

lations of fact and to narrow and simplify the issues in

order to expedite the Panel hearing;

(2) Each party shall mark and provide the other

party a copy of each affidavit or other exhibit to be in-

troduced at the Panel hearing. The genuineness of each

A-41

exhibit is admitted unless objection is served within ten

days after the pre-hearing meeting. If a party objects,

the Panel may award expenses of proof as permitted by

the Rules of Procedure for the District Courts. No addi-

tional exhibit shall be received at the Panel hearing

without the opposing party’s consent or the Panel’s per-

mission; and

(3) The parties shall prepare a pre-hearing state-

ment.

(f) Setting Panel hearing. Promptly after the pre-

hearing meeting, the Director shall schedule a hearing by

the Panel on the charges and notify the lawyer of:

(1) The time and place of the hearing;

(2) The lawyer’s right to be heard at the hearing and

(3) The lawyer’s obligation to appear at the time set

unless the hearing is rescheduled by agreement of the

parties or by order of the Panel chairman or vice-chair-

man. The Director shall also notify the complainant, if

any, of the hearing’s time and place. The Director shal!

send each Panel member a copy of the charges, of anv

stipulations, of the pre-hearing statement, and, unless the

parties agree or the Panel chairman or vice-chairman

orders o the contrary, of all documentary exhibts marked

orders to the contrary, of all documentary exhibits

marked at the pre-hearing meeting.

(g) Form of evidence at Panel hearing. The Panel

shall receive evidence only in the form of affidavits, depo-

sitions or other documents except for testimony by:

(1; The lawyer;

A-42

(2) A complainant who affirmatively desires to at-

tend; and

(3) A witness whose testimony the Panel chairman

or vice-chairman authorized for good cause.

If testimony is authorized, it shall be subject to cross-ex-

amination and the Rules of Evidence and a party may

compel attendance of a witness or production of docu-

mentary or tangible evidence as provided in the Rules of

Civil Procedure for the District Courts. The District Court

of Ramsey County shall have jurisdiction over issuance

of subpoenas, motions respecting subpoenas, motions to

ccmpel witnesses to testify or give evidence, and determin-

ations of claims of privilege. The lawyer shall be deno-

minated by initials in any district court proceeding.

(h) Procedure at Panel hearing. Unless the Panel

for cause otherwise permits, the Panel hearing shall pro-

ceed as follows:

(1) The Chairman shall explain that the hearing’s

purpose is to determine whether there is probable cause

to believe that public discipline is warranted on any

“harge, and that the Panel will terminate the hearing

whenever it is satisfied that there is or is not such

probable cause (or, if the Director has issued an ad-

monition under Rule 8(c)(2), that the hearing’s pur-

pose is to determine whether the Panel should affirm

the admonition on the ground that it is supported by

clear and convincing evidence, should reverse the ad-

monition, or, if there is probable cause to believe that

public discipline is warrante?, should instruct th?’ Di-

rector to file a petition for disciplinary action in this

Court);

A-43

(2) The Director shall briefly summarize the mat-

ters admitted by the parties, the matters remaining for

resolution, and the proof which he proposes to cffer

thereon;

(3) The lawyer may respond to the Direc*»r’s re-

marks;

(4) The parties shall introduce their evidence in con-

formity with the Rules of Evidence except that atfida-

vits and depositions are admissible in lieu of testimony;

(5) The parties may present oral arguments; and

(6) The Panel shall either recess to deliberace or

take the matter under advisement.

(i) Disposition. After the hearing, the Panel shall

either:

(1) Determine that there is not probable cause to

believe that public discipline is warranted (or, if the Di-

rector has issued an admonition under Rule 8(c)(2),

affirm or reverse the admonition), or

(2) If it finds probable cause to believe that public

discipline is warranted, instruct the Director to file in

this Court a petition for disciplinary action. The Panel

shall not make a recommendation as to the matter’s

ultimate disposition.

(j) Notification. The Director shall notify the law-

yer the complainant, if any, and the District Committee,

if any that has the complaint, of the Panel’s disposition. If

the Panel did not determine that there was probable

cause to believe that public discipline is warranted, the

notification to the complainant, if any, shall inform him

A-44

of his right to petition for review under subdivision (k).

If the Panel affirmed the Director’s admonition, the notifi-

cation to the lawyer shall inform him of his right to ap-

peal to the Supreme Court under subdivision (J).

(k) Complainant’s petition for review. If the com-

plainant is not satisfied with the Panel’s disposition, he

may within 14 days file with the clerk of the Supreme

Court a petition for review. The clerk shall notify the

respondent and the Board Chairman of the petition The

respondent shall be denominated by initials in the pro-

ceeding This Court will grant the review only if the pe-

tition shows that the Panel acted arbitrarily, capriciously,

or unreasonably. If the Court grants review, it may order

such proceedings as it deems appropriate. Upon conclu-

sicn of such proceedings, the Court may dismiss the peti-

tion or, if it finds that the Panel acted arbitrarily, capri-

ciously, or unreasonably, remand the matter to the same

or a different Panel, direct the filing of a petition for dis-

ciplinarv action, or take any other action as the interest of

justice may require.

