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Mark T. Higgins (WSBA No. 8346, admitted 1978), of Seattle, was ordered to receive a reprimand on March 7, 2005, following a stipulation approved by a hearing officer. This discipline was based on his conduct in 2002 involving a conflict of interest.
In 1993, a client (hereinafter M.M.) hired Mr. Higgins to represent her in the business aspects of a dissolution of marriage proceeding. M.M.’s spouse (hereinafter L.M.), represented himself pro se during most of the proceeding. The primary asset of the marriage was an interest in a closely held corporation. It was determined that the best way for the parties to maximize the value of the primary asset was to continue to own it and divide the profits. M.M. did not trust L.M. to operate and manage the business without a monitor.
In December 1994, the parties executed a property settlement agreement that provided L.M. would control and manage the day-to-day operations of the corporation. The property agreement included a provision allowing the removal of L.M. for, among other things, “theft or embezzlement or drug and alcohol abuse which makes [L.M.] unable to properly manage the business.” Under the terms of the property agreement, M.M. and L.M. comprised the board of directors of the corporation. The property agreement also provided that the corporation would pay Mr. Higgins’s outstanding legal fees for representing M.M. in the dissolution proceeding.
Subsequently, the parties and Mr. Higgins discussed the possibility of Mr. Higgins acting as the corporation’s lawyer on various legal matters. Mr. Higgins was aware of potential conflicts of interest if he simultaneously represented M.M. and the corporation, but he believed he could help monitor L.M.’s operation of the business and assist in resolving disputes that might arise between L.M. and M.M. relating to operation of the corporation.
Mr. Higgins drafted a letter to address potential and actual conflicts of interests in simultaneously representing the corporation and M.M. The letter, which purported to disclose the potential conflicts of interest and the advantages and risks involved, was signed by M.M. and L.M. in March 1995. The letter failed, however, to identify or disclose many of the potential conflicts of interests and risks and did not include a waiver of future conflicts. It specifically did not discuss the actual or potential conflicts that would ensue if Mr. Higgins simultaneously represented M.M. and the corporation in the event that M.M. sought to remove L.M. from control of the business pursuant to the property agreement. It also failed to identify Mr. Higgins’s potential conflict of interest in being the corporation’s lawyer while also being a significant creditor of the corporation for unpaid legal fees.
In 2002, Mr. Higgins was informed that L.M. was allegedly misappropriating or mishandling corporate funds, and he also became aware that the corporation was experiencing other financial problems that threatened its future viability and profitability. Mr. Higgins instigated a legal action to remove L.M. from control and management of the business pursuant to the property agreement. He arranged for M.M. and the corporation to be represented by himself and another lawyer. The fee agreement provided that the corporation would be obligated to pay attorney fees in the matter. L.M. signed the fee agreement on behalf of the corporation, notwithstanding that she had no authority at the time to manage or bind the corporation to such an agreement. Because he incorrectly believed the prior conflicts letter permitted the representation, Mr. Higgins did not inform M.M. or the corporation of potential conflicts regarding his joint representation of them in the removal action, nor did he obtain written consent to potential or actual conflicts of interest.
Under the terms of the fee agreement, Mr. Higgins and another lawyer hired by Mr. Higgins were to be paid fees substantially in excess of their standard hourly rates, an arrangement designed to compensate the lawyers for the risk that the corporation might not be able to pay for the legal services. The agreement also provided that certain legal fees relating to the removal action had priority over payment of outstanding fees owed to other third-party professionals. Mr. Higgins did not obtain proper authority from the corporation or L.M. to represent the corporation in the removal action or to obligate the corporation to pay legal fees for the removal action.
The removal action was eventually resolved through an arbitration that resulted in L.M.’s removal from management and control of the business owing to his embezzlement from the corporation. Neither M.M. nor the corporation could afford to pay the legal fees incurred in connection with the removal action. Ultimately, L.M. and M.M. sought bankruptcy protection and the corporation ceased business.
Mr. Higgins’s conduct violated RPC 1.7(a) and (b), prohibiting a lawyer from representing a client if the representation of that client will be directly adverse to another client, or if the representation may be materially limited by the lawyer’s responsibilities to another client or to a third person, or the lawyer’s own interests, unless the lawyer reasonably believes the representation will not be adversely affected and the client consents in writing after a full disclosure; and RPC 1.2(a), requiring a lawyer to abide by a client’s decisions about the objectives of representation and to consult with the client as to the means by which they are to be pursued.
Jonathan H. Burke represented the Bar Association. Kurt M. Bulmer represented Mr. Higgins. James M. Danielson was the hearing officer. |