$700,000 for clients bilked by Everett attorney

Published 10:27 pm Tuesday, December 16, 2008

EVERETT — Every lawyer in Washington will pay for Barry Hammer’s lies.

The Washington State Bar Association announced Tuesday that it plans to pay out nearly $700,000 to dozens of people swindled by the former Everett attorney who was caught bilking clients out of up to $1 million.

Hammer, 62, recently was sentenced to three years in federal prison for taking money from clients he persuaded to invest in a real estate investment scheme. Hammer has since surrendered his attorney’s license.

Hammer’s law practice and business dealings were dissolved in a complex $13 million bankruptcy that included more than 150 creditors.

In an effort to compensate some of the clients from his law practice, the bar association will dip into a special fund set aside for client protection.

“Someone like Barry Hammer is an anomaly,” bar association president Mark Johnson said. “When something like this occurs we want to protect the public and do what we can for the victims.”

The association has agreed to pay 26 of Hammer’s former clients. The awards range from $3,800 to $40,000. It is the largest claim connected to a single attorney since the fund was established in 1960, said Gregg Hirakawa, the association’s deputy director for external affairs.

Every year, the state’s 30,000 lawyers pay $15 into the fund. The money is set aside for clients who suffer from a lawyer’s dishonesty. Generally the damage wouldn’t be covered by an attorney’s malpractice insurance, which excludes compensation for intentional wrongful acts, Johnson said.

“The practice of law is a privilege. When one of our members breaches that trust, every lawyer in the state will be responsible for it,” Hirakawa said.

Because of the large claim, the association plans to increase the mandatory fee to $30 beginning next year, Johnson said. The state Supreme Court will have to sign off on the increase before it is adopted.

“It’s a very unusual set of circumstance,” Johnson said. “The vast, vast, vast majority of attorneys are honest and competent. When something like this happens it makes us feel terrible and look terrible. We do the best we can to make it right.”

Hammer’s scheme was revealed in 2004, when a former law partner realized what was happening and reported the violations to the bar association.

Investigators discovered that Hammer bought land in Sultan when it was auctioned off by the federal government. He then talked his law clients into investing hundreds of thousands of dollars into what he promised were tax shelters and retirement funds, bankrolled by lucrative property investments.

Hammer didn’t warn his clients that the money often ended up in his personal bank account, and often the investments were bankrolled on little more than his word. He pleaded guilty to one count of wire fraud in May.

Reporter Diana Hefley: 425-339-3463 or hefley@heraldnet.com.