(1) Respondent’s appeal to Supreme Court. The

lawyer may appeal the Panel’s affirmance of the Director’s

admonition by filing a notice of appeal and nine copies

therecf with the Clerk of Appellate Courts and by serving

a copy on the Director within 30 days after bein notified

of the Panel’s action. This Court may review the matter

on the record or order such further proceedings as it

deems appropriate. Upon conclusion of such proceedings,

the Court may either affirm the admonition or make such

other disposition as it deems appropriate.

(m>} Manner of recording. Proceedings at a Panel

A-45

hearing or deposition may be recorded by sound record-

ing or audio-video recording if the notification thereof so

specifies. A party may nevertheless arrange for steno-

graphic recording at his own expense.

(n) Panel chairman authority. Requests or disputes

arising under this Rule before the Panel hearing com-

mences may be determined by the Panel chairman or

vice-chairman. For good cause shown, the Panel chairman

or vice-chairman may shorten or enlarge time periods for

d'scovery under this Rule.

RULE 20. CONFIDENTIALITY: EXPUNCTION

(a) General rule. The files, records, and proceedings

ot the District Committees, the Board, and the Director,

as. they may relate to or arise out of any complaint or

charge of unprofessional conduct against or investigation

o1 a lawyer, shall be deemed confidential and shall not be

disclosed, except:

(1) As between the Committees, Board, and Director

in furtherance of their duties;

2) In proceedings before a referee or this Court under

these Rules;

(3) As between the Director and a lawyer admission

or disciplinary authority of another jurisdiction in which

the lawyer affected is admitted to practice or seeks to-

practice:

(4> Upon request of the lawyer affected;

(5) Where permitted by this Court; or

(6) Where required or permitted by these Rules.

A-46

(b) Special matters. The following may be dis-

closed by the Director:

(1) The fact that a matter is or is not being inves-

tigated or considered by the Committee, Director, or Pa-

nel;

(2) The fact that the Director has either determined

that discipline is not warranted, or issued an admonition:

(3) The Panel’s disposition under these Rules;

(4) The fact that stipulated probation has been ap-

proved under Rule 8(c) (3).

(c) Referee or Court proceedings. Except as ordered

by the referee or this Court, the files, records, and pro-

ceedings before a referee or this Court under these Rules

are not confidential. * * *

RULE 25. REQUIRED COOPERATION

(a‘ Lawyer’s duty. It shall be the duty of any law-

yer who is the subject of an investigation or proceed-

ing under these Rules to cooperate with the District Com-

mittee, the Director or his staff, the Board, or a Panei, by

complying with reasonable requests, including requests to:

(1) Furnish designated papers, documents or tangible

odjects;

(2) Furnish in writing a full and complete explana-

tion covering the matter under consideration;

(3° Appear for conferences and hearings at the times

and places designated.

A-47

(b) Grounds of discipline. Violation of this rule is

unprofessional conduct and shall constitute a ground for

discipline.

EXHIBIT E

MINNESOTA CODE OF PROFESSIONAL RESPONS-

IBILITY

DR 1-102. Misconduct.

(A) A lawyer shall not:

(1) Violate a Disciplinary Rule.

(2. Circumvent a Disciplinary Rule through actions

of another

(3) Engage in illegal conduct involving moral turpi-

tude

(4) Engage in conduct involving dishonesty, traud,

deceit, or misrepresentation.

(5) Engage in conduct that is prejudicial to the ad-

ministration of justice.

(6) Engage in any other conduct that. adversely re-

flects on his fitness to practice law.

DR 2-103. Recommendation of Professional Employ

ment: Suggestion of Need of Legal Services.

(A) The following prohibitions shall apply to in-person

or telephonic communications, and to employment result-

ing therefrom, but shall not apply to advertisement,

written communications or to employment resulting there-

from, unless the communications contain false, fraudu-

A-48

lent, misleading or deceptive statements or claims pro-

hibited under DR 2-101.

(1) A lawyer shall not recommend employment as a

private practitioner, or himself or anyone associated with

him to a non-lawyer who has not sought his advice re-

garding employment of a lawyer.

(2) A lawyer shall not compensate or give anything

of value to any person to recommend or secure, or as a

reward for having recommended or secured employment

bv a client of himself or any lawyer associated with him,

with the exception of public relations or advertising ser-

vices.

(3) A lawyer shall not request any person to recom-

mend employment, as a private practitioner, of himself

or anyone associated with him.

