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In re Disciplinary Proceeding Against Waechter

Supreme Court of Washington, En Banc

June 14, 2018

In the Matter of the Disciplinary Proceeding Against WILLIAM H. WAECHTER, an Attorney at Law.

          GONZALEZ, J.

         Attorney William H. Waechter committed multiple lawyer trust account violations. Among other things, he converted client funds and most egregiously, he forged a client's signature on a check. Waechter appeals the Washington State Bar Association (WSBA) Disciplinary Board's (Board) unanimous recommendation to disbar him. He contends that the Board erred by failing to consider the emotional problems mitigating factor and that double jeopardy principles apply. While we agree that the emotional problems mitigator should have been considered in relation to his trust account practices, it carries little weight in this case and does not affect his sanction. We agree with the Board's recommendation and disbar Waechter from the practice of law.

         Facts

         Waechter has been a licensed attorney in Washington since 1991. In 2010, he started his own personal injury firm as a solo practitioner. Among his professional banking accounts, Waechter operated a lawyer trust account and his firm's operating account. For about one year, Waechter's paralegal handled the firm's finances and accounting. Upon the paralegal's departure from the firm, Waechter took over the bookkeeping duties.

         The WSBA's Office of Disciplinary Counsel (ODC) began investigating Waechter after notification of overdrafts in his trust account. The subsequent audit of Waechter's trust account covered the period in which he maintained the firm's finances: January 1, 2012 through August 6, 2013. The audit revealed numerous violations of the Rules of Professional Conduct (RPC), including trust account discrepancies, theft, conversion of client funds, and a check bearing a client signature that Waechter had forged. See, e.g., Findings of Fact, Conclusions of Law & Hr'g Officer's Recommendation (FFCL) at 3-4 (conversion), 5-12 (theft), 12-13 (failure to maintain lawyer trust account check register), 15-18 (conversion, forgery). WSBA charged Waechter with 15 counts of misconduct arising out of these acts.

         Due to the way this case has been framed, some discussion of the facts and procedural history is necessary to properly resolve the issues presented.

         1. Trust Account Practices (Counts 1-8)

         The following counts involve misconduct arising from Waechter's representation of personal injury clients. For clarity, we discuss the misconduct by charge and as it relates to the specific client involved.

         For the first count, Waechter converted thousands of client funds for his own use. Over the course of six transfers from his lawyer trust account, Waechter removed $10, 300 that the WSBA's auditor could not attribute to any client. See FFCL at 1, 3-4; 1 Verbatim Report of Proceedings (VRP) (May 16, 2016) at 14, 57-58.

         These six transfers followed a pattern. Waechter's operating or personal accounts were overdrawn or short of funds; in response, he transferred trust account funds to cover the shortage. See, e.g., 1 VRP (May 16, 2016) at 59-60, 62, 64, 66-67, 71-72, 117, 123. For example, on January 6, 2012, Waechter's business account was in the red: the balance was negative $97.22. Two weeks later, Waechter transferred $100 from the trust account to cover the overdraft, bringing the negative balance of $97.22 to a positive $2.78.

         Additionally, in March 2012, Waechter transferred $1, 500 from trust into his operating account to avoid an overdraft. He did not record this transfer in his check register. As an explanation for the transfer and why he thought he owned the funds, Waechter claimed another client's subrogation lien would be reduced and Waechter would then own those funds. But when this transfer was made, the lien had not been reduced and would not be for another seven months.

         The hearing officer concluded Waechter removed funds from his trust account unrelated to any client and converted these funds for his own use, violating RPC 8.4(b) (by committing theft), RPC 1.15A(b) (a lawyer must not use, convert, borrow, or pledge client or third person property for the lawyer's own use), and/or RPC 8.4(c) (it is misconduct for a lawyer to engage in conduct involving dishonesty, fraud, deceit, or misrepresentation).

         The remaining counts involve misconduct arising from Waechter's representation of five personal injury clients.

         For client Karin Huster, Waechter worked on a contingency fee agreement. He would take 33 A percent of the total settlement. The case settled for $55, 000 in February 2012. Waechter told Huster he would reduce his fee and take his third of the settlement from $50, 000 instead of the full $55, 000. See 1 VRP (May 16, 2016) at 150; FFCL at 8. The subrogation interest was reduced. The difference between the subrogation fee and the amount paid from Huster's settlement was $535.62, which Waechter paid to himself by check.

         In deposition testimony and at the disciplinary hearing, Waechter acknowledged that Huster did not know the subrogation amount was reduced or that Waechter kept the difference for himself. Waechter also recalled that he was told the Mahler fees[1] applied to Huster's funds after the start of the ODC investigation. He admitted that the $500 should have gone to Huster. Waechter eventually paid the Mahler fees on May 2, 2016, after prompting by the WSBA investigator.

