## Facts

- Lawrence E. Hill, a Cape Cod resident and income beneficiary of two trusts, retained attorney Barry Kane for real estate and other legal matters starting in 1968.
- Kane formed Lawrence Properties, Inc. for Hill, prepared real estate documents for Hill’s Kent Road property, and arranged mortgage financing; Hill also paid Kane funds that Kane used to pay Hill’s bills.
- In 1970–1971, while living aboard a boat, Hill sought Kane’s advice on acquiring a larger vessel and asked Kane to obtain financing to purchase a 43-foot ketch (“Sea Chase”) for $31,500, with a $3,150 deposit and the balance due by May 17, 1971.
- Kane reported he could not obtain the planned financing; Hill directed Kane to sell property to raise funds, but the property was not sold in time and Hill risked losing the deposit.
- Kane proposed a substitute arrangement in which Hill would convey substantial assets to Kane’s corporation (Higley Hill, Inc.), including title to Hill’s Kent Road property and control of boats, as part of the “loan” structure for completing the Sea Chase purchase.
- Hill conveyed the Kent Road property to Higley Hill, Inc.; that corporation later sold the property for $86,000.
- After Hill later defaulted, Kane (through his corporation) took possession of the Sea Chase without notice to Hill.
- Hill sued; after Hill’s death, Maurice M. Goldman, executor, was substituted as plaintiff, along with Lawrence Properties, Inc.
- The Probate Court found Kane and Higley Hill, Inc. breached fiduciary duties and entered judgment for $50,806 plus interest for the estate; defendants appealed on the judge’s findings, rulings, and exhibits (no trial transcript).

## Issues

1. Whether an attorney who enters a business transaction with a client that transfers substantial client property interests to the attorney (or the attorney’s controlled entity) satisfies fiduciary duties of loyalty, full disclosure, and fairness.
2. Whether the Probate Court’s findings of fiduciary breach, unfairness, and resulting damages were clearly erroneous on the limited appellate record.

## Decision

- The Appeals Court of Massachusetts affirmed the Probate Court judgment.
- The court held the findings supported that Kane acted as Hill’s attorney and fiduciary during the transactions and engaged in self-interested dealing.
- The court upheld the determination that Kane failed to justify the transaction’s fairness and adequacy of disclosure and consent.
- The court upheld the damages award of $50,806 plus interest, finding no basis on the record presented to disturb it.

## Legal Principles

- An attorney owes a client the duties of utmost good faith and loyalty and may not use the fiduciary position to obtain an advantage in dealings with the client.
- When an attorney enters into a business transaction with a client and obtains a personal interest adverse or potentially adverse to the client, the attorney bears the burden to prove:
  - full disclosure of material facts,
  - the client’s informed and voluntary consent (often requiring meaningful independence in decisionmaking), and
  - that the transaction was fair and reasonable to the client.
- On appeal without a trial transcript, appellate review is constrained; trial findings are given substantial deference and are not set aside absent clear error on the record presented.

## Conclusion

The court affirmed a probate judgment holding an attorney and his controlled corporation liable for damages after an attorney-client “loan” transaction transferred the client’s valuable property to the attorney’s entity; the attorney did not carry the burden of proving full disclosure, informed consent, and fairness, and the trial court’s findings and damages were not clearly erroneous on appeal.


Goldman v. Kane, 329 N.E.2d 770 (Mass. App. Ct. 1975)