Bill Would Bar Bequests to Estate’s Attorney : Law: The legislation proposed by two lawmakers representing Leisure World residents would prohibit gifts such as those taken from elderly clients by Laguna Hills lawyer James D. Gunderson.

Two Orange County lawmakers on Thursday proposed legislation to prevent lawyers from making themselves beneficiaries of their clients’ estates--a practice that enriched a Laguna Hills lawyer who received millions of dollars in cash, stock and real estate from his elderly clients.

The proposed legislation, introduced by Assemblyman Bill Morrow (R-Oceanside) and state Sen. Marian Bergeson (R-Newport Beach), would invalidate any bequests to attorneys who prepared or arranged for wills or trusts that gave them gifts.

The legislation comes in the wake of revelations in The Times that Laguna Hills lawyer James D. Gunderon, 68, who boasted that he represented 7,000 Leisure World retirees, had prepared numerous wills and trusts making himself a major beneficiary of many of his clients’ estates.

Gunderson, who has repeatedly denied any wrongdoing, received the inheritances despite a longstanding California Supreme Court ruling that anything more than a “modest” gift from a client’s estate raises questions of impropriety. The Supreme Court defined a $21,000 inheritance as too great, and noted that a lawyer who inherited such a sum had to relinquish it.

In addition to invalidating any bequests to lawyers who arrange for the preparation of a will, the legislation would also prohibit other practices that Gunderson followed. The bills, if enacted by the Legislature and signed into law, would:

* Prevent guardians of estates from depositing client funds in a financial institution in which the guardian has a substantial interest.

* Prohibit lawyers who become guardians or conservators of estates from being paid any additional compensation as attorney fees, unless approved in advance by a probate court judge.

* Prohibit payment of legal fees to the guardian-conservator’s law partners or family members.

Officials with the State Bar of California, which some years ago rejected a similar ban on lawyers preparing wills and trusts that bequeathed them gifts, called the action by the Orange County legislators a step in the right direction.

Bar President Harvey Saferstein said the association’s board of governors will have to study the proposed reforms before taking a formal position.

But Saferstein said: “On a personal level I welcome any efforts to solve the problem that has (been) brought forward.”

The practices employed by Gunderson have been formally condemned by the American Bar Assn., the nation’s largest organization for members of the legal profession, whose guidelines specifically prohibit lawyers from preparing trusts or wills in which they are beneficiaries.

Those guidelines have been officially adopted in 38 states as the lawyers’ code of conduct, and lawyers can be disciplined--even disbarred--for violating them. California, which has more lawyers per capita than any other state in a nation that far and away leads the world in the number of lawyers, is not among the 38 states that have adopted the ABA Model Codes.

Saferstein noted Thursday that a State Bar committee is reviewing the association’s rules of professional conduct to see whether it should adopt the ABA guideline.

Apart from receiving property worth millions of dollars, The Times articles revealed how Gunderson deposited his clients’ money in a savings and loan association and a bank that he founded, how he donated their funds to his pet charities and how he made arrangements for his family’s bird company to benefit from his clients’ estates.

In one recent case, Gunderson arranged to have a client bequeath him stock valued at $3.5 million and included a “no-contest” provision in the will to deprive any other beneficiary of a share of the man’s $18-million estate if he or she mounted a legal challenge. The 98-year-old client, who was blind and bedridden, signed the will only six weeks before his death.

In another case, Gunderson persuaded a judge to name him legal guardian of a Canadian woman “suffering from . . . senile dementia” and thus incapable of managing her assets. Once in control of her affairs, Gunderson drafted a new will that gave him the lion’s share of her estate--nearly $250,000 worth of AT&T; stock.

Christopher Kahn, Bergeson’s chief of staff, said the senator considers the bill to be a high priority because the Gunderson case is “a very visible and important district issue,” particularly among Leisure World residents.

The aide also said that Bergeson planned to work with all sides on the issue.

“At this point, we’re looking at this bill as a starting point,” Kahn said. “We expect some lawyers to be concerned with it, but the conversations we’ve had with the State Bar indicate they realize there are some problems with the state’s probate laws and they want to work to solve them.”

Morrow, himself a lawyer, said he was “quite surprised” when he learned state law contains no provisions to prevent probate lawyers from getting substantial gifts from elderly clients.

“I’m not going to tell you that every probate lawyer is a crook,” Morrow said. “It’s not that way at all. Certainly the Gunderson episode is a minute exception to the rule. Nevertheless, it points out that there are some existing problems with the law we can address to prevent any temptation.”

The bill was drawn up in recent weeks with the assistance of the Assembly Judiciary Committee staff in consultation with the Orange County district attorney and officials from the American Assn. of Retired Persons, an advocacy group for the elderly.

Morrow said he is optimistic that probate lawyers will embrace the legislation. “They, certainly more than any group, have the most interest in policing these types of regulations,” he said. “They got a black eye with this Gunderson mess. That’s not good for their business or their reputation.”

While the bill is not expected to experience many problems in the Senate, where Bergeson enjoys a cooperative relationship with her peers, the Assembly version authored by Morrow could have a rockier road. The majority Democrats might frown on a bill authored by Morrow, a freshman Republican, especially since a competing bill dealing with cases like Gunderson’s has already been introduced by Democrat Assemblyman Tom Umberg of Garden Grove.

Umberg rushed his bill onto the floor on the opening day of the Legislature in early December, an action that irked Republican lawmakers because Morrow and Bergeson count Leisure World residents among their constituents and Umberg does not.

Although the initial version of the Umberg bill was narrowly focused, he has promised to introduce more comprehensive language that would curb any abuses. Democratic officials suggest that Morrow’s bill will likely be killed to make way for the Umberg bill. Any differences with a Senate version authored by Bergeson would be settled by a conference committee made up of members of both houses.

For his part, Morrow said his bill is “tougher” than Umberg’s version. But he would accept Umberg’s if politics comes into play, he said--as long as the legislation makes it into law and the elderly are protected.

“The way I look at it, it doesn’t matter if I’m author or co-author as long as it passes,” Morrow said. “If Tom Umberg’s bill incorporates my language, I’ll be tickled to death if it passes.”

Morrow plans to hold a news conference in Leisure World early next week to inform residents about the bill and drum up support.