State Bar Proposes Curb on Bequests to Lawyers : Ethics: A change in code of conduct would ban attorneys from preparing wills and trusts providing them with gifts. The action comes after a lawyer drafted wills netting him millions.

The State Bar of California, reacting to disclosures that a Laguna Hills lawyer prepared numerous wills making himself the recipient of millions of dollars from his clients’ estates, is formally proposing a strict new rule forbidding lawyers to prepare wills and trusts that bequeath them gifts.

State Bar officials said the newly proposed rule, released Wednesday for public comment, resulted from a report in The Times that Orange County lawyer James D. Gunderson had enriched himself by preparing wills and trusts that gave him millions of dollars in cash, stock and property from the estates of his elderly and sometimes incompetent clients.

Gunderson, who has denied any wrongdoing, has since become the target of at least four investigations.

“This new (proposed) rule offers the best consumer protection yet,” said Harvey I. Saferstein, president of the State Bar, which is legally charged with disciplining the 135,000 lawyers in the state. “It will make it impossible for a lawyer, even one who doesn’t exert undue influence (on his clients), to benefit unfairly from their estates.”

The proposed rule is almost identical to one in the American Bar Assn.’s model rules that states a lawyer “shall not prepare an instrument giving the lawyer or a person related to the lawyer . . . any substantial gift from a client, including a testamentary gift.”

That rule, or a similar one, has been adopted in 38 other states, but not in California, where the State Bar considered and then rejected the rule during an overhaul of the state’s code of conduct for lawyers in 1988.

The California rule currently in force simply states that “a lawyer shall not induce a client to make a substantial gift.” The rule says California lawyers may accept gifts from their clients, and lawyers “who participate in the preparation of an instrument memorializing a gift . . . ought not to be subject to professional discipline.”

If the proposed rule is approved by the state Supreme Court and placed among the State Bar’s Rules of Professional Conduct, lawyers who draft wills and trusts in their own favor could face stiff disciplinary action, and even be disbarred.

Saferstein, a partner in the Century City law firm of Irell & Manella, said the Times’ investigation of Gunderson convinced members of the State Bar’s committee on admissions and competence that they should propose “a harsher, more absolute prohibition” against attorneys drawing wills and trusts that leave them gifts.

Some members of the legal profession on Wednesday welcomed the State Bar recommendation.

“It’s about time,” said Ron Talmo, dean of the Irvine campus of Western State University College of Law. “It will finally put us in line with most of the jurisdictions in the United States.”

Orange County Superior Court Judge Tully H. Seymour, whose two-year assignment as the county’s chief probate court judge ended only last month, also described the State Bar’s action as “long overdue.”

“It’s unfortunate that we need such a rule, but I’m happy that the State Bar has acted,” Seymour said. “This should only be the beginning in the quest to shore up protection for the public in estate planning matters.”

The Times investigation last November showed that Gunderson, 68, arranged a will and trust that together bequeathed him stock valued at $3.5 million, and made the other beneficiaries liable for an estimated $2 million in inheritance taxes he normally would have incurred.

That will, the final version of which Gunderson had his blind, bedridden, 98-year-old client sign only six weeks before his death, included a “no contest” provision that would deprive other beneficiaries of a share of the man’s $18-million estate if the will were challenged.

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.