Iowa Supreme Court Board of Professional Ethics and Conduct v. Wagner

Carl Oehl hired experienced real estate attorney John Wagner (defendant) to help Oehl sell a restaurant. Oehl agreed to pay Wagner 10 percent of the sale price if Wagner could find a buyer and represent Oehl in the sale. David Childers wanted to buy the restaurant and asked Wagner to represent him. Wagner said that (1) he already represented Oehl, (2) there might be conflicts of interest, (3) Childers should consider separate, independent counsel, and (4) Wagner could not be involved in the price negotiations. But Wagner then agreed to represent Childers. At no point during the representation did Wagner tell Childers that Wagner had a personal financial interest in selling the property, nor did he specifically explain the potential conflicts to Childers or why Childers might want independent counsel. Childers bought the restaurant but defaulted on his payments to Oehl, losing over $200,000 in the process. Around that time, Childers hired a different attorney. Wagner helped Oehl sell the restaurant again, but that buyer also defaulted. Wagner then bought the restaurant himself. Childers sued Wagner, and the parties settled the claim. The Iowa Supreme Court Board of Professional Ethics and Conduct (the board) (plaintiff) cited Wagner for violating several rules of professional conduct for failing to disclose to Childers the risks of dual representation and Wagner’s personal financial interest. The board recommended suspending Wagner’s law license for three months. The Iowa Supreme Court reviewed the recommendation.