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December 2001Lawyers’ Fund for Client Protection 2001 Annual ReportThis is a summary of the Lawyers’ Fund for Client Protection Annual Report filed with the Supreme Court. This year, the Lawyers’ Fund for Client Protection Committee reviewed 62 applications concerning 22 lawyers. Forty-six applications were approved, totaling nearly $208,000. Of the denials, 12 were deemed fee disputes, malpractice claims, or that there was no evidence of a dishonest taking of funds; two received full restitution, and two were deferred. The following applications were approved: Ronald O. Foster-Balloun (aka Roland O. Foster Balloun) Balloun represented the trustees and one co-beneficiary of a trust; the fund applicants were the other co-beneficiaries. During a partition action over real property, the property was sold. In the partition action, a jury found the applicants had a two-thirds interest in the property. A check for $46,113.92 was paid to the trust and deposited into Balloun’s trust account. From the proceeds of that check, Balloun paid himself $6,461.30 in attorney fees and $5,000 to his client/beneficiary. The balance of $35,088.70 was retained in his trust account. Balloun never provided any accounting for the $35,088.70 and never paid any of the balance to the applicants. They filed suit against the banks that honored the endorsement on the check, and against Whatcom County. In September 2000, a settlement was agreed to whereby the applicants received $10,000. Their share of the proceeds from the property sale was $26,435. After the settlement, $16,435 remained unaccounted for, which was approved for payment from the fund. Charles W. Burns Burns abandoned his practice without notice to his clients and without any arrangement for anyone to take over his active cases. The Office of Disciplinary Counsel arranged for the appointment of a lawyer to protect Burns’ clients’ interests. In previous years, the fund considered 15 applications concerning Burns, and approved nine of them for payment. In this matter, Burns was hired for representation on a personal injury claim on a one-third contingent-fee agreement. On October 16, 1997, Burns told the applicant he had settled the claim. After not receiving the money or any adequate explanation from Burns, the applicant contacted the WSBA in January 1998, and after investigation the WSBA learned that the insurer had issued a check payable to the applicant and Burns for $2,000 on October 14, 1997; however, the applicant never received any funds from Burns. The applicant sought recovery of the funds from the bank that honored the forged endorsement, but the bank denied payment because his application was not timely filed. The committee approved payment of $1,333 to the applicant. Clayton C. Cochran Cochran abandoned his practice without notice to his clients, and without returning unearned fees in violation of RPC 1.15(d). In many of these cases, the Disciplinary Board ordered Cochran to pay restitution. The committee approved 14 applications totaling $13,120. They involved payment of fees ranging from $500 to $1,500 for representation in a variety of matters including marriage dissolution, child custody and support, paternity and criminal. In some instances, Cochran misrepresented to his clients that he had either filed court documents or had conducted negotiations with the adverse party. William I. Freeman Freeman entered into a scheme with a hearing-aid business to engage in deceitful conduct in Department of Labor and Industries (L&I) hearing-loss claims, and to charge clients improper fees. In Freeman’s arrangement with the hearing-aid company, the company would complete the L&I claims and file them in Freeman’s name. When an award was made, Freeman would claim a percentage as a fee, which he split with the company owner. The "clients" never met Freeman. Eventually, they contacted L&I, which entered orders that Freeman had gained no additional benefits for his "clients," and that he was not entitled to attorney’s fees. The committee approved two applications, for $941.24 and $450. Charles Eugene Hunter Hunter was the attorney for the estate of the applicant’s wife, and the applicant was appointed personal representative. The applicant and Hunter had been friends since both were 12 years old. While representing the estate, Hunter asked the applicant to loan him a total of $20,000 from estate funds. Contrary to the requirements of RLD 1.8(a), there was no documentation of these loans other than the checks, and Hunter made no payments on the loans. Hunter stated that the first $10,000 would be repaid within a few weeks, and the second $10,000 a few months later. The applicant says that between making the loans in 1995 and Hunter’s death in 1998, he asked for repayments, "no matter how small." Hunter died in December 1998 without making any repayment. The applicant employed an attorney to attempt to recover these funds, but the estate had no assets. The committee approved payment of $20,000 to the applicant. Mickie E. Jarvill There were two approved fund applications involving Jarvill. In the first, the applicant, who is Jarvill’s cousin, was a beneficiary of her father’s estate. The estate, which was in probate in Oklahoma, had commenced a lawsuit over some corporate issues. The applicant sought Jarvill‘s advice. Jarvill recommended that she be named as co-personal representative to better enable her to act on behalf of the estate. After Jarvill was appointed co-personal representative, the Oklahoma lawyers withdrew from the case, complaining about Jarvill’s conduct. The lawsuit brought by the estate was settled for $600,000. Jarvill recommended that all estate funds be paid to her to be held in trust. Jarvill received a total of $645,598 in estate funds, and disbursed $140,414.90 on behalf of the estate. She converted the balance of the estate funds to her own use. She eventually told the applicant that she lost the money "on a land deal," which involved a property-development project Jarvill and her husband were promoting. In August 1999, Jarvill sent the estate