Lawyer Discipline as Consumer Protection

By Anne I. Seidel

The Washington State Bar Association's Office of Disciplinary Counsel (ODC) is not what most lawyers expect to read about in connection to consumer protection. Yet helping consumers of legal services is both a byproduct of ODC's central mission of investigating and prosecuting allegations of lawyers' ethical violations, and is the focus of several related bar programs.

Living Trusts

In the last few years, we have begun seeing cases involving corporations run by nonlawyers that sell trusts and other estate planning services to elderly clients. The corporations typically hire a lawyer whose name appears on the estate planning documents. The clients are solicited through commissioned sales agents who tout the benefits of living trusts. The lawyer does not have any direct contact with the clients, and neither the lawyer nor the sales agents investigate whether the living trust would in fact benefit the client. In fact, the clients often would have been better off with a simple and less costly will. Most of the fee for the sale of the living trusts go to the corporation. In the worst cases, the sales agents also convince the clients to liquidate assets to fund other trusts and buy high-commission annuities.

A lawyer was recently suspended for two years for participating in a living trust sales arrangement. In re Michael J. Scaringi, Public No. 01#00114. Mr. Scaringi was disciplined in part for assisting nonlawyers in the unauthorized practice of law, and failing to disclose to clients his interest in maintaining a continuing business relationship with the corporation marketing the living trusts.

Consumer Affairs

ODC informally assists clients who are having difficulty communicating with their lawyers or who can't get their files from their former lawyers. Our consumer affairs staff will contact a lawyer if they are called by a client who is having trouble reaching the lawyer. Often a letter or call will reopen the channels of communication. The lawyer benefits because a formal grievance is not filed (an event some malpractice policies require to be reported to the carrier).

Similarly, a recently-hired lawyer sometimes needs help in getting the file from the client's former lawyer and our consumer affairs staff attempts to mediate these disputes. Under Formal Opinion 181, a lawyer cannot assert a lien over a client's file if doing so would materially interfere with the client's subsequent representation. Often educating the previous lawyer about this Formal Opinion resolves the dispute.

Fee Arbitration and Mediation

These programs, run by the Association's Lawyer Services Department, provide an avenue for resolving fee disputes outside of formal litigation. Both the client and lawyer must agree to participate in either the fee arbitration or the mediation program. Fee arbitration allows a lawyer to have a fee dispute resolved without the risk of a malpractice counterclaim. The client benefits by avoiding the delay and expense of litigation.

The Mediation program similarly allows lawyers and clients to resolve fee disputes, but is also available for other types of disputes between lawyers and clients. For example, a grievance against a lawyer for an estate may be rooted in communication problems between the lawyer and the personal representative. On referral to the mediation program, the parties can agree to a set of actions to close the estate. At times, the ODC has required lawyers as part of a stipulation to discipline to agree to resolve, through the bar's mediation or arbitration programs, disputes with clients over funds held in trust.

The Lawyers' Fund for Client Protection

The Lawyers' Fund for Client Protection compensates clients who have been the victims of dishonest lawyers. Typically these lawyers end up disbarred and judgment proof. Funded by an annual assessment paid by all active lawyers, the Fund makes gifts to eligible clients of up to $50,000. While this does not always fully compensate the victims, it goes a long way to helping restore their faith in our profession.