September 2006
Lawyers’ Fund for Client Protection
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 of up to $25,000 to eligible applicants. On applications for more than $25,000, the Committee makes recommendations to the Board of Governors, who are the Fund trustees. At their meeting on May 26, 2006, the Committee took the following action:
Grosvenor Anschell (WSBA No. 9756 — disbarred). (Mr. Anschell did not respond to this application.) The applicant paid Anschell $800 to file a petition for divorce. Anschell prepared a petition that he had the applicant sign pro se. It was filed in the King County Superior Court. Neither party filed anything further. The applicant wrote on her application that “every time I called he gave me a reason and I didn’t know anything about law.” She was not even aware that Anschell had filed the petition. It was dismissed for failure to comply with the court’s orders. The Committee approved a gift of $800.
J. Rodney DeGeorge (WSBA No. 22931 — disbarred). (This matter was a subject of DeGeorge’s Stipulation to Disbarment.) The applicant hired DeGeorge in January 2003 to represent her son in sentencing following his plea of guilty to criminal charges. She agreed to pay a fee of $10,000, and made an initial payment of $2,200. The client’s previous attorney had referred him to a certified sex-offender-treatment provider for consideration of his eligibility for Special Sex Offender Sentencing Alternative (SSOSA). The examiner concluded that the client was not amenable to treatment. DeGeorge arranged for the client to have a second polygraph examination. The examiner concluded that he did not attempt deception during that examination.
The treatment provider wrote DeGeorge that he would need to review the report of the new polygraph examination and interview the client again. He met with the client and advised DeGeorge that he was still not amenable to SSOSA treatment. DeGeorge also referred the client to a psychologist who was not a certified sex-offender-treatment provider. By statute, SSOSA examinations are required to be performed by certified sex-offender-treatment providers, with some exceptions not applicable in the client’s case.
At sentencing, the prosecutor opposed a SSOSA sentence. In arguing why the court should accept the psychologist’s report, DeGeorge falsely represented that he talked with the certified treatment provider who told him he could not prepare a report in time for the sentencing.
The judge found that the client did not qualify for SSOSA and sentenced him to 131 months in prison. After sentencing, DeGeorge told the client and the applicant that the judge had made a mistake and he would seek reversal. DeGeorge filed a Motion for Reconsideration, but on the date it was set, he struck the hearing. He took no further action on the client’s behalf. DeGeorge stipulated to pay restitution to the applicant of $2,200 and the Committee approved a gift in that amount.
Terry O. Forbes (WSBA No. 5626 — disbarred). (For background information regarding Forbes, see January 2006 Bar News, p. 34.) Forbes represented the applicant on a personal-injury claim arising from an auto accident. The case settled for $149,305. Forbes gave the applicant a settlement statement that showed that he was to hold $24,464.26 in trust to pay three insurance subrogation claims. They were never paid and Forbes never accounted for or paid the applicant the funds. The applicants contested the insurance subrogation claims, because they felt that the insurers had denied full coverage. One insurer never made any contact with Forbes’s office, and the others were told that they would contest any subrogation claim and they did not pursue the matter further. The Committee approved a gift of $24,464.26 to the applicant.
James E. Graham (WSBA No. 15290 — suspended pending discipline). (Graham did not respond to this application, he did not file an Answer to the Formal Complaint, and an Order of Default was entered. The hearing officer recommended that Graham be disbarred and that he pay $5,290 restitution to the applicant.) Graham was a family friend of the applicant and lived in an apartment owned by her in exchange for legal services for her and her businesses. They agreed she would pay actual costs incurred. Graham never provided any bills, receipts, or accountings, and did not maintain records of his receipts and disbursements for the applicant’s matters. To support his requests for payments, Graham often gave her copies of purported court documents or legal correspondence. Several of the documents were falsifications, and some bore forged signatures of judges and others. One of these fictitious documents was a purported court order that stated that a hearing transcript would be filed with the court within 10 days, and that the applicant had to pay $5,290 as her share of the transcript cost. The applicant paid Graham $5,290. The hearing officer found that Graham created the falsified documents for the purpose of defrauding the applicant and inducing her to give him money, that he committed theft against her. Because of the state of both Graham’s and the applicant’s record keeping, the only payment from the applicant that can be directly tied to Graham’s falsifications is the $5,290 “transcript” payment. The hearing officer ordered restitution in that amount, and the Committee approved a gift in that amount.
