## Facts

- Peter E. Baer, an Oregon attorney, participated in a residential real-estate transaction in which his then-wife was the prospective purchaser and the Petersons were the sellers.
- Baer and his wife inspected the property together, and Baer participated in negotiating the sale price and terms.
- Baer proposed to perform the legal work for the closing to save the Petersons legal fees; the sale price was reduced to reflect the purported savings.
- Baer did not clearly inform the Petersons that he represented only his wife, did not advise them that independent counsel was necessary, and did not explain the conflict in a way that would permit informed consent; the Petersons believed he represented all parties.
- Baer also served as escrow agent, further obscuring whether he was acting as a neutral intermediary or an advocate for his wife.
- The deal included a down payment, assumption of an existing mortgage, and a remaining balance due by a specified date; the Petersons understood from Baer’s statements that they could recover the house if the balance was not timely paid.
- When Baer’s wife could not pay the remaining balance and the Petersons attempted to retake the house, Baer asserted that his wife had an ownership interest requiring the Petersons to sell the house and reimburse her.
- After the Petersons retained counsel and raised conflict concerns, Baer filed lawsuits against the Petersons in state and federal court.
- The Oregon State Bar charged Baer with violating conflict-of-interest and business-transaction disciplinary rules; a Trial Board found violations and recommended a public reprimand and an ethics exam; the Disciplinary Review Board recommended a 30-day suspension plus the ethics exam.

## Issues

1. Whether Baer violated DR 5-101(A) by undertaking employment where his personal interests, through his wife’s stake in the transaction, could impair his professional judgment.
2. Whether Baer violated DR 5-104(A) by entering a business transaction with clients (or putative clients) without full disclosure and a meaningful opportunity for independent advice.
3. Whether Baer violated DR 5-105(A)–(C) by accepting or continuing representation despite conflicting interests, without adequately explaining the conflict and obtaining informed consent.

## Decision

- The Oregon Supreme Court, reviewing de novo, found Baer violated DR 5-101(A), DR 5-104(A), and DR 5-105(A)–(C).
- The court imposed a 30-day suspension from the practice of law.
- The court also required Baer to take and pass the legal ethics examination required of new admittees.

## Legal Principles

- When a lawyer’s personal interests, or duties to another client, conflict with a client’s interests, the lawyer must explain the conflict in sufficient detail for the affected person to understand why independent counsel is desirable.
- A vague statement that the other party may have another attorney “check the work” is insufficient to obtain informed consent to a conflict.
- A lawyer who participates in a business transaction with a client must provide full disclosure and safeguards, including a real opportunity for the client to seek independent legal advice.
- Acting in multiple roles (e.g., advocate, negotiator, escrow agent) in a transaction involving the lawyer’s own economic interests heightens conflict risks and can constitute professional misconduct when disclosure and consent requirements are not met.
- Sanctions may include suspension and remedial ethics testing when conflict misconduct involves self-interest, inadequate disclosure, and subsequent adversarial action against persons who reasonably believed the lawyer represented them.

## Conclusion

The court disciplined an attorney who used his professional role in a property sale involving his wife while failing to clearly disclose the adverse conflict and the need for independent counsel, holding that such inadequate disclosure and conflicted participation violated the professional responsibility rules and warranted a short suspension and an ethics exam.


In re Conduct of Baer, 688 P.2d 1324 (Or. 1984)