Barnes Ellis spent nearly 50 years at the pinnacle of Oregon's corporate legal world.

A magna cum laude graduate of both Yale University and Harvard Law School, Ellis occupied rarefied territory as a senior partner at the city's largest law firm, Stoel Rives. From his corner office high in the Standard Insurance Center, Ellis advised the Northwest's biggest companies. 

Ellis won virtually every legal honor available to him and devoted countless hours to civic causes, including nearly 30 years on the board of Metropolitan Public Defenders, which provides criminal attorneys for indigent defendants.

When Ellis, 72, retired last year, he might have faded into a posh Palm Springs life. Instead, he signed on as general counsel for Mercy Corps, the Portland-based international aid organization.

But Ellis has spent much of the past month fighting for his reputation, accused of 11 violations of the Oregon State Bar's code of professional conduct. He's facing the charges along with his longtime colleague at Stoel Rives, Lois Rosenbaum, 62, who succeeded Ellis as chief of the firm's securities practice.

The bar's allegations against Ellis and Rosenbaum boil down to this: that both are guilty of conflicts of interest for representing FLIR Systems Inc. and dozens of its employees—and protecting the company at the expense of those employees.

The bar enforces ethics rules for the state's 14,000 licensed lawyers. When it pursues charges of ethics violations, the issues are often mundane, the cases low profile, and they're often handled without much fanfare or expense.

But Ellis and Rosenbaum now await judgment by a three-member panel in a rare ethics trial—over whether or not they violated bar rules more than a decade ago. Ellis and Rosenbaum (who faces nine charges) declined to be interviewed for this story.

The battle between the state bar and two powerful lawyers—with a big firm paying a small fortune for their defense—has the state's legal community watching.

"It is unusual for two senior partners at a firm like Stoel Rives to get charged with ethical violations," says Mark Johnson Roberts, who chaired the bar's State Professional Responsibility Board in 2004.

"There is no statute of limitations on these things," Roberts adds. "It is unusual, but not unheard of, to go after somebody 10 years later.” 

Many lawyers who know Rosenbaum and Ellis believe they did nothing inappropriate, and others are surprised to see Ellis—who once sat on the state bar's board of governors—in the role of a defendant rather than sage counsel. 

"I would be astonished if Barnes Ellis did anything wrong," says Jack Faust, a retired senior partner of the city's second-largest law firm, Schwabe, Williamson & Wyatt. "I can't believe he would."

FLIR is a Wilsonville-based company known for its thermal imaging and night-vision cameras and for being one of Oregon's most successful defense contractors. But in 2000, FLIR ran into a serious problem: It overstated its revenues, and the company had to revise its reports to the U.S. Securities and Exchange Commission.

FLIR, which is publicly traded, soon found itself the target of shareholder lawsuits. The company's then-CEO, Ken Stringer, a 6-foot-9 former University of Oregon basketball player, determined the company needed legal advice and summoned Ellis and Rosenbaum to a March 2000 meeting at the University Club downtown.

FLIR's troubles were more complex than anyone realized.

"This one is a unique event in Oregon," Ellis testified at his and Rosenbaum's ethics trial this month. "Obviously it happens in Silicon Valley and New York and some other places. But for Oregon companies, to the best of my knowledge, this is the only time something of this magnitude and breadth has occurred."

Stoel Rives agreed to handle the shareholder lawsuit, which quickly settled. But the SEC opened an investigation and peppered FLIR employees with subpoenas.

Ellis and Rosenbaum informed the SEC they'd be representing 40 FLIR employees and executives, virtually everyone of significance except Stringer, who was by that time out as CEO.

SEC officials were immediately concerned about Stoel Rives' "joint representation."

"We believe there are potential conflicts of interest raised by your representation," Lori Echavarria, the SEC's lead attorney on the case, wrote to the Stoel Rives lawyers on July 20, 2001. "We are concerned that the broad range of interests possessed by your many clients cannot be adequately represented by a single attorney."

In its charges against the two lawyers, the state bar argues Ellis and Rosenbaum placed FLIR's corporate interests above those of its individual employees. The bar also alleges Ellis and Rosenbaum failed to share information fairly among clients and did not notify clients of potential conflicts. 

Bar disciplinary rules state that lawyers cannot represent two clients who have opposing interests in the same matter.

In 2000, FLIR board member Steve Wynne oversaw an independent investigation of the accounting issues, and by March 2001 he believed (as he testified at a later criminal trial) some of FLIR's problems arose because "fraud occurred."

Ellis and Rosenbaum pursued a settlement with the SEC on behalf of FLIR. Hoping to avoid SEC sanctions for FLIR, the lawyers in March 2002 filed an explanation of what went wrong and ways the company had fixed the problems—including purging employees it held responsible.

"There is no way at that point the same firm can represent the corporation and an employee it has identified as guilty of fraud," Eric Neiman, the bar's lawyer prosecuting Ellis and Rosenbaum, said at the attorneys' ethics trial.

Among the employees taking the blame was FLIR's chief financial officer, Mark Samper, who would later be penalized by the SEC and charged with fraud.

"Hard to believe this was written by lawyers who represented Mark Samper," Peter Glade, a lawyer at Markowitz Herbold Glade & Mehlhaf who shared representation of Samper, wrote of the filing Ellis and Rosenbaum made on FLIR's behalf with the SEC.

The bar alleges Ellis and Rosenbaum did the same thing to other FLIR employees: protected the company's interests while exposing the employees, ostensibly still their clients, to sanctions.

A subsequent criminal case against Samper raised questions about how Ellis and Rosenbaum represented him and other employees. In 2010, after Samper pleaded guilty to a misdemeanor, the state bar filed ethics charges against Ellis and Rosenbaum.

Neiman, the bar's prosecutor, told the trial panel Ellis and Rosenbaum failed in their ethical duty to "constantly reassess during a case to see whether interests have diverged."

"The highest duty a lawyer has to a client is loyalty," Neiman added. "This is a case about a loss of loyalty."

In their testimony, Rosenbaum and Ellis strongly defended their actions, saying they always disclosed potential conflicts of interest; made sure those who wanted outside lawyers got them; and ultimately provided the strongest possible representation to clients by pooling the information learned in the representation of each for the benefit of all.

"We didn't favor one client over another," Ellis testified at his and Rosenbaum's trial. "In my mind, it was a perfect marriage of interests for us to represent the employees at their interviews and be able to share that information with the former officers that might have liability for past acts."

Testifying with the faintly bemused air of a venerable professor, Ellis was politely defiant.

"I know people in my position—the bar is coming after you, and you're supposed to show contrition and all of that," Ellis testified. "I don't feel contrition. We did not do anything inappropriate, in my opinion. And I would not change what we did."

Rosenbaum, herself a veteran of 35 years of legal practice, was less restrained. 

"I feel [the bar's inquiry] hasn't been a search for truth," she testified. "I think it's been incredibly unfair." She added that the bar's staff "didn't understand complex securities litigation."

The trial ended Nov. 14 after 12 days, more than 600 exhibits, and a cost $250,000 to pay expert witnesses for the defense.

The three-member state bar panel—lawyers John Langslet and Lisa Caldwell, and Charles Martin, a retired accountant—has a month to deliver a verdict.

The penalties, if Ellis and Rosenbaum are found guilty, could range from slaps on the wrist to disbarment.

In bringing two such bold-faced names to trial, Neiman told the panel, the bar is sending a message to all 14,000 lawyers it oversees.

"The same rules apply to them as to every other lawyer," Neiman said at Ellis and Rosenbaum's trial. "No matter how important a lawyer is or thinks he or she is, the same rules apply.”