## Facts

- Katrina Menz, age 23, suffered severe head injuries in a 1989 motorcycle accident, leaving her significantly impaired.
- Menz’s mother retained attorney James A. Heard on a contingent-fee agreement providing Heard one-third of funds collected; Menz did not sign the agreement.
- Heard negotiated a settlement he represented as worth more than $150,000, but the only cash component was $50,000 in insurance proceeds.
- Heard retained the $50,000 cash proceeds and the remainder of the settlement consisted largely of non-cash interests that later proved to have little or no value.
- Heard failed to inform Menz that the settlement’s supposed value was problematic and failed to disclose that he was keeping the only cash portion.
- Heard did not provide a timely or adequate final accounting of settlement funds and took his fee from the cash portion without ensuring informed client consent.
- While representation was ongoing, Heard invited Menz to a lounge, provided her alcohol despite her stated concern about drinking, and later had sexual intercourse with her.
- Heard knew Menz had serious cognitive and psychological impairments and histories of substance abuse and sexual abuse.
- The Washington State Bar Association charged RPC violations tied to settlement handling and alleged an act of moral turpitude under the disciplinary rules based on sexual exploitation.
- The Disciplinary Board recommended a two-year suspension; Heard sought review.

## Issues

1. Whether an attorney violates the Rules of Professional Conduct by advising a client to accept a settlement containing illusory or worthless components while retaining the only cash proceeds without informed consent and without a final accounting.
2. Whether an attorney commits an act of moral turpitude under the lawyer discipline rules by exploiting a professional relationship with a vulnerable client by providing alcohol and engaging in sexual relations.

## Decision

- The court affirmed the Disciplinary Board’s findings that Heard violated the RPC in negotiating and administering the settlement.
- The court held that Heard’s failure to disclose material settlement information, retention of the only cash proceeds, and lack of proper accounting constituted professional misconduct.
- The court held that Heard committed an act of moral turpitude by exploiting the attorney-client relationship to facilitate sexual conduct with a known vulnerable client.
- The court imposed a two-year suspension and ordered Heard to pay restitution and costs.

## Legal Principles

- A lawyer violates professional duties by failing to communicate material settlement terms and risks, particularly where the lawyer structures or presents a settlement in a way that conceals illusory value.
- A lawyer must safeguard client property and provide a proper accounting; taking or retaining settlement funds without informed client consent and adequate accounting is misconduct.
- Self-interested handling of a settlement that prioritizes the lawyer’s financial benefit over the client’s interests constitutes impermissible self-dealing and conflict-related misconduct.
- Sexual conduct can constitute professional misconduct when it is tied to the representation and involves exploitation of the fiduciary relationship, especially where the client is impaired and the lawyer knows of the vulnerability.
- “Moral turpitude” in attorney discipline includes exploitative conduct that abuses the lawyer-client power imbalance and harms public trust in the profession.

## Conclusion

The Washington Supreme Court affirmed a two-year suspension, restitution, and costs where an attorney both mishandled a client’s settlement by retaining the only cash proceeds without adequate disclosure or accounting and committed moral turpitude by exploiting a vulnerable client for sexual purposes during the representation.


In re Disciplinary Proceeding Against Heard, 136 Wash. 2d 405, 963 P.2d 818 (Wash. 1998)