In re Disciplinary Action Against Boulger

• Decision Date: 31 December 2001
• Docket Number: No. 20010093.,20010093.
• Citation: 2001 ND 210,637 N.W.2d 710
• Parties: In the Matter of the Application for DISCIPLINARY ACTION AGAINST John V. BOULGER, a Member of the Bar of the State of North Dakota. Disciplinary Board of the Supreme Court of the State of North Dakota, Petitioner, v. John V. Boulger, Respondent.
• Court: North Dakota Supreme Court

637 N.W.2d 710

2001 ND 210

In the Matter of the Application for DISCIPLINARY ACTION AGAINST John V. BOULGER, a Member of the Bar of the State of North Dakota.

Disciplinary Board of the Supreme Court of the State of North Dakota, Petitioner, v. John V. Boulger, Respondent.

No. 20010093.

Supreme Court of North Dakota.

December 31, 2001.

Paul W. Jacobson, Bismarck, ND, for petitioner.

Timothy G. Richard and Ronald H. McLean (argued), Serkland Law Firm, Fargo, ND, for respondent.

PER CURIAM.

[¶ 1] Disciplinary counsel filed a petition for discipline against John V. Boulger, alleging multiple violations of the North Dakota Rules of Professional Conduct. Boulger contested the allegations of misconduct and was granted a hearing before a hearing panel. The hearing panel concluded Boulger had committed no act in violation of the professional conduct rules and ordered the petition against him be dismissed. Under N.D.R. Lawyer Discipl. 3.1(f), disciplinary counsel petitioned this Court for review of the hearing panel's order. This Court granted the petition for review only for the alleged violation of N.D.R. Prof. Conduct 1.8(c). We hold Boulger violated Rule 1.8(c) by drafting a codicil and a will for a client including provisions giving himself a substantial contingent testamentary gift. We issue this opinion as a reprimand of Boulger's misconduct and remand for assessment of costs to be determined by the Disciplinary Board.

I

[¶ 2] The facts in this case are not in dispute. Boulger was a high school classmate and friend of Jay Swanson, who owned and operated Swanson Health Products and other businesses in Fargo. Boulger provided legal services for Swanson and his businesses. In 1992, Swanson, his wife, and his two teenage sons planned a seven-day trip to Jamaica. Before leaving on the trip, Swanson requested Boulger prepare a codicil to his will providing that in the event the entire family were to die during the trip, Jay Swanson's estate would be divided between his former wife, his brother, and specific friends, including Boulger. Under that codicil, if all contingencies were met, Boulger could have received one-third of twenty five percent of Swanson's estate. The codicil was self-terminating and none of its provisions were implemented.

[¶ 3] In 1993, at Jay Swanson's request, Boulger prepared a new will bequeathing Swanson's estate to his two sons and providing that, in the event the sons should predecease Swanson and leave no living issue, Boulger would receive twenty percent of the estate. Jay Swanson subsequently executed a new will, and upon his death in November 1996, Boulger did not receive any property from the estate.

II

[¶ 4] Upon the complaint of Jay Swanson's brother, disciplinary counsel filed a petition for discipline against Boulger alleging, among other things, Boulger's drafting of the 1992 codicil and the 1993 will violated N.D.R. Prof. Conduct 1.8(c), which provides:

A lawyer shall not prepare an instrument giving the lawyer or a person related to the lawyer as parent, child, sibling, or spouse any substantial gift from a client, including a testamentary gift, unless the client is related to the donee.

The Official Comment to this rule explains its intent:

A lawyer may accept a gift from a client, if the transaction meets general standards of fairness. For example, a simple gift such as a present given at a holiday or as a token of appreciation is permitted. If effectuation of a substantial gift requires preparing a legal instrument such as a will or conveyance, however, the client should have the detached advice that another lawyer can provide. Paragraph (c) recognizes an exception where the client is a relative of the donee or the gift is not substantial.

[¶ 5] We review disciplinary proceedings against attorneys de novo on the record. In re Disciplinary Action Against Howe, 2001 ND 7, ¶ 4, 621 N.W.2d 361. Disciplinary counsel must prove each violation by clear and convincing evidence. Id. We decide each case on its own facts and, although we give due weight to the findings, conclusions, and recommendations of the Disciplinary Board, we do not automatically accept those findings. In re Disciplinary Action Against Dooley, 1999 ND 184, ¶ 12, 599 N.W.2d 619.

