July 2008
Lawyers’ Fund for Client Protection Report
by Robert D. Welden
May 16, 2008, 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 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. Because of funding issues this year, the Committee is authorizing payment of approved applications only up to $5,000, with any additional approved payment to be withheld until the end of the fiscal year in September, when it will be determined whether the balance of approved payments will need to be apportioned against available funds. At their meeting on May 16, 2008, the Committee conducted the following business.
Courtenay D. Babcock — WSBA No. 22674 (Blaine) — Suspended nonpayment of dues 6/12/06 — Disbarred 3/31/08.
Application A: Applicant, a Canadian citizen, paid Babcock $8,000 to apply for permanent residency in the United States. A year later, Applicant became concerned because Babcock had never had him sign any documents. He talked to Babcock, who assured him that the forms had been prepared and things were going ahead. Applicant then talked with another lawyer, who told him that “if things were going ahead, I should have been called in to sign documents.” Applicant met with Babcock, who admitted that little, if any, work had been done. Applicant asked for a refund of his $8,000. Babcock said he didn’t have the money, but after repeated requests, he paid Applicant $4,000 and also gave him a promissory note for the $4,000 balance, due by 7/1/06. On 7/1/06, Applicant went to Babcock’s office and found it vacated. He never received the remaining $4,000. The Committee approved payment of that amount to Applicant.
Application B: Applicant, a Canadian citizen, paid Babcock $2,000 to obtain lawful entry into the United States. Babcock advised her that she would need to apply for a non-immigrant waiver (I-192) and that first she needed to obtain a Royal Canadian Mounted Police criminal record check. Applicant says that, while waiting for the record check, she spoke with another lawyer who advised her that she did not need a non-immigrant waiver to enter the United States. Over the next year, Applicant made numerous phone calls to Babcock without being able to reach him. She then wrote to him requesting return of her $2,000. Babcock did not respond. She hired another attorney who successfully completed her entry into the United States without seeking an I-192 waiver. Babcock never accounted for the $2,000. The Committee approved payment in that amount to Applicant.
Application C: Applicant paid Babcock $3,000 for future preparation and processing of an immigration application. Subsequently, Applicant decided not to pursue the immigration application, and he contacted Babcock and requested a refund of the $3,000. Up to that time, Babcock had performed no services for Applicant. Babcock told him he had spent the $3,000, but that he would return the funds. He returned $1,000. Over the course of the next several months, Applicant made numerous unsuccessful attempts to contact Babcock. He never received the balance of the funds. The Committee approved payment of $2,000 to Applicant.
Bruce E. Hawkins — WSBA No. 25414 (Gig Harbor) — Disbarred 2/3/06.
Hawkins associated with several non-lawyers who maintained websites that promoted a program to reduce or eliminate consumer credit-card debt through private arbitrations. He allowed his name to be used in promotional materials and allowed an interview explaining this theory to be posted on these websites. He represented that credit-card debtors were not bound to the arbitration services specified in their cardholder agreements and that, because national banks cannot lend credit, debtors should not have to repay their debts. (For further background on Hawkins, see Bar News, June 2006, p. 39.)
Hawkins told Applicant that credit-card companies were lending credit in violation of the law, and that for $26,622.01, he would help her expunge her total debt. She says she told him she was then current with all her creditors, and he told her to stop paying them because now that she had discovered the “fraud,” continuing to pay them would constitute her agreement with the fraud. She stopped making payments.
Applicant paid Hawkins fees totaling $15,644.76. Hawkins sent her a letter she was to mail to her creditors, along with a brief and other documents. He instructed her that after 90 days, she should contact Solomon Arbitration Group and ask them to arbitrate the claims. Hawkins did not disclose that he was an owner of Solomon Arbitration Group. She sent them a total of $2,085 as arbitration fees, and they sent her arbitration awards.
She then learned that these “arbitration awards” were worthless unless entered in a court. She contacted Hawkins, who told her that if she wanted his help in enforcing the awards, she would need to pay $250/hour. She told him she had no money. He told her she could do it herself, and that the attorneys for the credit-card companies wouldn’t show for court. She filed the arbitration awards, “and all the attorneys did show and I wasn’t prepared to represent myself, so I was forced to drop the case.”
Applicant then filed for bankruptcy. She disclosed the arbitration awards, which the trustee researched and deemed worthless. A discharge was entered, and it was dismissed as a “no asset” case. The Committee advised the trustee that it might make a payment to Applicant, and the trustee responded that she did not intend to reopen the bankruptcy. The Committee approved payment of $17,729.76 to Applicant.
