By Sylvia E. Stevens
"As might be imagined, [my lawyer’s] actions in this matter have been a source of grave distress to me. Accordingly, it is indeed gratifying to know that my concerns are shared by the Oregon State Bar and in every instance the bar has provided me with an appropriate remedy and a gratifying sense of justice and ethical integrity." —Claimant upon receiving reimbursement from the Client Security Fund.
In 1966, the Oregon State Bar membership approved the bar’s sponsorship of legislation to establish a member-financed fund to protect clients from the dishonest conduct of their lawyers. The result was a statutory scheme at ORS 9.615 to 9.655 that enabled the creation of and governs the OSB Client Security Fund. The purpose of the fund, as expressed in ORS 9.625 is to "relieve or mitigate pecuniary losses to the clients of active members caused by the dishonest conduct of those members in their practice of law."
The Client Security Fund is a separate, dedicated OSB account. All of the fund money comes from annual member assessments, money collected by subrogation from the defalcating lawyers and interest on the invested funds. Eligible claims are paid up to $50,000; there is no limit to the number of claims that can be paid on behalf of one lawyer.
Claims to the CSF are investigated and reviewed by the members of a committee appointed by the Board of Governors. All claims recommended for payment are reviewed and approved by the BOG; the BOG will also review the committee’s denial of a claim upon timely request by the claimant. The CSF Committee is comprised of twelve OSB members and one public member. The Committee members in 2005 were R. Darren Class (chair), C. Scott Howard (secretary), Sarah K. Rinehart, Floyd H. Shebley, Conrad E. Yunker, William B. Crow, Thomas J. Moore, Scott E. Asphaug, Jennifer F. Kimble, Dennis McCaffrey, Constantin Severe, Theodore F. Sumner and Bonita J. Merten (public member).
The great majority of Oregon lawyers observe high standards of integrity when entrusted with client funds or property. Nevertheless, the dishonest acts of a small few reflect negatively on the public image of and confidence in the legal profession as a whole. The Client Security Fund works to restore public confidence in the profession by reimbursing clients for losses caused by their own lawyers.
The CSF Committee met seven times in 2005 and reviewed 38 claims for reimbursement, including several carried over from prior years. Thirty new applications were received in 2005. Of those, nine were approved for payment in 2005, nine were denied, two were withdrawn and 10 remain pending. The CSF also paid 13 claims in 2005 that had been received between 2002 and 2004 and denied five claims that were carried over from 2004. The total paid out in claims in 2005 was $253,553, significantly more than the $55,743 paid in 2004.
Eleven lawyers were responsible for the 24 claims paid in 2005, which are described in more detail below. Many of the claims were routine, in the sense that the existence of the lawyer-client relationship and the lawyer’s dishonesty were evident. Others required considerable analysis and study by the committee. In some cases, the BOG approved payment of a claim that the Committee had denied.
In exchange for payment from the Client Security Fund, claimants are required to assign their rights against the defalcating lawyer, and the bar then tries to recover the money paid out by the fund. The annual recovery on these receivables is in the $3,000 to $5,000 range. Recoveries in 2005 were well above average, because the bar was able to collect $50,000 from a former lawyer whose clients had been reimbursed by the fund nearly 20 years ago. (One third of the recovery was paid to a Wisconsin law firm that had been assisting with the collection for more than 10 years.) Outstanding receivables hover around $1 million (see sidebar).
Stephen C.P. Carroll ($28,000)
While an associate of a law firm, Carroll was assigned to handle the Clients’ matter. When the firm dissolved in late 2001, Clients retained Carroll directly to complete their legal work and gave him a retainer of $28,000. The following month, Carroll joined another law firm. He had no further contact with Clients except for a chance meeting in August 2002. Clients made numerous efforts over time to communicate with Carroll, to no avail. In 2004, Clients hired another lawyer to help them terminate their relationship with Carroll, get an accounting of the funds they delivered to him and obtain a refund of any unearned portion. In response to Clients’ demand, Carroll admitted that he had taken the Clients’ money and that he did not perform enough services to earn the entire $28,000, but did not refund any portion of the fees paid. The CSF investigation found no evidence that Carroll performed any legal work in exchange for Clients’ retainer.
In June 2005, Carroll submitted a Form B resignation; the pending disciplinary charges arose from the complaint of Clients and others.
Ronald K. Cue ($1,000)
The CSF reimbursed $750 to one of Cue’s clients and $250 to another. The first claim was for a $750 flat fee paid in February 2003 to defend a client on a restraining order violation charge. Cue assured the client he would get the charge dismissed and that the client did not need to appear at the hearing that had been scheduled. Cue was facing unrelated disciplinary charges at the time; after a hearing in April 2003 the trial panel recommended disbarment. Several months later during a traffic stop, the client was arrested for failing to appear in the earlier matter. He learned at that time that Cue had done nothing on the matter.