beneficiaries 22 unsecured promissory notes signed by her, totaling $632,543.21. Jarvill made no payments on the notes. In the second matter, Jarvill had written the wills of the applicant and her husband. In 1993, the husband was diagnosed with cancer, and the applicant and her husband decided to sell some property, and travel. They asked Jarvill to handle the legal transaction, and signed a power of attorney naming Jarvill their attorney-in-fact. They sold the property and received about $70,000. Prior to leaving on their travels, the applicant and her husband purchased a $60,000 certificate of deposit (CD) to earn interest for their retirement. When the applicant and her husband returned in February 1994, they found that Jarvill had cashed the $60,000 CD, converting the proceeds to her own use. Her explanation to the applicant and her husband was that an opportunity had come up whereby they could earn 10-12 percent interest, and to maximize their benefit, Jarvill had reinvested their funds. The applicant and her husband later learned that the funds were used to purchase Jarvill’s office condominium. The applicant, whose husband died in February 1995, continued to press Jarvill for her money. In January 1996, Jarvill and her husband executed an unsecured promissory note for $78,000 at 10 percent per annum, payable to the applicant in installments of $1,000 per month. Jarvill gave the applicant $1,000 at that time, and made monthly payments until December 1998. No additional payments have been made. The committee approved payment of $30,000 to each of these applicants. Hugh J. Kelly The committee approved three applications from Kelly’s former clients. In two of these matters, Kelly stipulated to restitution. In the first matter, Kelly was paid $750 plus costs to commence a child-support modification. After filing a petition, Kelly never served the petition or performed any other services for his client. Kelly stipulated to payment of $750, which is the amount approved by the committee. In the second matter, Kelly was paid $3,000 to file a motion for reconsideration of the criminal sentence imposed on the applicant’s son. Kelly told the applicant that he had filed a motion and it was set for hearing. He then told her that the hearing was continued, the last continuance to July 4. When the applicant noted that this was a holiday, she contacted the prosecutor and learned that Kelly had filed no motion and had never talked with the prosecutor about the matter. Kelly stipulated to payment of $3,000, which is the amount approved by the committee. In the third matter, Kelly was paid a total of $7,000 by a Mexican citizen whose wife had moved to Washington with the parties’ minor children. The wife obtained a default decree of dissolution in Washington. Kelly agreed to file a federal court proceeding under the Hague Convention. Over the next three years, Kelly gave his client a series of excuses for delay, and provided no billings or accountings. Kelly arranged one visitation for his client with the children but performed no other services until he was confronted by his client, who had learned that nothing had been filed. Kelly then filed a motion to set aside the default decree, but the motion was denied. He never commenced any federal court action, which was what he had been hired to do. Kelly also did not tell his client that he was suspended from practice. The committee approved payment of $7,000 to the applicant. Robert J. Lincoln Lincoln was hired by the applicant for $1,000 to seek Social Security (SSI) benefits. On August 14, 2000, Lincoln filed a notice of appearance with the Social Security Administration. On September 24, he died. His probate was filed October 30, 2000. When Lincoln died, his trust account had a zero balance and his estate had no assets. Jason James McCarty McCarty was convicted of drug-related criminal charges. His conviction is on appeal, and the disciplinary charges against him, including this grievance, are deferred pending the appeal. He is suspended pending the outcome of the deferred disciplinary matter. McCarty represented a friend of the applicant on criminal charges in Pierce County. In 1995, the applicant posted $5,000 bail for McCarty’s client. On July 28, 1995, an order was entered exonerating the client’s bail. The order states that it was to be released to McCarty, "as $2,500 of the funds represent the attorney’s fee and $2,500 will be given to [applicant] by Jason J. McCarty." This was done without the applicant’s knowledge or consent. After McCarty failed to return the applicant’s funds, she filed suit, and on March 14, 1997 a default judgment of $5,000 plus interest, fees and costs was awarded to her. McCarty repaid the applicant $4,000. The committee approved payment of $1,000 to the applicant. Kenneth R. Mitchell The applicant hired Mitchell to obtain an emergency restraining order against his neighbor; he paid $750 in advanced fees and costs. The applicant contacted Mitchell at least daily, and on April 13, 2000 Mitchell told the applicant he would obtain the restraining order the next day; however, he did not do so. On April 14, Mitchell received an order from the Supreme Court notifying him that he was suspended from the practice of law for 60 days pursuant to a stipulation he knew was pending before the Supreme Court when he agreed to represent the applicant. He did not tell the applicant of the suspension. The applicant continued to leave messages for Mitchell but received no response. On April 27, a lawyer who shared space with Mitchell told the applicant that Mitchell was suspended. On May 2, the applicant requested a refund of his fees. Mitchell has not repaid the $750. The stipulation provides for restitution of $750 to the applicant, to be paid before Mitchell may be reinstated to practice law. Brad A. Plumb Last year, the fund approved a payment to a former client of Plumb for $2,000. In the present matter, the applicant’s 17-year-old son was involved in a vehicle accident with Burlington Northern Railroad. Passengers in the son’s car were injured and reached settlements with Burlington