Robert W. Huffhines Jr. — WSBA No. 11279 (Kelso) — Suspended nonpayment of dues 7/28/04 — Suspended pending discipline 3/25/05 — Disability inactive 11/16/07.
Application A: Applicant paid Huffhines $700 to file a Chapter 7 bankruptcy proceeding. Applicant says that he had difficulty reaching Huffhines, and when he did, Huffhines would say only that he was waiting for some paperwork to clear. Applicant went to New York to seek employment. He received a letter from Huffhines enclosing a Chapter 7 petition, which he noted was out-of-date and incomplete. He recommended that Applicant consult a lawyer in New York. He also wrote, “I can arrange in the future to refund some of the fee that you paid in.” A few weeks later, Applicant called Huffhines and Huffhines said he could not file any petition. Huffhines refused to return any of Applicant’s money. The Committee approved payment of $200 to Applicant, representing the unused filing fee, and denied the balance as a fee dispute.
Application B: Applicant paid Huffhines $495 to file a Chapter 7 bankruptcy proceeding along with a $200 filing fee. Applicant gave Huffhines the necessary information and documentation to prepare the petition. Subsequently, Applicant contacted Huffhines, who told him the petition and papers were ready for signature. Applicant and his wife signed them. At the time, they were missing at least two creditors’ addresses. When Huffhines was asked in a deposition during the disciplinary investigation why he had Applicants sign the petition when he didn’t have all the information, he testified, “I’m not sure exactly.”
Applicant continued to receive calls from creditors, so he contacted Huffhines, who said that he had not filed the petition because he needed the addresses of creditors and that he needed $30 for postage to mail the petitions to the bankruptcy court, which Applicant paid. He heard nothing further until he called Huffhines in April 2004. Huffhines told him his office was closing and to pick up his paperwork. He told Applicant he could have his money back at some future date. He never refunded any funds. The Committee approved payment of $230 to Applicant, representing the unused filing fee and postage costs, and denied the balance as a fee dispute.
Bradley R. Marshall — WSBA No. 15830 (Seattle) — Suspended 5/10/07.
Applications A, B, and C: Marshall represented 15 longshoremen in a workplace racial discrimination case, including these applicants. For additional facts, see In re Discipline of Marshall, 160 Wn. 2d 317 (2007).
In 1995, several longshoremen contacted Wayne Perryman, who did business as Consultants Confidential. Perryman is not a lawyer, but he and the longshoremen signed an agreement that he would prepare a racial discrimination lawsuit for $5,000. They also agreed that Perryman would act as their representative throughout the case, and that they would pay him and his company 10 percent of any settlement. Perryman contacted Marshall’s law office and Marshall became the lead attorney in the case. The parties agreed to mediation, and 14 of the 15 plaintiffs agreed to a settlement of $800,000.
The Supreme Court opinion states that Marshall retained slightly less than 30 percent for attorney fees, and charged the plaintiffs over $100,000 in costs. It says Perryman initially asked for Marshall to pay him $80,000, or 10 percent of the settlement, but at Marshall’s urging, he reduced his fee to $70,000 plus costs of $1,459. The Court found that Marshall had subtracted $108,122.91 from the settlement proceeds for costs. This included $9,473.75 that Marshall paid to other attorneys for work on the lawsuit. However, the fee agreement provided that any lawyer associated with the lawsuit would be associated without additional expense to the plaintiffs. Therefore, this sum should not have been taken as costs.
In addition, the Court found that Marshall admitted inflating the costs by $41,000 because of an “accounting mistake.” During the litigation, the plaintiffs had collectively advanced $41,000 to cover costs, with some plaintiffs paying more than others. When the case settled, Marshall returned to each plaintiff the amount they had paid him for costs. When he obtained the settlement, he paid the costs, but he also considered the return of the $41,000 as an additional cost.
The Court ordered restitution of the $41,000 he overcharged for costs and the $3,473.75 he charged in excess of his agreed fee, totaling $44,473.75. Marshall has paid no restitution. The Committee determined that each client is entitled to 1/14 of $44,473.75, or $3,176.70, and approved payment of that amount to each applicant.
Roger D. Ost Jr. — WSBA No. 22141 (Seattle) — Interim suspension 11/29/07 — Disbarred 12/7/07.
