November 2003

Lawyers' Fund for Client Protection: Recent Committee Actions and 2003 Annual Report

by Robert Welden

August 2003 Committee Meeting

The Lawyers' Fund for Client Protection Committee meets quarterly to review applications for gifts from the fund. The committee is authorized to make gifts of up to $10,000 to eligible applicants. On applications for more than $10,000, the committee makes recommendations to the Board of Governors, who are the fund's trustees. The committee met August 22, 2003, reviewing 54 applications concerning 18 lawyers, and approving the following:
 
Karl W. Ferrier (Bar No. 25217; Ocean Park; suspended): The committee reviewed eight applications concerning Ferrier and approved five of them.

• Applicants hired Ferrier to sue a real estate agent. The written fee agreement provided for fees at $120 per hour and an advance fee deposit of $750 to be deposited into Ferrier's trust account. Applicants paid Ferrier $750 that day. Ferrier did not deposit the $750 into his trust account, but instead deposited it into a personal account and converted it to his own use. He never filed a lawsuit on behalf of Applicants, and never accounted for or returned any of the $750 they had paid him. The Disciplinary Board ordered restitution of $750, and the committee approved a gift from the fund in that amount.

• Applicant hired Ferrier to represent him in a lawsuit with the U. S. Department of the Interior. The written fee agreement provided for fees at $125 per hour and an advance fee deposit of $1,000 to be deposited into Ferrier's trust account. Applicant paid Ferrier $1,000 that day. Ferrier did not deposit the $1,000 into his trust account, but instead deposited it into a personal account and converted it to his own use. After Ferrier did nothing on Applicant's case, Applicant discharged him and requested a refund of his fees. Ferrier did not respond, provided no accounting, and returned none of Applicant's fee. The Disciplinary Board ordered restitution of $2,000, and the committee approved a gift from the fund in that amount.

• Applicant hired Ferrier to file a lawsuit on a promissory note. The fee agreement provided for fees at $125 per hour and an advance fee deposit of $1,500 to be deposited into Ferrier's trust account. Applicant paid Ferrier $1,500 that day. Ferrier did not deposit the $1,500 into his trust account, but instead deposited it into a personal account and converted it to his own use. Ferrier filed a complaint in the Pacific County Superior Court on May 25, 2001, and had it served on the defendant. However, he did not file the affidavit of service with the court. The defendant did not answer the complaint. In July and August 2001, Applicant spoke with Ferrier by phone, and Ferrier told him that he had not had time to get a default order. After August 2, 2001, Applicant could not reach Ferrier. Ultimately, Applicant had to hire a new lawyer to refile and serve a new complaint. The Disciplinary Board ordered restitution, and the committee approved payment to Applicant of $1,500.

• Applicants paid Ferrier $665 on September 6, 2002, to file an adverse-possession action in Pacific County. Applicants called Ferrier's office once a week from October to December 2002 and received no response. Ferrier never filed an adverse possession action, never accounted for Applicants' funds, and never returned any unearned fees. The committee approved payment to Applicants of $665.

• Applicant hired Ferrier on September 8, 1999, to file a lawsuit against a roofing company. The fee agreement provided for fees at $100 per hour and an advance fee deposit of $1,000 to be deposited into Ferrier's trust account. Applicant paid Ferrier $900 that day. Ferrier did not deposit the $900 into his trust account, but instead deposited it into a personal account and converted it to his own use. Ferrier filed a complaint; the defendants appeared, and served interrogatories and requests for production of documents. From that point, Ferrier did nothing further on Applicant's case, and eventually Applicant hired new counsel. Ferrier never accounted for any of the funds paid to him by Applicant. The Disciplinary Board ordered restitution of $900, and the committee approved payment of that amount to Applicant.
 
Ricardo Guarnero (Bar No. 18922; Seattle; suspended): Applicant hired Guarnero on November 14, 2000, to represent her in a dispute with her former employer. Their fee agreement provided for an hourly fee of $125. She gave him a check for $300 on November 17, 2000. On April 24, 2002, Guarnero billed her for an additional $345.69, which she paid. In November 2002, Guarnero told Applicant that if he could not resolve the claim, she would have to file a lawsuit in federal court. He told her that she would need to pay him $1,650 to begin a lawsuit, which she paid on October 2, 2002. In February 2003, Guarnero sent Applicant a copy of a demand letter setting a deadline for response of February 21, 2003, or a lawsuit would be filed. After that, Guarnero did nothing further. Applicant discharged him and requested return of "my filing fees of $1,650 that I have paid you in full to file in court, which you have not done." She got no response. The committee approved payment to Applicant of $1,650.

