There were recent postings at the Volokh Conspiracy and Benefits Blog concerning the famous quote by Justice Holmes that “Taxes are what we pay for civilized society” (Philipine Tobacco Company opinion). Their blogging got me thinking about Tax Whiners and, although it’s a topic of civic rather than legal ethics, please indulge me briefly in this pet peeve. As a good American, I recognize my civic duty to tolerate the constant complaining of Tax Whiners (who have never seen nor imagined a tax they would pay without some expression of pain, resentment or suspicion). I wonder, however, if said Tax Whiners will ever recognize a reciprocal duty on their own part to cool it once in awhile, and stop spreading their misery to everyone else within eyeshot or earshot. I realize this might be too much to ask, as most Tax Whiners (like sulking teenagers) seem to lack any notion of social interdependence, instead asserting an absolute entitlement to all they have and all they receive. As I wrote in the Albany (NY) Times Union (March 1, 1998): “Through a mind-numbing misunderstanding of morality, political science, economics and human nature, Tax Whiners have convinced themselves that they hold the moral and intellectual high ground and will listen to no other opinions.” But, I digress. What increases my concern right now is that even the estimable Professor Volokh stooped to a bit of tax whining this week. Although he admits that his hero Justice Holmes has not been taken out of context, and did indeed mean that taxation is a fair price for civilization, Eugene Volokh just had to add this whine to his July 13th posting [bold emphases added]: The interesting question, I think, is what the aggregate tax burden (federal, state, local, and territorial) was in 1927. My guess is that it was a lot less than the 35% or so that it is today. (I’m speaking here of the effective tax burden, which is basically revenues / gross domestic product, not the top marginal rates, which strike me as less telling.) If Holmes were alive today, would he think that civilization was gouging? With all due respect, it seems to me that the question is not one of mere percentage numbers and effective tax burdens. Beyond having a far more just society than in Justice Holmes’ era, the individual pieces of economic pie that we are now sharing with the government through taxation are inarguably larger at all levels of society, with the average leftover portion we each get to consume, invest or save surely greater than it was in absolute terms when Holmes lived. Not to mention: despite all the cries of tax-gouging, the USA has been the mightiest and wealthiest nation on the planet for decades, with no end in sight (unless we let our infrastructure rot through lack of public investment). I doubt that the argument could be successfully made that keeping overall taxation at the rates that existed in 1927, would have resulted in the social and economic investment, stability and infrastructure that is the basis for our current wealth. Also, if we believe that our marketplace is workably competitive and our investment system reasonably rational and efficient, we should also believe that income levels are adjusted to take into account the size of our aggregate tax burden. Just as nontaxed bonds come with smaller interest rates than taxable ones of similar risk and value, salaries and wages (as well as the return demanded by investors) would surely be readjusted downward in a relatively short time, if the overall effective tax burden were significantly lowered. E.g., employers would pay workers less if workers had significantly less to pay in taxes. [Take a look at the average wages, and cost of living, in states that have no or low income taxes or property taxes.] Therefore, Tax-Whiner Heaven — a place with no taxes of any kind — would certainly give Tax Whiners something else to complain about: Relatively speaking, they wouldn’t be any richer than they were under the current “gouging” system. And they wouldn’t have all the psychic payoff they apparently get from anger over taxes. Okay, I’m getting sarcastic, so I better stop. Let me take a few deep breaths and get back to the arduous task of tolerating Tax Whiners, and complaining about the sorry state of legal ethics.
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July 17, 2003
Trying to Tolerate Tax-Whiners
July 16, 2003
A Bar President Writes About Contingency Fees
I‘ve wanted to quote publically from an article by Rutledge R. Liles for a long time, and it just occurred to me that I have a weblog that will let me do just that. Liles was president of the Florida Bar when he wrote the artcle entitled Professionalism and the Contingent Fee: When is Enough Enough?, for The Florda Bar Journal (Jan. 1989, at 5). [Given its vintage, the article is not available online, but can be ordered through the Journal archives on the Bar site, or by email to gbusch -at- flabar.org .]
After a successful fight against an early tort reform proposal called Amendment 10, Liles wanted to discuss a topic that came up often when he spoke against Amendment 10 — “The contingent fee and perceived abuses.” Here are some excerpts [bold emphases added]:
- “Judging from the many comments I received during the past several months, the contingent fee, or perhaps more accurately, the size of the percentage of fee that it often generates, causes considerable hostility among the public. They constantly hear and read of lawyers retaining 40 percent or 45 percent of a damage award as a fee which, after adding costs, results in less than half of the award findings its way to the client. This distribution creates the impression of greed.”
