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Panel finds former McCaw attorney violated ethics rule

September 19, 2008 7:28 AM

A three-member arbitration panel issued a unanimous decision in favor of News-Press co-publisher Wendy McCaw in a $9.7 million dispute with her former lawyer according to court papers filed Thursday.

The dramatic result came following an eight-year legal battle and an original award of more than $10 million for Gregory Parker, later reversed by an appellate court.

Among the issues the arbitrators -- former California Attorney General John Van de Kamp, former U.S. District Court Judge Eugene Lynch and former California Appellate Court Justice John Zebrowski -- had to deal with was whether Mr. Parker violated a state rule governing attorney-client business transactions.

"I am thankful to the three arbitrators who saw this case for what it was, a breach of ethics by a practicing attorney," Mrs. McCaw said.

David Millstein, the San Francisco attorney representing Mrs. McCaw in the case, noted that the 28-page decision reflected a "careful weighing and review of the evidence and was based upon well-accepted legal precedent."

According to legal papers, the two met in 1995 during a real estate transaction. Mr. Parker went on to represent Mrs. McCaw in a number of matters, including her divorce. Mr. Parker, who was also personally involved with Mrs. McCaw, became her advisor and the trustee for a number of trusts he drafted for her. He was later terminated in January 2000.

Mr. Parker filed a multimillion-dollar claim against Mrs. McCaw in February 2001, claiming he was entitled to receive, among other things, a percentage interest in the appreciation of certain stock holdings of Mrs. McCaw under the terms of an incentive compensation agreement that was created at his direction. An arbitrator in 2002 ruled in favor of Mr. Parker, prompting an appeal by Mrs. McCaw based on procedural irregularities, namely the fact that a Santa Barbara Court had wrongly ruled the arbitration could be conducted by one arbitrator, instead of the three arbitrators that the contract called for.

The Appellate Court reversed that part of the award.

The new arbitration was conducted in late 2007 and early 2008. Mr. Parker asked the arbitrators for an award of $9.7 million, plus interest and costs, which could have totaled more than $17 million, according to Mrs. McCaw's attorney. The arbitrators heard testimony of more than 15 witnesses and experts over a period covering almost a month. Mrs. McCaw contended, among other things, that the agreement was void under attorney ethics rules.

The panel, including the arbitrator selected by Mr. Parker, ruled that Mr. Parker failed to comply with Rule 3-300 of the California Rules of Professional Conduct, which sets forth requirements of what an attorney must do when entering into a business transaction with a client. Mr. Parker did not, the panel ruled, demonstrate that the agreement was fair and reasonable.

"(I)t is manifest that there was no compliance with Rule 3-300," the decision states. "Indeed, there was not even an effort to comply."

The award was made public only yesterday when Mrs. McCaw's attorney filed court papers to "confirm" the arbitration award, a formal legal procedure that follows arbitration.

Mr. Parker referred a request for comment to his attorney, Tom Foley.

"Mr. Parker does not agree with the ruling of the three-person arbitration panel with regard to whether he complied with Rule 3-300 regarding the incentive compensation agreement," Mr. Foley said.

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