Clout Of State's Big Law Firms Wards Off Misconduct Cases

Despite an intensified effort by the Washington State Bar Association to investigate lawyer misconduct, attorneys from the state's largest law firms are rarely cited for unethical or illegal practices.

None of the 14 lawyers expelled from the profession or the 30 others who received lesser punishment last year worked for firms with more than two dozen people, according to a recently released bar association report.

While small, understaffed firms may be more prone to mistakes, attorneys and disciplinary officials say the culture of the legal community insulates powerful firms from grievances filed with the bar association, the organization charged by the state Supreme Court to oversee the profession.

Among the reasons: Attorneys are reluctant to jeopardize otherwise collegial relationships by filing grievances, the cases are often complex and take considerable resources for the bar to investigate, and the firms themselves handle potential problems in-house.

In addition, Washington is one of only three states that do not require mandatory reporting of unethical conduct, the American Bar Association said. The others are California and Kentucky.

That's not to say allegations of misdeeds involving large firms don't exist. Firms with 100 or more attorneys have settled claims in recent years ranging from hiding millions of dollars in a bankruptcy case to not disclosing the potentially dangerous effects of prescription drugs.

Most of the 2,896 complaints filed with the bar's Office of Disciplinary Counsel last year alleged unsatisfactory performance, schemes to defraud clients or misrepresentation of facts to the court.

While the vast majority of complaints were dismissed or are pending investigation, 44 lawyers received discipline ranging from a letter of reprimand to disbarment. That compares with 26 lawyers the year before, of which only one came from a large practice.

"If you file a complaint against someone in a large firm, you're not dealing with one lawyer, you're dealing with hundreds," said James Rigby, a Seattle attorney.

"There's no incentive for the average lawyer to file a complaint, because you'll only make a lot of people mad."

Attorneys repeatedly encounter the big firms in court and often depend on them for references; few lawyers have the stomach to lodge a grievance and risk souring future relationships, say legal experts.

Rigby represented the creditors in a bankruptcy case involving the Seattle firm Foster, Pepper & Shefelman, one of the state's largest. In a recent settlement, Foster Pepper reportedly paid a $2.5 million malpractice claim that accused one of its attorneys of backdating financial documents belonging to Seattle entrepreneur Hiroshi Tanaka. The claim alleged Foster Pepper tried to hide assets from Tanaka's creditors.

Since 1994, 180 claims totaling more than $23 million have been filed against Tanaka, who left a trail of angry investors after his golf-course developments collapsed.

In court records, Foster Pepper denied the charge but agreed to settle the matter. None of the parties would say if a grievance against Foster Pepper has been filed with the bar. But the settlement illustrates that powerful firms are not immune from charges of misconduct.

It is unknown how many other cases exist involving accusations of unethical practices against large firms, but the firms typically make considerable efforts to avoid mistakes, say legal experts.

With numerous partners supervising younger associates, most firms provide the oversight to catch problems before they develop into malpractice claims, sanctions or bar grievances.

There's good reason for such precautions.

"When the big firms screw up, the amount of money is very, very big - much bigger than a smaller firm," said Barrie Althoff, director of lawyer discipline at the state bar association.

Investigations into large law firms typically stretch the resources of the disciplinary committee, Althoff said. The cases are lengthy, and clients are largely unaware of the rules of ethical conduct that may have been violated. What's more, powerful law firms tend to fight grievances. In the past, that may have led the bar to overlook certain misconduct.

"It's the same reason why the average person doesn't sue Seafirst or Boeing. There is an inequality of resources," said Althoff, adding that in the three years he has been in charge, his office has not turned down a case because of lack of resources.

While bar discipline against a large firm has been rare, attorney misconduct often will draw a reprimand from the court, though such sanctions are not often publicized. Judges can chastise a lawyer's conduct, demand apologies or impose financial sanctions.

In one of the sharpest penalties ever levied against a law firm, the Washington State Supreme Court fined the Seattle firm Bogle & Gates and its client, the drug company Fisons, $325,000 in 1993. The Supreme Court found that Bogle & Gates and Fisons withheld documents that conclusively showed that Fisons knew one of its products was dangerous if used in conjunction with other drugs.

Two years later, Bogle & Gates was sanctioned by a federal court judge for a similar violation.