III

[¶ 6] Boulger concedes he drafted will instruments for his client, Jay Swanson, which provided testamentary devises to himself. Boulger also concedes that had he inherited property under either of those contingent devises he would have received a substantial gift, amounting to perhaps hundreds of thousands of dollars, because Swanson was a successful businessman with substantial assets. Nevertheless, Boulger argues, and the Disciplinary Board's hearing panel concluded, Boulger's drafting of the will instruments did not violate Rule 1.8(c) because the contingencies to trigger the testamentary gifts to Boulger were so unlikely to happen that it was improbable Boulger would receive anything under the will instruments and, consequently, the contingent bequests did not constitute substantial gifts to Boulger. We disagree.

[¶ 7] Rule 1.8(c) expressly forbids an attorney from drafting an instrument for a client which gives the attorney a substantial gift, and the official comment makes clear the intent of the rule is to insure the client receives "detached advice" from a lawyer with no interest in the matter. Although the rule does not define "substantial gift," we find guidance in other cases interpreting similar rules, wherein the courts have concluded that a gift is not rendered insubstantial merely because it is contingent.

[¶ 8] The Supreme Court of Indiana in In the Matter of Watson, 733 N.E.2d 934, 936 (Ind.2000), applying a similar rule of attorney conduct, concluded that when a legal document has "the potential for providing a substantial testamentary gift" to an attorney, that attorney should not draft the instrument. Watson, an attorney practicing in Indiana, drafted a will for a client who owned stock in a telephone company for which Watson served as director, president of its board of directors, and as its general counsel. Watson also owned a share of stock in the company and his mother was beneficiary of a trust which controlled 92 shares of stock in the company. The will drafted by Watson allowed the telephone company to purchase the client's stock upon his death at the stated "book value." When the client died the company purchased the stock at book value of $9,500 per share. About two years later the company sold the stock for $21,000 per share, realizing a substantial gain.

[¶ 9] Indiana's disciplinary commission brought proceedings against Watson, alleging he violated the professional rules of conduct by drafting a legal document for a client which he should have known had the potential of providing a substantial gift to himself and to his mother and which constituted, therefore, an impermissible conflict of interest. The disciplinary commission argued the book value of the stock was substantially less than its market value when the instrument was drafted, but Watson argued the book value at that time was equal to or greater than the fair market value. The Indiana Supreme Court held the attorney's conduct constituted a violation of the professional rules of conduct and explained:

We find that the mere potential for the shares' book value to be less than the fair market value created a situation that should have precluded the respondent from accepting employment as the testator's attorney to draft the codicils. 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. At that time, the respondent knew or should have known that the codicils had the potential for providing a substantial testamentary gift to himself or his mother....

Where it is possible, as it was here, that a testamentary gift has the potential substantially to benefit the drafting attorney or his family, the ethical propriety of drafting the instrument should be evaluated in light of reasonably foreseeable circumstances and not the capriciousness of market values years in the future. Because the respondent drafted the codicils when it was reasonably foreseeable that the instruments had the potential for providing a substantial gift to the respondent and his mother, the respondent violated Prof.Cond.R. 1.8(c).

Watson, 733 N.E.2d at 936-37.

[¶ 10] In The Florida Bar v. Miller, 555 So.2d 854, 855 (Fla.1990), the Florida Supreme Court concluded that an attorney violated professional conduct rules by drafting a will making himself a contingent beneficiary to an estate, in the event the testator's wife, who was "somewhat younger" than the testator, should predecease the testator. The Florida Supreme Court concluded the attorney's conduct in drafting the will constituted "serious" misconduct, and the court issued a public reprimand as a sanction for the attorney's wrongdoing.

[¶ 11] The intent of Rule 1.8(c) is to have clients get independent advice before executing legal documents which give their attorneys a substantial gift. In our view, a contingent devise of twenty percent of a sizeable estate, potentially amounting to receipt of thousands of dollars to the drafting attorney, constitutes a substantial gift for purposes of the rule. Although Boulger argues it was unlikely both of Jay Swanson's sons would predecease him, without issue, and therefore the gift has to be considered not to be substantial, we do not view the rule as inviting a debate about probabilities and foreseeability. If there is a potential for receiving a substantial gift, the rule indicates a lawyer should not participate in drafting a document that creates such potential. Rule 1.8(c) prohibited Boulger from drafting the 1992...