Bar News - May 20, 2015
NH Supreme Court Professional Conduct Committee
Chrystal, Deanne M. advs. Attorney Discipline Office #12-032
SUMMARY OF PUBLIC CENSURE
From April 2011 to July 2012, Ms. Chrystal represented her client in his divorce from his wife. Prior to entering into an attorney-client relationship, Ms. Chrystal and her client were personal friends. In April 2011, the client consulted with Ms. Chrystal about his divorce. He entered into a fee agreement with Ms. Chrystal on April 7, 2011. Ms. Chrystal billed her client hourly.
On March 5, 2012, the parties and their counsel met to discuss settlement. The parties agreed that Ms. Chrystal’s client would keep the marital home, and his wife would keep her retirement funds. Ms. Chrystal and opposing counsel corresponded in the weeks that followed to finalize the details. Ms. Chrystal subsequently learned that her client could not qualify to refinance the debt on the marital home. He needed to refinance in order to remain in the home and honor those financial obligations set forth in the Proposed Final Decree.
On May 8, 2012, Ms. Chrystal, on behalf of her client, spoke with a loan officer to determine whether and on what terms her client could qualify for a refinancing of the marital home. The loan officer informed Ms. Chrystal that her client’s credit score would prevent him from refinancing unless someone was willing to co-sign on the loan. Ms. Chrystal and her client discussed possible co-signors for the loan. They discussed the possibility of Ms. Chrystal co-signing for the loan on the marital home so that it could be refinanced. Ms. Chrystal and her client believed that this arrangement was reasonable. Ms. Chrystal could: (1) help her client continue to live in his home with affordable monthly payments and pay off outstanding debt; (2) be paid her legal fees from the equity upon refinancing, because her client lacked the funds to pay them otherwise; and (3) invest in real property, enjoying future equity in the home without the necessity of investing significant funds to acquire and maintain such property on her own. Her client and Ms. Chrystal agreed that Ms. Chrystal would be a co-borrower.
On May 29, 2012, Ms. Chrystal transmitted the Proposed Final Decree to the Plymouth Family Division. On June 20, 2012, Ms. Chrystal drafted two revocable trusts – one for herself and one for her client. The purpose of the trusts was to hold all property transferred to the Trustees, which would include the marital home once the wife signed a quitclaim deed and the refinance closed. On June 21, 2012, Ms. Chrystal filed a motion to withdraw.
On July 25, 2012, Ms. Chrystal and her client executed the Business Agreement, which provided that her client would pay Ms. Chrystal’s attorney’s fees from the “equity in the property upon refinance, and in addition, split any future equity in the property in exchange for [Ms. Chrystal] co-signing the mortgage.” The Agreement noted that the property had been appraised in June 2012, and that “future equity” meant “any equity in the home moving forward from this appraisal.” The Agreement obligated her client to pay the mortgage, taxes, insurance, and maintenance. Ms. Chrystal agreed to allow her client to “use her credit score to help refinance the home for $125,000 which allows [her client] to pay off the current mortgage . . . and other individual debt and closing costs held by [her client] at his discretion.” The parties agreed that the $36,000 obtained from the refinance was “considered [her client’s] equity individually.”
Ms. Chrystal did not, however, obtain her client’s “informed consent” to the Business Agreement as that term is defined in Rule 1.8(a)(3) and Rule 1.0(e), including the requirement that she state explicitly in writing to her client that Ms. Chrystal did not represent her client with regard to the Business Agreement. While testifying in his deposition that he believed that the Business Agreement was fair, her client also testified that he did not know whether Ms. Chrystal represented him with regard to the transaction.
Ms. Chrystal and her client are living together as a couple in the former marital home. Ms. Chrystal produced evidence that she did not move in with her client until approximately late September 2012, after the representation was concluded on July 11, 2012.
Pursuant to Rule of Professional Conduct 1.7(a)(2), Ms. Chrystal had a duty not to represent her client under circumstances involving a concurrent conflict of interest. Specifically, she could not represent her client if there was a significant risk that her representation of her client would be materially limited by Ms. Chrystal’s personal interests.
Ms. Chrystal had a duty to avoid any business transactions with her client, unless all conditions set forth under Rule 1.8(a)(1)-(3) were met. Ms. Chrystal breached that duty when she failed to obtain informed consent from her client as to her role in the transaction, including whether she represented her client in the transaction, as required under Rule 1.8(a)(3). Ms. Chrystal had a further duty to avoid providing any financial assistance to her client in connection with the litigation, other than to advance court costs and expenses as set forth in Rule 1.8(e)(1) & (2). Ms. Chrystal further had a duty to avoid acquiring any proprietary interest in her client’s cause of action or in the subject matter of the divorce litigation.
The Committee issued a Public Censure, and reimbursement of all costs associated with the investigation and prosecution. An Order is available on our website at www.nhattyreg.org and at the Attorney Discipline Office at 4 Chenell Drive, Suite 102, Concord, NH 03301.
April 24, 2015