In the Matter of the Disciplinary Proceeding Against John L. McKean, Attorney at Law

Summary

The Washington Supreme Court reviewed disciplinary sanctions imposed on attorney John L. McKean for entering into a business arrangement with clients, using client trust-account funds to finance the venture, commingling funds, and failing to disclose conflicts of interest. The court affirmed violations involving RPC 1.14 and RPC 1.8(a), additionally found a violation of RPC 1.7(b), and rejected an alleged RPC 8.4(c) violation for insufficient proof of dishonesty. It affirmed a six-month suspension followed by six months of probation.

Holdings

1. Unanimously approved disciplinary findings will generally be upheld when supported by a clear preponderance of the evidence; McKean failed to demonstrate that the challenged findings lacked evidentiary support.
2. RPC 1.14 prohibits a lawyer from loaning money held in trust to the lawyer's own business ventures, business associates, or other clients; McKean violated RPC 1.14 by loaning client funds to his business venture with another client.
3. A lawyer violates RPC 1.14 by commingling client funds with personal funds and by using a trust account as a personal or business account, even absent proof of actual client loss or dishonest intent.
4. McKean violated RPC 1.7(b) because his financial interest in American Hay Company may have materially limited his representation of the Bergman Estate, and he did not obtain written consent after full disclosure.
5. The WSBA failed to prove that McKean's representation of the Martins violated RPC 1.7(b), but the court affirmed the separate RPC 1.8(a) violation arising from McKean's business transaction with them.
6. The evidence did not establish that McKean violated RPC 8.4(c), because although his conduct reflected bad judgment, it did not rise to the level of dishonesty, fraud, deceit, or misrepresentation proven by the WSBA.
7. A six-month suspension followed by six months of probation, including trust-account competency and continuing-legal-education conditions, was an appropriate and proportional sanction for McKean's misconduct.
8. McKean waived his challenge to the assessment of $8,906.90 in disciplinary costs and expenses by failing to seek review before the Board within the time required by RLD 5.7.

Questions Presented

1. Whether the hearing examiner's and Disciplinary Board's factual findings were supported by a clear preponderance of the evidence.
2. Whether a lawyer violates RPC 1.14 by loaning client funds held in a trust account to the lawyer's own business venture or to a business associate or client.
3. Whether McKean violated RPC 1.8(a) by entering into a business transaction with clients without adequate disclosure of the conflict and its risks.
4. Whether McKean violated RPC 1.7(b) when his financial interest in American Hay Company materially limited his representation of the Bergman Estate without written informed consent.
5. Whether the evidence established a violation of RPC 8.4(c)'s prohibition on dishonesty, fraud, deceit, or misrepresentation.
6. Whether a six-month suspension followed by six months of probation was the appropriate sanction.
7. Whether McKean waived his challenge to the assessment of disciplinary costs and expenses.

Disposition

affirmed