In December 2003, the Oregon Supreme Court ordered that Cue be disbarred effective March 1, 2004. In January 2004, Cue accepted a $250 retainer from a second client, but performed no services.
Deborah Dealy-Browning ($5,000)
In June 2003, Clients’ 15-year-old son died in a fall and Clients wanted to pursue a federal civil rights claim against the fire district that performed the rescue. After consulting with several attorneys who declined the case, Clients hired Dealy-Browning, who was very enthusiastic and encouraging. Clients had very limited financial means and were unsophisticated about the law and legal matters. Clients hired Dealy-Browning in August 2003. There was no written fee agreement. Clients believed Dealy-Browning was handling the case on a contingent fee basis, but Dealy-Browning’s letters suggest she was expecting to be paid an hourly rate. At her request, Clients delivered $5,000 in October 2003 for "fees and expenses," but Dealy-Browning assured Clients they would be able to recover their litigation costs if their claim was successful.
In the spring of 2004, Clients contacted Dealy-Browning expressing frustration at her lack of communication, especially since they understood their claim had to be filed by mid-June. Dealy-Browning responded with a draft complaint and requested an additional $292.50 to cover the court filing fee and additional fees Dealy-Browning claimed to have earned in excess of the $5,000 paid previously. Clients heard nothing more from Dealy-Browning and eventually filed their civil rights case pro se, using the draft complaint that DealyBrowning had prepared. Shortly, they were served with a motion to dismiss and eventually their claim was dismissed on the ground that the statute of limitations on their claim ran one month before they hired DealyBrowning.
The CSF Committee and the BOG concluded that, while Dealy-Browning likely had no dishonest intent, Clients were entitled to a reimbursement of the fee because Dealy-Browning’s services were of no value.
Pedro Fernandez ($7,000)
Two of Fernandez’s clients were reimbursed by the Client Security Fund in 2005. One client hired Fernandez in August 2002 regarding a partnership dispute and advanced $4,000 for Fernandez’s fees. Fernandez filed a complaint in November 2002 after much badgering from the client, but thereafter performed no work on the matter, which was ultimately dismissed in April 2003. Fernandez acknowledged that he owed the client a refund for the unearned portion of the fees, but did not refund anything. The CSF reimbursed the client for the entire amount paid to Fernandez.
The second client hired Fernandez in late September 2002 to pursue a wrongful termination/employment discrimination claim on a contingent fee. The client deposited $500 for costs at that time and Fernandez began to work on the case, including conferring with the client and the client’s employer and reviewing documents. On Oct. 18, 2002, Fernandez requested $2500 so he could travel to Texas to meet personally with the employer and perhaps come to a settlement on the issues. The client’s file indicates there were telephone conversations and some correspondence between Fernandez and the employer in November, including the transmission of a settlement offer, but no activity after that. In April 2003, Fernandez told the client he had to quit practicing because of health issues. The BOG agreed with the CSF Committee that the client should be reimbursed because there was no evidence that the money paid was used for any "costs" relating to the case; in particular there was no evidence that Fernandez made a trip to Texas on the client’s behalf.
Fernandez submitted a Form B resignation in May 2003 arising out of unrelated matters.
James E. Flanagan Jr. ($785)
Clients hired Flanagan in May 2003 to help them with a Chapter 13 bankruptcy. They paid $785 to cover the filing fee and Flanagan’s initial services. Despite many calls to Flanagan’s office in the following months, Clients were never able to talk to him. Flanagan committed suicide in November 2004; his records contained no evidence that Flanagan had done any work on their case.
Philip J. Groh ($1,500)
Client hired Phil Groh in December 2000 in connection with the dissolution of a domestic partnership. Client paid Groh $1,500; there was no written fee agreement, and Client was unsure whether he would be charged hourly or if the fee was fixed. After months of Groh not returning calls, Client hired another attorney to take over in the matter. The committee found that Groh’s only work on the matter was to prepare and file a response to the petition and draft a request for production of documents, which was never sent. The committee and the board agreed that Client was entitled to reimbursement of the entire fee because the work done by Groh was of minimal value.
Groh submitted his Form B resignation in October 2002 with charges pending involving 13 clients. He has reimbursed the CSF nearly half of the money paid out on this claim.
Keith A. Miller ($38,375)
Client was a 57-year-old disabled veteran who hired Keith Miller in early 2003 to pursue claims with the Board of Veterans’ Appeals for disability benefits going back to 1989. There was no written fee agreement. Client understood that legal fees in such matters were regulated by the VA but he was not aware of the particulars. Client completed the necessary paperwork himself. He does not believe Miller did any work on the matter other than the initial consultation and sending one letter to the VA in which Miller indicated he represented Client but would not be charging a fee.
