April 2008

Report from the LFCP Committee Meeting

by Robert Welden

The Lawyers’ Fund for Client Protection Committee meets quarterly to review applications for gifts from the Fund. The Committee is authorized to make gifts less than $25,000 to eligible applicants. On applications for $25,000 or more, the Committee makes recommendations to the Board of Governors, who are the Fund’s trustees. At their meeting on November 30, 2007, the Committee took the following actions, and discussed potential Fund financial problems which were reported to the Fund’s trustees as discussed below.

Mary Betker — WSBA No. 30429 (formerly of Washougal) — Resigned in lieu of disbarment 2/16/06.

The applicant hired Betker to represent her in an action against her former employer. Their fee agreement provided for a $3,000 “non-refundable deposit” and a provision that the applicant would be charged against this deposit at a rate of $125/hour for Betker, $100/hour for her legal assistant, and $75/hour for “law clerk, legal assistant, or legal secretary.” In August 2005, the applicant received an invoice showing charges of $1,612.50 and a balance of $1,387.50. In December 2005, the applicant received a letter from Betker saying that she was quitting her practice due to health issues. She tried to reach Betker for recommendations of other attorneys and to obtain a refund of her unearned deposit. She got no reply. She searched the Internet and discovered that Betker had resigned from the Bar in lieu of disbarment.

In March 2006, the applicant wrote another letter to Betker and got no response. She then filed a Small Claims Court action. Judgment was entered in the applicant’s favor in the principal amount of $1,487.50, plus costs, for a total judgment of $1,586.14.

The applicant received a letter from Betker stating: “I am willing to settle our case quickly for $1,000.00. Call me, if so & I’ll have a cashier’s check and satisfaction of judgment for your signature.” The applicant told Betker that the time to settle the case was before going to court, not after, and she demanded full payment of the amount of the judgment. No payment was made. The Committee approved payment to the applicant of $1,387.50.

Thomas J. Brothers — WSBA No. 9653 (Lynnwood) — Disbarred 1/16/07.

The applicant, with the assistance of his son, hired Brothers to make changes to a family trust after his wife died. After some delay, Brothers sent the applicant a letter enclosing an Affidavit of Successor Cotrustees to be signed by the applicant and his son, along with a letter with various instructions. It said that after the papers were returned to him along with the mother’s death certificate and Social Security number, he would record the affidavit and obtain a new Tax Identification Number (TIN). He also sent a bill for $350.

The applicant mailed a check for $350 and the signed affidavit to Brothers, along with the death certificate and Social Security number. The applicant and his son heard nothing further from Brothers. Brothers never advised them that he had been disbarred in January.

Brothers’s letter of instruction was not clear and did not provide the applicant with necessary and understandable information. Brothers never secured the TIN. He did complete the affidavits, but the affidavit was never recorded and thus was of no value to the applicant. The Committee approved payment of $350 to the applicant.

Robert Louis Butler — WSBA No. 448 (Seattle) — Disbarred 10/20/81; reinstated 6/10/88; resigned in lieu of disbarment 5/7/07. Robert L. Butler is to be distinguished from Robert David Butler of Bellingham.

Butler was the personal representative (PR) of Estate A. He had previously held the decedent’s power of attorney. He filed an “appraisal” he prepared that valued the estate assets at around $200,000.

One of the estate beneficiaries was a family friend who had cared for the deceased. He left her 25 percent of his estate. Butler made various distributions to the heirs, including three to the friend totaling $42,500. The friend died in April 2003. At that time, Butler had not filed an accounting or closed Estate A. For this reason, the attorney for the friend’s estate, Estate B, did not know the value of Estate B. Butler told the attorney for Estate B that at least $15,000 was due to the estate. When Butler did not close Estate A, the attorney for Estate B filed a petition to remove Butler as PR of Estate A. Butler was removed and the applicant was appointed the new PR (he was also the PR of Estate B). Butler was ordered to deliver the Estate A files and pay costs of $2,625 to the attorney. He failed to do so. In September 2005, he was ordered to pay an additional $1,575 to the attorney. He failed to do so. He never filed an accounting for the Estate A assets.

The Office of Disciplinary Counsel subpoenaed bank records for Estate A from June 1998 until the account was closed in June 1999. The highest balance during that period was $7,000.

Bank records were subpoenaed for a second Estate A account for the period January 1995 until the account was closed in September 1998. As of August 1995, the account balance was $42,736. In September 1995, a deposit of $25,000 was made to the account, leaving a balance of $70,281. After September 1995, funds were withdrawn in a series of checks and wire transfers until the account was closed in September 1998. In his resignation, Butler promised to pay restitution to Estate A of $15,000. He has not done so and the Committee approved payment of that amount to the estate.