(4) A lawyer shall not accept employment when he

knows or it is obvious that the person who seeks his ser-

vices does so as a result of conduct prohibited under this

Disciplinary Rule. .

(5) A lawyer shall not accept employment if he

krows or it is obvious that it results from unsolicited ad-

vice by him or any lawyer associated with him to a lay-

man that he should obtain counsel or take legal action,

except:

(a) If the advice was ‘o a close friend, relative, form-

er client (if the advice is germane to the former employ-

ment), or one reasonably believed to be a client.

(by) Without affecting the right to accept employment,

a lawyer may speak publicly or write for publication on

legal topics.

A-49

(c) If success in asserting rights or defense of his

client in litigation in the nature of a class action is de-

pendent upon the joinder of others, a lawyer may accept,

but shall not seek employment from those contacted for

the purpose of obtaining their joinder.

(Amended, effective September 29, 1975; amended. ef-

fective May 29, 1980).

DR 3-102. Dividing Legal Fees with a Non-Lawyer.

(A) A lawyer or law firm shall not share legal fees

with a non-lawyer, except that:

(1) An agreement by a lawyer with his firm, partner,

or associate may provide for the payment of money, over

a reasonable period of time after his death, to his estate

or to one or more specified persons.

(2) A lawyer who undertakes to complete unfinished

legal business of a deceased lawyer may pay to the estate

or the deceased lawyer that proportion of the total com-

pensation which fairly represents the services rendered by

the deceased lawyer.

(3) A lawyer or law firm may include non-lawyer

employees in a retirement plan, even though the pian is

based in whole or in part on a profit-sharing arrange-

ment.

DR 5-101. Refusing Employment When the Interests

of the Lawyer May Impair His Independent Professional

Judgment.

(A) Except with the consent of his client after full dis-

closure, a lawyer shall not accept employment if. the ex-

ercise of his professional judgment on behalf of his client

A-50

wll be or reasonably may be affected by his own finan-

cial. business, property, or personal interests.

(BY A lawyer shall not accept employment in con-

templated or pending litigation if he knows or it is ob-

vicus that he or a lawyer in his firm ought to be called

as a witness, except that he may undertake the employ-

ment and he or a lawyer in his firm nay testify:

(1) If the testimony will relate sulely to an uncon-

tested matter.

(2) If the testimony will relate solely to a matter of

formality and there is no reason to believe that substantial

evidence will be offered in opposition to the testimony.

(3) If the testimony will relate solely to the nature and

value of legal services rendered in the case by the lawyer

or his firm to the client.

(4. As to any matter, if refusal would work a sub-

stantial hardship on the client because of the distinctive

value of the lawyer or his firm as counsel in the particu-

lar case.

DR 5-105. Refusing to Accept or Continue Employment

if the Interests of Another Client May Impair the Inde-

pendent Professional Judgment of the Lawyer.

(A) A lawyer shall decline proferred employment if the

exercise of his independent professional judgment in behalf

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

acceptance of the proferred employment, or if it would

be likely to involve him in representing differing interests.

except to the extent permitted under DR 5-105(C).

(B) A lawyer shall not continue multiple employment

we Te eS

OS ee ee ee Oe ee ee as Seren *

mh ON ML 2 nee eS Tk EY Ee ae i. cr hae te

A-51

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, or if it would be

likely to involve him in representing differing interests,

except to the extent permitted under DR 5-105(C).

(C) In the situations covered by DR 5-195(A) and (B),

a lawyer may represent multiple clients if it is obvious that

he can adequately represent the interests of each and if

each consents to the representation after full disclosure of

the possible effect of such representation on the exercise

of his independent professional judgment on behalf of each.

* * *

DR 5-106. Settling Similar Claims of Clients

(A) A lawyer who represents two or more clients shall

not make or participate in the making of an aggregate

settlement of the claims of or against his clients, unless

each client has consented to the settlement after being

aivised of the existence and nature of all the claims in-

vulved in the proposed settlement, of the total amount of

the settlement, and of the participation of each person in

the settlement.

DR 7-101. Representing a Client Zealously

(A) A lawyer shall not intentionally

(1) Fail to seek the lawful objectives of his client

through reasonably available means permitted by law and ~

the Disciplinary Rules, except as provided by DR 7-101(B).

A lawyer does not violate this Disciplinary Rule, how-

ever, by acceding to reasonable requests of opposing

counsel which do not prejudice the rights of his client, by

A-52

being punctual in fulfilling all professional commitments, by

avoiding offensive tactics, or by treating with courtesy and

cons:deration all persons involved in the legal process.

(2) Fail to carry out a contract of employment en-

tered into with a client for professional services, but he

may withdraw as permitted under DR 2-110, DR 5-

102, and DR 5-105.

(3) Prejudice or damage his client during the course

of the professional relationship, except as required under

DR 7-102(B).

