Lawyers’ Gift Limit Bill OKd : Legislation: The Assembly has approved a bill that restricts attorneys from making themselves beneficiaries of their clients’ estates.

The Assembly unanimously approved a bill Thursday that would restrict attorneys from making themselves beneficiaries of their clients’ estates, a practice that enriched one Laguna Hills lawyer who received millions of dollars from his elderly Leisure World clients.

The bill, sponsored by Assemblymen Tom Umberg (D-Garden Grove) and Bill Morrow (R-Oceanside), was approved on a 67-0 vote and now goes to the state Senate, where a similar measure is being pushed by Sen. Marian Bergeson (R-Newport Beach).

Umberg said the legislation, which invalidates bequests to attorneys who prepare or arrange for wills or trusts that give them gifts and restricts lawyers from controlling trusts they create for their clients, could be on the governor’s desk by the end of March.

The legislation was prompted by revelations in The Times that Laguna Hills lawyer James D. Gunderson, 68, had made himself a major beneficiary of many of his clients’ estates. Gunderson, who has 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.

In a speech to the Assembly, Umberg said the bill would help prevent “a small number of unscrupulous lawyers” from taking advantage of elderly clients in drafting wills and managing estates. He also noted that similar restrictions are already in place in more than three dozen other states and suggested in an interview that “it’s an embarrassment that California has lagged so far behind on this.”

Morrow, who represents a large portion of South County that includes the Leisure World Laguna Hills retirement community, told his Assembly colleagues that he was “quite surprised” to learn that the state has no rules against attorneys receiving gifts from a client’s estate. He, too, predicted that the legislation would “go a long way to protect the elderly” while also helping to salve the reputation of probate lawyers in general, which has been sullied by the Gunderson case.

Although the bill originally suggested that lawyers be allowed to receive gifts valued up to $500 from their clients, the version approved by the Assembly on Thursday makes all gifts subject to the law.

But it does allow an attorney who prepares a will to receive a bequest if an independent review is conducted by another lawyer who has no professional or personal ties to the attorney receiving the bequest. The independent attorney would be required to provide legal advice to the client and certify that the bequest was “not the product of fraud, menace, duress or undue influence.”

The bill approved by the Assembly also includes provisions not contained in earlier versions that would restrict attorneys from acting as trustees of trusts they create for their clients. Again, attorneys could circumvent the restrictions if an independent lawyer reviewed the case and certified that all was above board.

The restrictions on attorneys acting as trustees stem not only from the Gunderson case, but also from concerns among lawmakers about a State Bar investigation of another Orange County attorney, Lloyd G. Copenbarger, who is suspected of exerting undue influence in gaining near-absolute control of the $24-million estate of an elderly Anaheim woman. Copenbarger, like Gunderson, denies any wrongdoing.

In addition, the legislation would make it illegal for guardians of estates to deposit client funds in a financial institution in which the guardian had a substantial interest and prohibit the payment of any additional compensation to the attorney in the form of attorney or conservator fees. It would also outlaw payment of attorney fees to law partners or family members of guardian conservators. Gunderson was found by The Times to have engaged in each of these practices.

Aside from the efforts in Sacramento, the State Bar of California is proposing a rule forbidding lawyers to prepare wills or trusts that bequeath them gifts. In addition, Superior Court Judge John C. Woolley is tentatively planning to establish probate court seminars for members of the public with an aim to educate them on the issue.