James E. Graham — WSBA No. 15290 (Renton) — Suspended for nonpayment of dues 8/3/05; disbarred 10/5/06; deceased 6/6/07.

The applicant contacted the WSBA after he read that Graham had been killed in a car accident, and said that Graham was handling four cases for the applicant. He wanted to know who to contact to get his files. After contacting Graham’s family, no files or records were located.

Graham represented the applicant in several matters including drafting of a will, a dispute with Medicare, a matter relating to a child day-care center run by the applicant, and a landlord-tenant dispute. The Committee found that Graham never advised the applicant that he was suspended from practice or that he was disbarred, and that he continued to collect fees for allegedly ongoing representation after he was suspended. The Committee approved payment to the applicant of $3,455.

Robert W. Huffhines Jr. — WSBA No. 11279 (Kelso) — Suspended for nonpayment of dues 7/28/04; suspended pending discipline 3/25/05; disability inactive status 11/16/07.

Huffhines was hired by the applicant to represent him on appeal in a matter where he won a partial judgment in 2000. The defendant deposited $9,663.54 with the court pending the outcome of the appeal. The applicant’s lawyer at the trial had filed an attorney’s lien for $6,123.39. Those funds were released to him on 6/18/01. The balance continued to be held by the court. The Court of Appeals issued its decision on 8/10/01, affirming the trial court.

On 8/27/03, the county clerk’s office wrote to Huffhines stating that they had been holding $2,742.93 since 6/19/01, and that unless they heard from Huffhines within 30 days, the funds would be submitted to the state as unclaimed property. On 9/24/03, Huffhines’s legal assistant wrote to the applicant, enclosing a motion to release the funds. It read:

Mr. Huffhines would like to know your opinion as to the amount of funds recovered you would feel it would be fair for him to retain for his services in recovery. It would be greatly appreciated if you could contact the office as soon as possible to advise us as to your thoughts on the matter. Please send a letter in the enclosed envelope stating any amount you are agreeable to, and we will forward the remaining balance to you as soon as we receive the funds from the clerk.

The applicant responded, “I asked an attorney friend regarding this matter, who indicated $100.00 would be adequate. Please let me know if this is not satisfactory.”

On 9/15/03, an order was entered releasing the funds to Huffhines and stating “Attorney Huffhines will have the responsibility of delivering the funds to the plaintiff.” Huffhines never paid the funds to the applicant and never provided any billing or accounting. The Committee approved payment of $2,642.93 to the applicant.

Michael Johnson-Ortiz — WSBA No. 23580 (formerly of Seattle) — Disbarred 9/15/04.

Johnson-Ortiz abandoned his high-volume immigration practice in January 2004 and left more than 300 open files. The Committee has reviewed 112 applications and approved 70 totaling $122,421.91.

The applicant, an immigrant from El Salvador, hired Johnson-Ortiz in 1997 to obtain legal status in the United States. Johnson-Ortiz said he would file for Temporary Protected Status (TPS) and attend any interview or hearing required (however, under TPS there is no interview). The applicant paid Johnson-Ortiz $3,000 at that time. He understood “that the TPS portion of my case was about half of the cost, while the court or interview would be the other half, about $1,500.” The applicant received TPS and a work permit in 1998, without any hearing or interview. He also filed an application for asylum. Over the next few years he paid Johnson-Ortiz $750 annually to renew his TPS and work permit.

In 2000, the applicant met with Johnson-Ortiz who told him that there was a new law, the Nicaraguan and Central American Relief Act (NACARA), that would allow him to adjust his status to permanent resident. The applicant paid him $750 plus the filing fees. Johnson-Ortiz told him that there would be an interview or hearing on this application. The applicant says he “told him that I had already paid for this, under our initial agreement, and he agreed.”

After 2002, the applicant concluded that he could file his TPS renewal himself rather than continue paying Johnson-Ortiz. He heard nothing further from Johnson-Ortiz.

In 2005, the applicant received notice to attend a hearing on his NACARA application. He tired to contact Johnson-Ortiz, but he could not be found. He attended the interview by himself. He later hired another immigration lawyer who told him that Johnson-Ortiz had left the country. The Committee approved payment to the applicant of $1,500.

William B. Knowles — WSBA No. 17211 (Seattle) — Interim suspension 9/14/07; resigned in lieu of disbarment 9/20/07. William B. Knowles is to be distinguished from William F. Knowles of Seattle.

Knowles resigned in lieu of disbarment based, in part, on a jury verdict on 8/17/07, finding him guilty of interstate travel with the intent to engage in sex with a minor, and of coercion and enticement, felonies under federal law.