(B) Inhis representation of a client, a lawyer may:

(1) Where permissible, exercise his professional judg-

ment to waive or fail to assert a right or position .f his

client

(2. Refuse to aid or participate in conduct that he

believes to be unlawful, even though there is some support

for an argument that the conduct is legal.

CANON 9

A Lawyer Should Avoid Even the Appearance of

Professional Impropriety

9-102. Preserving Identify of Funds and Property of a

Client

(A) All funds of clients paid to a lawyer or law firm

shall be deposited in one or more identifiable interest bear-

ing trust accounts as set forth in DR 9-103. No funds be-

longing to the lawyer or law firm shall be deposited there-

in except as follows:

A-53

(1) Funds of the lawyer or law firm reasonably suf-

ficient to pay service charges may be deposited therein.

(2 Funds belonging in part to a client and in part

presently or potentially to the lawver or law firm must be

deposited therein, but the portion belonging to the lawyer

or law firm may be withdrawn when due unless the right

of the lawyer or law firm to receive it is disputed by the

client, in which event the disputed portion shall not be

withdrawn until the dispute is finallv resolved.

(B) A lawyer shall:

(1) Promptly notify a client of the receipt ut his

funds, securities, or other properties.

(2) Identify and label securities and properties of a

client promptly upon receipt and place them in a sate de-

posit box or other place of safekeeping as soon as >racti-

cable.

(3) Maintain complete records of all funds, securi-

ties, and other properties of a client coming into thc pos-

session of the lawyer and render appropriate accounts to

his client regarding them.

(4) Promptly pay or deliver to the client as requested

by a client the funds, securities, or other properties in the

pcssession of the lawyer which the client is entitled to re-

ceive.

(Amended effective July 1, 1983).

.

A-54

EXHIBIT G

MINNESOTA RULES OF PROFESSIONAL CONDUCT

Effective September 1, 1985

RULES OF PROFESSIONAL CONDUCT

STATE OF MINNESOTA

IN SUPREME COURT

C8-84-1650

ORDER PROMULGATING MINNESOTA

RULES OF PROFESSIONAL CONDUCT

WHEREAS, The American Bar Association has adopted

Model Rules of Professional Responsibility; and

WHEREAS, the Minnesota Ad Hoc Committee on the

American Bar Association Model Rules of Professional

Conduct, a committee of the Minnesota State Bar Associa-

ticn, has proposed the adoption of the ABA Mode! Rules,

with certain amendments; and

WHEREAS, the Rules as modified by the Ad Hoc Com-

mittee have been discussed at a convention of the Min-

nesota State Bar Association on June 30, 1984; and

WHEREAS, the House of Delegates and General As-

sembly of the Minnesota State Bar Association has di-

cected the officers of the association to petition the Min-

nesota Supreme Court to adopt the ABA Model Rules

as amended; and

WHEREAS, the Minnesota Supreme Court has held a

hearing on the proposed rules on January 4, 1985, and

being fully advised in the premises,

A-55

NOW. THEREFORE, IT IS HEREBY ORDERED

that the attached Minnesota Rules of Profesional Conduct

are adopted as the standard of professional responsibility

for lawyers admitted to practice in Minnesota, effective

September 1, 1985, and

IT IS FURTHER ORDERED that the existing Min-

nesota Code of Professional Responsibility as adopted by

the Minnesota Supreme Court on August 4, 1970, is here-

by repealed, effective August 31, 1985.

Dated: June 3, 1985.

BY THE COURT

/s/ Douglas K. Amdahl

Chief Justice Minnesota Supreme Court

RULE 1.2 Scope of Representation

(a) A lawyer shall abide by a client’s decisions con-

cerning the objectives of representation, subject to para-

graphs (b), (c) and (d), and shall consult with the client

as to the means by which they are to be pursued. A lawyer

shall abide by a client’s decision whether to accept an offer

of settlement of the matter. In a criminal case, the lawyer

shall abide by the client’s decision, after consultation with

the lawyer, as to a plea to be entered, whether to waive

jury trial and whether the client will testify.

(b) A lawyer may limit the objectives of the representa-

tion if the client consents after consultation.

(c) A lawyer shall not counsel a client to engage, or

assist a client, in conduct that the lawyer knows is criminal

or fraudulent, but a lawyer may discuss the legal conse-

quence of any proposed course of conduct with a client

A-56

and may counsel or assist a client to make a good faith

effort to determine the validity, scope, meaning or applica-

tion of the law. * * *

RULE 1.3 Diligence

A lawyer shall act with reasonable diligence and

promptness in representing a client.

