733 N.E.2d 934 (Ind. 2000)
Joe F. Watson was admitted to the bar of Indiana in 1958.1 In 1982, Watson drafted a will for an 85-year-old testator who owned 189 out of 800 shares in an Indiana telephone company.2 The will designated the testator's wife as the residual beneficiary, with the testator's daughter to inherit upon the wife's death.3
Watson's mother owned 102 shares in the company, making her the second largest shareholder, while Watson himself owned one share and held positions as director, president of the board, and general counsel.4 A trust controlled 92 additional shares, with Watson's mother serving as one of the two life beneficiaries.5 Collectively, Watson and his mother owned or controlled 103 shares, and his mother held a partial interest in the trust's shares.6
Following the death of the testator's wife, Watson prepared a codicil in 1988 that granted the company an option to purchase the testator's 189 shares at book value upon the testator's death, contingent on the daughter's consent.7 In 1992, at which time the testator was 96 years old, Watson drafted a second codicil that was identical except for the removal of the consent requirement.8 The testator died on September 17, 1993.9
Watson offered the will and codicils for probate on October 1, 1993.10 The executor bank retained Watson as attorney for the estate, and he secured probate court approval to hire special counsel for acquiring the shares.11 The company exercised the option, purchasing the shares for approximately $9,500 each, totaling about $1.8 million.12 Roughly two years afterward, Watson, his mother, and the other shareholders sold the company's stock at $21,000 per share.13
The parties disagree on whether the book value was less than, equal to, or greater than the fair market value when the codicils were drafted and when the testator died.14
Whether the respondent's drafting of codicils for the testator created an impermissible conflict of interest because the instruments had the potential of providing a substantial gift to the respondent and his mother?15
Indiana Professional Conduct Rule 1.8(c) provides that a lawyer shall not prepare an instrument giving the lawyer or a person related to the lawyer as a parent, child, sibling, or spouse any substantial gift from a client, including a testamentary gift, except where the client is related to the donee.16 Professional Conduct Rule 1.7(b) provides that a lawyer shall not represent a client if the representation of the client may be materially limited by the lawyer’s own interests, unless the lawyer reasonably believes the representation will not be adversely affected, and where the client consents after consultation.17
Yes. The established facts show that Watson drafted the 1988 codicil and the 1992 codicil for the testator granting the company an option to purchase the 189 shares at book value.18 Watson and his mother owned or controlled 103 shares plus a partial interest in the trust's 92 shares.19 Exercise of the option at book value had the potential to deliver a substantial benefit to them through increased equity ownership and greater corporate control if book value proved lower than fair market value.20 The respondent knew or should have known of this potential when drafting the instruments for the 96-year-old testator.21
This potential for substantial benefit to the respondent and his mother violated Rule 1.8(c).22 The same facts establish a violation of Rule 1.7(b) because the respondent's personal interests materially limited the representation without any showing of client consent after consultation.23
The respondent's drafting of the codicils created an impermissible conflict of interest in violation of the Rules of Professional Conduct.24
Whether a sixty-day suspension from the practice of law is the appropriate discipline for the respondent's misconduct?25
When determining the appropriate sanction for attorney misconduct, the court considers agreed sanctions between the respondent and the Commission along with mitigating factors such as recognition of the wrongfulness of the misconduct, the close relationship with the decedent, and the length of unblemished legal practice.26
Yes. The respondent and the Commission agreed that a sixty-day suspension is commensurate with the violations of Rules 1.8(c) and 1.7(b).27 The established facts include the mitigating circumstances of the respondent's recognition of the wrongfulness of his misconduct, his very close relationship with the decedent, and his forty years of unblemished legal practice since admission to the bar in 1958. In light of these factors, the agreed sixty-day suspension constitutes the appropriate discipline under the facts of this case.28
A sixty-day suspension from the practice of law is the appropriate discipline for the respondent's misconduct.29