Applicant paid Ost $4,500 to pursue a claim against a contractor and its licensing bond. Ost contacted the contractor and claimed to have contacted the bonding company. Ost told Applicant that arbitration with the bonding company would be held in September 2006. Applicant contacted Ost in August and Ost told him that the arbitration would be rescheduled. Applicant waited to hear, not knowing how long it would take. He says it wasn’t until early 2008 that he again tried to contact Ost, but his phone calls were not returned. He then checked the WSBA website lawyer directory and learned that Ost was disbarred. He called Ost and this time reached him. Applicant asked for return of his $4,500, and Ost told him to call back in February. That was the last time Applicant was able to reach Ost. Ost returned none of Applicant’s funds. The Committee approved payment of $4,500 to Applicant.
Thomas P. Sughrua — WSBA No. 14117 (Seattle) — Interim suspension 12/12/07 — Disbarred 2/20/08.
Application A: Applicant paid Sughrua $2,500 to file a lawsuit against a bank. Applicant says that despite the fact that Sughrua assured him that he had a “solid case,” nothing was ever filed. After Sughrua was disbarred, Applicant attempted to contact him for the return of his files, without success. Finally, accompanied by a county sheriff, Applicant went to Sughrua’s home, and Sughrua gave him what he said was all he had of Applicant’s files. A review of the materials given to Applicant discloses not a single letter, phone memorandum, draft pleading, or other work product. The only thing that indicated any work was done on the case was collection of a few court cases and Securities and Exchange Commission orders. Sughrua never accounted for the $2,500. The Committee approved payment of that amount to Applicant.
Application B: Applicant paid Sughrua $500 to extend a judgment, which was granted. The next step was to levy against property to force a sheriff’s sale. Sughrua e-mailed Applicant that he needed “a $500 cash bond for eviction; and a $2,000 cash bond for the levy sale.” Applicant sent Sughrua a check for $2,500. A month later, Applicant e-mailed Sughrua regarding the status of the proceeding. He responded that “I have time on Friday to finalize the pleadings for filing.” He said the whole process would take about 30 days. A few weeks later, Applicant again e-mailed him, noting that he had not returned several messages she had left for him. On 9/6/07, Sughrua responded that he had been in trial for the past two weeks, but would update her by the following Monday. He said he had a jury trial beginning on 10/9/07 and would have their case completed before that date. That was the last she heard from Sughrua. The court docket shows that nothing was filed with the court after entry of the order extending the judgment. Sughrua has never accounted for the $2,500, and the Committee approved payment of that amount to Applicant.
Todd W. Wetsel — WSBA No. 20720 (Vancouver, WA, and Portland, OR) — Suspended, nonpayment of fees 6/13/07 — 18-month suspension 9/6/07 — resigned in lieu of disbarment 2/25/08.
Applicant’s father paid Wetsel $1,500 to represent Applicant in an action to establish paternity of her child and to seek child support. There was no written fee agreement, so this advanced fee should have been deposited to Wetsel’s trust account. Instead, he immediately cashed the check and converted the funds to his own use.
Applicant was scheduled to meet with Wetsel later that month, but he did not show up. She tried reaching him by phone over the next several weeks without success. A week later, Wetsel called her and asked her to come to his office. When she got there, he was on the phone. After one hour, she left because she had another appointment. Her mother then sent Wetsel an e-mail to which he responded that he was having personal issues relating to his divorce. He said he had “[Applicant’s] stuff done” and that he would appreciate the chance to finish the work. Wetsel then called Applicant and said there was a court date set for 3/21/07 at 3:00 p.m. She went to court and there was no such hearing. On 3/22/07, she discharged Wetsel as her lawyer and requested return of her fee payment to her father. They never heard from him again. A search of Clark County Superior Court records finds nothing filed by Wetsel on behalf of Applicant. He never accounted for the $1,500, and the Committee approved payment of that amount to Applicant and her father.
Other Business: The Committee reviewed 14 additional applications that were denied for lack of evidence of dishonest conduct, as fee disputes or claims for malpractice, or because restitution was made. One of them was deferred while Applicant exhausts other remedies, and two were deferred for further investigation.
Restitution: Before payment is made, 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 March 31, 2008, seven lawyers were making regular restitution payments to the Fund totaling $22,156 since October 1, 2007. This includes $15,260 deposited into the Fund pursuant to Supreme Court order 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.
