In re Botimer, 166 Wn.2d 759, 214 P.3d 133 (Wash 2009)

Brief Summary
Attorney violated conflicts rule by representing multiple family members without obtaining informed consent to joint representation. When a dispute arose among the family members, attorney also violated confidentiality rule by revealing confidences across the line of dispute.

Complete Summary
The Washington Supreme Court suspended attorney Larry Botimer for six months based on his conduct in representing multiple members of the Reinking family: Ruth, her son Jan, and Jan’s wife. For a number of years, Botimer prepared tax returns for all three. Botimer also represented all three in matters regarding Magnolia Health Care Center, Inc. (“Magnolia”), which Ruth owned and leased to Jan. Finally, Botimer advised Ruth regarding another company, Alternative Care Corporation, which was run by another son, James. Ruth guaranteed Alternative Care Corp.’s loans, using her interest in Magnolia as collateral.

A dispute arose when James disagreed with the others about ownership in Alternative Care Corp. Botimer represented Ruth and Jan in negotiations with James on this issue. Another dispute later arose following the sale of Magnolia. Jan expected to receive proceeds from the sale and Botimer expected his attorney fees to be paid out of the sale, but Ruth used the proceeds to satisfy her loan guarantees to Alternative Care Corp.

Botimer then terminated his representation of Ruth and took various actions against her interests. He informed the IRS of errors on Ruth’s prior tax returns. Further, after Jan sued Ruth, James and Alternative Care Corp., Botimer provided Jan’s lawyer with declarations, including information about Ruth’s business affairs and her tax returns.

The court held that Botimer had violated two ethical rules. The court first held that Botimer violated the concurrent client conflicts rule by failing to obtain informed consent from Ruth, Jan and his wife before representing them in various business arrangements that had the potential of resulting in conflicts. One such arrangement was the Magnolia lease.

Botimer also violated his duty of confidentiality twice by revealing Ruth’s confidences to Jan’s attorney and to the IRS without Ruth’s consent. Botimer’s first violation was not mitigated by the fact that the judge in the underlying dispute between Jan and his family members admitted Botimer’s declarations into evidence. Nor was Botimer aided by the judge’s apparent finding that Ruth had waived the attorney-client privilege as to the information in Botimer’s declarations. Botimer argued that this finding collaterally estopped the Supreme Court from finding that he violated the duty of confidentiality, but the court noted that privilege issues are distinguishable for confidentiality issues, and therefore collateral estoppel did not apply.

Botimer argued that his revelation of Ruth’s confidences to the IRS was permissible: (1) under the tax code, (2) to mitigate Botimer’s risk of perjury prosecution, and (3) under the crime/fraud exception to the confidentiality rule. The court noted that the tax code merely requires tax preparers to inform clients, not the IRS, of errors on tax returns. Further, Botimer was not at risk of perjury prosecution because when he signed the returns he was unaware of any false information contained therein. Finally, the court noted, the crime/fraud exception to the confidentiality rule only pertains to future crime or fraud.

Significance of Opinion
This case demonstrates two common pitfalls of joint representation: the potential for conflicts between co-clients and issues of confidentiality between co-clients or former co-clients. Both pitfalls can and should be addressed in a conflicts waiver.

This alert has been prepared by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship.

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