In August 2003, the VA made a partial award to Client of $109,000 for benefits retroactive to 1998. Miller reiterated that he was not charging a fee (nor had the VA awarded him a fee), but asked Client for a "charitable contribution" equal to 35 percent of the award, ostensibly to facilitate Miller’s ability to assists other veterans in similar matters. Because Client needed Miller’s help with the remaining claims, he felt he had no choice but to give Miller the requested "contribution." At Miller’s request for payment in cash or check denominations of less than $10,000 each, Client paid Miller $38,375 in cash.
Miller submitted a Form B resignation in December 2004; the pending charges related to Miller’s representation of this client and two other matters.
Warren G. Moe ($400)
Moe was hired in April 2002 to handle Client’s Chapter 7 bankruptcy; client paid $400 for the work. In early July, Client met with Moe’s assistant to provide the information for his petition. That was Client’s last contact with Moe or his office. Client eventually hired another lawyer to prepare and file his bankruptcy petition and handle the matter. The fee was reimbursed in full because Moe’s services were of no value to the client. At the time he took Client’s case, Moe was appealing a disciplinary suspension order; he was also suspended for several weeks in March 2002 and in July 2002 for nonpayment of dues and on affirmation of the earlier trial panel decision. Moe resigned Form B in October 2002 as a result of complaints filed by Client and others.
Bob Pangburn ($27,500)
The CSF reimbursed seven of Pangburn’s clients in amounts ranging from $1,000 to $10,000. The representations spanned the period between 1999 and 2004. In each case, the clients hired Pangburn and paid a fixed fee in advance, after which they had virtually no contact with Pangburn. All but one of the cases involved inmates seeking post-conviction relief or direct appeal. The CSF found in each case that Pangburn either provided no services or that the work he did was of no value to the client.
Beginning in April 2000, the bar began investigating disciplinary complaints against Pangburn; he ultimately submitted his Form B resignation on the eve of his disciplinary trial involving 11 different client matters.
Dennis F. Tripp ($4,100)
Two clients of Tripp received full reimbursement of fees paid for bankruptcy representation. One client hired Tripp in late 2002 and the other hired him in mid-2003. Over the ensuing months, Tripp apparently satisfied the clients that he was working on their matters. When Tripp died in April 2005, the clients retrieved their files from Tripp’s office and discovered that he had not filed bankruptcy petitions or performed any work for them.
ABOUT THE AUTHOR
Sylvia E. Stevens is senior assistant general counsel and
CSF administrator for the Oregon State Bar. She can be reached at (503)
620-0222, or toll-free in Oregon at (800) 452-8260, ext. 359, or by e-mail
at sstevens@osbar.org.
| CLIENT SECURITY FUND’S ACTIVE RECEIVABLES |
|
Attorney and Amount Anderson, Willis $1,447 Roger Anunsen $60,000 Barber, David $470 Barrett, Michael $4,690 Belcher, Richard $500 Biggs, John $7,884 Carroll, Stephen $28,000 Cue, Ronald $1,000 Daughters, Harold $342 DeZell, John $3,100 Dickerson, Donald $3,250 Dixson, Kenneth $520 Donovan, James $6,245 Ellison, Beecher $850 Evans, Kenneth H. $5,000 Fearey, Ross $73,878 Fernandez, Pedro $7,330 Gallagher, Alan $16,224 Gloyn, Paul F. $44,571 Grady, Hugh $99,086 Green, Glenda $2,000 Griffen, Keith $23,089 Groh, Philip $2,325 Guthrie, A. Sue $500 Harris, David $4,900 Hilke, Charles $14,843 Jacobsen, Mark W. $2,000 Johnstone, Robert B. $4,000 Jordan, Lawrence W. $1,469 Judy, William S. $134,868 Kelley, Phil M. $88,074 King, Lewis M. $101,034 Little, Cameron $7,750 Loennig, Carlton $119,000 Martin, Thane $5,250 McGrady, Michael $900 Miller, Keith $38,375 Miller, Steven G. $19,199 Moe, Warren G. $1,314 Morin, Volney $1,550 O’Neal, James P. $50,000 Ogilvy, William $22,904 Pangburn, Bob $24,500 Pollock, Woodrow $845 Rae, Gary $130,763 Schwindt, Steven $1,257 Shannon, Bobby J. $18,654 Smith, Raymond R. $1,444 Sousa, Dennis $7,105 Stache, Dale $1,950 Sylvester, Gregg $50,500 Taub, Barry $445 Taylor, R. Randall $7,224 Wangen, Erik D. $16,600 Wasson, Greg $1,650 Weerts, James L. $1,150 Wilkes, John E. $61,190 Total $1,335,008 |
© 2006 Sylvia E. Stevens