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Jeffrey T. Haley (WSBA No. 9526, admitted 1979), of Bellevue, was suspended for one year, effective July 27, 2006, by order of the Washington State Supreme Court following a hearing. This discipline was based on his conduct in 1993 involving conflicts of interest. For additional information, see In re Discipline of Haley, 157 Wn.2d 398, 138 P.3d 1044 (2006).
Mr. Haley provided no evidence at the disciplinary hearing. Testimonial evidence was submitted through affidavits and declarations proffered by the Bar Association. Mr. Haley declined to submit any affidavits or declarations supporting his case.
In 1992, Mr. Haley was hired by the owner of a corporation to file a trade-secret lawsuit against a former employee. The former employee counterclaimed, and the client hired Mr. Haley to represent him personally in defending the counterclaim. In August 1993, Mr. Haley filed a notice of intent to withdraw from representation of both the individual client and the corporation on grounds that there had been a falling out between Mr. Haley and the client. Mr. Haley asked another lawyer to take over the case for him; the new lawyer signed and filed a substitution of counsel.
Meanwhile, Mr. Haley obtained from the client a security agreement to secure past, present, and future fees owed to Mr. Haley’s firm. The client asked another lawyer, who represented him on an unrelated matter, to review the security agreement. The other lawyer reviewed and revised the agreement, and also advised the client that the agreement to pay fees could be set forth in a letter and that it was not necessary to have a promissory note. Mr. Haley subsequently obtained from the client a letter agreement that provided, in pertinent part: “[New lawyer] will be substituted as counsel of record in the case . . . . [New lawyer] will send to me bills for his time . . . . We will pay [new lawyer], at a discounted rate, to reflect our risk and advancing of cash, and you will pay us . . . . Interest will accrue at 12% per annum and you may prepay at any time.” The letter did not contain the suggestion that the client should seek independent counsel and, according to the client, Mr. Haley never advised him of the consequences of signing the letter agreement, did not advise him of any conflict of interest, and did not give him time or opportunity to consult with independent counsel. Except for the above-described communications with his lawyer in the other matter, the client did not in fact consult another lawyer regarding the letter agreement.
Mr. Haley also discussed with the client how the corporation could finance a settlement agreement for the pending litigation. Mr. Haley said that his firm would finance the settlement in return for a waiver of any malpractice claims against Mr. Haley and his firm. On September 24, 1993, Mr. Haley and the client entered into a settlement-financing agreement, which included a release of potential claims against Mr. Haley and his firm for improper or inadequate services. Mr. Haley neither disclosed any potential conflict of interest to the client nor did he advise the client that independent representation was appropriate. The client did not in fact consult with another lawyer regarding the agreement. The client’s new lawyer was unaware that Mr. Haley’s law firm had financed the litigation settlement.
The former client made payments pursuant to the September 24 agreement until May 1998. After payments ceased, the former client received a collection letter. As a result, the client filed a grievance against Mr. Haley.
Mr. Haley’s conduct violated 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 its terms are fair and reasonable and fully disclosed and transmitted in writing to the client, the client is given opportunity to seek the advice of independent counsel, and the client consents; RPC 1.8(e), prohibiting a lawyer, while representing a client in connection with contemplated or pending litigation, from advancing or guaranteeing financial assistance to his or her client; and RPC 1.8(h), prohibiting a lawyer who is representing a client in a matter from making an agreement prospectively limiting the lawyer’s liability to a client for malpractice unless permitted by law and the client is independently represented in making the agreement.
Leslie C. Allen represented the Bar Association. Mr. Haley represented himself. Moses F. Garcia was the hearing officer. |