Northern. In July 1998, Burlington Northern sued the applicant. The applicant paid Plumb a "flat fee" of $20,000 for representation in this matter. Plumb advised her to liquidate her assets and give them to him. He advised her that she could legally invest her funds out of state where her creditors could not locate them, and that he would invest them in Nevada. Acting on Plumb’s advice, the applicant mortgaged her home, liquidated her retirement account, and paid Plumb $100,000; Plumb then stole the funds. The committee approved payment to the applicant of $30,000. Kelly M. Seidlitz The committee approved three applications concerning Seidlitz, totaling $3,868, after Seidlitz abandoned his practice. In this matter, the applicant, who speaks little English, paid Seidlitz $1,250 to collect a loan debt owed by his daughter and son-in-law. Seidlitz wrote three one-page letters. The first letter was sent to the applicant’s daughter and son-in-law; the other two were sent to the lawyers representing each of them in their divorce. The applicant says that Seidlitz advised him to take no action on collecting the debt until the divorce was final. After the divorce was final, the applicant could not get Seidlitz to respond to his calls or take any further action. Seidlitz was ordered to pay $1,250 restitution in the disciplinary proceeding. Daniel S. Wilner The committee approved 15 applications totaling $13,979.11. These applications all concern legal fees or advance costs paid to Wilner. He provided little or no services for his clients, and in each case provided no accounting for the funds. In many of these cases, the Disciplinary Board ordered Wilner to pay restitution. The applications involved payments ranging from $200 to $4,800 for representation in a variety of matters including contractor and zoning disputes, bankruptcy, wills, real estate, marriage dissolution, child custody and support, paternity and criminal. In one case, Wilner agreed to represent a client in a California court proceeding, even though he was not admitted to practice in that state. In some instances, after the clients demanded refunds, Wilner gave them checks drawn on accounts that had no funds. Jonathan T. Zackey During the investigation of Zackey, the WSBA conducted an audit of his trust account. Among other things, it was discovered that his trust account had been garnished twice in 1998 and 1999 for his personal debts. On March 6, 2000, his trust account balance was $32.49. Restitution was ordered in both of these matters. In the first, the applicant hired Zackey on a one-third contingent-fee basis to represent him in a personal injury claim. In May 1999, he received $50,000 in settlement funds and deposited them to his trust account. The audit of his trust account conducted by the WSBA showed that on that same day he wrote a check from that account to himself for $10,000 designated "partial fees." On September 7, he wrote a check for $1,000 from the trust account designated "cost reimbursement [applicant]." At some point, Zackey withdrew all funds from his trust account, including the applicant’s. Zackey never provided the applicant with an accounting or paid any of the settlement funds to him. The committee approved payment to the applicant of $25,000. In the second matter, the applicant also hired Zackey on a one-third contingent-fee basis to file a personal injury claim; the applicant agreed to settle his claim for $66,600. The defendant’s insurer issued two settlement checks, one for $46,200, payable to the applicant and Zackey; another for $20,400, payable to the applicant, Zackey and the applicant’s insurer, which had a subrogated interest from payment of medical expenses. The applicant’s insurer was liable to the applicant for the portion of his fees and costs attributable to its subrogated claim. Under the fee contract with Zackey, that money belonged to the applicant. Zackey represented to the insurance company that their portion of the fees and costs was to be paid to Zackey. In support, he sent them a copy of a fee agreement different from the one signed by the applicant. He advised the applicant of his claim on these fees and costs (totaling $6,900.32), which the applicant disputed. The insurer endorsed the $20,400 settlement check which Zackey deposited into his trust account. He misappropriated those funds and used them for his own use or to pay funds owing to other clients. The committee approved payment to the applicant of $6,900. The lawyers on whose behalf the fund committee makes payments are obligated to make restitution to the fund. In most cases, this only occurs as a condition of criminal sentencing with the cooperation of county prosecuting attorneys, or when a disbarred lawyer seeks reinstatement. During the last fiscal year, the fund received $7,160 in restitution. The fund is administered by the Washington State Bar Association. Most investigations of application claims are conducted by the Office of Disciplinary Counsel in connection with investigation of disciplinary grievances. Direct and indirect costs of administering the fund are charged to the fund, and during the last fiscal year, totaled $17,485, or less than seven percent of revenue. Finally, as reported in previous issues of Bar News, the fund receives thank-you notes to Washington lawyers. A recent note reads: I am in receipt of your gift check and want to thank you and the WSBA for your assistance, persistence and patience regarding my situation. I only regret that [this lawyer] caused hardship for many others as well. The gift will go a long way towards getting me out of the hole that resulted from the theft of my father’s estate. Who knows? Perhaps I will attend law school after all, as it has always been a dream of mine. For a copy of the 2001 Lawyers’ Fund for Client Protection Annual Report, or for further information, see www.wsba.org/lawyers/groups/lawyersfund/, call 206-727-5954, or e-mail your request with your mailing address to questions@wsba.org. The committee chair is Seattle attorney Thomas R. Dreiling. WSBA General Counsel Robert Welden is staff liaison to the committee. |
