Court Opinion

ID: 4963362
Source: CourtListenerOpinion
Date Created: 2021-09-24 15:26:52.633977+00
Date Added: 2024-06-11T08:15:57.357562
License: Public Domain

THOMPSON, Associate Judge,
dissenting:
In my opinion, the result the majority reaches today is unfair to Smith. I cannot join my colleagues in upholding the trial court’s finding that she violated Rule 1.8(a) of the Rules of Professional Conduct when Glover’s siblings, who had the burden of proof in this proceeding before Judge Lopez, presented no pertinent evidence other than the fact of a business transaction between lawyer/real estate broker Smith and her client Glover; when neither the Probate Division’s procedural rules nor the court’s instructions required Smith to make an affirmative showing with respect to matters as to which the siblings had the burden of proof; where, before the trial court’s ruling, Rule 1.8(a) and its requirements were never mentioned in this litigation; and where this court has not interpreted the requirements of Rule 1.8(a) in the context of a straightforward real property listing agreement using a standard form.
A brief recap of the facts: The siblings objected to personal representative Glo*260ver’s request to ratify the sale of the house (the estate asset), alleging that Smith did not disclose her interest in Smart Choice, the real estate brokerage company with which Glover contracted to list the property for sale. It appears that this allegation was incorrect, as- Smith signed the listing agreement. Judge Lopez scheduled an ev-identiary hearing and advised the parties that the issues on which he would hear evidence were whether the selling price was reasonable and whether Smith had a conflict of interest.1 Judge Lopez confirmed to the parties that the siblings had the burden of proof in the proceeding. All parties advised the court about the witnesses they expected to call, Smith saying that she anticipated calling Glover but explaining that whether she would do so depended on what evidence was presented by the siblings.2 The siblings put on expert and lay testimony about the reasonableness of the sale price, but presented no evidence on conflict of interest.
More particularly, none of the witnesses mentioned Rule 1.8(a) or testified about its requirements or whether they were satisfied. No witness testified that the terms of the listing agreement — a Greater Capital Area Association of REALTORS, Inc. “Exclusive Right to Sell-Listing for Improved Real Property” agreement specifying a six-month exclusive right to sell and a 3% broker’s fee — were unfair or unreasonable. There was no evidence that Smith denied Glover the opportunity to consult with independent counsel. There was no evidence that Glover did not understand the (uncomplicated) terms that were set out expressly in the listing agreement that she signed, or did not understand- that Smith had an interest in the real estate brokerage company. The listing agreement states, as the only “Additional Term[ ],” that “Seller does not want agent to enter listing on MLS.” There was no evidence that this approach was suggested to Glover or foisted upon her by Smith. There was no evidence that Glover — who, the record discloses, was a GS-11 personnel management specialist — was incompetent. There was no evidence that Glover was dissatisfied with Smith’s services.
At the close of the siblings’ evidence, the court asked Smith whether she had “rebuttal evidence.” Not surprisingly, she said she did not (there being no evidence on conflict of interest to rebut, and Glover having already put on her expert testimony out of turn). The court then heard the parties’ closing arguments. Counsel for the siblings characterized Glover as having been “hell bent” on selling the property her way and insistent on selling the property without a multiple listing because she was indifferent to their interests.3 Smith argued that her interests as broker were aligned with those of Glover as seller, not with the buyer. On this record, the court found that Smith violated Rule 1.8(a).
My colleagues in the majority justify this result on the basis of the principle that the lawyer bears the burden of proving compliance with Rule 1.8(a). However, as far as I can tell, that principle pertains to assignment of the burden as between law*261yer and client See, e.g., Valley/50th Ave., L.L.C. v. Stewart, 159 Wash.2d 736, 153 P.3d 186, 190 (2007). Comment (a) to section 126 of the Restatement (Third) of the Law Governing Lawyers, cited by the majority, states that “[i]n any civil proceeding between a lawyer and a client or their successors, the lawyer has the burden of persuading the tribunal that requirements stated in this Section have been satisfied.” Id. (emphasis added). The principle assigning the lawyer the burden of proof also has some application in disciplinary proceedings in cases, where the client alleges that her attorney has acted in a way inconsistent with the rules governing professional conduct, see, e.g., Hunniecutt v. State Bar, 44 Cal.3d 362, 243 Cal.Rptr. 699, 748 P.2d 1161, 1167 (1988); and, more generally, where the lawyer has an affirmative duty (but not the sole burden) to come forward with evidence bearing on her compliance with the Rules in question. See D.C. Rules of Prof’l Conduct R. 8.1(b) (“[A] lawyer in connection with a ... disciplinary matter, shall not ... fail to disclose a fact necessary to correct a misapprehension known by the lawyer ... to have arisen in the matter, or knowingly fail to respond reasonably to a lawful demand for information from an admissions or disciplinary authority....”).
