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In the Matter of William Thomas Hays

May 23, 2012


The opinion of the court was delivered by: Epstein, J.



William Thomas Hays, Jr. was admitted to practice law in California in 1988, and has no prior record of discipline. He is seeking review of a hearing judge's disbarrment recommendation based on his misappropriation of over $62,000 from a paraplegic client. Hays stipulated to the misappropriation, but challenges the hearing judge's finding that he lied to a State Bar investigator about his misconduct. Hays further asserts that he was denied due process when the hearing judge rejected his request for a continuance to subpoena records to impeach a witness and to show that the prosecutor committed misconduct in the trial below. Finally, he contends that disbarrment is unduly harsh because the hearing judge did not properly evaluate his evidence in mitigation. The Office of the Chief Trial Counsel (State Bar) asks us to affirm the hearing judge's culpability findings and disbarrment recommendation.

Upon our independent review (Cal. Rules of Court, rule 9.12), we conclude that the record supports the hearing judge's findings that Hays misappropriated over $62,000 and thereafter lied to the State Bar. We agree that he should be disbarred to protect the public, the courts and the legal profession.


Many facts stated herein are based on the parties' stipulation executed on the first day of trial. However, we have independently considered the disputed factual findings raised in Hays's brief. (Rules Proc. of State Bar, rule 5.152(C).)

In July 2002, Kory Lee Laird and his friend, Peter Flynn, were passengers in a single-vehicle accident. The driver was intoxicated, drove at an excessive speed and lost control of the vehicle. Laird and Flynn suffered severe spinal injuries that rendered Laird a paraplegic and Flynn a quadriplegic. At the time, Laird was in his early twenties and was working as a manager of three cell phone kiosks.

While Laird and Flynn were hospitalized, their mothers became acquainted. Flynn's mother persuaded Laird and his mother to meet with Hays, who was a close family friend. On December 18, 2002, Laird and his mother signed a retainer agreement with Hays that provided for a contingency fee of 37.5% of any gross recovery if the matter settled before trial. Hays filed three complaints in San Diego County Superior Court in January 2003 against the driver of the car and his father, General Motors, and an individual who owned the home where the driver had been served liquor. After conducting further investigation, Hays did not pursue the claims against any of these defendants except the driver of the car. On February 21, 2003, Hays settled Laird's personal injury claim with the driver's insurance company for the $100,000 policy limit and deposited the money in his client trust account (CTA).

Hays and the Laird family had differing views of what fee, if any, Hays was entitled to and when he would distribute the funds to Laird. Hays believed that he was entitled to $37,500 pursuant to the retainer agreement and therefore he was obligated to hold $62,500 in trust for Laird. Hays maintains that he intended to hold the funds for approximately six months to ensure payment of outstanding liens and after that, "whenever they wanted it, they could have it."

Laird and his mother's understanding of the arrangement with Hays was very different. They believed they signed the retainer agreement as a mere "technicality" to allow the settlement funds to be deposited in Hays's CTA. Laird and his mother further understood that Hays's services would be on a pro bono basis because the insurance payment was a fait accompli at the time they retained him. For this reason, they expected Hays to ultimately distribute the entire $100,000 plus interest to Laird, although they believed that Hays would retain the money in his CTA for four and a half years to protect the funds from lien attachments. In fact, when they signed the fee agreement, the only known lien was from the hospital for $719,319, and this lien was released when the matter settled. No other liens were ever filed.

Without question, Hays was required to maintain at least $62,500 in trust regardless of the difference of opinion about his fee. Hays admits he did not do this and that he withdrew Laird's funds to pay his law office expenses. By April 2004, his CTA balance was $26,416, and thereafter it fell below the required amount on at least 15 occasions, including:

Date $Balance July 31, 2004 6,055.78 August 31, 2004 828.78 October 29, 2004 15,728.78 December 31, 2004 1,821.78 February 1, 2005 121.78 April 1, 2005 14,164.78 April 30, 2005 4,096.78 June 30 to September 12, 2005 19.78

Hays testified that he tried to distribute the settlement to Laird at least four times, but Laird "didn't want the money." Laird disputes this. He testified that he had no reason to refuse the settlement money since he actually needed it to buy a truck to drive to his rehabilitation and to obtain some independence. Laird borrowed approximately $23,000 from his grandfather to purchase the truck.

Laird, his mother and his grandfather began calling Hays well before expiration of the four and one-half years to confirm the funds were still available and would be distributed when the time had elapsed. On July 23, 2007, Laird's grandfather arranged a meeting at his house. Hays provided a cashier's check in the amount of $60,000. The Lairds were dissatisfied since they believed they should receive $100,000 plus interest. Laird's mother did not immediately deposit the $60,000 check because she feared that Hays would then claim that they had relinquished any right to the remainder of the settlement and interest. Instead, the Lairds met with Hays twice to demand that he pay them the settlement balance and accrued interest.

On September 21, 2007, Hays met with the Laird family and gave Laird a check for $2,500 to rectify his earlier miscalculation of his attorney fee.*fn1 The meeting was rancorous because the Laird family still expected the rest of the $100,000 settlement plus interest. At the end of the meeting, Hays signed a letter agreement dated September 21, 2007, acceding to Laird's demand that Hays pay the full amount of the settlement, plus 3.5% interest accruing from the date the settlement funds were deposited into his CTA, to be paid on or before October 5, 2007.

Hays did not pay Laird in October as promised. On December 31, 2007, the Laird family met with Hays, who then gave Laird a check from his general office account for $37,500, which represented the unpaid portion of the $100,000 settlement. Hays signed another agreement to pay the accrued interest on the entire settlement amount no later than January 20, 2008, with the interest to be "determined and compounded daily per standard accounting practices or the State Bar Rules from the date of receipt in [of the settlement funds] in 2002 [sic]."

After the January 20, 2008 deadline passed with no interest payment from Hays, Laird's mother deposited the $60,000 cashier's check and the $37,500 check into Laird's Smith Barney account. The $37,500 check did not clear. Hays testified he told the Laird family at the December 31, 2007 meeting that if "[t]hey want the fees, they cash it right away, or no deal." When they delayed depositing the check, Hays said he "made sure there wasn't [enough money]" in his general account to cover the check. Laird's mother denied that Hays had imposed a time restriction on depositing the check.

Laird filed a complaint with the State Bar in September 2007. In response to the State Bar investigator, Hays wrote that "I offered to give Kory Laird his money at least 4 times since the settlement. He refused." Hays also stated that "[a] year prior to my 9/13/07 letter to [Laird] I spoke to his grandparents and advised them he had 60K available."

The State Bar filed a three-count Notice of Disciplinary Charges (NDC) on December 27, 2010, alleging that Hays failed to maintain client funds in trust, misappropriated client funds and committed acts involving moral turpitude because he knowingly made misrepresentations to the State Bar. After a six-day trial beginning on April 15, 2011, the hearing judge found Hays culpable on each count and recommended that he be disbarred. At the time ...

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