author: LAYORATO, Chief Justice.

text:
    IOWA DEPARTMENT OF TRANSPORTATION, Appellee, v. John M. SOWARD, Deborah A. Soward, and SNL, Inc., Appellants, and Warren Water District and Polk County, Iowa, Defendants.
    No. 00-0861.
    Supreme Court of Iowa.
    Sept. 5, 2002.

      Daniel L. Manning of Connolly, O’Mal-ley, Lillis, Hansen & Olson, Des Moines, for appellants.
    Thomas J. Miller, Attorney General, David A. Ferree, .Special Assistant Attorney General, and Mark Hunacek and Carolyn J. Olson, Assistant Attorneys General, for appellee.
   LAYORATO, Chief Justice.

Landowners appeal from a district court ruling denying their request for payment of expert witness fees as “costs occasioned by the appeal” in a condemnation action, pursuant to Iowa Code section 6B.33 (1997). We find no error in the ruling and therefore affirm.

I. Background Facts and Proceedings.

The Iowa Department of Transportation (IDOT) condemned property owned by John and Deborah Soward and a corporate entity formed by the Sowards, SNL, Inc. (hereinafter collectively “Sowards”). On August 19,1998, the Polk County Compensation Commission awarded the Sowards $950,000 to compensate them for the property condemnation.

The Sowards were satisfied with the award and had no intention to appeal. The IDOT, however, appealed the award to the district court. Following a jury trial in March 2000, the jury awarded the So-wards $1.3 million plus interest.

In April 2000, the Sowards filed an application for costs in which they sought $33,970.50 for expert witness fees. In a memorandum of law, the Sowards challenged this court’s decision in City of Ottumwa v. Taylor, 251 Iowa 618, 102 N.W.2d 376 (1960). In Taylor, this court held that the language “all costs occasioned by the appeal” in Iowa Code section 472.33 (1958) (predecessor to Iowa Code section 6B.33) did not include payment of fees and expenses for expert witnesses in eminent domain proceedings. 251 Iowa at 625, 102 N.W.2d at 380. The IDOT resisted the Sowards’ application.

Following a hearing, the district court filed an order denying the application. It is from this order that the Sowards appeal.

II. Issue.

The Sowards contend, as they did in the district court, that this court’s decision in Taylor is contrary to the meaning of Iowa Code section 6B.33 (1997). In short, the Sowards argue, contrary to Taylor; the language “all costs occasioned by the appeal” in section 6B.33 includes expert witness fees.

III. Scope of Review.

We review questions of statutory construction for correction of errors at law. In re S.J.D., 641 N.W.2d 794, 797 (Iowa 2002).

IV. Applicable Rules of Statutory Construction.

When the text of the statute is plain and its meaning clear, we do not search for a meaning beyond the statute’s express terms or resort to rules of statutory construction. Henriksen v. Younglove Constr., 540 N.W.2d 254, 258 (Iowa 1995). It is only when there is ambiguity in the statute that we resort to such rules. Stroup v. Reno, 530 N.W.2d 441, 443 (Iowa 1995). We consider a statute ambiguous if reasonable minds could differ or be uncertain as to the meaning of it. Carolan v. Hill, 553 N.W.2d 882, 887 (Iowa 1996).

Our ultimate goal in construing statutes is to find the true intention of the legislature. Bernau v. Iowa Dep’t of Transp., 580 N.W.2d 757, 761 (Iowa 1998). If more than one statute is relevant, we consider the statutes together and try to harmonize them. State v. Snyder, 634 N.W.2d 613, 615 (Iowa 2001).

The legislature is its own lexicographer. low a Beef Processors, Inc. v. Miller, 312 N.W.2d 530, 533 (Iowa 1981). So in searching for legislative intent, we are bound by what the legislature said, not by what it should or might have said. Krull v. Thermogas Co., 522 N.W.2d 607, 612 (Iowa 1994). Additionally, we are bound to follow the legislature’s definitions and “may not add words or change terms under the guise of judicial construction.” Iowa Beef Processors, 312 N.W.2d at 533. If the legislature has not defined words of a statute, we may refer to prior decisions of this court and others, similar statutes, dictionary definitions, and common usage. Bernau, 580 N.W.2d at 761.

Y. Does the Language “All Costs Occasioned by the Appeal” in Iowa Code section 6B.33 Include Expert Witness Fees?

Iowa Code section 6B.33 provides in pertinent part:

The applicant shall also pay all costs occasioned by the appeal, including reasonable attorney fees to be taxed by the court, unless on the trial thereof the same or less amount of damages is awarded than was allowed by the tribunal from which the appeal was taken.

Iowa Code § 6B.33 (emphasis added).

As mentioned, in Taylor, this court addressed whether the language “all costs occasioned by the appeal” included expert witnesses fees, and concluded it did not. Taylor, 251 Iowa at 625, 102 N.W.2d at 380. The court in Taylor was addressing Iowa Code section 472.33 (1958), which was subsequently renumbered section 6B.33. The language at issue here is identical to the language at issue in Taylor. See id. at 621, 102 N.W.2d at 377. The court’s analysis in Taylor included the following points, all of which we conclude are valid today.

The court first noted that costs are “taxable only to the extent provided by statute.” Id. at 621, 102 N.W.2d at 378. Moreover, the term “just compensation” for land taken by eminent domain includes neither attorney fees nor expert witness fees. Id. “Costs,” the court explained, “has a well-defined legal meaning” and “includes the sums ordinarily taxable for expense incurred in an action as provided by statute.” Id. at 622, 102 N.W.2d at 378. And, the court concluded, the term “costs” does not include expert witness fees. Id.

The court in Taylor gave several reasons for its conclusion. First, “[n]o good reason is apparent why condemnees in eminent domain proceedings should be reimbursed for such expenses ... while other successful litigants must themselves bear similar expenses.” Id. at 624, 102 N.W.2d at 379. Second, section 472.33 (now section 6B.33), a special statute, applies over section 625.1, a general statute. Id. (Section 625.1 remains part of the Iowa Code. See Iowa Code § 625.1 (1997) (“Costs shall be recovered by the successful against the losing party.”)). Last, the court concluded, the express mention of attorney fees implies exclusion of all other expenses. Id. at 625, 102 N.W.2d at 380. It reasoned that

[i]f the language ... were broad enough to include attorney fees, the clause [rer garding attorney fees], added by way of amendment to the statute, would be sur-plusage which effected no change in the law. Our interpretation of this statute gives effect to the clause pertaining to attorney fees.
If the legislature intends to grant [authority for payment of expert witness fees], it must do so in clearer language than that in [section] 472.33.

Id.

The court in Taylor was careful to point out that nothing in its opinion was intended to “cast doubt on the propriety of taxing expert witness fees under Iowa Code section 622.72 (1958)” (providing for additional compensation for expert witnesses not to exceed four dollars per day). Id. (Iowa Code section 622.72 (1997) provides for additional compensation for expert witnesses not to exceed $150 per day.) However, the court noted, any increase beyond that compensation had to be fixed by the legislature. Id.

The Sowards contend that because we have taken steps away from this court’s holding in Taylor, we must now overturn it. To support their position, the Sowards cite Lehigh Clay Products, Ltd. v. Iowa Department of Transportation, 545 N.W.2d 526 (Iowa 1996), and River Bend Farms, Inc. v. M & P Missouri River Levee District, 324 N.W.2d 460 (Iowa 1982).

In River Bend Farms, this court addressed whether attorney fees were allowable in an appeal from a levee district’s condemnation award involving land in an intercounty levee district. The court’s analysis of the issue involved statutory interpretation and a discussion of the interplay between Iowa Code chapters 455 (levee and drainage districts), 457 (inter-county levee or drainage districts), and 472 (eminent domain procedure) (now chapter 6B). River Bend Farms, 324 N.W.2d at 462-63. The court concluded section 472.33 (1979) (now section 6B.33), which allows for attorney fees, applied in this case “as mandated by section 472.1 [providing that the provisions of chapter 472 apply to “the condemnation of private property for works of internal improvement ... unless and except as otherwise provided by law”] because there is no contravening definition of costs of appeal in either chapter 455 or 457.” Id. at 464.

The Sowards rely heavily on language appearing in River Bend Farms. The court described Iowa Constitution article I, section 18 as the “basic law” governing the exercise of the eminent domain power. Id. at 461. The court said that chapter 472 (now chapter 6B), which governs the procedure to be followed in condemnation proceedings, “helps to protect ‘the citizen in the quiet and proper enjoyment of his property.’ ” Id. at 462 (citations omitted). The court further said, “[w]e believe the statutes here under scrutiny can be deployed fairly to provide complete justice to an owner whose property is being involuntarily taken, first by assuring the reimbursement of attorney fees does not turn on the happenstance of the public purpose for which the property was taken ...; and second, by permitting him or her to receive its market value undiminished by expenses necessarily incurred to obtain a fair result.” Id.

In Lehigh Clay Products, we addressed whether appellate attorney fees are recoverable under section 6B.33. 545 N.W.2d at 529. Overruling Wilson v. Fleming, 239 Iowa 918, 32 N.W.2d 798 (1948), we concluded such fees are recoverable under section 6B.33. Id. The Sowards point to the following passage from Lehigh Clay Prodticts to support their argument:

The manifest purpose of section 6B.33 is to more nearly make whole those property owners whose lands are taken by eminent domain and who must litigate in the courts in order to obtain a proper determination of their just compensation. If such persons are required to pay their own attorney fees, much of the benefit that might be gained by a successful appeal would be offset by the resulting legal costs. Given this general acceptance of the statute’s purpose, there is no basis for attributing to the legislature an intention to draw an arbitrary distinction between fees in the district court and fees on appeal.

Id. at 528.

The Sowards argue that River Bend Farms and Lehigh Clay Products “conclusively establish” the legislative intent of section 6B.33. They urge us to look not only to the statutory language of section 6B.33, but also to Iowa Constitution article I, sections 1 (providing that the right to own, enjoy, and protect property is an inalienable right) and 18 (allowing for the taking of property for a public purpose provided that a property owner is justly compensated). Given that the goals are to (1) ensure the property owner obtains “complete justice,” as pronounced in River Bend Farms, and (2) promote justice and make a property owner whole, as pronounced in Lehigh Clay Products, the So-wards argue they must be awarded the market value of their property “undiminished by expenses necessarily incurred to obtain a fair result.” According to the Sowards, Taylor “lies directly in the path” of legislative intent and must be overturned.