Even in disciplinary cases, however, Bar Counsel has the burden of proving a violation of the Rules of Professional Conduct by clear and convincing evidence, see In re Cater, 887 A.2d 1, 13 (D.C.2005), and a respondent is not required to “make Bar Counsel’s case.” In re Artis, 883 A.2d 85, 99 (D.C.2005). This court has upheld Board on Professional Responsibility/Hearing Committee recommendations that charges be dropped where Bar Counsel presented no evidence to sustain the charge that a lawyer violated a rule of professional conduct. See In re Douglass, 859 A.2d 1069, 1072-73, 1085 (D.C.2004) (sustaining “the Board’s determination that no violation of Rule 1.8(g)(2) has been established under the applicable standard of proof’ because “Bar Counsel was unable to prove that Mr. Walker did not represent Mrs. Wilson at the crucial time”); cf. In re Lawrence, 954 So.2d 113, 118 (La.2007) (upholding hearing committee finding that no violation of Rule 1.8(a) was proven where no evidence was introduced to establish that client was denied the opportunity to seek the advice of another attorney before she signed the agreement with respondent and client did not deny understanding the terms of the agreement). As far as I have been able to determine, the principle that the lawyer bears the burden of proving compliance with the rules of professional conduct has not heretofore been applied in a case such as this, where it is a third party, not the client, that alleges a violation and that third party fails utterly to present any evidence on the issue. In cases such as this, I do not believe that this principle displaces the familiar rule, applicable in probate proceedings as well as others, that it is the moving party (here, the siblings) that bears the burden of proof.
We would have a different case if Rule 1.8(a) flatly prohibited business transactions between lawyer and client, or prohibited a lawyer from acting as both attorney and real estate broker. But the plain language of the rule does not establish any such broad prohibition, nothing in our decisions suggests such a broad prohibition, and it appears from our decision in In re Pierson, 690 A.2d 941 (D.C.1997), that the Bar community does not understand the Rule 1.8(a) to impose such a prohibition. See id. at 944 (referring to a hearing committee finding that “the facts ... did not establish a violation of Rule 1.8(a) ... [because] not every transaction with a *262client requires separate counsel or the client’s written consent”). I am aware of only one case from another jurisdiction holding that a lawyer may not act as both lawyer and real estate broker for a client. See In re Estate of Schuldt, 428 N.W.2d 251, 259 (S.D.1988) (“There is a need to limit the attorney’s role to that of an attorney in probate proceedings. An attorney should be an attorney first and foremost, not broker or executor or whatever hat he can find to wear.”). Even in that case, the court stated that it would give this prohibition only future effect. See id. at 258 (“We note for the future that it is doubtful whether this arrangement would pass muster against Rule 1.8(a)_”).
As the majority notes, District of Columbia Bar Ethics Opinion No. 226 states that where a lawyer “is performing both professional roles (lawyer and [real estate] broker) with respect to a single transaction, ... he should comply with applicable provisions of the Rules of Professional Conduct....” However, this court has never interpreted Rule 1.8(a) in a context such as the one presented here, involving a straightforward real estate transaction and a standard form listing agreement. Without exception, the cases in which we have interpreted Rule 1.8(a) or found violations of the Rule have involved a business transaction — most typically, a loan from the client to the lawyer — that manifestly was solely for the advantage or convenience of the lawyer (and of no apparent benefit to the client, and, in many cases, entailing a non-standard instrument prepared by the lawyer) and/or a transaction with an elderly, incompetent or otherwise vulnerable client. See In re Elgin, 918 A.2d 362, 375 (D.C.2007) (lawyer used client’s credit card and thereafter settled a collection suit by the credit card company against the client “on terms which he negotiated and apparently did not disclose to [the client] in violation of ... [Rule 1.8(a)] requiring that the [client] be ‘given a reasonable opportunity to seek the advice of independent counsel in the transaction’ ”); In re Bailey, 883 A.2d 106, 111, 111 n. 12, 113 (D.C.2005) (lawyer borrowed proceeds of client’s personal injury settlement suit and violated Rule 1.8(a) by failing to advise client, who “had difficulty fully comprehending spoken English,” to seek the advice of independent counsel to review promissory note prepared by lawyer; no finding that the transaction was unfair or unreasonable to the client even though lawyer did not provide client with the prevailing interest rate).
