Brief Fact Summary. Respondent attorney is recommended for discipline in regards to his participation in a development deal with a client in which he accepted stock in the corporation in lieu of payment.
Synopsis of Rule of Law. Attorneys should be very cautious about entering into business transactions with clients, doing so only after a full disclosure in situations in which each party has a “differing interest.”
Held. Yes. Respondent and Miller clearly had “differing interests” here, in that Respondent’s fee was tied to the success of the corporation and he was effectively contracting to make himself a debtor of the corporation to ensure that his services would be performed. Miller also failed to make anything approaching the full disclosure required by the relevant Iowa rule. Reprimand recommended.
Discussion. Attorneys should generally avoid going into business with their clients. Those willing to take this risk must recognize that courts will always view the transaction in the light most favorable to the client should the situation go awry.