The Sowards’ argument is flawed in several respects. First, they fail to recognize that the constitutional right to “just compensation” does not extend to compensation for ancillary items such as attorney fees or litigation costs. See United States v. Bodcaw Co., 440 U.S. 202, 203, 99 S.Ct. 1066, 1066-67, 59 L.Ed.2d 257, 259 (1979) (“[Ijndirect costs to the property owner caused by the taking of his land are generally not part of the just compensation to which he is constitutionally entitled.”); Atherton v. State Conservation Comm’n, 203 N.W.2d 620, 622 (Iowa 1973) (“The right of a eondemnee to an award of costs on the condemnor’s abandonment of an eminent domain proceeding has been said to be purely statutory, and in the absence of a specific statutory provision therefore, there may not be a right to recover such costs.”) (citation omitted); Taylor, 251 Iowa at 621, 102 N.W.2d at 378 (neither attorney fees nor expert witness fees are embraced within the term “just compensation” for land taken by eminent domain) (citing cases). So, to the extent that the Sowards rely on statements in Lehigh Clay Products and River Bend Farms discussing the constitutional provisions relating to eminent domain and just compensation, their reliance is misplaced.

More important, thé Sowards “put the cart before the horse.” They spend their entire brief arguing about the législative intent behind section 6B.33, and how the court has more clearly articulated legislative intent since Taylor. However, the Sowards fail to mention how the language of the statute supports their interpretation and fail to counter the statutory construction analysis set forth in Taylor. Finally, they do not explain why, given the invitation by this court in Taylor, to amend the statute, the legislature has failed to do so after more than forty years. See Taylor, 251 Iowa at 625, 102 N.W.2d at 380.

Recent amendments to section 6B.33 have not addressed the issue of expert witness fees. See 2000 Iowa Acts ch. 1179, § 19; 1999 Iowa Acts ch. 171, § 15. We note a recent attempt to add the phrase “costs of appraisals and expert witnesses” to section 6B.33 did not make it out of committee. See S.F. 37, 79th G.A., 1st Sess. § 4 (Iowa 2001).

The legislature’s failure to “correct” this court’s decision in Taylor is entitled to considerable weight. See Cover v. Craemer, 258 Iowa 29, 34, 137 N.W.2d 595, 599 (1965) (construction given to a statute in a case decided sixty years earlier “has evidently met with the approval of each successive legislature, and under such circumstances we should not change it”). As this court noted in Cover, the rule of stare decisis

is especially applicable where the construction placed on a statute by previous decisions has been long acquiesced in by the legislature, by its continued use or failure to change the language of the statute so construed, the power to change the law as interpreted being regarded, in such circumstances, as one to be exercised solely by the legislature.

Id. at 34-35, 137 N.W.2d at 599 (citation omitted). We conclude that if there is to be a change to section 6B.33 after forty years of acquiescence by the legislature, such change should come from that body.

VI. Disposition.

The Sowards have failed to give us any compelling reason to overturn Taylor, a forty-year-old decision that squarely addresses the issue of expert witness fees under Iowa Code section 6B.33. Accordingly, we affirm the decision of the district court denying the Sowards’ application for payment of such fees.

AFFIRMED.


source: Caselaw Access Project

author: STREIT, Justice.

license: Public Domain

text:
    IOWA SUPREME COURT BOARD OF PROFESSIONAL ETHICS AND CONDUCT, Complainant, v. Allan H. RAUCH, Respondent.
    No. 02-0652.
    Supreme Court of Iowa.
    Sept. 5, 2002.

      Norman G. Bastemeyer and Charles L. Harrington, Des Moines, for complainant.
    Allan H. Rauch, Des Moines, pro se.
   STREIT, Justice.

An Iowa attorney is charged with improper ex parte communications with several judges, -deceiving the court, and neglect of client matters. The Iowa Supreme Court Board of Professional Ethics and Conduct filed a complaint with our Grievance Commission against Allan Rauch, alleging he violated several ethical rules. The Commission recommended we suspend Rauch’s license to practice law for seven months. Our review is required by Iowa Court Rule. 35.10 (2002). We agree with the Commission’s findings of misconduct and suspend Rauch’s license to practice law for one year.

I. Facts and Background

Allan Rauch represented Robin Copie (formerly known as Robin Noble) in divorce and child custody proceedings. During Copic’s representation, Rauch had three ex parte conversations with three judges, and obtained two ex parte orders knowing there was another attorney involved in the case. Rauch is also charged with neglect of client matters. All of these charges involve the same case.

Rauch is charged with neglect of Copic’s case at both the trial and appellate levels. He filed the petition for modification of the Noble decree but failed to properly represent Copie. He did not arrange mandatory mediation. Rauch did not file and exchange witness and exhibit lists within ten days before trial as required. For these lapses the court ordered Rauch to pay a $600 discovery sanction and dismissed the petition for modification. Rauch filed a notice of appeal. However, he did not diligently prosecute the appeal. Rauch failed to pay the $600 judgment imposed by the trial court.

In December 1999, Rauch had two ex parte communications with two separate district court judges resulting in two orders. He first presented a judge with an order to terminate the original income withholding order of child support from his client’s paycheck. Rauch did not notify opposing counsel, Michael Adams, of this meeting. Adams learned of this order over a month later. The judge who signed this order had no specific recollection of it.

Rauch’s second ex parte contact, again in the same case but with a second judge, involved the obtaining of an order captioned “nunc pro tunc” correcting the first order to make it retroactively stop income withholding. Again, attorney Adams did not know about this order at the time Rauch presented it to the court for signing. The judge who signed this particular order could not remember any specifics of the order.

Finally, in April 2000, Rauch had a third ex parte communication with the trial judge attempting to obtain a continuance of Copic’s trial in which Rauch sought modification of child custody and support. The judge testified Rauch led him to believe opposing counsel was aware of and supported the request for a continuance. In reality, attorney Adams had no knowledge of this request. Rauch stated he had this ex parte communication with the court only after being told to do so by the court administrator’s office. Rauch also stated he did not intend to mislead the court.

II.Scope of Review

We review the findings and recommendations of the Grievance Commission de novo. Iowa Ct. R. 35.10. We give respectful consideration to the Commission’s findings and recommendations, but are not bound by them. Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Lemanski, 606 N.W.2d 11, 13 (Iowa 2000). The Board has the burden to prove misconduct by a convincing preponderance of the evidence. Iowa Supreme Ct. Bd. of Profl Ethics & Conduct v. Sherman, 619 N.W.2d 407, 409 (Iowa 2000).

III. The Commission’s Findings

The Commission found Rauch violated the rule prohibiting conduct involving dishonesty, fraud, deceit, and misrepresentation. DR 1 — 102(A)(4). For the same conduct, the Commission found Rauch violated the rules prohibiting conduct that is prejudicial to the administration of justice and conduct that adversely reflects on the fitness to practice law. DR 1-102(A)(5), (6). Because Rauch failed to prosecute the appeal, the Commission found he violated the rule prohibiting neglect of a client’s legal matter. DR 6-101(A)(3). Finally, the Commission found Rauch communicated with a judge as to the merits of the case in violation of the requirements for ex parte communications outlined in DR 7-110(B).

IV. Misconduct and Sanction

We find the record supports the findings of the Commission. Rauch lied to the judge in his attempt to have the trial continued. When the trial judge checked with opposing counsel, Michael Adams, to see if he agreed to the continuance, Adams was “shocked” to learn of Rauch’s request. The judge then dismissed Rauch’s modification petition for failure to complete certain pretrial matters. Rauch contends he contacted the judge ex parte at the direction of the court administrator. We assume the administrator told him that trial continuances could only be obtained by court order. It is unwarranted for Rauch to claim a court administrator’s instruction to talk to the trial judge if he sought a continuance somehow authorized the ex parte contact. Rauch’s excuse for such contact is wholly without merit.

Rauch is charged with neglect of his client’s matter both in prosecuting her modification action in the trial court and later on the appeal. The court dismissed the petition for modification because Rauch did not comply with several pretrial matters. He failed to exchange exhibits with opposing counsel. He served counsel with a witness list five days before trial instead of the required ten days. Finally, Rauch did not comply with the court-ordered mediation. In regard to Rauch’s failure to prosecute the appeal, he attempts to justify his inaction by asserting he could not continue because his client had not paid him enough money for these legal services. This argument is likewise unpersuasive. Once Rauch filed the appeal, it was his duty to diligently prosecute it. See Iowa R.App. P. 6.32. If Rauch was unable to complete his professional obligation, it was his duty to file a motion to withdraw. The course of action pursued — that of inaction — is not ethical.

Finally, with regard to Rauch’s ex parte contact to terminate the order for income withholding of child support for his client, Rauch offers yet another excuse. Though he attempts to defend his conduct by asserting it was in his client’s best interests, this is no excuse. See Comm. on Prof'l Ethics & Conduct v. Bauerle, 460 N.W.2d 452, 453 (Iowa 1990) (deceitful act done in the interests of the client not excused). Rauch claims he did not tell Adams because Adams’ client would insist on filing a resistance. Rauch asserts his client was in an unfair position because she now had custody of the child but was forced to continue child support payments to the child’s father — something Rauch would have certainly later argued, had the case gone to trial.

We have before considered ex parte communications resulting in ethical violations. Our rule governing standards of professional conduct for ex parte contact provides,

In an adversary proceeding, a lawyer shall not communicate, ... as to the merits of the cause with a judge ... before whom the proceeding is pending, except:
(1) In the course of official proceedings in the cause.
(2) In writing if a copy is promptly delivered to opposing counsel or to the adverse party if not represented by a lawyer.
(3) Orally upon adequate notice to opposing counsel or to the adverse party if not represented by a lawyer.
(4) As otherwise authorized by law.