See also In re Douglass, 859 A.2d at 1081-82 (lawyer violated Rule 1.8(a) where, after client indicated her intent to discharge lawyer, lawyer “informed her that she would have to sign a note confessing judgment to [the lawyer] in the amount of $750 for his legal services, as well as a release shielding him from [malpractice liability]” and “did not advise [her] to seek the advice of another attorney about the confession note and the release, and also did not fully disclose the terms of either of those documents.... For example, [the lawyer] did not inform [client] of his hourly rate, the amount of actual hours he had expended on [her] matter, or the basis for the $750 quantum meruit calculation for the confession note. Nor did [the lawyer] explain technical legal terms in the documents”); In re Austin, 858 A.2d 969, 972-73 (D.C.2004) (lawyer violated Rule 1.8(a) where he sought and received a number of personal loans totaling over $26,000 from his 73-year-old client even though he “was aware of [her] limited financial resources and lack of sophistication” and did not advise her to seek the advice of independent counsel); In re Maxwell, 798 A.2d 525 (D.C.2002) (reciprocal matter involving the facts of Maxwell v. Gallagher, 709 A.2d 100, 102 (D.C.1998), which describes *263the lawyer’s actions in acquiring stock in a client’s corporation as “double dealing” and “failing to disclose the business advantages they sought”); In re Viehe, 762 A.2d 542, 543 (D.C.2000) (lawyer violated Rule 1.8(a) where, using checks that clients had signed, for use in completing a real estate transaction, without writing in a payee or amount, lawyer wrote himself checks totaling $77,500, without making the necessary disclosures or obtaining the clients’ written consent); In re Jones-Terrell, 712 A.2d 496, 498-99 (D.C.1998) (lawyer violated Rule 1.8(a) by engaging in a transaction with a client without full disclosure or fair and reasonable terms where she caused elderly client, who was found to be incapable of making “rational decisions about her finances or her health,” to sign an agreement specifying that lawyer and her husband would move in with client rent-free, for one year); In re McLain, 671 A.2d 951, 953 (D.C.1996) (finding that lawyer violated Rule 1.8(a) where he borrowed $21,500 from clients to help satisfy his income tax obligations and gave them a promissory note which he never explained and did not recommend that another lawyer review the note, and where he asked the same clients for a loan to purchase a house and clients agreed to buy the house and to let lawyer live in the house in exchange for monthly payments equal to the mortgage plus expenses and taxes); and In re White, 605 A.2d 47, 48 (D.C.1992) (reciprocal discipline matter in which lawyer was sanctioned for violating Rule 1.8(a) where he induced 88-year-old client to “loan” him over $160,000).
In some of the foregoing cases involving business transactions with vulnerable clients and/or for the sole advantage of the lawyer, we sustained a finding that the respondent lawyer had violated Rule 1.8(a) by failing to advise the client to seek the advice of independent counsel. But we have never held that Rule 1.8(a) invariably requires such affirmative advice rather than, in the language of the rule, “a reasonable opportunity to seek the advice of independent counsel in the transaction.”4 (I note that, by contrast, Rule 1.8(g)(2) prohibits a lawyer from making an agreement prospectively limiting the lawyer’s liability to a client for malpractice “without first advising that person in writing that independent representation is appropriate in connection therewith.”) A number of states have adopted the language of ABA Model Rule 1.8(a) that does require such affirmative advice.5 See, e.g., Attorney *264Grievance Comm’n v. Parker, 389 Md. 142, 884 A.2d 104, 111 n. 3 (2005) (“In the revised [Maryland Rules of Professional Conduct] that we adopted effective July 1, 2005, Rule 1.8(a)(2) specifies that the client be advised in writing of the desirability of seeking the advice of ‘independent legal counsel.’ ” (internal emphasis omitted)). Our jurisdiction has not done so, and I see no reason why we should uphold the finding here that Smith violated Rule 1.8(a) on the basis of a failure to prove that she advised Glover to seek independent counsel where our rule does not explicitly require this, and where the terms of the transaction do not on their face appear to have been unfair to either party (a six-month exclusive right to sell in exchange for a discounted commission, terms that, it would seem, left both seller and broker with an incentive to sell the property for the highest possible price). In my view, the transaction here raises no more red flags than “a contingent fee agreement with a client in a civil case,” which the comments to Rule 1.8(a) states áre not precluded by the Rule so long as the contingent fee agreement complies with Rule 1.5(c) (requiring a written agreement stating how the fee is to be calculated).6