Trenidad Hernandez (Bar No. 25849; Federal Way and Yakima; disbarred):
• Applicant had a friend who was charged with a criminal drug offense in Yakima Superior Court. Hernandez agreed to represent the friend. Applicant paid Hernandez $250 on April 26, 2002, for the representation. The receipt, dated April 26, 2002 (more than a month after Hernandez had been suspended), states "initial interview—nonrefundable." Applicant says that before Hernandez met with the client, he wanted an additional $500. Applicant called the WSBA, and found out that Hernandez had been suspended March 7, 2002. The committee approved payment of $250 to Applicant.

• Applicant had two pending criminal charges in Yakima County Superior Court. According to Applicant, in April 2002 Hernandez agreed to represent him for $300 cash and various items of personal property. Applicant paid $242 of the agreed $300 in cash. Applicant became angry, contacted the WSBA, and learned that Hernandez was suspended at the time he agreed to represent Applicant. The committee approved payment of $242 to Applicant.

• Applicant hired Hernandez to seek an expungement of a criminal conviction record. Hernandez agreed to do it for $500. Applicant paid $400. Due to illness, Applicant let time pass. Later, Applicant could not contact Hernandez, so he called the WSBA and learned that Hernandez had been suspended. Hernandez never performed any services for Applicant, and never returned the unearned fee. The committee approved payment of $400 to Applicant.

• Applicant paid Hernandez $150 on November 28, 2001, to review documents. After that, Applicant was unable to reach Hernandez. On December 22, 2001, Applicant filed a grievance with the WSBA. On December 24, Hernandez arranged to meet with Applicant. He returned Applicant's documents, but Applicant said that when he asked for return of the $150, "Mr. Hernandez responded with a laugh and no response to my request was given." The committee approved payment of $150 to Applicant.

Richard Kyaw (Bar No. 21312; Tacoma; disbarred): The committee reviewed seven applications and approved the following:

• Applicant hired Kyaw to represent him on criminal charges for $5,000, with an additional $5,000 if the case went to trial. Kyaw told him he would need an additional $2,500 to hire a detective to investigate the possibility of an alibi. Applicant paid Kyaw $2,500 on January 11, 2002. Applicant and his wife met with the detective for about 15 minutes. Kyaw told Applicant that the detective's fee would not require the full $2,500, and that Kyaw would use $750 toward the $1,500 cost of hiring a psychosexual evaluation. Applicant paid $750, but Kyaw never paid the other half of the bill. After that, Applicant could not reach Kyaw, and Kyaw failed to appear in court. The committee approved payment of $750 to Applicant.

• Applicants hired Kyaw to represent them in bankruptcy. On May 10, 2000, Kyaw filed a Chapter 13 petition. On April 15, 2002, he filed a motion to convert the proceeding to Chapter 7, which was granted. On April 17, 2002, an order was entered requiring Applicants to file post-conversion schedules, which were incomplete or missing. When they were not filed, the Chapter 7 petition was dismissed. After the dismissal was entered, Kyaw told Applicants he could have it vacated if they paid him an additional $200. They mailed him a check in that amount on October 16, 2002, and heard nothing further. The court docket shows that no further action was taken in court after the dismissal. The committee approved payment of $200 to Applicants.

• Kyaw filed a Chapter 13 bankruptcy proceeding for Applicant in 2001. On January 25, 2003, Applicant paid him an additional $500 to convert the proceeding to a Chapter 7. The bankruptcy-court docket shows this entry on February 27, 2003: "Amendment to Petition filed by Richard Kyaw . . . NO INDICATION AS TO WHAT IS AMENDED—NUMEROUS ATTEMPTS   TO CONTACT ATTORNEY—NO RESPONSE" (emphasis in original). The next entry is a motion to dismiss the Chapter 13 proceeding. At that point, Applicant hired a new lawyer, who filed a motion to convert to Chapter 7. Kyaw never refunded the $500 or accounted for it. The committee approved payment of $500 to Applicant.

• On June 20, 2002, Applicant paid Kyaw $500 as fee and $200 for advance costs to file bankruptcy. In early November, Kyaw told Applicant he had attempted to file her petition electronically, but that it had not gone through. He said they would have to refile and that she would have to appear in court. Applicant called Kyaw and left several messages. When she got no response, she went to his office on January 4, 2003. The receptionist told her that Kyaw no longer worked there, but picked up mail occasionally. Applicant left a note asking him to call, and in early February he called and apologized, saying there had been deaths in his family. He told Applicant he would soon file her bankruptcy. That was the last she ever heard from him. Kyaw never returned any of her fees or accounted for her funds. The committee approved payment of $700 to Applicant.