DR 7-110(B). The fourth exception includes only ex parte communications for the purpose of “obtain[ing] ex parte restraining orders, submissions made in camera by order of the judge, or similarly rare occasions.” Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Lesyshen, 585 N.W.2d 281, 287 (Iowa 1998) (quoting Charles W. Wolfram, Modern Legal Ethics § 11.3, at 605 (1986)). Rauch does not meet any of these exceptions for any of the ex parte communications. As such, the ex parte communications between Rauch and the district court judges occurred in a manner not permitted by law.

As the above rule indicates, we explicitly allow ex parte communications only under specific circumstances. See DR 7-110(B); EC 7-35. The purpose behind the rule prohibiting ex parte communications is to prevent “the effect, or even the appearance, of granting undue advantage to one party to the litigation.” In re Conduct of Thompson, 325 Or. 467, 940 P.2d 512, 515 (1997); EC 7-35 (“[A] lawyer should not communicate with a judge relative to a matter pending ... in circumstances which might have the effect or give the appearance of granting undue advantage to one party.”). Our adversarial system is premised on affording each party to a controversy the opportunity to be heard. Lawyers and litigants should have access to tribunals on an equal basis. EC 7-35.

Improper ex parte communications undermine our adversarial system, which relies so heavily on fair advocacy and an impartial judge. [Such communications] threaten[ ] not only the fairness of the resolution at hand, but the reputation of the judiciary and the bar, and the integrity of our system of justice.

In re Anonymous, 729 N.E.2d 566, 569 (Ind.2000) (quoting Matter of Marek, 609 N.E.2d 419, 420 (Ind.1993)). It is imperative that we avoid even the appearance of granting one party a procedural or tactical advantage over the other as a result of an ex parte contact. Both judges and lawyers must demonstrate due regard for the rights of parties to be heard.

To facilitate a balance of representations by opposing advocates, we require lawyers to fulfill certain procedural requirements before engaging in ex parte communications. In general, a lawyer may not discuss with the court ex parte matters related to the merits of a pending proceeding. Such matters may be either substantive or procedural. In re Conduct of Eadie, 333 Or. 42, 36 P.3d 468, 477-78 (2001) (The term “on the merits” includes procedural as well as substantive matters.).

Some courts allow an exception to the general rule prohibiting ex parte contact for scheduling matters. See, e.g., In re Anonymous, 729 N.E.2d at 568; Model Code of Judicial Conduct Canon 3B(7)(a). However, not all communications regarding scheduling matters are permitted when the nature of scheduling matters may affect the case. In the case before us, Rauch’s eleventh-hour attempt to obtain a trial continuance certainly includes the potential for affecting the merits of the case. There are other circumstances where procedural matters clearly impact a case and can affect later proceedings. Because Rauch did not attempt to comply with the provisions of DR 7-110(B) and because the substance of his communications had potential ramifications on important legal interests at stake in the proceedings, we conclude Rauch engaged in an impermissible ex parte contact with'the court.

Rauch’s violation of the rule prohibiting ex parte communications except under limited circumstances is seriously aggravated by his misrepresentation to the court. Not only did he violate the rule prohibiting deceit and misrepresentation, but Rauch also violated the rules prohibiting conduct prejudicial to the administration of justice and conduct adversely reflecting on one’s fitness to practice law. DR 1-102(A)(5), (6). We have discussed such violations before in Committee on Professional Ethics & Conduct v. Postma, 430 N.W.2d 387 (Iowa 1988). There we found the violation for the ex parte communication was compounded by all of the relevant details Postma failed to disclose to the judge, including the fact that there was another attorney of record on the case who was not notified of the order Postma presented to the court. We suspended Postma’s license for six months. Postma, 430 N.W.2d at 392. Also, in another similar case, we suspended an attorney’s license for six months for an ex parte communication with a judge in which the attorney failed to tell the court that a party was represented by counsel. See Lesyshen, 585 N.W.2d at 288. There we said,

[fundamental honesty is the base line and mandatory requirement to serve in the'legal profession. The whole structure of ethical standards is derived from the paramount need for lawyers to be trustworthy. The court system and the public we serve are damaged when our officers play fast and loose with the truth. The damage occurs without regard to whether misleading conduct is motivated by the client’s interest or the lawyer’s own.

Id. (quoting Bauerle, 460 N.W.2d at 453). “Absent mutual trust and confidence between a judge and a lawyer — an officer of the court — the judicial process will be impeded and the administration of justice frustrated.” Id. (quoting Iowa Supreme Ct. Bd. of Profl Ethics & Conduct v. Plumb, 546 N.W.2d 215, 217-18 (Iowa 1996)). Rauch misrepresented facts to the trial judge to gain advantage for his client. His misrepresentation bespeaks of a know-, ing deception attempted on the court. This type of misconduct cannot go undisciplined.

In determining the appropriate sanction we consider the presence of mitigating or aggravating circumstances. Here, one such aggravating circumstance is Rauch’s previous sanction for ethical violations. In 1988, we reprimanded Rauch for failing to act with competence and proper care in representing his clients, failing to prepare adequately for a legal matter, and neglecting entrusted legal matters. See Comm. on Prof'l Ethics & Conduct v. Rauch, 417 N.W.2d 459, 460 (Iowa 1988). As a mitigating factor in that case, we considered the fact that Rauch’s lack of competence and care in handling his client’s case was an isolated event inconsistent with his normal practice. Id. Again in 1992, Rauch came before this court on ■ charges of misappropriation of testamentary trust funds, collection of con-servatorship fee without court approval, maintenance of disorganized client trust accounts, ■ undignified and discourteous conduct toward a tribunal, and mishandling of an adoption proceeding. Comm. on Prof'l Ethics & Conduct v. Rauch, 486 N.W.2d 39 (Iowa 1992). Finding the Commission proved the above, allegations by a convincing preponderance of the evidence, we suspended Rauch’s license to practice law for one year. Id. at 40. Because Rauch later failed to notify his clients and opposing counsel of his 1992 suspension, we extended Rauch’s suspension for another three months. Comm. on Prof'l Ethics & Conduct v. Rauch, 508 N.W.2d 628, 629 (Iowa 1993).

Rauch attempts to offer as a mitigating circumstance the fact that many other lawyers also have ex parte communications with judges, especially in domestic relations court, as to routine scheduling matters. Rauch states such communications are “a fact of life.” Even if there is some evidence of ex parte communications regarding scheduling matters, Rauch’s contention that everyone does it is without merit. Rauch does not articulate the difference between an ex parte request asking that a motion or other matters be set for hearing and a motion to continue a trial. There is no evidence, other than Rauch’s testimony, in the record to suggest ex parte trial continuances are routinely granted in divorce matters. See, e.g., Mississippi Bar v. Logan, 726 So.2d 170, 178 (Miss.1998) (speaking with lawyers concerning various procedural issues not prohibited because it was a common and accepted practice in Mississippi). Iowa rules of professional conduct plainly state, “a lawyer shall not violate a disciplinary rule.” DR 1 — 102(A)(1). It does not say a lawyer shall not violate a disciplinary rule unless such violation is commonplace. See Comm, on Prof'l Ethics & Conduct v. Zimmerman, 465 N.W.2d 288, 291 (Iowa 1991) (The fact that lawyers violate a particular disciplinary rule routinely does not work as a defense.). Contrary to Rauch’s assertion, we are not imposing an unreasonable standard upon Rauch. We are merely requiring conformance with our rules of professional responsibility as they are written.

We find the facts as shown above warrant suspension of Rauch’s license to practice law. A suspension is warranted in the interests of protecting the integrity of the legal system, specifically a party’s right to a fair hearing. We therefore suspend Rauch’s license with no possibility for reinstatement for a period of one year from the date of the filing of this opinion. Upon application for reinstatement, Rauch shall have the burden to prove he has not practiced law during the period of suspension and that he meets the requirements of Iowa Court Rule 35.13. Any hearing on application for reinstatement shall be at least sixty days after the filing of such application. See Iowa Ct. R. 35.13(l)(a). Rauch’s “motion for leave to appeal and other relief’ is denied. The costs of this action are assessed against the respondent in accordance with Iowa Court Rule 35.25.

LICENSE SUSPENDED.


author: CADY, Justice.

text:
    VAN BUREN COUNTY HOSPITAL AND CLINICS, Appellant, v. BOARD OF REVIEW OF VAN BUREN COUNTY, Appellee.
    No. 00-1535.
    Supreme Court of Iowa.
    Sept. 5, 2002.

      Mark R. Schuling of Brick, Gentry, Bowers, Swartz, Stoltze, Schuling <& Levis, P.C., Des Moines, for appellant.
    Frank W. Pechacek, Jr. and Michael J. Davenport of Willson & Pechacek, P.L.C., Council Bluffs, for appellee.
    J. Kirk Norris, Des Moines, for amicus curiae Iowa Hospital Association.
   CADY, Justice.

This appeal requires us to determine whether portions of a county hospital used as a medical clinic for physicians and a clinic for specialists, as well as portions of the hospital property used to provide employment placement services and agricultural health and safety instructional courses, were entitled to an exemption from property taxation pursuant to Iowa Code section 427.1 (1997). The Board of Review of Van Burén County (Board) denied the county hospital’s claim for exemption. The Board found the portion of the property in dispute was not devoted to a public or charitable use and was operated with a view to realizing a pecuniary profit. The district court affirmed the Board’s decision on judicial review. On our review, we conclude the property was exempt from taxation. We reverse the decision of the district court and remand the case for further consideration.

I. Background Facts and Proceedings.

Van Burén County is located in the southeastern part of Iowa. It is primarily a rural county and is one of Iowa’s least populated. Between the 1980 and 1990 census, the population of Van Burén County decreased from 8626 to 7676 citizens. The unemployment rate is relatively high compared to other parts of the state, and most residents work in agricultural-related fields.

The county has one hospital. It is located in the town of Keosauqua and is owned by Van Burén County Hospital. The hospital property has always been exempt from property taxation.

In 1997, the hospital constructed an addition to its existing complex at the cost of $3.5 million. The addition included a new emergency room, a physician’s clinic, and a specialist’s clinic.