Courts in some other jurisdictions have found violations of Rule 1.8(a) where a lawyer acted as both real estate broker and lawyer to a vulnerable client or pursuant to an unusual listing agreement that was to the obvious and lopsided advantage of the lawyer. See In re Moores, 854 N.E.2d 350, 352-53 (Ind.2006) (lawyer who was also a real estate broker violated Rule 1.8(a) where he requested a legal retainer that the clients could not pay in full, and so to protect himself, lawyer had the clients sign, without the benefit of independent legal counsel, an eight-year exclusive listing agreement that was on terms unfavorable to the clients and that included language that the lawyer acknowledged was unusual, giving him the right of refusal on the sale of the property); In re Lupo, 447 Mass. 345, 851 N.E.2d 404, 407-08, 411 (2006) (violation of Rule 1.8(a) where, among other things, lawyer-real estate broker had elderly clients sign a standard form listing agreement with some of the information, including his fee, not yet specified, and did not advise the clients that they should seek independent counsel). However, other than In re Estate of Schuldt, 428 N.W.2d 251, discussed supra, where the court stated that it would give only prospective effect to its holding that lawyers should not simultaneously act as lawyers and real estate brokers, I am aware of no case in which a court found a violation of Rule 1.8(a) solely from the fact of a lawyer’s acting as real estate broker for the client, or solely because it was not *265shown that the lawyer advised the client to seek independent legal counsel.7
Nor am I aware of a case in which a court found a violation of Rule 1.8(a) solely from the fact that the lawyer did not prove that she explained the ways in which client’s and the lawyer/real estate broker’s interests might not be identical. Our prior disciplinary rules may have contained such a requirement. In our jurisdiction, Rule 1.8(a) replaced former Disciplinary Rule 5-104(A) as of January 1, 1991. See In re McLain, 671 A.2d at 952 n. 1. The language of Rule 5-104(A) was different: “A lawyer shall not enter into a business transaction with a client if they have differing interests therein and if the client expects the lawyer to exercise his professional judgment therein for the protection of the client, unless the client has consented after full disclosure.” As we explained In re James, 452 A.2d 163, 167 (D.C.1982), that “ ‘[f]ull disclosure’ includes a clear explanation of the differing interests involved in the transaction and the advantages of seeking independent legal advice. It also requires a detailed explanation of the risks and disadvantages to the client entailed in the agreement, including any liabilities that will or may foreseeably accrue to him.” The “consent after full disclosure” language used in former Rule 5-104(A) is missing from Rule 1.8(a)(3) (“the client consents in writing thereto”), and I do not believe that we can fairly read any other portion of Rule 1.8(a) to impose an identical requirement. We have said that Rule 1.8(a) is “similar” to Rule 5-104(A), see In re McLain, 671 A.2d at 952 n. 1, but we have not said that the two rules are to be construed as identical. As noted, Rule 5-104(A) required “client consent [ ] after full disclosure,” and “full disclosure” entailed, inter alia, an explanation of the advantages of seeking independent legal counsel. By contrast, Rule 1.8(a)(1) requires that the “transaction” be “fully disclosed,” language that appears to refer to a narrower requirement than the “client consent [] after full disclosure” language of Rule 5-104(A) imposed (since, for example, Rule 1.8(a)(2) deals separately with advice of independent legal counsel).
To summarize, the siblings, who had the burden of proof, did not offer evidence that Smith failed to satisfy the requirements of Rule 1.8(a)(l)-(3), and I do not believe that we are entitled to assume that the requirements were not satisfied, either from the mere fact of Smith serving as both lawyer and (through her real estate company) broker, or from the fact that, in a nondisciplinary proceeding where her client was not the aggrieved party, Smith presented no evidence as to compliance with the Rule. I do not suggest that Smith’s conduct was exemplary, and I would not foreclose a finding that she violated Rule 1.8(a) if a hearing committee were so to find (after notice to Smith of any rule she is alleged to have violated, and a hearing). But, on the record before us, I believe we should decline in this appeal to uphold the trial court’s ruling that Smith violated Rule 1.8(a).8
I respectfully dissent.

