Ex-Lawyer Told to Return Client’s Bequest : Court: James Gunderson had received $3.5 million in the will of a 98-year-old Orange County man.

In a case that attorneys described as without precedent in California, an Orange County Superior Court judge Friday ordered former probate lawyer James D. Gunderson to return $3.5 million he received from the estate of a 98-year-old Leisure World man.

In a brief written decision, Judge Byron K. McMillan said Gunderson should repay the money, plus $500,000 in interest, to heirs of Merrill A. Miller, who died in February, 1992, leaving an $18-million estate. Two days after Miller’s death, Gunderson paid himself his one-fifth share of the estate, after selling Miller’s substantial holdings of Abbott Laboratories stock.

Gunderson’s inheritances from the Miller estate, and from those of several of his other elderly clients, were brought to light in a series of articles published by The Times in late 1992.

The articles prompted the state Legislature to pass a 1993 law that invalidated bequests to attorneys who prepare wills and trusts naming themselves as beneficiaries.

William H. Westover, a Phoenix lawyer representing eight heirs who contested the bequest to Gunderson, said he was delighted by the judge’s decision.

“This will serve as a warning to all those lawyers, fiduciaries and people in positions (of confidence) that if they abuse their trust, they will pay for it,” Westover said.

“There are a substantial number of published cases about attorneys who have, while acting as an attorney for a client, prepared a will in which the attorney was named as a beneficiary,” he said in court papers filed last week. “In this particular instance, the ingenuity of James Gunderson, in devising other means by which he could profit from his clients’ estates, has no precedent.”

In the case of Miller’s estate, Gunderson arranged for a former law partner to serve as the attorney of record, when the final version of Miller’s last will and some trust documents were presented to the blind and bedridden man only six weeks before his death.

Gunderson, 69, has vigorously denied any wrongdoing.

He could not be reached for comment Friday, but during the civil trial he testified that Miller was his best friend and fishing buddy. Miller, he said, wanted his lawyer to have the lion’s share of his estate.

The judge, however, found in favor of eight other heirs whose attorneys claimed that Miller’s “gift” to Gunderson followed a disquieting pattern in which the probate lawyer received lucrative inheritances from several other estates.

The verdict against Gunderson is the latest in a series of actions triggered by the November, 1992, Times articles detailing how Gunderson inherited millions of dollars in cash, stock and real estate from clients whose wills and trusts had been prepared either by him or other members of his law firm.

The inheritances appeared to conflict with a longstanding California Supreme Court ruling that anything more than a “modest” gift to an attorney preparing a will raised questions of impropriety. The justices in that landmark case decided that a $20,000 bequest was excessive and ordered that inheritance returned.

Immediately after the Times articles appeared, the State Bar of California announced that it would conduct an investigation into Gunderson’s legal practice. Gunderson surrendered his license to practice law in California in January of this year, after State Bar prosecutors announced that they were prepared to file conflict-of-interest charges that could have led to his disbarment. Gunderson said he resigned because of his failing health.