The hospital constructed the clinic areas as part of a plan to employ the three physicians who practiced medicine in the community and provide them with an area to treat and care for their patients in a clinic setting. This plan was conceived after the hospital had been unable to recruit new physicians into the area during the preceding six years. During this time, the number of physicians who utilized the hospital and provided care to the hospital patients decreased. Furthermore, it was anticipated that there would soon only be two physicians at the hospital. The three physicians practiced in a private clinic in Keosauqua, with a satellite clinic in Farm-ington. There were two other physicians who provided medical services in Van Bu-rén County, but they were not affiliated with the hospital. One physician maintained a satellite clinic in Farmington, and the other maintained a satellite clinic in the town of Milton.

The small number of doctors serving the hospital, including the emergency room, made it increasingly difficult for the hospital to provide adequate care to the residents of the county. The hospital trustees feared the hospital would lose its ability to provide emergency and obstetric services. They also feared the lack of physicians could eventually force them to close the hospital. Without hospital services, residents would be forced to travel twenty to thirty miles to obtain emergency treatment.

In response to the growing crisis facing the hospital, the trustees entered into an agreement with the three physicians in the community to purchase their medical practice and hire them as employees of the hospital. Under the physician-employee agreements entered into by the hospital, the employee doctors were required to provide health care services at both the Keosauqua hospital and the clinic in Farm-ington. The doctors were responsible for hospital rounds, responding to emergency calls, and sharing on-call responsibilities. The employment agreement further prohibited the doctors from engaging in the private practice of medicine, either independently or with another association of physicians.

Physician compensation was based, in part, on each individual doctor’s productivity. In addition to a base salary, each doctor received fifty-five percent of the collected billings in excess of the base salary, with some limitations and adjustments. Despite the presence of incentive compensation, the hospital mandated the employee doctors to provide treatment to individuals in emergency situations, irrespective of the patient’s ability to pay. The compensation arrangement was considered very competitive for rural physicians, and the trustees believed the nature of the arrangement would attract other physicians to the area.

In a similar manner, the hospital created a specialty-physician clinic in the hospital. This was done around the same time the local doctors were hired as employees. The decision to create a specialty clinic stemmed from the unavailability of specialty care in the community. Specialists did not frequent the community on a regular basis, if at all. Consequently, residents were forced to travel long distances to receive the necessary care. After failing to successfully attract specialists to the area, the hospital entered into an agreement with the University of Iowa Hospitals and Clinics to provide part-time specialty care to the residents of Van Burén County. Under the agreements, approximately twenty-two specialists provide treatment and consultation services in such areas as cardiology consultation, pulmonary diseases, rheumatology, psychiatric, vascular surgery, hematology/oncology, general orthopedics, general dermatology, and general urology.

The specialists in each care area see patients in varying intervals every month, resembling a clinic-type format. To comply with federal law, the hospital entered into a lease with the University of Iowa at the market rate. Pursuant to the lease agreement, a full-day rental of the clinic space costs $75, while a half-day rental is $50. In general, each specialist visits the hospital from one-half day to three days each month. Furthermore, the hospital maintains control over the specialty clinicians by furnishing supplies and staff. In addition, most patients schedule appointments by directly contacting the hospital. However, the hospital is not involved with the patients’ bills and does not receive revenues from the specialty doctors’ services.

Around the same time as the clinics were established, the hospital also created a Job Opportunities Department located at the main hospital campus in Keosauqua. The objective of Job Opportunities is to provide employment assistance, placement, counseling, and evaluation for the unemployed residents of Van Burén County. Additionally, Job Opportunities provides clients with access to free computer usage and professional clothing. The clients are primarily mentally and physically disabled and are not charged for the assistance. It is the only employment service bureau in the community. In placing clients, Job Opportunities contracts with entities within and outside of Van Burén County for vocational services. If Job Opportunities does contract with a county other than Van Burén County, Van Burén County remains involved by subcontracting under the original agreement.

The hospital also created a Farm Health and Safety Department located in the Farmington clinic. This division is also associated with the University of Iowa, and serves as an agricultural health and safety center for the southeastern counties of Iowa. The purpose of the agricultural center is to educate agricultural workers and other individuals who must satisfy federal and state safety guidelines on the prevention of work-related injuries, deaths, and illnesses. The center also provides free health screenings to Van Burén County farmers.

Following the construction of the hospital addition, the Van Burén County Assessor granted tax-exempt status to the new emergency room area. However, it assessed those areas of the new addition used as clinics. It also assessed the area of the hospital devoted to the Job Opportunities Department, as well as the Farming-ton Clinic including the Farm Health and Safety Department.

The hospital timely protested the tax assessments. See Iowa Code § 441.37(l)(c) (permitting protest of assessment by taxpayer). The Board denied the hospital’s claims for exemptions and affirmed the assessor’s decision.' The hospital then appealed to the district court. See id. § 441.38(1) (protesting taxpayer may appeal from board of review’s decision to district court).

At the trial before the district court, the hospital administrator explained the reasoning underlying the Board of Trustees’ decision to revise the original physical and operational structures of the hospital. In evaluating the community’s needs, the Board of Trustees found the hospital lacked essential services that needed to be provided in order for the hospital to remain viable. Similarly, the failure of other small rural county hospitals to address their community’s needs had resulted in termination of the facilities. The hospital administrator testified that the hospital’s primary responsibility was to satisfy the community’s health care needs in a cost-effective manner and in a close proximity. The administrator acknowledged the financial stability of the hospital was a concern to the hospital trustees.

The Board presented two expert witnesses. A certified public accountant concluded the hospital did not qualify for the charitable institution exemption because it provided a minimal amount of charity care. Moreover, the accountant found the hospital enforced an aggressive collections policy, which was indicative of a pecuniary profit motive. Another expert witness was a professor of economics at Iowa State University. He found the operating practices of the specialty clinics reflected the operation of a business for profit. Several doctors who used the clinic acknowledged their treatment of the hospital patients was a for-profit enterprise. Furthermore, the professor found a lack of public or charitable use. This conclusion stemmed from his belief that county government need not provide medical clinics that can appropriately be provided by the private marketplace. Lastly, several real estate appraisers testified to their evaluations of the assessed property areas.

The district court denied the hospital’s claims for exemption from taxation on all four property areas. The hospital appeals. It claims the disputed property is entitled to exempt status under either the municipal use or charitable institution exemptions. The Board counters municipal property, such as county hospitals, can qualify for exemption only under the municipal use exemption of section 427.1(2). Nevertheless, the Board asserts the district court properly rejected the hospital’s exemption claims because the hospital did not use the disputed areas for public or charitable ■ objectives and operated them with a view for a pecuniary profit.

II. Standard of Review.

An appeal from a decision of a board of review concerning the tax assessment of property resides in equity. Id. § 441.39 (“The court shall hear the appeal in equity ....”); Friendship_Haven, Inc. v. Webster County Bd. of Review, 542 N.W.2d 837, 840 (Iowa 1996). Thus, we review tax exemption appeals de novo. Carroll Area Child Care Ctr., Inc. v. Carroll County Bd. of Review, 613 N.W.2d 252, 253 (Iowa 2000); City of Osceola v. Bd. of Review, 490 N.W.2d 539, 540 (Iowa 1992). Our determination in each case depends upon the unique facts and special circumstances presented. City of Osceola, 490 N.W.2d at 540; Doto City Sr. Citizens Hous., Inc. v. Bd. of Review, 230 N.W.2d 497, 499 (Iowa 1975); South Iowa Methodist Homes, Inc. v. Bd. of Review, 173 N.W.2d 526, 533 (Iowa 1970).

We give weight to the factual findings rendered by the district court, but are not bound by them. Carroll Area Child Care Ctr., Inc., 613 N.W.2d at 253-54. The burden of proving an entitlement to tax-exempt status is placed on the taxpayer seeking the exemption. City of Osceola, 490 N.W.2d at 540. Furthermore, the taxpayer must establish the tax-exempt status by a preponderance of the evidence. Carroll Area Child Care Ctr., Inc., 613 N.W.2d at 254.

III. Exemption From Property Tax.

Our legislature exempts certain categories or classes of property from taxation. Iowa Code § 427.1. Two of these exemptions are at issue in this case. One is the exclusion for property of a county or other governmental subdivision, commonly referred to as the municipal exemption. Id. § 427.1(2). The second is the exemption for property of a charitable institution. Id. § 427.1(8). We first consider the county property exemption under section 427.1(2).

A. Municipal Exemption.

The municipal exemption portion of the statute exempts from taxation:

The property of a county ... when devoted to public use and not held for pecuniary profit....

Id. § 427.1(2).

Generally, we strictly construe statutes exempting property from taxation, and resolve any doubts in favor of taxation. City of Oskaloosa v. Bd. of Review, 490 N.W.2d 542, 545 (Iowa 1992). This approach is followed because exemptions from taxation are generally disfavored as contrary to the democratic notions of equality and fairness, and exist solely due to legislative grace. 71 Am.Jur.2d State and Local Taxation § 233, at 511 (2001). Yet, this strict rule does not require a construction that is so narrow that it defeats the legislative purpose. Johnson v. Bd. of Supervisors, 237 Iowa 1103,1108, 24 N.W.2d 449, 452 (1946). We observe that our Iowa statute exempting county property from taxation is consistent with the traditional notion that government-owned property is immune from taxation when devoted to public use. 71 Am.Jur.2d State and Local Taxation § 267, at 547. Clearly, our legislature wanted to maintain this practice by establishing the municipal exemption.

We have previously recognized that the municipal exception under section 427.1(2) establishes a three-part exemption test: “(1) the property must be owned by the (county); (2) the property must be devoted to public use; and (3) such property must not be held for pecuniary profit.” City of Osceola, 490 N.W.2d at 541 (quoting Airport Bldg. Corp. v. Linn County Assessor, 406 N.W.2d 806, 808 (Iowa Ct. App.1987)). Thus, county property is not exempt from taxation solely because it is county property. See City of Oskaloosa, 490 N.W.2d at 545. Instead, the exemption depends on the manner and characteristic of the use of the property by the county. The property must be “devoted to public use” and not held “for pecuniary profit.” Iowa Code § 427.1(2).

