This attorney disciplinary proceeding presents us with a question of how broadly CPR DR 5-104, the rule governing attorneys’ business dealings with clients, should sweep. We must focus on whether to limit the rule’s applicability solely to present and clearly defined attorney-client relationships or whether to include less well defined relationships where the attorney’s status gives him disproportionate influence. To more effectively protect the public, we choose to paint with the broader brush. In so broadening the rule, we hold that the transaction in this case, an attorney’s purchase of property from a client, was subject to CPR DR 5-104. We hold further that the respondent attorney did not satisfy the high standards of disclosure which that rule imposes. Inasmuch as we are announcing a new standard, however, it would be unfair to impose discipline here and hence we refrain from doing so.
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McGlothlen apparently contacted Delford Woodall, the executor of Mr. Cole’s estate, and was asked to bring the estate to a satisfactory close. On July 22, 1975, McGlothlen wrote to Ward, reviewing the file for her, informing her that he was taking it over, requesting her cooperation and assistance, and suggesting that she call him “*f [she] ha[d] any immediate legal questions”. Report of Proceedings, Exhibit 4. Ward, who lived in California, replied several days later, basically thanking McGlothlen for his assistance. In part, her letter stated:
I sincerely hope you will take care of this matter for me. It is kinda hard for me living in Calif. instead of Wash. I could drop in to see you about the second week in Sept. I had not planned on coming to Toppenish however I can do so if you need to see me.
Report of Proceedings, Exhibit 1.
McGlothlen apparently informed Ward that a meeting was unnecessary.
On September 19, 1975, McGlothlen wrote to Ward once more, to notify her that it would be necessary to probate Mrs. Cole’s estate as well as that of Mr. Cole. McGlothlen also acted to set up an account in the name of Mrs. Cole’s estate. On December 17, McGlothlen wrote to Ward again, informing her that he was able to commence the probate of Mrs. Cole’s estate and suggesting that Delford Woodall be substituted as executor. Ward agreed and Woodall was apparently officially substituted at some point, though the record does not indicate when.
At the time she authorized Woodall's substitution as executor, Ward also mentioned that she wished to sell the sole asset of the Cole estates, a house, as soon as possible.
McGlothlen wrote back, offering to help locate a purchaser and asking Ward what price would be acceptable. Apparently, McGlothlen and Ward later spoke on the phone about selling the house and on June 1, 1977, McGlothlen wrote to Ward offering to purchase it himself for $8,500. McGlothlen also offered to draw up the necessary papers, so that Ward would save attorney’s fees. He testified at his disciplinary hearing, however, that he intended to act as his own counsel, not Ms. Ward’s. Though the house had last been appraised in 1971 for $9,000, it had significantly deteriorated since that time and McGlothlen did not mention the appraisal to Ward. He did describe a recent fire in the house, indicate that it was in very poor shape, and suggest that she check with Delford Woodall if she had any questions about its condition.
Ward agreed to sell her interest in the house for $8,500 and entered into a real estate contract with McGlothlen. A year later, McGlothlen sold the house, also by real estate contract, to the occupying tenant for $14,500. Because McGlothlen's resale was on different payment terms than his purchase from Ward, the hearing examiner found, and we agree, that it is not possible to judge the relative value of the respective real estate contracts.
Soon after McGlothlen's resale, a local real estate broker filed a complaint with the [663 P.2d 1333] bar association 1 which instituted the present proceeding. The hearing officer concluded (1) that McGlothlen and Ward had an attorney-client relationship; and (2) that CPR DR 5-104, which requires an attorney who enters into a business transaction with a client to make full disclosure, was applicable; but (3) that there had been sufficient disclosure.
Pursuant to DRA 5.2, bar counsel filed an objection to
this last conclusion with the Disciplinary Board while McGlothlen filed no objections at all. The Board concluded that McGlothlen’s disclosure had not been sufficient and recommended that he receive a censure. McGlothlen refused to accept the censure, and the proceeding is now before us. McGlothlen contends that CPR DR 5-104 is not applicable because Ward was not his client and that, even if CPR DR 5-104 were applicable, his disclosure was sufficient….