Matter 1: The applicant paid Knowles $3,000, which their fee agreement said was payment for 14 hours of attorney’s time on three matters relating to her former employment with the United States Postal Service (USPS): (1) an Office Workers Compensation Program (OWCP) hearing; (2) an EEO proceeding pending with the USPS; and (3) a potential Office of Personnel Management (OPM) appeal. She had previously been represented by Knowles on related issues.

After Knowles’s arrest, the applicant received a letter advising her that Knowles’s office was closing and she should arrange to pick up her files. When she did, the people at Knowles’s office had difficulty finding all of her files, and what was found was in disarray.

In response to the applicant’s grievance, Knowles claimed to have spent seven or eight hours on the applicant’s matters, including speaking with officials at USPS, preparing EEO and appeal papers, and reviewing medical records. He wrote that he would estimate that the applicant would be entitled to a refund of approximately $1,500. The Office of Disciplinary Counsel concluded that it did not appear that Knowles provided any meaningful representation to the applicant. The OWCP hearing occurred while Knowles was in jail, and the applicant represented herself. The USPS EEO investigator sent the applicant a request for additional information which, because of Knowles’s incarceration, she had to respond to herself. And, from a review of the files, it did not appear that Knowles did anything regarding the possible OPM appeal. The ODC concluded that Knowles’s fee was unreasonable, and the Committee approved payment of $3,000 to the applicant.

Matter 2: In June 2007, the applicant paid Knowles $2,500 for representation in an EEO complaint against the Bureau of Indian Affairs (BIA). Their fee agreement states that the $2,500 was a “non-refundable retainer” to cover the first 13 hours of attorney’s time. During their initial meeting, Knowles contacted a law firm that had formerly represented the applicant and prepared and faxed a letter signed by the applicant to the BIA. She says she had no further contact with Knowles despite several attempts to contact him.

One month later, she learned that Knowles had been arrested in Portland. She received a letter advising her that Knowles’s law office would be closing and she should pick up her file. She was also told that they would refund any unearned fee. However, she was later told that there were no funds in the trust account.

When the applicant obtained her file, there were some handwritten notes and some documents faxed to Knowles from the BIA. She contacted the BIA and learned that Knowles had not initiated any claims on her behalf.

In its investigation, the Office of Disciplinary Counsel noted that the applicant’s file contained no legal research, time records, or any substantiation that Knowles initiated any claim. They concluded that, under the circumstances, the $2,500 fee was unreasonable. The Committee approved payment of $2,500 to the applicant.

Other Business: The Committee reviewed 12 additional applications that were denied for lack of evidence of dishonest conduct, as fee disputes or claims for malpractice, as civil disputes, because restitution was made, or were continued to seek further information. In addition, the Committee made two recommendations for payments of $25,000 or more that were denied by the trustees because there was no attorney-client relationship between the applicants and the lawyer.

Meeting with Trustees: Committee Chair Christopher Mertens reported to the Board of Governors, who serve as trustees of the Fund, at their January 2008 meeting regarding the potential impact on the Fund caused by former attorney Barry A. Hammer who resigned in lieu of disbarment. Hammer engaged in a Ponzi scheme that has resulted in substantial losses to his clients and investors. There are currently more than 30 Fund applications regarding this lawyer which, if they all qualified for recovery from the Fund, would total more than $1.9 million. These are in addition to all other applications to the Fund. The Fund is budgeted to have not more than $1.1 million this fiscal year. The Committee asked for guidance from the Board on how to proceed, including the possibilities of asking the Supreme Court to increase the current annual $15 assessment on all active members; seeking a special assessment; or prorating payments based on available funds. The Board directed the Committee to proceed on the assumption that the Fund will be limited to the amount budgeted, and to report back to the Board at the end of the fiscal year. The Committee intends to begin its review of these application at is August meeting.

Restitution: Before payment is made to an applicant, the applicant must sign a subrogation agreement with the Fund, and the Fund seeks restitution from the lawyers. Because in most cases those lawyers have no assets, the chief avenue of restitution is through court-ordered restitution in criminal cases. Prosecuting attorneys cooperate with the fund in getting the Fund listed in restitution orders. As of November 2007, eight lawyers were making regular restitution payments to the Fund totaling $32,860 since 10/1/06. In addition, on 11/9/07, pursuant to order of the Supreme Court, $15,260 was deposited into the Fund from abandoned and unidentifiable funds in the trust account of former attorney Barry A. Hammer. 

The Committee chair is Kennewick attorney Christopher J. Mertens. WSBA General Counsel Robert Welden is staff liaison to the Committee.