Representing Subaru of America, Bogle & Gates was asked to provide warranty and personal-injury claims relating to the seatback design of the Subaru Justy. The company responded that it had no records that would answer those questions. Later depositions revealed that the information did, in fact, exist.

Bogle & Gates had to pay the other side's legal fees, and the case was later settled.

Neither case prompted complaints to the bar association, said Richard Wallis, managing partner of Bogle & Gates.

The Fisons case involved litigation that took place in the late 1980s, when the court was changing its policies on how lawyers should turn over information to opposing counsel, Wallis said. He argued that a grievance probably would not have been merited. As for the Subaru case, Wallis said he was disappointed with the sanction, and the firm initiated a training effort to prevent future problems.

"Are lawyers in firms sometimes overzealous in representing clients? It happens, but I think it's an aberration," said Wallis, past chairman of the bar association's Disciplinary Board. He acknowledged that most of those cases never come to light.

With most court records involving sanctions against attorneys either sealed or unpublicized, the bar association's annual report on discipline stands as the only effective clearinghouse of lawyer conduct.

But such reports often give the false impression that large firms have spotless ethical records, said Raymond Trombadore, past chairman of the committee on professional discipline at the American Bar Association.

"I think that is a very real criticism that the bar continues to grapple with," he said. "There is concealing information, falsifying information, or permitting a client to falsify information. The continuing difficulty is to persuade the lawyers and judges for the need to report behavior to the disciplinary committee."

According to Washington's rules of professional conduct, a lawyer who questions another lawyer's "honesty, trustworthiness or fitness as a lawyer . . . should promptly inform the appropriate professional authority."

Unless the word "should" changes to "shall" and reporting misconduct becomes mandatory, there is no obligation for an attorney to file a grievance with the bar association.

"I can't get any lawyer to squeal on another lawyer," said Althoff. "If the word was `shall,' I could take disciplinary action against anyone who didn't report misconduct."

In recent years, the only lawyer from a major firm to receive disciplinary action was Wilfred Bennett, an Anchorage attorney with Perkins Coie. Bennett received a letter of censure after the Alaska Bar Association Disciplinary Board found he had billed work to clients that had been performed by younger associates in 1993.

Auditors at the firm caught the mistake and informed the clients, said a spokesman for Perkins Coie. Bennett reported the incident to the bar himself and left the firm in 1994. The Washington state bar took reciprocal action because Bennett is also licensed in this state.

Notwithstanding the lack of cases against large firms, the total number of grievances that resulted in some kind of discipline jumped to 105 last year from 42 a year earlier. Some lawyers had multiple complaints against them.

The increase followed a major push to increase staff and resources at the Office of Disciplinary Counsel.

Five years ago, an American Bar Association review found thousands of pending cases, an overtaxed staff and the public impression that lawyers had no effective oversight.

To ease the crisis, the ABA recommended nearly doubling the number of investigators. In 1995, the bar hired eight attorneys in the disciplinary office, bringing the staff to 13.

The majority of grievances last year involved missed court filings or financial impropriety. The disbarment of Long Beach, Pacific County, attorney Catherine Morrow was among the cases.

Morrow was the overseer of a $102,000 trust for the care of an elderly man, according to bar association documents. Within a year, Morrow spent essentially all of the trust without authorization, leaving the beneficiary with less than $2.50. Morrow could not be reached for comment.

Another attorney, Thomas Bierlein of Issaquah, was given a year's suspension for a series of grievances filed in the late 1980s, including depositing a client's settlement check into his own savings account to qualify for a mortgage and failing to maintain adequate financial records.

Bierlein, who practices law with his wife, said the disciplinary process was fair but dragged on far too long.

So far, the bar association's backlog is shrinking, and older cases are either being resolved or dismissed, said Althoff.

A year ago in March, the disciplinary committee was investigating 639 cases that had been filed before 1996. In February, that number had dropped to 106, reducing the backlog by 83 percent.

Still, new grievances keep coming. And until investigators get a better handle on the backlog, Althoff said he will not press for mandatory disclosure of attorney misconduct, a move that may add more large firms to the case roll.

"I would like to know everything that lawyers are doing," he said, "but not until I get rid of my backlog."

Alex Fryer's phone message number is 206-464-8124. His e-mail address is: afryer@seattletimes.com