Columbus Bar Ass'n v. Barns

123 N.E.3d 922, 156 Ohio St. 3d 50, 2018 Ohio 5098
CourtOhio Supreme Court
DecidedDecember 20, 2018
DocketNo. 2018-0823
StatusPublished

This text of 123 N.E.3d 922 (Columbus Bar Ass'n v. Barns) is published on Counsel Stack Legal Research, covering Ohio Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Columbus Bar Ass'n v. Barns, 123 N.E.3d 922, 156 Ohio St. 3d 50, 2018 Ohio 5098 (Ohio 2018).

Opinions

Per Curiam.

*51{¶ 1} Respondent, Stephen Wallace Barns, of Granville, Ohio, Attorney Registration No. 0065571, was admitted to the practice of law in Ohio in 1995.

{¶ 2} In December 2017, relator, Columbus Bar Association, charged Barns with *924professional misconduct arising from his representation of a client in the formation and operation of a corporation. The parties stipulated to the admission of facts and misconduct, aggravating and mitigating factors, and exhibits; agreed to dismiss three of the eight alleged rule violations; and jointly recommended that Barns be publicly reprimanded for his misconduct.

{¶ 3} After a hearing before a panel of the Board of Professional Conduct, the panel issued a report adopting the parties' stipulations of facts and exhibits-including their agreement to dismiss three alleged rule violations. The board adopted the panel's findings of fact and conclusions of law, and upon consideration of the applicable aggravating and mitigating factors and the sanctions imposed by this court for comparable misconduct, it recommended that we publicly reprimand Barns. Neither party has objected to the board's report and recommendation.

{¶ 4} Based on our independent review of the record, we adopt the board's findings of misconduct and recommended sanction.

Background

{¶ 5} In October 2009, Barns was a solo practitioner who promoted his law practice as being capable of providing legal representation in matters that included business formation and intellectual-property matters. At that time, Mark Plaskow hired Barns to form a corporation to protect, finance, and commercialize certain medical intellectual property that Plaskow had created.

{¶ 6} Barns submitted initial articles of incorporation for Plaskow's company, American Health Technology Corporation ("AHT"), to the secretary of state on October 5, 2009. Plaskow and Barns were the two founding members of the company. Plaskow was the initial director and also served as the chairman of the board and chief technology officer. Joseph Borovsky served as the company's president and chief executive officer. Barns served as the statutory agent and provided legal services to Plaskow and AHT in connection with business and intellectual-property matters and was issued shares of common stock in the company at its formation.

*52Misconduct

Count One

{¶ 7} Barns was appointed as the chief legal officer of AHT on January 1, 2010, and served in that capacity until May 1, 2012-but Plaskow and the corporation were never his only clients. Barns was responsible for all of the usual and customary services rendered by an attorney in that role, including the handling of all business and legal affairs of the corporation and the preparation, completion, and maintenance of AHT's corporate records and books. Although AHT attempted to comply with some of Ohio's required corporate formalities, it did not fulfill all of its statutory obligations. For example, the company held an organizational meeting after its incorporation, but Barns did not formally record the actions taken at that meeting as required by R.C. 1701.10(B) or maintain a complete set of corporate records and minutes as required by R.C. 1701.37. In fact, he maintained just one set of minutes, that from AHT's March 15, 2010 meeting. And although the company issued stock, Barns did not prepare stock-subscription agreements, nor did he create stock certificates as required by R.C. 1701.24.

{¶ 8} At his disciplinary hearing, Barns testified that before he represented Plaskow, he had never organized a corporate structure for anyone other than himself. He admitted that he entered an area of law that he knew nothing about and in which he was not competent to practice.

*925{¶ 9} The parties stipulated and the board agreed that this conduct violated Prof.Cond.R. 1.1 (requiring a lawyer to provide competent representation to a client).

Count Two

{¶ 10} In May 2011, while serving as AHT's president and chief executive officer, Borovsky filed initial articles of incorporation for World Health Technology, Inc. ("WHT"), and issued shares of WHT stock to Barns. Later that month, Plaskow decided to terminate Borovsky's employment, and Barns drafted a severance agreement on behalf of AHT. Despite knowing that Borovsky was represented by Borovsky's son, who was an attorney in another state, Barns negotiated the terms of the severance agreement directly with Borovsky. He also executed a stock-swap agreement with Borovsky, which provided that he would transfer his WHT stock to Borovsky in exchange for Borovsky's shares of AHT stock.

{¶ 11} The parties stipulated that this conduct violated Prof.Cond.R. 4.2 (prohibiting a lawyer from communicating about the subject of the representation with a person the lawyer knows to be represented by another lawyer unless the *53lawyer has the consent of the other lawyer or is authorized by law or a court order).

Count Three

{¶ 12} In late 2011, Barns drafted and entered into an agreement with AHT under which he became an employee of the company. The agreement provided that he would receive a salary from the company as compensation for his work as the chief legal officer and that he would continue to be paid separately for legal services related to patent applications requested by Plaskow and AHT. Despite the existence of that contract, the company never paid Barns a salary. Instead, he continued to bill the company through his law firm, and he was paid as an independent contractor. Barns also received shares of AHT stock as compensation for his work at the company, but he did not provide AHT with written confirmation of the terms of that compensation or the desirability of seeking the advice of independent counsel regarding the transaction, nor did he obtain the company's informed consent to the essential terms of the transaction in writing. The parties and board agreed that this conduct violated Prof.Cond.R. 1.8(a) (prohibiting a lawyer from entering into a business transaction with a client or knowingly acquiring an ownership, possessory, security or other pecuniary interest that is adverse to a client unless the client is advised in writing of the desirability of obtaining independent legal counsel and the terms of the transaction are fair, reasonable, and fully disclosed in a writing signed by the client).

Count Four

{¶ 13} When Plaskow initially retained Barns in 2009, Barns maintained professional-liability insurance. At some point during that representation, Barns's coverage lapsed, but he failed to notify his existing clients, including Plaskow and AHT, of that fact. He also failed to notify new clients that he did not carry professional-liability insurance. Barns admits that his conduct violated Prof.Cond.R.

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123 N.E.3d 922, 156 Ohio St. 3d 50, 2018 Ohio 5098, Counsel Stack Legal Research, https://law.counselstack.com/opinion/columbus-bar-assn-v-barns-ohio-2018.