Under this standard, the exempt status of county or other governmental subdivision property will ultimately rest with the particular facts of each case. See City of Osceola, 490 N.W.2d at 540. The statute, like many others, is necessarily general, and each case must be examined in light of the general statutory parameters as well as the legislative purpose for the municipal exception. Each claim for a municipal exception should fit within the theory behind the exemption. See City of Muscatine v. Swickard, 232 Iowa 1175, 1186, 6 N.W.2d 23, 28 (1942); Readlyn Hosp. v. Roth, 223 Iowa 341, 345, 272 N.W. 90, 92 (1937) (claim for exemption will be sustained only if shown to be within the letter and spirit of the law).

We have previously recognized that the theory behind exempting county or municipal property is county or municipal residents should not be taxed to raise money to pay taxes on their own property. City of Muscatine, 232 Iowa at 1186, 6 N.W.2d at 28. If a governmental entity is forced to pay tax on its own property, it would normally be forced to levy a new tax to pay the tax. 71 Am.Jur.2d State and Local Taxation § 267, at 548. The ultimate effect of such a tax spiral is the public will be taxing itself to raise money to pay itself. State Bd. of Equalization v. City of Lander, 882 P.2d 844, 850 (Wyo.1994) (citing 16 Eugene McQuillan, The Law of Municipal Corporations § 44.57, at 206 (3d ed.1994)). This approach provides no real benefit, and only takes money out of one pocket and places it in another. State Bd. of Equalization, 882 P.2d at 850 (citing 2 Thomas M. Cooley, The Law of Taxation § 621, at 1317 (4th ed.1924)); 2 Am.Jur.2d State and Local -Taxation § 267, at 548. Consequently, the theory for exempting county property rests with a rather fundamental principle of government that there should be no unnecessary interference imposed on government in carrying out its purposes and obligations. 71 Am.Jur.2d State and Local Taxation § 267, at 548.

The rationale behind the county exemption explains the necessity for the “public use” and “pecuniary profit” elements of this statute. If a county owns property but uses it for a private purpose or in a proprietary manner, the justification for exempting the property from taxation is lost. The use of the property can generate the funds necessary to pay the taxes or the use can be assumed by a private entity. Public property held for private purposes and used for profit should be subject to tax in the same manner as property of private corporations or individuals. 71 Am.Jur.2d. State and Local Taxation § 282, at 563. Thus, we have held that a city may be taxed for electrical transmission lines when they are used to provide power outside the city borders. City of Muscatine, 232 Iowa at 1186, 6 N.W.2d at 28. Under these circumstances, nonresidents of governmental subdivisions receive the principal benefit from the use of the lines. Id. Additionally, a city has no obligation to provide electrical power to citizens beyond its border. Id. When it does so, it is using property as' a private corporation and should be taxed accordingly. Likewise, we have held that a city building leased to the United States Postal Service to process and deliver mail is not exempt from taxation under the municipal exception because the use of the building is outside the city’s obligations to its citizens. City of Oskaloosa, 490 N.W.2d at 545. The important factor is that the municipality is primarily using land as a private corporation.

On the other hand, we have held that the portion of a city airport terminal used as a residence for the airport manager nevertheless constitutes public use of land when the duties of the manager essentially require round-the-clock services. City of Osceola, 490 N.W.2d at 542. In such a situation, the use of the property as a private residence is incidental to the predominate public purpose. Id. Additionally, we have held that the collection of rent from pasture land used by a municipality as an essential water shed around its municipal waterworks system was incidental to the public use of the land and did not destroy the exempt status of the land. City of Osceola v. Bd. of Equalization, 188 Iowa 278, 281, 176 N.W. 284, 285 (1920).

Clearly, the distinction between public and private use can be fine, and the uses of property by a governmental entity can have characteristics of both public and private use. Thus, the test that has emerged from our cases interpreting the “public use” element of section 427.1(2) is whether the property in dispute is primarily used to carry on “reasonably necessary or essential facilities to the efficient operation and maintenance” of the public use for which the exemption is authorized. City of Osceola, 490 N.W.2d at 542 (quoting City of Cheyenne v. Bd. of County Comm’rs, 484 P.2d 706, 709 (Wyo.1971)). Our statute no longer requires the property to be used “entirely” for public use. Id. at 541-42. Accordingly, municipal property is exempt if it is used for a “predominately public purpose and only incidentally for a private purpose.” 71 Am.Jur.2d State and Local Taxation § 280, at 560. An incidental private benefit of public property does not affect its character as property devoted to public use. City of Osceola, 188 Iowa at 281,176 N.W. at 285.

A similar approach is taken to the “not ... held for pecuniary profit” element of the statutory exemption. When the primary use of property is public, it is not subject to taxation simply because the municipality incidentally receives revenue from the operation of the property. City of Osceola, 188 Iowa at 278, 176 N.W. at 285; 71 Am.Jur.2d State and Local Taxation § 282, at 563. Of course, the public use of property held for a profit is subject to taxation.

The parties agree all four areas in dispute in this case are owned by the county. Thus, the fighting issue centers on the public use and pecuniary profit requirements.

The overall operation of a hospital by a county fits the public use requirement. Counties are permitted by statute to establish hospitals. See generally Iowa Code ch. 347 (county hospitals); see also Iowa Code § 331.301(1) (general powers of a county include improving health and welfare of its citizens); § 331.441(2)(e)(8) (“general county purpose” includes a county public hospital). Additionally, the board of hospital trustees, which is the governing body of the hospital, is authorized to do those “things necessary for the management, control and government” of the hospital. Iowa Code § 347.14(11). Furthermore, the mission statement adopted by the hospital trustees in this ease reveals the hospital is committed to “providing health care and education to the public at large” and to provide its residents with “comprehensive state-of-the-art health care,” including “related interests that contribute to the health and welfare of both the hospital and the community.”

A hospital is clearly committed to serving the public. Yet, we recognize that such declarations and commitments are not controlling in determining an exemption from taxation. See Readlyn Hosp., 223 Iowa at 344, 272 N.W. at 91. Although they may be considered, the controlling consideration turns to the actual use made of the property. See South Iowa Methodist Homes, Inc., 173 N.W.2d at 532. Under our test, we must first determine if the primary use of each of the four areas in dispute is to carry on “reasonably necessary or essential facilities to the efficient operation and maintenance” of the county hospital. Additionally, we must determine if the areas in dispute exist to make a profit.

1. Employee-Physician Clinics.

The landscape of rural Iowa is changing, and so too are the methods and manner of delivering public services. For sure, in years gone by, physician clinics were operated as private businesses independent of hospitals, and they were not considered essential to the operation of a hospital. See Readlyn Hosp., 223 Iowa at 345, 272 N.W. at 92. A community with a hospital would attract doctors to the area who would, in turn, establish their own clinic practices, much like certain natural resources or unique features of a community attract various interdependent enterprises. Thus, physician clinics have traditionally been considered to be independent of hospitals, and clinic services are recognized to serve a slightly different purpose in delivering health care services than by hospitals. See City of Springfield v. Comm’r of Revenue, 380 N.W.2d 802, 806 (Minn.1986). Yet, even the most ardent traditions are not always impervious to the march of time.

The record in this case reveals that Van Burén County, and perhaps other rural areas around the country, have been experiencing a critical shortage of physicians. Without a sufficient number of physicians to staff a hospital, or any physicians at all, it is not unreasonable to believe that the hospital will eventually lie forced to abandon its noble pursuit, and become a remnant of the past. The county trustees responsibly and thoughtfully responded to this emerging crisis by considering new ways to retain and attract physicians to preserve the hospital and maintain its ability to provide quality health care to the community. While the approach adopted by the trustees crossed traditional paths, we have no occasion to doubt the underlying motive or purpose.

We fully understand that the operation of physician clinics may in another period of time have been viewed to be outside the role of county government. We also recognize our obligation to preserve the sound principles of the past and avoid unwarranted exemptions to taxation when the objects and methods of exempting property become too remote from the traditionally recognized objects and methods. Harvard Cmty. Health Plan, Inc. v. Bd. of Assessors, 384 Mass. 536, 427 N.E.2d 1159, 1163 (1981) (quoting Boston Chamber of Commerce v. Assessors of Boston, 315 Mass. 712, 718, 54 N.E.2d 199, 202 (1944)). However, changes in social and economic conditions often require government to change directions and consider new approaches to the delivery of services. Moreover, our traditional approach to construing a statute providing for an exemption from taxation must not tie us to past notions of the meaning of the statutory phrase “public use.” Instead, we must carefully construe the phrase consistent with the objectives and purposes sought to be accomplished by the statute, while considering the degree to which these objects affect public welfare. Roe v. Kervick, 42 N.J; 191, 199 A.2d 834, 842 (1964). This necessarily requires us to construe “public use” in a flexible manner to permit the statute to meet the changing needs of the public and society. In addressing the meaning of “public purpose,” the New Jersey Supreme Court thoughtfully said:

Generally speaking, it [public purpose] connotes an activity which serves as a benefit to the community as a whole, and which, at the same time is directly related to the functions of government. Moreover, it cannot be static in its implications. To be serviceable it must expand when necessary to encompass changing public needs of a modern dynamic society. Thus, it is incapable of exact or perduring, definition. In such instance where the test is to be applied the decision must be reached with reference to the object sought to be accom.plished and to the degree and manner in which the object affects the public welfare.

Id.

The evidence in this case supports the conclusion that the clinics, in this rural setting, have become a reasonably ñeces-sary and essential component of the viable overall operation of this hospital. The use of the property as physician clinics constitutes a public use because the clinics have become an important link to the very existence of the hospital. This was supported by the evidence in the case and the decision of the hospital trustees. The slight differences in purposes between clinics and hospitals may continue to exist in rural Iowa, but the two entities have nevertheless become uniquely interwoven in a rural setting. For sure, physician clinics provide a private benefit, but we think such a benefit in this case fits well within the permissible incidental private benefit to the greater public benefit.

