Opinion ID: 2571721
Heading Depth: 1
Heading Rank: 7

Heading: VIOLATIONS OF RPC 1.7(b) and 8.4(c )

Text: The WSBA argues that the hearing examiner erred in dismissing the RPC 1.7(b) and 8.4(c) charges. Answering Brief of WSBA at 15-17. While we agree with the hearing examiner's conclusion that the WSBA failed to prove that McKean's representation of the Martins violated RPC 1.7(b), the evidence does establish that his representation of the Bergman Estate violated the rule. RPC 1.7(b) provides: A lawyer shall not represent a client if the representation of that client may be materially limited by the layer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless: (1) The lawyer reasonably believes the representation will not be adversely affected; and (2) The client consents in writing after consultation and a full disclosure of the material facts.... We hold that the evidence establishes that McKean's representation of the Bergman Estate may have been materially limited by his own financial interest in the Company. McKean loaned money held in trust for the Bergman Estate to the Company. Not only was the Company in financial need, but McKean held a majority interest in the Company. Furthermore, he never informed the Bergman Estate's heirs that he loaned money held in trust for the Estate. The hearing examiner found that he knew or should have known he was dealing improperly with other clients trust money. DP at 11. RPC 1.7(b) allows for a lawyer to represent a client when a potential conflict of interest exists only if the lawyer reasonably believes the representation will not be adversely affected and the client consents in writing after consultation and a full disclosure of the material facts.... The first condition of consent is measured by whether a disinterested lawyer would conclude that the client should not agree to the representation under the circumstances, and if so, the lawyer involved cannot properly ask for such agreement or provide representation on the basis of the client's consent. Annotated Model Rules of Professional Conduct Rule 1.7, Comment [5] (discussing Model Rule 1.7 which is substantially similar to RPC 1.7). It was not reasonable for McKean to believe that his representation of the Bergman Estate would not be adversely affected under these circumstances. McKean loaned the Estate's money, without any disclosure of the transaction to the Estate, to a company in which he held a majority interest and which was in desperate need of financial support. A disinterested lawyer would conclude that the Bergman Estate should not agree to the representation. Second, even if it was reasonable for McKean to believe that his interest in the Company would not adversely affect his representation of the Bergman Estate, the rule requires a lawyer to receive client consent in writing after consultation and a full disclosure of the material facts.... RPC 1.7(b). McKean completely failed to disclose the transaction to the Estate's heirs; thus, they never gave consent to McKean to make the loans. His representation of the Bergman Estate may have been materially limited by his own financial interest in having the company receive the loans. We hold that McKean violated RPC 1.7(b). RPC 8.4(c) prohibits a lawyer from engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation. RPC 8.4(c). The evidence supports the hearing examiner's finding that the WSBA did not meet its burden of proof that McKean violated this rule. Although McKean acted with bad judgment, the record indicates that his conduct did not rise to the level of violating RPC 8.4(c).