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John L. McKean (WSBA No.16537, admitted 1983), of Moses Lake, was suspended for six months by order of the Supreme Court following a hearing, effective March 26, 2003. For additional information, please see In re McKean, 148 Wn.2d 849, 64 P.3d 1226 (2003). This discipline is based on his business transaction with his clients and failure to properly administer his trust account in 1997.
In 1997, Mr. McKean agreed to represent Mr. and Mrs. M. in a Chapter 12 bankruptcy. In July 1997, Mr. McKean learned that his clients have not been filing required reports. He believed that the court would involuntarily dismiss the client’s bankruptcy. Mr. McKean advised the clients to dismiss the bankruptcy and form a corporation to protect them from creditors. The clients asked Mr. McKean for help managing their farm and for financial assistance. In July, 1997, Mr. McKean agreed to take an ownership interest in the client’s business. Mr. McKean took a 51% interest in the business and the clients retained 49%. In June and July 1997, Mr. McKean wrote four checks totaling $11,128.25 from his trust account for the client’s benefit. The amount was charged to an estate for which Mr. McKean was the personal representative with non-intervention powers. Mr. McKean did not notify the estate of this loan or prepare any documentation of the terms. After receiving financial help, the clients refused to dismiss the bankruptcy, so Mr. McKean did not perfect the corporation, but continued to treat it as a separate entity.
In November 1997, realizing that he would be unable to recoup the “loan” of estate funds, Mr. McKean borrowed $23,000 and reimbursed the estate account. The clients retained new counsel who contacted the Bar Association. The Bar Association auditor found that Mr. McKean’s trust account had errors, missing records and a negative balance at times. Mr. McKean also used his trust account as his general business account for approximately two weeks.
Mr. McKean’s conduct violated RPC 1.14, requiring lawyers to preserve client funds deposited into the lawyer’s trust account, keep the lawyer’s funds separate from the client funds and maintain complete records of funds in the lawyer’s possession; 1.7(b), prohibiting lawyers from representing clients if the representation may be materially limited by the lawyer’s responsibility to another client, a third party or by the lawyer’s own interests; and 1.8(a) prohibiting a lawyer from entering a business transaction with a client, unless the transaction is fair and reasonable, the client consents and the client is given a reasonable opportunity to seek independent advice.
Philip E. Cutler represented the Bar Association at hearing. Douglas Ende represented the Bar Association on appeal. Leland Ripley represented Mr. McKean at the hearing. Mr. McKean represented himself on appeal. J. Donald Curran was the Hearing Officer.
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