The Board points to decisions in numerous other jurisdictions that have refused to exempt physician clinics merged into hospital settings from property taxation, even when faced with claims that the clinics are necessary to recruit and maintain physicians or to satisfy patient needs. See Crittenden Hosp. Ass’n v. Bd. of Equalization, 330 Ark. 767, 958 S.W.2d 512 (1997); Chisago Health Servs. v. Comm’r of Revenue, 462 N.W.2d 386 (Minn.1990); City of Springfield, 380 N.W.2d at 805; St. Clair Hosp. of Monroe, Wis., Inc. v. City of Monroe, 209 Wis.2d 364, 563 N.W.2d 170 (Ct.App.1997). However, a review of these cases reveals critical differences between the statutory exemption for public property under consideration and our statute. One notable difference is the frequent statutory requirement in other jurisdictions that the public property be used “exclusively” for public purposes. See City of Springfield, 380 N.W.2d at 804; Crittenden Hosp. Ass’n, 958 S.W.2d at 513. We have previously indicated that our legislature has broadened our municipal property exemption by removing the word “entirely” from the statute. See City of Osceola, 4’90 N.W.2d at 541-42. Additionally, these cases from other jurisdictions recognize, as we have, how the particular facts of each case ultimately guide the outcome, as well as the influence of the standard of review. See South Iowa Methodist Homes, Inc., 173 N.W.2d at 533 (“[i]n each case there is some distinguishing feature or statute” which commands us to decide each case on its own unique facts); see also City of Springfield, 380 N.W.2d at 805 (exemption denied but circumstances of case presented extremely close decision); Greater Anchorage Area Borough v. Sisters of Charity, 553 P.2d 467, 471 n. 12 (Alaska 1976) (case did not raise question whether exemption was necessary to secure services of doctors for the hospital to function).

In considering all the facts in this case, we conclude -the physician clinics operated by the Van Burén County Hospital are devoted to public use. We next turn to consider whether the clinics are held for a pecuniary profit.

The Board points to evidence that the revenue from the clinic exceeded expenses in 1998 and 1999, which is indicative of a pecuniary profit. However, these figures do not include such unassigned expenses as employee benefits and building and equipment depreciation. Additionally, the community contributes a substantial amount of volunteer hours. This diminishes the amount of salaries paid and therefore decreases the expense totals. Evangelical Lutheran Good Samaritan Soc’y v. Bd. of Review, 267 N.W.2d 413, 415 (Iowa Ct.App.1978). In any event, any realized surpluses are reinvested into the hospital and clinics through maintenance, repairs, and expansion of the facilities. See, e.g., Mingledorff v. Vaughan Regional Med. Ctr., Inc., 682 So.2d at 415, 418 (Ala.1996); Bethesda Found. v. Bd. of Review, 453 N.W.2d 224, 228 (Iowa Ct.App.1990); Twilight Acres, Inc. v. Bd. of Review, 346 N.W.2d 40, 42 (Iowa Ct.App.1984); Evangelical Lutheran Good Samaritan Soc’y, 267 N.W.2d at 416; Appeal of Cmty. Gen. Hosp., 708 A.2d 124, 130 (Pa.Commw.Ct.1998); Med. Ctr. Hosp. of Vermont, Inc. v. City of Burlington, 152 Vt. 611, 566 A.2d 1352, 1357 (1989). Additionally, no private individuals affiliated with the hospital, such as the hospital administration or Board of Trustees, reap individual benefits from excess funds. Mingledorff, 682 So.2d at 418; Twilight Acres, Inc., 346 N.W.2d at 42; Evangelical Lutheran Good Samaritan Soc’y, 267 N.W.2d at .416 n. 7; Hotel Dieu v. Williams, 410 So.2d 1111, 1112 (La.1982); Appeal of Cmty. Gen. Hosp., 708 A.2d at 130. In fact, members of the Board of Trustees receive no compensation. Iowa Code § 347.19; see Twilight Acres, Inc., 346 N.W.2d at 42; Evangelical Lutheran Good Samaritan Soc’y, 267 N.W.2d at 416 n. 7. Moreover, in order for small rural county hospitals like Van Burén County Hospital to survive financially, the operating income must exceed expenses. See Twilight Acres, Inc., 346 N.W.2d at 42 (any entity must generate more revenue than expenses to remain in operation). Additionally, profit or loss is not the determinative test. An institution that operates at a loss is not necessarily guaranteed a tax-exempt status. Mayflower Homes, Inc. v. Wapello County Bd. of Review, 472 N.W.2d 632, 634 (Iowa Ct.App.1991); see Readlyn Hosp., 223 Iowa at 345, 272 N.W. at 92 (denying hospital tax exemption, despite fact that hospital operated at a loss).

We have previously determined the hospital established the clinics for the institutional purpose of maintaining the future of the hospital. Even if the clinics realize a profit from time to time, this does not mean the property is held for the purpose of making a financial profit. See Smyth County Cmty. Hosp. v. Town of Marion, 259 Va. 328, 527 S.E.2d 401, 405 (2000); see also Richards v. Iowa Dep’t of Revenue, 414 N.W.2d 344, 353 (Iowa 1987) (determining whether a patient will be able to pay at least some charges does not indicate pecuniary intent); Evangelical Lutheran Good Samaritan Soc’y, 267 N.W.2d at 416 (“To require that the society sustain operating deficits in order to perpetuate its real estate tax exemption is unsound and would discourage responsible management practices.”). The clinics are held for the purpose of maintaining the overall operation of the hospital, and any profit it may realize is merely incidental.

Finally, the Board argues that the effect of an exemption for the physician clinic areas placed two other small part-time clinics that provide family practice services in other towns in the county at a competitive disadvantage with the hospital clinic because these two clinics pay property tax. While we question the dubious nature of the claim of unfair competition, we acknowledge the general policy of the law to make all property owners share in the common burden of taxation. Moreover, an exemption from uniform taxation tends to give an unfair competitive advantage to the exempted facility over similar privately owned facilities. Chisago Health Servs., 462 N.W.2d at 391. Yet, while this unfair result may be a justification for taxing public property used in a private manner, it is not a reason to tax public property put to public use. Our legislature has made the determination to exempt municipal property used for public purposes, and we have determined under the facts of this case that the hospital is not primarily operating the clinic for private use and any private use is merely incidental to the greater public purpose. Consequently, any unfair competitive advantage is similarly incidental, and a product of the judgment of our legislature in providing for a municipal exception. In truth, we think the exemption claimed by the hospital fits neatly within the rationale for exempting public property.

2. Specialty Clinic.

Although the specialty clinic is not tied to the future viability of the hospital to the same degree as the physician clinic, it does intimately relate to the ability of the hospital to provide the level of medical care needed in the community. Thus, like the physician clinic, the use of part of the hospital as a specialty clinic combines public and private use. The question turns to whether the private nature of the use is incidental or primary.

We have previously found government property leased to a private entity exempt from property taxation where the lease was devoted to public use and not held for pecuniary profit. See City of Osceola, 490 N.W.2d at 542 (referencing 1967 Op. Iowa Att’y Gen. 57 (1968)); Airport Bldg. Corp: v. Linn County Assessor, 406 N.W.2d 806, 811 (Iowa Ct.App.1987) (city leased land to private entity to enable construction of government facility);. see also 71 Am. Jur.2d State and Local Taxation § 280, at 561 (“Use of exempt property by a private party under a lease agreement does not defeat the exemption if the private party’s use is the public use underlying the exemption.”); § 324, at 621 (facility remained exempt where lease “directly related to the operation of the hospital”). On the other hand, we have found leased municipal property to fall outside the municipal exemption when the use of the leased property did not relate to the duties of municipality. City of Oskaloosa, 490 N.W.2d at 544.

We acknowledge a hospital facility is not entitled to an exemption if physicians lease space from the hospital for the purpose of furthering their private practice. See Greater Anchorage Area Borough, 553 P.2d at 471; St. Mary’s Med. Ctr. of Evansville, Inc. v. State Bd. of Tax Comm’rs, 571 N.E.2d 1247, 1249 (Ind.1991); St. John’s Mercy Hosp. v. Leachman, 552 S.W.2d 723, 726 (Mo.1977); Genesee Hosp. v. Wagner, 364 N.Y.S.2d 934, 943 (1975); Grand Prairie Hosp. Auth. v. Dallas County Appraisal Dist., 730 S.W.2d 849, 851 (Tex.Ct.App.1987); Gifford Mem’l Hosp. v. Town of Randolph, 119 Vt. 66, 118 A.2d 480, 484 (1955). Yet, the lease agreement in this case does not permit the specialty doctors to maintain their medical practice at the hospital. Instead, the purpose underlying the lease agreement is to provide health care services otherwise unavailable in Van Burén County. The arrangement was not made for the benefit of the specialists, but for the benefit of the community. Moreover, as with the physician clinic, the need for the specialty clinic can be traced to the rural setting, and the use of the area of the hospital for specialty care is reasonably necessary to the operation and maintenance of the hospital. The private benefit to the physicians is incidental to the greater public use.

The evidence in this case also does not support a finding that the specialty doctors are utilizing the clinic space to further their own private practice for pecuniary profit. The lease agreement between the University of Iowa and the hospital is not a standard lease agreement in which the lessor relinquishes substantial rights to the lessee. Cf. Milton Hosp. & Convalescent Home v. Bd. of Assessors, 360 Mass. 63, 271 N.E.2d 745, 748 (1971) (hospital essentially became a landlord with no rights to exercise except for those delineated in lease agreement). The specialty doctors are not granted unlimited control and discretion under the lease agreement. The lease agreement simply provides for the operation of a clinic for a specified number of days each month. The doctors are not permitted to “pick and choose” patients as private practitioners operating their own practices would be entitled. Each doctor leases the space for only a few days each month. In exchange for the office space, the doctors must pay a nominal amount of rent and, ordinarily, are not required to pay for additional expenses. Moreover, the doctors are not engaging in a competitive practice, because there are no other specialty physicians in the area. We find all of these facts favor a finding of a lack of pecuniary intent.