. As Smith reiterated the court’s instructions, "[t]hose are the two issues that the Court instructed us to limit our testimony.”

. At one point in the proceedings, Smith inquired as to whether she might call Glover out of turn to present her testimony, explaining that it might be difficult for Glover to take off from work to be present in court at a later date. The court responded, "I am not so sure yon want to do that because they [the siblings] have the burden of proof, and you’ll want to hear what they have to say before you want to put on your evidence.”

.The record suggests that Glover wanted to sell the property quickly to relieve herself of the obligation to pay real estate taxes.

. Moreover, the comments to Rule 1.8(a) state not that a review by independent counsel on behalf of the client is always necessary, but instead that such a review is "often advisable.”

. Model Rule 1.8(a) states:
(a) A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless:
(1) the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing in a manner that can be reasonably understood by the client;
(2) the client is advised in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent legal counsel on the transaction; and
(3)the client gives informed consent, in a writing signed by the client, to the essential terms of the transaction and the lawyer’s role in the transaction, including whether the lawyer is representing the client in the transaction.
Model Rules of Prof'l Conduct R. 1.8.
I note that courts in states that have adopted this model language have not always strictly enforced the affirmative-advice-in-writing requirement. See, e.g., Milo Fields Trust v. Britz, 378 NJ.Super. 137, 874 A.2d 1130, 1138 (App.Div.2005) (holding, despite New Jersey rule prescribing that client be advised in writing of the desirability of seeking independent legal advice about a pro*264posed business transaction between lawyer and client, that "it is not mandatory that an attorney advise his client in writing tó seek independent counsel’'); Twachtman v. Hastings, No. CV 9557307S, 1997 WL 433878, *8, *11, 1997 Conn.Super. Lexis 2014, *21, *30 (Conn.Super.Ct.1997) (holding, despite Connecticut rule requiring that the "client or former client [be] advised in writing that the client or former client should consider seeking the advice of independent counsel in the transaction,” that "there is no indispensable requirement that the client actually receive [independent legal advice] from another attorney or that he be instructed by his attorney that such an alternative is available to him”).

. I note that, like the broker’s fee here, a contingent fee arrangement affords the lawyer an incentive to resolve the matter for the highest possible amount of money, but does not guarantee against the lawyer’s efforts to achieve a quick but less lucrative settlement. Lawyers’ hourly fee arrangements with their clients also may provide incentive for lawyers to run up a high number of billable hours, but our rules and case law do not suggest that such fee agreements must be reviewed by independent counsel.

. And it is not hard to imagine that (and to understand why) a client who is trying to settle an estate whose major asset is a parcel of real property would, for the client's own benefit, desire and perhaps seek the services of a lawyer who could act as both lawyer and broker and eschew the expense and inconvenience of seeking other legal counsel to review a listing agreement.

. This is both because, I believe, the ruling should not be res judicata as to Smith, and *266because it may well disserve the legal community to find a violation of Rule 1.8(a) in the circumstances involved here on a record that was not fully developed in the trial court. Cf. In re McLain, 671 A.2d at 953 ("With respect to the charge of misrepresentation of the firm’s name, we would not be able to reach a conclusion without a careful analysis, as this court has not previously ruled on whether the inclusion of an associate’s name in a firm name violates our Rules of Professional Conduct. Under the particular circumstances present here, we will not undertake that analysis in this proceeding.... Because ... we do not have the benefit of adversary briefing and presentation, we deem it inappropriate to decide this issue of first impression.").