COMMENT:

A lawyer should pursue a matter on behalf of a client

despite opposition, obstruction or personal inconvenience

to the lawyer, and may take whatever lawful and ethical

measures are required to vindicate a client’s cause or en-

deavor. A lawyer should act with commitment and dedi-

cation to the interests of the client and with zeal in advo-

cacy upon the client’s behalf. However, a lawyer is not

bound to press for every advantage that might be real-

‘zed for a client. A lawyer has professional discretion in

determining the means by which a matter should be pur-

sued Sce Rule 1.2. A lawyer’s workload should be con-

trolled so that each matter can be handled adequately.

Perhaps no professional shortcoming is more widely re-

sented than procrastination. A client’s interests often can

be adversely affected by the passage of time or the change

of conditions; in extreme instances, as when a lawyer

overlooks a statute of limitations, the client’s legal posi-

tion may be destroyed, Even when the client’s interests

are not affected in substance, however, unreasonable de-

lay can cause a Client needless anxiety and undermine

confidence in the lawyer’s trustworthiness.

Unless the relationship is terminated as provided in

A-57

Rule 1.16, a lawyer should carry through to conclusion

all matters undertaken for a client. If a lawyer’s employ-

ment is limited to a specific matter the selationship termin-

aies when the matter has been resolved. If a lawyer has

served a client over a substantial period in a variety of

matters, the client sometimes may assume that the lawyer

will continue to serve on a continuing basis unless the

lawyer gives notice of withdrawal. Doubt about whether

a client-lawyer relationship still exists should be clarified

by the lawyer, preferably in writing, so that the client will

nct mistakenly suppose the lawyer is looking after the

clhient’s affairs when the lawyer has ceased to do so. For

example. if a lawyer has handled a judicial or adminis-

trative proceeding that produced a result adverse to the

chent but has not been specifically instructed concerning

pursuit of an appeal, the lawyer should advise the client

of the possibility of appeal before relinquishing responsi-

bility for the matter.

RULE 1.7 Conflict of Interest: General Rule

(a) A lawyer shall not represent a client if the repre-

sentation of that client will be directly adverse to another

client, unless:

(1) the lawyer reasonably believes the rpresen-

tation will not adversely affect the relation-

ship with the other client; and

(2) each client consents after consultation.

(b) <A lawyer shall not represent a client if the repre-

sentation of that client may be materially limited bv the

lawyer’s responsibilities to another client or to a third per-

son, or by the lawyer’s own interests, unless:

A-58

(1) the lawyer reasonably believes the represen-

tation will not be adversely affected; and

(2) the client consents after consultation. When

representation of multiple clients in a sirgle

matter is undertaken, the consultation shall

include explanation of the implications of

the common representation and the advan-

tages and risks involved.

Rule 1.8 Conflict of Interest: Prohibited Transactions

(g) A lawyer who represents two or more clients shall

not participate in making an aggregate settlement of the

claims of or against the clients, unless each client consents

after consultation, including disclosure of the existence

and nature of all the claims and of the participation of

each person in the settlement.

RULE 1.10 Imputed Disqualification: General Rule

(a) While lawyers are associated in a firm, none of

tem shall knowingly represent a client when any one of

them practicing alone would be prohibited from doing so

bv Rules 1.7, 1.8(c), 1.9 or 2.2.

(b‘’ When a lawyer becomes associated with a firm,

the firm may not knowingly represent a person in the same

or a substantially related matter in which that lawyer. or

a firm with which the lawyer was associated, had pre-

viously represented a client whose interests were material-

ly adverse to that person and about whom the lawyer had

acquired information protected by Rules 1.6 and 1.9(b)

that is material to the matter.

(c) When a lawyer has terminated an association with

a firm, the firm is not prohibited from thereafter represent-

A-59

ing a person with interests materially adverse to those

of a client represented by the formerly associated lawyer

unless:

(1)

(2)

the matter is the same or substantially related

to that in which the formerly associated law-

yer represented the client; and

any lawyer remaining in the firm has infor-

mation protected by Rules 1.6 and 1.9(b)

that is material to the matter.

(d) A disqualification prescribed by this Rule may be

wrived by the affected client under the conditions stzted

in Rule 1.7.

RULE 1.15 Safekeeping Property

(a) All funds of clients paid to a lawyer or law firm

shall be deposited in one or more identifiable interest bear-

ing trust accounts as set forth in paragraphs (c) through

(f). No funds belonging to the lawyer or law firm shall be

deposited therein except as follows:

(1)

(2)

funds of the lawyer or law firm reasonably

sufficient to pay service charges may be de-

posited therein.

funds belonging in part to a client and in

part presently or potentially to the lawyer

or law firm must be deposited therein, but ~

the portion belonging to the lawyer or law

firm may be withdrawn when due unless the

right of the lawyer or law firm to receive it

is disputed by the client, in which event the

disputed portion shall not. be withdrawn un-

til the dispute is finally resolved.

A-60

(b) A lawyer shall:

(1) promptly notify a client of the receipt of the

client’s funds, securities, or other properties.

