## Facts

- Robert T. Neville, an Arizona attorney admitted in 1964, had represented Floyd Bly in prior real-estate matters and also engaged in business transactions with him.
- Bly was a knowledgeable real-estate investor and broker but lacked legal training.
- Neville held an option interest in certain properties and participated in a transaction proposed by Bly that involved conveyances through a third party, property to Neville, and a promissory note to Bly.
- Neville drafted the contract for the transaction, which proved disadvantageous to Bly.
- Disciplinary authorities found Neville entered a business transaction with a client with adverse interests without adequate disclosure and consent, acted amid conflicts involving multiple interests, and engaged in improper professional communications.
- Neville asserted he told Bly he was not acting as Bly’s lawyer for this transaction.
- A local administrative committee found violations in two counts and recommended a 90-day suspension; the Disciplinary Board recommended a 60-day suspension.
- The Arizona Supreme Court reviewed the matter de novo, requiring clear and convincing evidence and giving serious consideration to, but not treating as binding, the bar’s findings.

## Issues

1. Whether Neville violated DR 5-104(A) by entering an adverse business transaction with a client without full disclosure and informed consent.
2. Whether Neville violated DR 5-105 by proceeding despite conflicts that could impair independent professional judgment, without adequate disclosure and consent.
3. Whether Neville violated DR 2-102(C) through misleading or improper professional communications.
4. What sanction was appropriate in light of the misconduct and the disciplinary recommendations.

## Decision

- The court found, by clear and convincing evidence, that Neville violated DR 5-104(A) by dealing adversely with a client without full disclosure and knowing consent.
- The court found Neville violated DR 5-105 because his personal interest in the transaction conflicted with duties associated with his ongoing relationship with Bly and the record did not show the required disclosure and consent.
- The court accepted findings supporting a violation of DR 2-102(C) regarding improper professional communications.
- The court imposed a suspension from the practice of law consistent with the Disciplinary Board’s recommendation (approximately 60 days).

## Legal Principles

- A lawyer who enters a business transaction with a client where interests differ must make full and frank disclosure of material facts and legal consequences and obtain the client’s informed, knowing consent.
- A client’s business sophistication does not eliminate the lawyer’s duty to explain adverse interests and ensure the client understands the conflict and consequences.
- Whether an attorney-client relationship exists for conflict and fiduciary-duty purposes turns on the client’s reasonable expectations and the parties’ conduct; a unilateral disclaimer does not, by itself, end the lawyer’s fiduciary obligations.
- A lawyer must not continue representation when independent professional judgment is likely to be adversely affected by another client or the lawyer’s own interests unless full disclosure is made and informed consent is obtained.
- Disciplinary sanctions may include suspension when conflicts and adverse dealings with clients involve insufficient disclosure and consent, even absent prior serious discipline.

## Conclusion

The Arizona Supreme Court suspended Neville for a short period after concluding he engaged in an adverse business transaction and conflicted roles with a client without the full disclosure and informed consent required by the disciplinary rules, and that he could not avoid fiduciary duties through a simple disclaimer given the parties’ history and the client’s reasonable expectations.


In re Neville, 147 Ariz. 106, 708 P.2d 1297 (Ariz. 1985)