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Deborah Jean Clark (WSBA No. 12606, admitted 1982), of Lake Stevens, resigned in lieu of disbarment, effective May 11, 2011. Ms. Clark affirmatively admitted that if the matter were to proceed to a public hearing, there is a substantial likelihood the Bar Association could prove by a clear preponderance of the evidence the facts and misconduct, and that proof of such misconduct would suffice to result in disbarment, but did not affirmatively admit to the facts and misconduct herein. This resignation is based on conduct involving failure to act diligently, failure to communicate,and conflicts of interest.
According to the Statement of Misconduct: Ms. Clark drafted a will for a client, who died in January 1995. Decedent’s will left the bulk of his estate to a testamentary trust(hereinafter “Trust”) for the benefit of his daughter, who was born in 1987, and designated his friend as Trustee. The provisions drafted by Ms. Clark directed Trustee to only make investments that he considered to be “safe” investments. Trustee hired Ms. Clark to represent him in his capacity as Trustee of the Trust and relied completely on Ms. Clark to advise him about his duties.
Ms. Clark’s legal practice focused on real estate transactions. After a period of time, Ms. Clark effectively exercised complete control over the Trust assets and began using those assets to make loans as a “hard money” lender to people she knew, many of whom could not qualify for more conventional financing. Ms. Clark’s loan fees were paid from the loan proceeds.
Ms. Clark’s misconduct involving the Trust, and her representation of other clients who borrowed funds from the Trust or lent funds with competing security interests, includes the following:
--Ms. Clark failed to advise the Trustee of safe investments as provided for in the Trust documents, failed to promptly record two deeds of trust to secure loans from the Trust, failed to collect the full amount of interest due on loans from the Trust, failed to properly compute interest owed to the Trust, and prepared and executed subordination agreements that were not in the Trust’s best interests.
--Ms. Clark failed to fully and properly inform the Trustee about the risky nature of the loans being made by Ms. Clark on behalf of the Trust, the risk of subordinating the Trust’s security
interest in loan collateral, and the Trustee’s exposure to liability for not adequately supervising the investment of funds from the Trust.
--Ms. Clark had the Trustee and other clients, to whom she loaned funds from the Trust, sign notices regarding conflict of interest that inaccurately reflected that Ms. Clark was only appearing as an escrow officer in transactions when, in fact, she acted in a
representative capacity.
--Ms. Clark concurrently represented the Trust and four other clients with loans that had competing security interests in the same collateral.
--Ms. Clark made personal loans whose security interests competed with the loans of her clients and acted as a listing agent for the
real property that secured the loans between the Trust and one of her clients.
--Ms. Clark acquired security interests in the real property that were adverse to the interest of the Trust, without complying with the provisions of RPC 1.8(a).
Ms. Clark’s conduct violated RPC 1.3, requiring a lawyer to act with reasonable diligence and promptness in representing a client; former and current RPC 1.4(a) and (b), requiring a lawyer to keep a client reasonably informed about the status of a matter, promptly comply with reasonable requests for information, and explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation; RPC 1.7(a), prohibiting a lawyer from representing a client if the representation involves a concurrent conflict of interest and if the representation of one client will be directly adverse to another client, or there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person, or by a personal interest of the lawyer; RPC 1.7(b), allowing a lawyer to represent a client, notwithstanding the existence of a concurrent conflict of interest, if the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client, the representation is not prohibited by law, the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal, and each affected client gives informed consent, confirmed in writing; RPC 1.8(a), prohibiting a lawyer from entering into a business transaction with a client or knowingly acquiring an ownership, possessory, security, or other pecuniary interest adverse to a client unless 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, 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 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; and RPC 1.8(b), prohibiting a lawyer from using information relating to representation of a client to the disadvantage of the client unless the client gives informed consent.
Jonathan H. Burke represented the Bar Association. Ms. Clark represented herself. |