(2) identify and label securities and properties

of a client promptly upon receipt and place

them in a safe deposit box or other place

of safekeeping as soor. as practicable.

(3) maintain complete records of all funds, secur-

ities, and other properties of a client coming

into the possession of the pawyer and

render appropriate accounts to the client re-

garding them.

(4) promptly pay or deliver to the client as re-

quested by a client the funds, securities, or

other properties in the possession of the law-

yer which the client is entitled to receive.

(c) Each trust account referred to in paragraph (a)

stall be an interest bearing account in a bank, savings

bank, trust company, savings and loan association, sav-

ings association, credit union, or federally regulated in-

vestment company selected by a lawyer in the exercise

ot ordinary prudence.

(d) A lawyer who receives client funds shall maintain

a pouled interest bearing trust account for deposit of client

funds that are nominal in amount or expected to be held

for a short period of time. The interest accruing on this

account, net of any transaction costs, shall be paid to the

Lawyer Trust Account Board established by the M:nne-

sota Supreme Court.

Sate Re

A-61

(e) All client funds shall be deposited in the account

specified in paragraph (d) unless they are deposited in:

(1) a separate interest bearing trust account for

the particular client or client’s matter on

which the interest, net of any transaction

costs, will be paid to the client; or

(2) a pooled interest bearing trust account with

subaccounting which will provide for com-

putation of interest earned by each client’s

funds and the payment thereof, net of any

transaction costs, to the client.

(f) In determining whether to use the account specified

in paragraph (d) or an account specified in paragraph (e),

a lawyer shall take into consideration the following factors:

(1) the amount of interest which the funds would

earn during the period they are expected to

be deposited;

(2) the cost of establishing and administering the

account, including the cost of the lawver’s

services;

(3) the capability of financial institutions de-

scribed in paragraph (c) to calculate and pay

interest to individual clients.

(g> Every lawyer engaged in private practice of law

shall maintain or cause to be maintained on a currect

basis books and records sufficient to demonstrate income

derived from, and expenses related to, the lawyer’s private

practice of law, and to establish compliance with para-

ieee

A-62

eraphs (a) through (e). The books and records shall be

preserved for at least six years following the end of the

taxable year to which they relate or, as to books and rec-

ords relating to funds or property of clients, for at least

six years after completion of the employment to which

they relate.

(h) Every lawyer subject to paragraph (g) shall cer-

tify, in connection with the annual renewal of the lawyer’s

registration and in such form as the Clerk of the Appel-

late Court may prescribe, that the lawyer or the law-

yzr’s law firm maintains books and records as required by

p3ragravh (g).

RULE 5.4 Professional Independence of a Lawyer

(a’ A lawyer or law firm shall not share legal fees

with a nonlawyer, except that:

(1) an agreement by a lawyer with the lawyer's

firm, partner, or associate may provide for

the payment of money, over a reasonable

period of time after the lawyer’s death. to

the lawyer’s estate or to one or more specified

persons;

(2) a lawyer who undertakes to complete un-

finished legal business of a deceased lawyer

may pay to the estate of the deceased law-

yer the proportion of the total compensation

which fairly represents the services rendered

by the deceased lawyer; and

(3) a lawyer or law firm may include nonlawyer

employees in a compensation or retirement

A-63

plan, even though the plan is based in whole

or in part on a profit-sharing arrangement

(b) A lawyer shall not form a partnership with a non-

Jawyer if any of the activities of the partnership

consist of the practice of law.

(c) A lawyer shall not permit a person who recom-

mends, employs, or pays the lawyer to render legal ser-

vices for another to direct or regulate the lawyer’s pro-

fessional judgment in rendering such legal services.

(d) A lawyer shall not practice with or in the form of

a professional corporation or association authorized to

practice law for a profit, if:

(1) a nonlawyer owns any interestt therein, ex-

cept that a fiduciary representative of the es-

tate of a lawyer may hold the stock or in-

terest of a lawyer for a reasonable time dur-

ing administration;

(2) a nonlawyer is a corporate director or officer

thereof; or

(3) a nonlawyer has the right to direct or control

the professional judgment of a lawyer.

Rule 7.3. Direct Contact with Prospective Clients

A lawyer may not solicit professional employment from |

a prospective client with whom the lawyer has no family

or prior professional relationship, by in-person or telephone

contact, when a significant motive for the lawyer’s doing so

is the Jawyet’s pecuniary gain.

A-64

RULE 8.4 Misconduct

It is professional misconduct for a lawyer to:

(a) violate or attempt to violate the Rules of Profes-

sicnal Conduct, knowingly assist or induce another tc do

so, or do so through the acts of another;

(b) commit a criminal act that reflects adversely on

the lawyer’s honesty, trustworthiness or fitness as a law-

ver in other respects;

(c) engage in conduct involving dishonesty, fraud, de-

~eit or misrepresentation;

(d) engage in conduct that is prejudicial to the ad-

ministration of justice.

