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Donald B. Lundahl (WSBA No. 21424, admitted 1992), of Tacoma, has been suspended for 30 days by order of the Supreme Court approving a stipulation effective May 15, 2000. This discipline is based upon wrongful acceleration and miscalculation of his attorney’s fees from 1993 to 1999.
In August 1993, Mr. C hired Mr. Lundahl to represent him in a wrongful-termination suit. Mr. C signed a contingent-fee agreement and gave Mr. Lundahl a $1,000 advance on costs; however, Mr. Lundahl did not deposit the advance in a trust account. In November or December 1993, Mr. Lundahl asked, and Mr. C orally agreed, that $850 of the advance could be applied to Mr. Lundahl’s current attorney’s fees. Mr. Lundahl retained two experts who required advance retainers, and Mr. C gave Mr. Lundahl $2,500 for the retainers. Mr. Lundahl’s fee agreement permitted him to hire associate counsel, and in August 1994 he hired Mr. J to assist him.
The settlement took place on October 18, and Mr. C was to receive a structured settlement of $150,000 over two years. Mr. Lundahl received Mr. C’s first payment of $15,000 on or about November 28, 1994. He opened a trust account for the settlement proceeds, paid approximately $5,500 in costs and expert fees, and retained the balance as part of his attorney’s fees. He did not send an accounting or any of the funds to Mr. C.
In December 1994, Mr. C asked Mr. Lundahl if any money remained after expenses, stating that Mr. Lundahl told him he would send a little money but had not done so. Mr. Lundahl received the second $15,000 on or about December 28, 1994. He paid expert fees of $2,289.37 and applied the remainder to attorney’s fees, using $4,000 to pay Mr. J. In late February 1995, Mr. C wrote Mr. Lundahl and asked for an accounting. In March 1995, Mr. Lundahl sent Mr. C his ledger sheet for the settlement funds and a list of the costs paid to date. The list contained some mathematical errors.
In late June 1995, Mr. Lundahl received a third check for $30,000, which he deposited into the trust account on July 10. On July 11, he removed $1,000 from the trust account, and on July 19, he transferred approximately $26,000 from the trust account into his general business account, which he used for personal bills. On the same date, he sent Mr. C two checks totaling $2,267.39 and an accounting of fund disbursements. According to the accounting, Mr. Lundahl retained $50,000 as his attorney’s fees.
After receiving the accounting, Mr. C contacted Mr. J, who filed a motion for an accounting and for an order that all settlement funds be deposited with the court. During a deposition, Mr. Lundahl testified that he had Mr. C’s oral agreement to accelerate his attorney’s fees, and stated that the written fee agreement also gave him the right to accelerate fees; however, the fee agreement did not give him this right. During the deposition, Mr. Lundahl stated he was not aware of RPC1.5(c)(2), requiring a structured contingent fee to be calculated based on the present value, not the full value of the settlement. Mr. Lundahl also miscalculated the fees at 33-1/3 percent when the fee agreement entitled him to 33 percent, or $49,500. Disciplinary counsel advised Mr. Lundahl that if there was a dispute over accelerated fees, the disputed funds should be placed in the trust account, and the dispute should be solved by mediation, arbitration or litigation.
On September 19, 1995, Mr. Lundahl wrote Mr. C, stating he had miscalculated his attorney’s fees and he owed Mr. C an additional $3,235.66. He stated the amount was in the trust account and he offered it as a full settlement. Mr. C did not accept the offer due to his position that Mr. Lundahl had wrongfully accelerated his fees. Mr. C ultimately received the rest of the settlement payments.
In December 1997, Mr. C and Mr. J sued Mr. Lundahl, alleging negligence, breach of fiduciary duty, conversion, breach of contract, and for quantum meruit. Mr. Lundahl counterclaimed against Mr. C for breach of contract and against Mr. J for interference with a contractual relationship. The matter was referred to mandatory arbitration, and a hearing was held on July 29 and July 31, 1998. Mr. Lundahl testified he had obtained Mr. C’s oral agreement to accelerate his fees, stating that after the grievance was filed, he realized he had been wrong to accelerate his fees because he did not have a written agreement to do so.
The arbitration decision was entered on August 15, 1998. The arbitrator found that Mr. Lundahl had wrongfully accelerated his fees, and he awarded Mr. C the statutory interest rate on the fees, prejudgement interest, and attorney’s fees and costs. He also awarded Mr. C the $500, which Mr. Lundahl admitted he took by mistake when he used a 33-1/3 percent calculation instead of 33 percent. The arbitrator awarded Mr. J $16,500 (less the $5,000 already received) for his work on the case. The judgment on the arbitrator’s decision was entered on September 25, 1998. Mr. Lundahl paid both Mr. C and Mr. J in or near March 1999.
Mr. Lundahl’s conduct violated RPCs 1.5(c)(2), requiring lawyers to calculate their contingent percentage on the present value of a settlement if part of the settlement is to be paid in the future; and 1.14(b)(4), requiring lawyers to promptly pay client funds upon request.
Leslie Allen represented the Bar Association. Mr. Lundahl represented himself.
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