O.C. Lawyer’s Estate Cases Probed by Bar

The State Bar of California, in a rare public disclosure, said Tuesday that it is investigating an Orange County attorney who prepared numerous wills and trusts making himself the recipient of millions of dollars in cash, stock and real estate.

In a departure from the organization’s policy of refusing comment on such matters, State Bar President Harvey I. Saferstein said that probate lawyer James D. Gunderson, whose practice is based just outside the gates of the Leisure World retirement community in Laguna Hills, is being investigated for receiving substantial bequests from his clients under questionable circumstances, for allegedly taking actions that were not in the best interest of his clients and for potential conflicts of interest.

Saferstein, a partner in the Century City law firm of Irell & Manella, said his decision to confirm that an investigation is underway was “an emergency measure meant to protect the public.”

The State Bar customarily refuses to confirm or deny that a lawyer is under investigation, in order to protect that lawyer’s reputation from false accusations, he said.

But that policy can be “waived when there is concern that somebody is doing something that is larger than the particular complaint indicates,” Saferstein said. “You are worried about people calling in and asking if there are any disciplinary measures pending (against this particular lawyer), and when the answer is no, they are lulled into a false sense of security.”

Saferstein said the State Bar, which is legally charged with disciplining the 133,000 lawyers in California, had received “many” calls from people asking if officials contemplated taking any action against Gunderson in light of an article in The Times on Sunday.

A Times investigation revealed that, despite a longstanding California Supreme Court ruling that anything more than a “modest” gift from a client’s estate to an attorney raises questions of propriety, Gunderson had arranged to inherit millions from his elderly clients.

Gunderson has generally denied any wrongdoing and has declined to comment on specific gifts, acquisitions or inheritances he has received from his clients. His attorney did not return a telephone call seeking comment Tuesday on the State Bar’s action, and a woman who answered the telephone at Gunderson’s San Juan Capistrano home Tuesday evening said he would have “no comment.”

Late Tuesday, the board of the 6,000-member Orange County Bar Assn. took an unprecedented decision to launch its own investigation into Gunderson’s practice. Bar Assn. President Thomas Malcolm said it was the first time in the organization’s 92-year history that the board had decided to initiate its own complaint against an attorney.

Speaking after the board’s regular monthly meeting, Malcolm said board members were “outraged” by the matter.

“Most of us were mortified,” Malcolm said. “We’ve been contacted by colleagues who are probate lawyers, older people have called us concerning attorneys that have drafted their wills. It’s been a dark day, this particular incident; it’s depressing to all of us.”

Malcolm said he believes the investigation by the local bar will accelerate the investigation by the State Bar. He said the Orange County Bar’s client relations committee, which comprises 45 attorneys, will proceed to investigate Gunderson’s practice by following leads in The Times report.

The announcements by the two bar associations mean there are now four active investigations of Gunderson. On Monday, Orange County Superior Court Judge Tully H. Seymour, who presides over probate court where wills and trusts are administered, ordered investigators to review all probate files in which Gunderson or his law partners were involved. Seymour also instructed investigators to scrutinize all cases in which Gunderson served as a trustee or legal guardian for someone who was judged incompetent to handle his or her own affairs.

The Orange County Sheriff’s Department also confirmed that it had launched its own investigation into Gunderson’s practice.

Saferstein said the State Bar’s investigation could take some time to complete. “They do take a while,” he said. Based on what he had read in the newspaper, he said Gunderson’s case “sounds a little bit complicated.”

The Times report noted how Gunderson received $3.5 million in stock from one estate and a 316-acre Fresno County farm from another.

In another case, he persuaded a judge to name him legal guardian of a Canadian woman who was “suffering from . . . senile dementia” and thus was incapable of managing her assets. After becoming her conservator, he drafted a new will that gave him the lion’s share of her estate--$225,000 worth of American Telephone & Telegraph Co. stock.

One of the woman’s blood heirs, who lives in Canada, accused Gunderson in court documents of defrauding the rightful beneficiaries of their shares in the estate with a will that the dead woman was obliged to sign against her wishes. The heir abandoned her court challenge, however, when Gunderson offered her $60,000 in exchange for dropping the case.

Saferstein confirmed that several lawyers as well as members of the public had called him and the State Bar to suggest that the Bar should adopt “a stricter rule” that prohibits lawyers from profiting from wills and trusts that they prepare. That rule has been incorporated in guidelines promulgated by the American Bar Assn. and adopted in 38 states--though not in California--as the lawyer’s code of conduct.

But Saferstein said that Gunderson may have run afoul of California law if he received substantial gifts from his clients’ estates. He referred to an oft-quoted 1962 California Supreme Court decision, Magee vs. the State Bar of California, which he says makes it “a violation of rules to receive more than a nominal gift.”

The Magee decision states that “even though an attorney may be acting only to carry out the wishes of his client in drawing a will containing a gift to himself, he should send the client to another lawyer when the circumstances would support an inference of wrongdoing.”

The Supreme Court decision noted that the case at hand involved an inheritance of $20,000, which it said was substantial.

The Times report also noted that several trusts prepared by Gunderson gave him absolute authority over estates valued in the hundreds of thousands of dollars. He was frequently empowered to dispose of their assets in any way he chose, and he has often elected to pay large sums of money to parties with whom he was doing business, to his law partners for legal services to the estates in question, to charities and to his alma mater.