         The hearing officer determined the counts relating to Waechter's representation of Huster were proved by a preponderance of the evidence. For converting client funds in count 2, the hearing officer found Waechter violated RPC 1.15A(b). For failing to provide an accurate written accounting to Huster and failing to properly pay clients and subrogation parties in counts 7-8, Waechter violated RPC 1.15A(e), RPC 1.4, RPC 1.5(c)(3), and RPC 1.15A(f).

         Counts 3-8 concern Waechter's representation of Tori Weisel, David Rowland, Cal Rooks, and Tiffany Judson.

         First, Tori Weisel's case settled in October 2012 for a sum of $7, 250. The funds were deposited in the trust account. A month later, Waechter wrote a check for $2, 000 in fees and deposited it into his personal account. 1 VRP (May 16, 2016) at 126 ('"Weisel fee'" written in the '"Memo"' portion of the check); see also id. at 127 (Weisel fee check deposited into Waechter's account); FFCL at 7.

         Waechter later e-mailed Weisel with a breakdown of her settlement, subrogation amount, and costs. In the e-mail, Waechter represented that he '"ha[d] no intention of taking a fee on this matter.'" 1 VRP (May 16, 2016) at 132. Waechter sent a second e-mail saying again that he would take '"[n]o fee, just costs, but costs are very low.'" Id. On January 17, 2013, Waechter sent a third e-mail to Weisel reiterating that he would take no fee and that he would pay the $2, 500 subrogation. Weisel approved this accounting. Weisel was not made aware that Waechter had already taken a fee in her case or received an updated accounting.

         In addition, Waechter issued a check to Weisel for the total client net of $4, 648.58 on March 25, 2013. The trust account lacked sufficient funds from Weisel's settlement to cover this check because, as Waechter knew, he had already disbursed the funds to other clients and to himself.

         The WSBA investigating officer sent Waechter a letter on October 22, 2014, informing him that neither subrogation party in the Weisel case had been paid. Waechter sent a check to one company for the full amount, even though there were no Weisel funds in trust to pay that amount. The other subrogation party waived its lien. Waechter explained he "didn't have the wherewithal to recognize" the lien had not been pursued or why it had not been paid. Id. at 139. Ultimately, Waechter paid the one subrogation holder after notification from the ODC investigation, nearly two years after the case had settled. He finally paid Weisel the funds she was owed, $1, 000, prior to the disciplinary hearing.

         The hearing officer concluded Waechter knew the accounting he provided Weisel was false and misleading because he had already taken $2, 000 in fees and insufficient funds existed to pay the $2, 500 in subrogation fees. The hearing officer found that Waechter converted these subrogation funds intentionally and failed to provide an updated settlement statement or accounting. The hearing officer further determined Weisel was injured by this deception, deprived of an opportunity to object to Waechter's handling of the funds, and deceived as to the amount she was owed.

         Waechter also represented David Rowland. The fee agreement for Rowland's case stated Waechter would receive 33 ⅓ percent on gross recovery. The matter settled in February 2012 with a recovery of $55, 000.00. Waechter paid Rowland $33, 163.38 on February 9, 2012; the subrogation was listed at $8, 249.35; and Waechter took $18, 331.50 in fees. These numbers were listed as line items on the settlement statement. One subrogation party reduced its claim to $4, 496.00. The funds were deposited into trust on February 27, 2012. Waechter paid the subrogation fee not through Rowland's settlement amount but through funds deposited for Weisel and another client.

         Regarding Cal Rooks, Waechter settled the case in March 2013 for $11, 000. He deposited the sum in trust. Waechter reduced his fee and transferred that amount to his operating account. Waechter owed approximately $8, 700 to Rooks. The trust account had insufficient funds to cover this in March 2013. Waechter did not pay Rooks until April 8, 2013. This triggered an overdraft, which Waechter supplemented with his own funds.

         Finally, Waechter represented Tiffany Judson. This case settled in January 2014 for $40, 000. Waechter deposited the amount into trust and on February 13, 2014, he disbursed the funds: $17, 000 to Judson, $13, 333 to himself, and approximately $7, 900 in subrogation and costs. This left about $1, 700 for Judson. But Waechter did not hold these funds in trust for her; instead he wrote a check for that amount to himself.

         The hearing officer held that counts 3-8 were proved by a preponderance of the evidence. For count 3, Waechter converted funds owed to Weisel and third party subrogations without permission and with intent to deprive these parties of their funds. Waechter violated RPC 8.4(b), RPC 1.15A(b), RPC 1.15A(f), and RPC 8.4(i).

         As to count 4, the hearing officer found Waechter failed to maintain funds in trust for Weisel, Rowland, Rooks, and Judson. This violated RPC 1.15A(c)(1). For count 5, Waechter violated RPC 1.15A(h)(8) by ...


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