3. Job Opportunities and Farm Health and Safety Divisions.

The purpose of the Job Opportunities division is to assist individuals, primarily those who are disabled, to find employment. The purpose of the Farm Health and Safety division is to educate members of the agricultural community in the methods of preventing farm-related injuries, fatalities, and illness. In addition to creating hazardous waste guideline materials for businesses, this division administers free health screenings for farmers as well as other educational and preventative services.

Although these purposes do not relate to the traditional role of health care, they clearly relate to the overall health and welfare of the community. See Sebastian County Equalization Bd. v. W. Ark. Counseling & Guidance Ctr., Inc., 296 Ark. 207, 752 S.W.2d 755, 758 (1988) (gymnasium and meeting rooms used for both clinic patients and general public did not affect mental health center’s exempt status). The major changes in the health care area have necessitated corresponding changes in definitional predicates. Harvard Cmty. Health Plan, Inc., 427 N.E.2d at 1163. Here, one program helps prevent accidents that would require medical services and the other program relates to the long-term overall care needs for those who have suffered health problems. Considering the changing nature of health care, we have no difficulty in concluding that these programs are reasonably necessary facilities to the effective and efficient operation of the hospital, much like prenatal services offered by the hospital in another area of the complex provides parenting skills and prepares expecting parents for the birthing process. Similarly, the agricultural health care services provided by the Farm and Health Safety division seek to prepare farmers for unexpected accidents that may arise in the workplace, as well as to prevent such accidents from occurring. Moreover, the hospital declares part of its responsibility as a rural hospital to provide for the welfare of farmers, which constitutes a significant portion of the community’s employed population. Likewise, the Job Opportunities division fosters care of the disabled and assists them in a full and complete recovery. These programs not only reduce the burdens on the hospital and serve the health and welfare of the community, but tend to diminish the burdens on government in general.

We conclude both areas constitute a public use and any private benefit would be incidental to the public use. Likewise, any profit would also be incidental to the primary purpose and role within the spectrum of hospital services.

B. Charitable Exemption.

The charitable exemption under section 427.1(8) utilizes a slightly different test than the municipal exemption under section 427.1(2). Section 427.1(8) exempts property “used ... by [charitable institutions] solely for their appropriate objectives.” This standard does not limit the exemption to uses that are actually necessary, but only requires that the use be proper and appropriate to effectuate the objectives of the charitable institution. Congregation B’Nai Jeshurun v. Bd. of Review, 301 N.W.2d 755, 756-58 (Iowa 1981). However, when a charitable institution devotes property to such a purpose, the property must be used exclusively by that institution for that purpose. Id. at 758.

Because we have determined that each of the designated areas in this case fall within the county exemption under section 427.1(2), it is unnecessary for us to consider the charitable exemption. Similarly, it is unnecessary for us to address the claim raised by the Board that the charitable institution exemption is not available to a county hospital because a specific exemption exists for county property.

IV. Conclusion.

We conclude under the particular facts of this case that physician clinics and specialty clinics owned and operated by a county hospital are exempt from property taxation under the municipal use exemption of section 427.1(2); We also conclude that the property operated by the county hospital to provide farm health and safety information and services is exempt from property taxation under section 427.1(2). Finally, we conclude the property used by the hospital for employment opportunities is also exempt. We remand the case to the district court for entry of judgment consistent with this opinion. See St Am-brose Univ. v. Bd. of Review, 503 N.W.2d 406, 409 (Iowa 1993).

REVERSED AND REMANDED.

All justices concur except TERNUS, J., takes no part.

      . The assessor granted the hospital an exemption on a pro-rata basis of the common areas of the new addition.

      . The Board's argument is based on our decision in Merged Area (Education) VII v. Bd. of Review, 326 N.W.2d 310, 312-13 (Iowa 1982), where we held that a school corporation was limited to claims for property tax exemption as an educational institution under section 427.1(2) and could not claim an exemption as a charitable institution under section 427.1(9) (1979) (predecessor to 427.1(8) (1997)). Yet, we have previously recognized that subsections of our exemption statute overlap. See id. at 313 (citing McColl v. Dallas County, 220 Iowa 434, 441, 262 N.W. 824, 827 (1935)). In fact, in McColl, we specifically held property owned by a county could also be found exempt under another exemption provision. See McColl, 220 Iowa at 441, 262 N.W. at 827. We concluded a county-owned school was an “educational institution” and, consequently, exempt from taxation under both the municipal use and school system exemptions. See id. In Merged Area, we found McColl inapplicable because we did not believe our legislature intended to classify a school corporation as a charitable institution. Merged Area, 326 N.W.2d at 313.


text:
    Jane DOE, by John DOE and Mary Doe, Her Father and Mother and Next Friends, and John Doe and Mary Doe, Individually, Appellants, v. PERRY COMMUNITY SCHOOL DISTRICT, Arthur Pixler, and Russell Gronewold, Appellees.
    No. 01-1883.
    Supreme Court of Iowa.
    Sept. 5, 2002.

      Paige Fiedler of Fiedler & Townsend, P.L.C., Johnston, for appellants.
    Larry D. Spaulding and Samara R. Sar-no of Bradshaw, Fowler, Proctor & Fair-grave, P.C., Des Moines, for appellees.
   STREIT, Justice.

Litigants in a civil sexual abuse case against a school district want the court to stop their lawyer’s new law firm from representing the school district in the litigation. The law firm, Bradshaw, Fowler, Proctor & Fairgrave, P.C., argues it has implemented a screening mechanism sufficient to prevent the disclosure of confidential information between the disqualified associate, Jason Palmer, and the other members of the firm. The district court found adequate screening procedures were in place to ensure there was no actual conflict between the other members of the firm and its client. Because the representations by Palmer for the plaintiffs and the Bradshaw law firm for the defendants bear a substantial relationship to each other, we reverse and remand.

I. Facts and Background

Russell Alan Gronewold, an eighth-grade teacher at Perry Middle School was convicted of sexually abusing Jane Doe, one of his fourteen-year-old students. Attorney Brent Cashatt of Smith, Schneider, Stiles, Hudson, Serangeli, Mallaney <& Shindler served as Doe’s guardian ad li-tem in the criminal case. Attorney Jason Palmer was an associate with the Smith law firm at that time and appeared as the Does’ attorney.

Doe and her parents retained Cashatt, Palmer, and Jan Mohrfeld to represent them in their civil suit against Gronewold, the Perry Community School District, and principal Arthur Pixler. Palmer attended a pre-petition conference with the clients. He prepared a draft of the petition using the clients’ file, including internal memo-randa. Palmer signed the petition and it was filed on February 26, 2001.

On March 21, 2001, members of Bradshaw, Fowler, Proctor & Fairgrave, P.C., appeared on behalf of the school district and Pixler. Palmer joined the Bradshaw firm in August 2001. Because of the conflict between Bradshaw’s current representation of the defendants and Palmer’s prior representation of the Does, Palmer filed a motion to withdraw as counsel for the Does.

The Does filed a motion to disqualify the Bradshaw firm based upon Palmer’s prior representation of the Does in the same lawsuit. The district court denied the motion. The court presumed confidences were divulged by the Does to Palmer in the prior representation which may be relevant to the current representation. However, the court found it was clear Bradshaw ensured there was no actual conflict by creating a “Chinese Wall.” The court further noted to disqualify Bradshaw at this stage of the proceedings would deny the defendants counsel of their choice and place them at a disadvantage in the lawsuit. We granted the Does’ application for interlocutory appeal.

II. Scope of Review

We review a ruling on an attorney disqualification motion for abuse of discretion. Rickers v. Marsh & McLennan Group Assocs., 459 N.W.2d 478, 481 (Iowa 1990). An abuse of discretion exists when the court’s ruling is based on clearly untenable grounds. Id.

III. The Merits

This case presents an issue of first impression in Iowa. We must determine whether a screening mechanism known as a Chinese Wall is sufficient to allow a law firm to eliminate the conflict of an attorney who switched sides of representation during the same case. In general, an attorney must be disqualified from representing a party against a former client if the two representations bear a “substantial relationship” to each other. Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Walters, 603 N.W.2d 772, 777 (Iowa 1999). Here, Bradshaw contends its implementation of a Chinese Wall is sufficient to avoid disqualification of the entire law firm. Before we turn to the main issue, we briefly address the use of screening mechanisms to allow a law firm to continue its representation of a client even though a conflict may exist.

In Iowa, we have not specifically dealt with the use of Chinese Walls in the attorney disqualification context. However, the Iowa Supreme Court Board of Professional Ethics and Conduct has endorsed the use of screening procedures. The Board first approved the use of screening procedures where appropriate in Formal Opinion 87-33, June 10, 1988. It stated,

Screening is the process through which a disqualified lawyer is isolated from other lawyers in the firm so that the firm can try to avoid disqualification. Some courts have modified the imputed disqualification rule [that any knowledge a disqualified attorney holds is imputed to the members of his or her law firm so as to disqualify the entire firm] by holding that in some instances the presumption of shared confidences may be rebutted by use of an effective screening mechanism to cordon off the disqualified lawyer, thereby preventing that lawyer from tainting the other members of the law firm. The screening procedure is commonly referred to as a “Chinese Wall.”

Id. (quoting ABA/BNA Lawyer’s Manual on Professional Conduct 51:2004 (1986)). The Board of Professional Ethics and' Conduct stated in appropriate situations carefully monitored screening policies and procedures can be effective. The Board has approved the use of the Chinese Walls to prevent disqualification of the entire law firm in various circumstances. See, e.g., Formal Op. 98-18 (Feb. 25, 1999) (Chinese Wall sufficient where conflict was fully disclosed and the clients consented); Formal Op. 98-09 (Dec. 8, 1998) (Chinese Wall sufficient to prevent disqualification of firm attorneys from practicing in juvenile court in same county where associate previously worked as assistant county attorney in adult and juvenile courts); Formal Op. 91-47 (May 18, 1992) (Chinese Wall sufficient where an associate could be shielded from the firm’s cases over which the associate’s husband, the Iowa Commissioner of Insurance, had jurisdiction); Formal Op. 87-33 (June 10, 1988) (Chinese Wall sufficient to screen new associate who is the wife of a department or division head in a state agency from the other members of the firm). Bearing in mind the purpose and use of a Chinese Wall, we now turn to the main issue.