(e’ state or imply an ability to influence improperly

a government agency or official; or

(f) knowingly assist a judge or judicial officer in con-

duct that is a violation of eases rules of judicial con-

duct or other law.

EXHIBIT 2

STATE OF MINNESOTA

Ss.

COUNTY OF HENNEPIN

AFFIDAVIT OF STEPHEN S. ECKMAN

STEPHEN S. ECKMAN, being first duly sworn on

oath, says:

1. Affiant is a licensed attorney in Minnesota, practic-

ing in Minneapolis at 501 Butler Square, with the firm

of ECKMAN, STRANDNESS & EGAN, P.A.;

A-65

2. Affiant was an employee of the DeParcq, Anderson,

Perl & Hunegs (Respondents) Law Firm from August 1,

1972 through April 6, 1979, as an attorney;

3. While with Respondent’s law firm, Affiant handled

plaintiff personal injury cases and Federal Employer Lia-

bility Act cases (FELA files);

4 During affiant’s employment with the Respondent’s

law firm, Respondent was a managing partner with

Richard G. Hunegs, each owning fifty percent of the law

firm:

5. Affiant was introduced to Willard F. Browne as a

ciaims adjuster for Aetna Casualty Insurance Conipany

(Aetna);

6 Affiant was aware that Respondent’s law firm op-

posed Aetna in various legal matters in addition tc the

Dalkon Shield claims;

7. Affiant was not aware Browne had been hired by

Respondent’s law firm for any kind of work on any files,

FELA. or otherwise;

8 Affiant became aware that Browne was granted

access to Respondent’s law firm offices on occasion, in-

cluding a portion of the law firm in which client Dalkon

Shield files were stored;

9. Affiant observed no work by Browne on any FELA -

fires, nor did he observe Browne working on any FFLA

files in the offices of Respondent’s law firm;

10. Your affiant, in reviewing numerous FELA files

over the term of his employment with the law firm, ob-

served no work product of any kind produced by Browne,

or any references to Browne, in any FELA file;

A-66

11. Affiant was present in office meetings when Re-

spondent and Hunegs instructed office attorneys to

handle cases with Aetna, Browne’s employer, differently

than other insurance companies. Cases with Aetna were

not tc be placed in suit, but were to be given to Respondent

for negotiation with Browne;

12 Affiant attended a general office staff meeting of

attorneys and investigators in which Respondent instructed

various attorneys in the room to prepare several Aetna

cuses for settlement discussions with Browne, who was to

be in the office the following week. Respondent also said

Browne was in Las Vegas, Nevada, on that date, and com-

mented, “I don’t know what that is costing me;”

13. Your Affiant did not work on Dalkon Shield

claims in the law firm, but did see Browne in the law of-

fices on many occasions with firm Dalkon Shield files in

his possession, in the company of Respondent;

14. In early March 1979, Affiant was summoned to a

eeting in Respondent’s office. Respondent told those in

aitendance (Hunegs, Donald Rudquist, Orville Heil, and

your Affiant) that he had just learned of a Complaint

lodged against Respondent’s law firm by a doctor in Su-

perior, Wisconsin. At that meeting, Respondent directed

Affiant to go to the Duluth/Superior area and meet with

Respondent’s Dalkon Shield clients in the Radisson Hotel.

Affiant was instructed by Respondent to have each of the

clients sign a document confirming that Respondent and

his agents had not solicited the client’s case, but that the

clients had sought Respondent’s advice and representation

on the Dalkon Shield cases. Affiant refused to do this:

A-67

15. A second meeting was held at Respondent’s law

offices sometime later regarding the same subject matter

as the above meeting. Affiant was also present at this

meeting. Respondent again directed Affiant to go to the

Duluth/Superior area, talk to the Dalkon Shield clients

and have them sign the letter above discussed, but your

Affiant refused again to participate in this activity. At

that time, Respondent, Hunegs, Rudquist, and your Af-

fiant dictated a strong letter to the doctor (and another

doctor making a complaint from West Duluth) to hopeful-

lv dissuade the doctor from his complaint.

16 Further your Affiant states and verily believes

that this final meeting was held on April 6, 1979, Af-

fiant’s last working day at Respondent’s law firm;

FURTHER AFFIANT SAYETH NAUGHT.

/s/ Stephen S. Eckman

Subscribed and sworn to before me this 6 day of Feb.

1984.

/s/ Helen C. Carcicfini

NOTARY PUBLIC

EXHIBIT 5

STATE OF MINNESOTA

Ss.

COUNTY OF HENNEPIN

AFFIDAVIT OF JOHN MICHAEL EGAN

I, JOHN MICHAEL EGAN, being first duly sworr on

oath, says:

A-68

1. Affiant is a licensed attorney in Minnesota.

2. Affiant was employed as an attorney with DeParcq,

Anderson, Perl & Hunegs (respondent’s) law firm from

January 1976, until April 8, 1979.