• Applicant hired Kyaw to represent her on criminal charges in Pierce County Superior Court. Kyaw told her he would charge $2,500, but if the case went to trial it would be $5,000 or $6,000. She paid $2,500 on October 24, 2002. On November 8, 2002, Kyaw told Applicant he needed $1,000 to hire an investigator, which she paid. Applicant says that none of the witnesses she had identified were contacted by either Kyaw or an investigator. Applicant obtained a new lawyer. After Applicant's new lawyer took over the case and got Applicant's file from Kyaw, he found no evidence that any investigation had been done or that an investigator had been hired. Trial was set for January 5, 2003, and Applicant paid Kyaw an additional $3,000. The trial was continued to March 13, 2003, and Kyaw demanded an additional $4,150, which Applicant paid. Kyaw did not appear on the trial date.  Kyaw gave him Applicant's file, but there was nothing in it except notes from Applicant's initial interview with Kyaw and discovery given to Kyaw by the prosecutor after he had filed a notice of appearance, which appeared unopened. There was no evidence that Kyaw did any work on Applicant's case after the January 21 payment of $4,150. The committee recommended payment to Applicant of $5,150, which included the funds paid to be used to hire an investigator.

• Applicant hired Kyaw in April 2000 to file a legal-malpractice lawsuit against another lawyer on a one-third contingent-fee basis. He paid Kyaw $2,000 on April 7, 2000, for advance costs. On January 6, 2001, Kyaw asked Applicant to sign the complaint. Applicant paid an additional $1,500 for advance costs at that time. For the next two years, when Applicant called Kyaw, he was told the case was filed and awaiting a court date. On January 20, 2003, Applicant's son-in-law investigated, and found that the complaint had never been filed and that Kyaw had been disbarred. By that time, the statute of limitations had run on the claim for malpractice. The committee approved payment of $3,500 to Applicant.

Robert C. Lyons (Bar No. 22275; Tacoma; disbarred): Applicant employed Lyons in 1996 for representation in a marriage dissolution. A decree of dissolution was entered August 8, 1997. Among other things, it provided for a division of property between the spouses, and for the husband to pay Applicant's attorney's fees by a joint check payable to Applicant and Lyons. It further provided that if Applicant had paid her fees in full, Lyons was to endorse the check to Applicant. Applicant's husband sent a check for $2,500, made payable to Lyons only, on April 30, 1999. Lyons cashed the check and paid none of the proceeds to Applicant. Lyons sent Applicant a billing on March 5, 1999, showing a balance due of $2,950. Applicant paid him $1,001. Therefore, the committee concluded that when the former husband paid Lyons $2,500, Lyons was entitled to payment of $1,949, and should have paid the balance of $551 to Applicant. The committee approved payment of $551 to Applicant.

Brenda J. Means (Bar No. 26180; Mill Creek; disbarred): The committee reviewed eight applications and approved the following:

• Applicant hired Means on June 12, 2002, to represent her in a divorce. She paid Means $2,500. Applicant says weeks went by and she didn't hear from Means. She then contacted the WSBA and learned that Means had been suspended for not paying her annual license fee. Applicant last met with Means on July 17, 2002, two days after she had been suspended, at which time Means told her she had mailed the pleadings to her. Applicant never received anything from Means. On July 26, 2002, Applicant wrote Means requesting return of papers she had given Means, and a refund of the $2,500. Means did not respond. The committee approved payment of $2,500 to Applicant.

• Applicants had legal guardianship of their two grandchildren, and they hired Means to commence an adoption proceeding. Means agreed to take the case for a flat fee of $1,000, which Applicants paid on May 7, 2002. After that meeting with Means, they heard from her only one time, when she called to tell them they would have to pay an additional $600 guardian ad litem fee, and also that she was having difficulty getting papers from the Department of Social and Health Services. Applicants contacted DSHS, got the papers, and delivered them to Means's office. After that, they heard nothing further from Means and could not reach her. Finally, Applicants contacted the WSBA and learned that Means had been suspended. They then contacted the court clerk and learned that no petition for adoption had been filed. The committee approved payment of $1,000 to Applicant.