We must determine whether the circumstances of this case require the Bradshaw firm’s disqualification from its representation of the school district and principal. Once the Does prove there' is a substantial relationship between the former and current representations, there is a presumption the attorney must be disqualified. Any knowledge a disqualified attorney holds is imputed to the members of his or her law firm so as to disqualify the entire firm. Hoffmann v. Internal Med., P.C., 533 N.W.2d 834, 836 (Iowa Ct.App.1995); Iowa Code of Prof 1 Responsibility for Lawyers DR 5-105(E) (“If a lawyer is required to decline employment or to withdraw from employment, no partner or associate of the lawyer or the lawyer’s firm may accept or continue such employment.”); 7A C.J.S. Attorney & Client § 164, at 238 (1980).

The Does do not need to show confidences were actually disclosed by Palmer to prove a conflict exists. Walters, 603 N.W.2d at 778; 7A C.J.S. Attorney & Client § 162, at 236. To show the Bradshaw firm must be disqualified, the Does must only prove there is a substantial relationship between the former and the present representation. Rickers, 459 N.W.2d at 481. In determining whether a substantial relationship exists, we consider: (1) the nature and scope of the prior representation; (2) the nature of the present lawsuit; and (3) whether the client might have disclosed a confidence to her attorney in the prior representation which could be relevant to the present action. Hoffmann, 533 N.W.2d at 837. The former client must be given the presumption confidences were disclosed. See, e.g., Rickers, 459 N.W.2d at 482 (abuse of discretion existed where district court did not give former client the presumption that confidences were disclosed).

Bradshaw admits a substantial relationship exits between the two representations. Palmer’s former representation of the Does and Bradshaw’s current representation of the defendants involve the same case. Palmer filed a motion to withdraw from the current litigation because of his previous participation in the Does’ case. The pending lawsuit includes allegations that the school district and principal knew Gronewold molested Doe but did nothing to stop the continual harassment and abuse. Such issues necessarily involve sensitive and confidential information. The Does likely disclosed confidences to Palmer in the prior representation which would certainly be relevant in Bradshaw’s defense of the school district and principal. See id. As such, we conclude there is a substantial relationship between the former and the present representations. This determination alone requires disqualification of the Bradshaw firm.

Because of the strong appearance of impropriety, once we conclude a substantial relationship exists between the two representations, disqualification cannot be avoided. See 7A C.J.S. Attorney & Client § 159, at 229. Our rules of professional responsibility allow us to consider the appearance of impropriety as one factor in an attorney disqualification analysis. “Public confidence in law and lawyers may be eroded by irresponsible or improper conduct of a lawyer. On occasion, ethical conduct of a lawyer may appear to laypersons to be unethical.” EC 9-2. “Every lawyer owes a solemn duty ... to strive to avoid not only professional impropriety but also the appearance of impropriety.” EC 9-6.

In examining whether the appearance of impropriety exists, the mere possibility of impropriety is insufficient to warrant disqualification. See State v. Van-over, 559 N.W.2d 618, 628 (Iowa 1997) (“Standing alone, an appearance of impropriety is not enough to justify disqualification, but it is a factor a trial judge may consider.”). The appearance of impropriety “cannot be a fanciful, unrealistic or purely subjective suspicion of impropriety that requires disqualification. The appearance of impropriety must be real.” Clinard v. Blackwood, 46 S.W.3d 177, 187 (Tenn.2001) (quoting United States v. Smith, 653 F.2d 126, 128 (4th Cir.1981)). We will look through the perspective of a reasonable layperson to decide whether an appearance of impropriety exists. See id. The appearance of impropriety is strong, especially in cases where the representations are identical and the subject matter involves sensitive and confidential information. Here we have such a case.

The extent of Palmer’s involvement in the prior representation is clear. Palmer first appeared in this case as Does’ attorney. One on occasion, Palmer met with Mr. and Mrs. Doe to discuss whether the Does should file a civil law suit. Palmer had telephone conversations with the Does. He signed pleadings and entered his appearance on behalf of the Does. Brent Cashatt, Jane Doe’s guardian ad litem, testified “confidences were exchanged.” Paige Fiedler joined the Smith attorneys in the lawsuit only a few days prior to the date the Does filed their lawsuit. Cashatt stated that prior to Fiedler taking over, Palmer had done most of the work on the case. Palmer drafted the petition in the civil suit. In drafting the petition, Palmer had access to the entire case file, including all internal memoranda, correspondence to and from the Does, and attorney notes from confidential meetings, and telephone calls with the Does. The Smith law firm ultimately filed Palmer’s draft of the petition with some revisions. Though there is some question regarding whether Palmer drafted the exact petition filed, there is no doubt Palmer signed the filed petition.

Given these circumstances, we find a reasonable layperson would conclude Bradshaw’s current representation would compromise the integrity of the trial and would harm the Does. This conflict before us did not arise as the result of Palmer’s prior representation in a different, unrelated matter. Clinard, 46 S.W.3d at 188. Rather, Palmer’s firm now stands as adversary against the Does in the very litigation in which Palmer first served as their trusted attorney. When Palmer left the Smith firm, he stopped advocating for the Does by taking a new position clearly adverse to their best interests.

To analogize to baseball, [Palmer] has not only switched teams, he has switched teams in- the middle of the game after learning the signals. ■ That [Palmer] has been benched by his new team does little to ameliorate the public perception of an unfair game.

Id. Por a lawyer to represent the Does today, and the defendant school district and principal tomorrow in the same litigation “creates an unsavory appearance of a conflict of interest that is difficult to dispel in the eyes of the lay public or even the bench and bar.” Wafers, 603 N.W.2d at 778. Despite the attempted screening, continued representation constitutes a threat to the adversarial process and creates an undeniably strong appearance of impropriety.

Though Bradshaw concedes there is a substantial relationship between the prior and current representations, it attempts to minimize the degree of Palmer’s involvement in the plaintiffs case and emphasizes the steps it took to lessen his contact with the defense. Specifically, Bradshaw argues the use of a Chinese Wall allows the firm to avoid imputed disqualification. Bradshaw contends it has taken precautionary measures to prevent disclosure of confidential information. The firm asserts Palmer, now at the Bradshaw firm, has no involvement in or access to the Does’ case. Bradshaw contends it has taken and will continue to take “appropriate safeguards to completely isolate Mr. Palmer from involvement- in or knowledge about this case.”

The presence or absence of a Chinese Wall does not enter into our analysis of whether there is a substantial relationship between two representations. We consider whether a substantial relationship exists based upon the nature and scope of the prior representation, the nature of the present lawsuit, and whether confidences may have been disclosed. Hoffmann, 533 N.W.2d at 837. If we determine a substantial relationship exists, then unequivocally, the law firm must be disqualified. This is such a case. This is not a case where Palmer did not have involvement in the case prior to his switch to Bradshaw. As discussed above, Palmer’s involvement was substantial, significant, and intimate. A Chinese Wall will not prevent the conclusion that a substantial relationship exists and Palmer’s new firm cannot continue to represent the defendants.

If, however, we conclude a substantial relationship does not exist, then we examine whether the firm has taken any measures to prevent disclosure of confidential information. Certain procedures must be followed to constitute a sufficient screening mechanism to prevent the potential disqualification of the firm. Such screening procedures must be timely implemented to protect confidential client information. We must also look at the nature and extent of the screening mechanism to determine whether it is adequate to prevent dissemination of confidential information between its new employee and the law firm.

Under the facts before us, even if we concluded there is not a substantial relationship between the representations, that would not guarantee Bradshaw the ability to continue its current represénta-tion. It appears Bradshaw implemented the Chinese Wall only after the Does filed their petition to disqualify the firm. There is no evidence to suggest Bradshaw took any steps to prevent Palmer from divulging the Does’ confidences to the other Bradshaw attorneys prior to that time. There is also little evidence to prove Bradshaw implemented procedures to prevent the other Bradshaw attorneys from discussing sensitive matters regarding the present lawsuit. We presume Palmer and the Bradshaw lawyers will act within the confines of our rules of ethics and professional responsibility. However, confidence in attorneys alone does not overcome the strong appearance of impropriety in cases such as this where the litigation involves sensitive and confidential matters.

IY. Conclusion

We approve of the use of Chinese Walls under certain circumstances to overcome imputed disqualification of a law firm. Such circumstances do not exist in this case. There is a substantial relationship between the former and present representations. Accordingly, it is improper for Bradshaw to continue its representation and it must be disqualified. We conclude the district court abused its discretion in denying Does’ petition to disqualify Bradshaw. We reverse and remand for further proceedings consistent with this opinion.

REVERSED AND REMANDED.

All justices concur except TERNUS, J., takes no part.

      . Other jurisdictions have refused to recognize the use of Chinese Walls as a defense to an imputed disqualification. See, e.g., Roberts v. Hutchins, 572 So.2d 1231, 1234 (Ala.1990); Lansing-Delaware Water Dist. v. Oak Lane Park, Inc., 248 Kan. 563, 808 P.2d 1369, 1377 (1991); Koch v. Koch Indus., 798 F.Supp. 1525, 1539 (D.Kan.1992).

      . Bradshaw argues the interests in avoiding the appearance of impropriety are outweighed by interests in preventing a chilling effect on the practice of law. The firm contends the practice of law will be severely affected because clients will no longer be free lo choose their own counsel. As a result, attorneys may become unwilling to represent certain clients.or hire laterally for fear of the potential of future conflicts. The list of horri-bles is unrealistic and not supported by the facts before us.

      . Most of the steps taken were designed to stop any of Bradshaw’s clients' information from flowing to Palmer rather than Palmer imparting his knowledge to Bradshaw. The only evidence of a screening mechanism is the use of case management software to restrict Palmer’s access to the Bradshaw documents. This alone is insufficient to conclude Bradshaw's Chinese Wall is adequate to allow it to continue representation of the school district and principal.