Juan Gabriel Ibarra (WSBA No. 29461 — deceased). Ibarra died in a car accident. He had no will. In going through Ibarra’s records in order to wind down his law office and pay all due taxes, the attorney hired to probate the estate found one case in which Ibarra had a 30 percent contingent fee agreement with clients, but had mistakenly taken 33 percent, and another where the client had paid Ibarra a fee shortly before he died, and for which little or no work was done. The attorney suggested that these clients file creditors’ claims with the estate and also advised them to file applications to the Fund.
• The first applicant paid Ibarra $5,000 to defend his son on criminal charges shortly before Ibarra died. On the creditor's claim, the court ordered that the applicant's claim for $5,000 be approved. He was paid $1,557.02 from the assets of the law firm. The Committee approved a gift to the applicant of $3,442.98 based on failure to account for these funds.
• The applicants in a second case hired Ibarra to file a wrongful death claim regarding their son on a 30 percent contingent fee basis with the proviso that it would be 33 percent if it the matter went to trial. This was the case where the probate attorney discovered that Ibarra paid himself 33 percent instead of 30 percent. Their creditor's claim was allowed by the court, but because of the insolvency of the estate, they received no payment. The Committee approved a gift of $5,013.79 based on failure to account for these funds.
Craig E. Kastner (WSBA No. 8141 — deceased). The applicant hired Kastner for representation regarding injuries sustained in a car accident. Kastner filed suit but he never filed proof of service. He settled the applicant’s claim without the applicant’s knowledge or consent. The insurer issued a check payable to the applicant and Kastner for $10,000. Kastner endorsed the check, someone falsified the applicant’s endorsement, and it was deposited into Kastner’s trust account. The applicant filed a claim against Kastner’s estate. The claim was allowed, but the estate was insolvent and no creditor’s claims were paid. The Committee approved a gift of $10,000.
Richard J. McKay (WSBA No. 19987 — disbarred). (McKay has disappeared and his whereabouts are unknown. He did not respond to this application.) McKay was the administrator and attorney for the applicant’s father’s estate. The applicant and her brother were each entitled to half the net assets of the estate, approximately $250,000 apiece. McKay had previously represented the applicant’s brother in various matters. In a subsequent judgment entered against McKay, it was noted that he accepted this appointment despite the “obvious conflict of interest” in administering the estate of his client’s father where the client was one of the beneficiaries.
Despite not having nonintervention powers, and without approval of the court, McKay sold estate assets, entered into estate contracts, made loans of estate funds, made distributions of real estate and cash, and so forth. This included selling real property and making cash advances to the applicant’s brother without court authority. McKay paid himself fees totaling $26,204.87 without approval of the court. The applicant filed a petition for an accounting from McKay. At that point, McKay paid $15,000 to a lawyer who alleged that she was hired as the attorney for the estate. It was the position of the applicant that McKay hired the lawyer to represent him personally regarding the applicant’s petition for an accounting.
A judgment was entered against McKay for $331,762.27 for breach of fiduciary duty; awarded attorney fees in the amount of $57,889.37 to the applicant; and awarded $56,909.59 in additional attorney’s fees. McKay has disappeared and the judgment remains uncollected. The Committee and trustees approved a gift of $41,204.87 to the estate.
Other business: The Committee reviewed 23 additional applications that were denied for lack of evidence of dishonest conduct, or as fee disputes or claims for malpractice. One application was continued to seek further documentation. The Committee also voted to recommend to the Board of Governors that the WSBA cosponsor proposed amendments to the ABA Model Rules for Lawyers’ Funds for Client Protection regarding multijurisdictional practice proposed by the ABA Standing Committee on Client Protection. The Board approved the recommendation at their June 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 May 2006, eight lawyers were making regular restitution payments to the Fund.
Thank yous: The purpose of the Lawyers’ Fund for Client Protection is to assist persons who have been the victims of dishonest lawyers or lawyers who fail to account for client funds. Although the Fund cannot fully compensate a person for the harm done by a dishonest lawyer, the Fund receives notes of appreciation to the lawyers of the state of Washington:
• “On behalf of my client, I wish to thank the Washington State Bar Lawyers’ Fund for Client Protection for their efforts in rectifying this apparent defalcation. I must applaud your staff and the members of the Lawyers’ Fund Committee for their important work on behalf of our Bar Association.”
• “Your excellent assistance in this matter is greatly appreciated.”
• “God bless you. Thank you.”
The committee chair is Tacoma attorney Sarah Richardson. WSBA General Counsel Robert Welden is staff liaison to the committee.