• Applicant paid Means $2,500 on April 18, 2002, to seek a change of custody of his children from his ex-wife to him. Applicant delivered documents to Means, but he generally could not reach her or get any acknowledgment from her that she had reviewed the documents. He said, "On two occasions when we contacted her she assured us everything was ok; then we wouldn't hear from her for several weeks." Applicant said he contacted Means on July 18, 2002 (she had been suspended July 15), and arranged to meet with her on July 22. He said that just before the appointment, Means cancelled the meeting and said they would have to reschedule. Applicant then contacted the WSBA and learned that Means had been suspended. Applicant asked Means to return his file and refund the fee. She returned the file, but did not refund the fee or provide any accounting. A review of the court docket shows that no petition for modification of custody was ever filed. The committee approved payment of $2,500 to Applicant.

• On February 24, 2001, Applicant paid Means $2,500 for a child-custody modification proceeding. On March 13, 2001, Means filed a petition for modification, and motion for show cause. A show-cause hearing was set for March 27. Applicant and his former wife appeared at the show-cause hearing, but Means did not. The hearing was continued, and costs of $100 were assessed against Applicant. Means called later that day and apologized to Applicant. He told her she was discharged, and he requested a refund. On April 17, Means sent Applicant a check for $1,520.10. When he tried to cash it, he was told there were insufficient funds. The committee approved payment of $1,520.10 to Applicant.

Douglas M. O'Coyne Sr. (Bar No. 15689; Spokane; deceased): The committee previously approved five applications concerning O'Coyne. Applicants are owners of two businesses. They hired O'Coyne in February 2001 to represent one of the businesses regarding a dispute with their business partner. They made a payment of $2,200 on August 1, 2001, to O'Coyne in anticipation of further legal actions regarding the partnership dispute. Applicants' last meeting with O'Coyne was in November 2001, when O'Coyne told them to "put together what we had" and make another appointment. Applicants said that when they next tried to reach O'Coyne in June 2002, his phone was disconnected and they could not reach him. They reached his assistant and learned O'Coyne was ill. They asked O'Coyne to return their funds, but he did not respond. The committee approved payment of $2,200 to Applicants.

Stephen L. Palmberg (Bar No. 3178; Grand Coulee; disbarred): The committee previously approved five applications concerning Palmberg. Applicant hired Palmberg to file for dissolution of marriage. He paid him $700 in cash on March 9, 2000. The receipt states: "$650 retainer, $50 to be applied to filing fee." Applicant received a phone call from Palmberg's secretary saying that Palmberg needed an additional $55 for processing fees. Applicant sent him a check for $55 on August 8, 2000. Palmberg prepared draft pleadings that Applicant edited and returned to Palmberg. Several months had passed when Applicant received a phone call from Palmberg's secretary telling him she was no longer working for Palmberg, because she was tired of his not showing up for work or court. Applicant tried to call Palmberg but could not reach him. Palmberg did not file the dissolution petition or give Applicant copies, and did not return any of the funds paid to him by Applicant. The committee approved payment of $755 to Applicant.

Glenn E. Reed (Bar No. 5328; Mt. Vernon; disbarred): Applicant hired Reed in 2000 for representation on a claim arising from an auto accident. Reed was to receive $500 as his fee. He negotiated a settlement for $3,500 in June 2001. The insurance company sent Reed the settlement agreement and check made payable to Applicant and Reed. Applicant signed the agreement and endorsed the check. Reed was to deposit the check into his IOLTA trust account and pay Applicant's medical bills, with any remaining balance to be paid to Applicant. According to his stipulation to disbarment, Reed deposited the check in his IOLTA account, but he used the money for his own purposes and did not pay Applicant's bills. He was ordered to make restitution to Applicant of $3,500. The committee approved payment to Applicant of $3,000, the amount Applicant was entitled to under the fee agreement with Reed.

2003 Annual Report
The Lawyers' Fund for Client Protection Committee met four times this fiscal year—November 22, 2002, and February 21, May 16, and August 22, 2003—to consider 117 applications to the fund involving 42 lawyers. Fifty-one were approved for payment, totaling $125,913.24. Of the denials, most were deemed to be fee disputes or malpractice claims, or there was no evidence of a dishonest taking of funds. During fiscal year 2002, $11,299 in restitution was received by the fund. The full report is available online at www.wsba.org/lawyers/groups/lawyersfund, or by contacting the WSBA Service Center at 800-945-WSBA or 206-443-WSBA, or questions@wsba.org.

Robert Welden is WSBA general counsel and staff liaison to the Lawyers' Fund for Client Protection Committee. The committee chair is Pullman attorney Scott J. Bergstedt.