3. While with respondent’s law firm, Affiant handled

perscnal injury and probate matters.

4. During Affiant’s employment with respondent’s

law firm respondent was a managing partner.

5. Affiant knew Willard F. Browne (Browne) to be a

claims adjuster for Aetna Casualty and Surety Insurance

Company (Aetna).

6. Affiant verily believes that within the perioa of

January 1976 to April 1979, that Browne had not been

hued by respondent’s law firm to work on Federa: Em-

ployee Liability Act (FELA) cases nor on any other kind

of cases

7. Affiant frequently saw Browne in respondent’s law

offices on a weekly or more than weekly basis. Affiant

saw Browne at respondent’s law office’s social functions.

8. At an office meeting for all lawyers and investiga-

tcrs in respondent’s law office in early 1978, Affiant

heard respondent to say Will says Aetna is paying on

these (Dalkon Shield) claims and they should go out and

sign up some of these cases.

9. During an office meeting at respondent’s law of-

fice in the spring of 1978, Affiant heard respondent say

Will says other lawyers are getting fifty percent on these

(Dalkon Shield) cases and that respondent’s office shou!d

do so too. Affiant did not agree to dc this.

A-69

10. Browne never attended any of the regularly

scheduled office meetings at respondent’s law firm from

January 1976 to April 1979.

11. At a 1978 Christmas party at which respondent,

Browne, investigators for respondent’s law firm and other

employees were present, Affiant heard respondent say to

Olson, an investigator, don’t worry about Will, we’re tak-

‘ng care of him. :

12. Affiant handled approximately seventeen Dalkon

Shield cases for respondent’s law firm. Respondent did

all the settlement negotiations on Affiant’s files. Affiant

was not present at the settlement negotiations.

13. Dalkon Shield cases were handled differently than

Jther personal injury cases in respondent’s law office.

Other claims were handled with a view towards going to

trial. Dalkon Shield cases were handled with a view toward

settlement.

14. Late in November 1978, Affiant observed Browne

going through a stack of ten to fifteen Dalkon Shield files

in respondent’s offices. Four of these files were being

handled by Affiant. Affiant had not given Browne per-

mission to review these files. These four files were settled

between respondent and Browne as part of a group on

January 31, 1979.

15 On several occasions, Respondent told Affiant that ~

Browne said a case (Dalkon Shield) could settle for X

dollars if respondent could get certain specific medical or

biographical information into the file.

16. Affiant brought the Mary A. Pitman Dalkon

Shield claim into respondent’s law firm on a referral from

——

A-70

another attorney. The issue of causation between the

use of the Dalkon Shield and the alleged injury in the Pit-

man case was defensible as indicated in the medical rec-

ord. In March of 1979, respondent told Affiant he had

met with Browne regarding the Pitman case. Respondent

said the case could be settled for $8,000 but thought he

could get $10,000 to $14,000. Respondent further said

Browne told him if a doctor’s opinion could be obtained

stating the Dalkon Shield was related to the injury they

could get $18,000 to $20,000. On April 8, 1979, Affiant

started his own practice and had physical possession of

the Pitman file. On April 30, 1979, respondent sent a let-

ter to Pitman, carbon copying Affiant. Affiant had not

given respondent permission to negotiate for his client

Pitman. The April 30 letter stated respondent had been

offered $24,000 on the Pitman claim. Affiant then spoke

to Ms. Pitman after receiving a copy of this letter and set

up a meeting with respondent, Ms. Pitman and himself.

This meeting was held May 2, 1979, at respondent’s of-

fice. Respondent told Pitman that Aetna made an offer

of $20,000 to $22,000 but he thought he could get as

much as $24,000. The date of the settlement check to

Pitman is May 8, 1979, for $24,000. There were no ex-

penses on the settlement sheet for any further medical

opinions or medical evaluations done on the Pitman case

prior to negotiation and settlement. Affiant advised his

client, Pitman, that it was in her best interest to accept

the substantial settlement offer, which she did.

17. Affiant was aware that respondent’s law firm paid

referral fees to non-lawyer employees for bringing in cases

to the firm.

Det -SEiiet? dire on 0 ke 4 ted oy eel 2 ea)

A-71

18. -Affiant was aware that respondent’s law firm op-

posed Aetna in other matters in addition to the Dalkon

Shield claims.

19. Affiant was never informed by respondent that

Browne was available as an expert consultant for medi-

cal evaluations. |

FURTHER AFFIANT SAYETH NAUGHT.

/s/ John Michael Egan

Subscribed and sworn to before me this 8 day of Feb.

1984.

/s/ Helen C. Carciofini

Notary Public