- “Once explained, I seriously doubt that anyone would dispute the philosophy behind the contingent fee. It is the application of the concept on a case-by-case basis that causes the perceived — and sometimes real — problem. And it is in the context of professionalism and of monitoring legitimate criticism that we must reexamine the applied philosophy of the contingent fee.”
- Drawing upon personal experience, I recall a time when one-third and even less was the ’standard’ fee. Over the years, it began to move upward into the 40 percent range with some lawyers charging even more. . . . What has caused this evolution from a fractional percentage of the recovery to one approaching an equal partnership [with the client]?”
- Experienced trial lawyers will tell you that while there may be cases that ultimately justify a 40 percent contingent fee — complex products liability and medical malpractice — there remain many, many cases that clearly do not.”
- While it is easy to defend the philosophy of the contingent fee, it is impossible to defend its abuses. We must as professionals address these abuses and the process must start in our own individual practices. The contingent fee should be reasonable under the circumstances of the given case. The contracted fee should be a guide not a mandate.”
- It has been accurately said, in justification of the contingent fee, that it is the “poor man’s key to the courthouse.” Professionalism, however, demands that we be ever mindful that keys are made of brass — not solid gold.”
Are there any other bar leaders willing to be as honest as Rutledge Liles?
P.S. It is probably no coincidence that Liles’ state, Florida, is the only state in the nation with a Statement of Client’s Rights for Continency Fees. Among other information, clients in Florida must be told that there is no set percentage for a contingency fee and they are free to negotiate the fee level with their lawyer.
See our version of The Injured Consumers’ Bill of Rights for Contingency Fees, which is based on the requirements set forth in ABA Ethics Op. 94-389 and in the Florida Bar’s fee rules.
Challenge to Public Citizen: Help Fix the Contingency Fee System (get the current rules enforced and clients informed)
In a press release issued yesterday evening, Public Citizen announced that it had submitted comments to the Utah Bar, opposing the Common Good proposal that would limit contingency fees when personal injury cases are settled early. [The proposals were discussed here in postings made on May 30, June 3, and June 12, 2003.] Public Citizen’s 10-page Comments/ Critique (dated July 14th) is available online in pdf. The PC press release is headlined: “Proposal to Undermine Contingency Fee System for Personal Injury Lawyers Should Be Rejected: Changes Would Put Injured Parties at a Disadvantage, National Public Interest Group Tells Utah Bar.” (dated 7/15/03)
Despite several decades admiring much of the work of Ralph Nader and Public Citizen, I find myself once again wondering how this band of “consumer advocates” can so consistently parrot the arguments of the p/i plaintiff’s bar when it comes to the topic of contingency fees. [Actually, “parrot” isn’t quite the right word, because it implies that Public Citizen does not understand the trial lawyers’ position or its consequences. Maybe “zealously advocate” is more appropriate, as it captures the frequently over-the-top, one-sided and often misleading nature of PC’s arguments in support of current contingency fee practices.]
Frankly, many of the points made in the PC Critique of Common Good’s proposal have some merit — the proposal is highly regulatory, complicated and experimental. What I find inexplicable, however, is that this self-proclaimed consumer-rights champion makes no arguments beyond those of the trial lawyers’ bar and makes no recommendations to help eliminate the acknowldeged injustice created by the use of “standard” contingency fees in p/i cases, with the accompanying failure to take the risk factor in each case into account when setting the fee level. P/i clients have a lot of interests in common with their lawyers, but clearly not all interests are consistent, especially those having to do with splitting the award pie.
In fact, there are only two sentences in the entire 10-page submittal that might depart from the party-line position of the plaintiffs’ trial lawyers. At the bottom of page 5, the PC Critique asserts: “The stated goal of the proposal is uncontroversial. It is widely accepted that contingency fees should vary depending on the riskiness and complexity of the individual case; indeed, that is what the ethical rules currently require (even though almost universally honored in the breach).” [emphases added]
The meaning of Public Citizen’s admission is clear: Although the percentage rate of a contingency fee is ethically required to relate to the riskiness of each particular case, they “almost universally” do not. Since p/i lawyers customarily reject the most risky cases and almost always charge the maximum percentage allowed in their jurisdiction for the cases they do take, a large percentage of contingency fees are greater than can be justified by the risk taken by the lawyer of working without adequate compensation. Put another way, in a significant percentage of p/i cases, plaintiff’s lawyer is paid an excessive amount of the client’s award and the client is cheated out of a portion of his or her fair share. In those cases, the lawyers receive unreasonably high fees, in violation of their ethical obligations.
Public Citizen offers not one word of outrage or concern about this anti-consumer outcome and unjustified enrichment of the plaintiffs’ lawyers. The only concern mentioned is that consumers might not be able to attract adequate numbers of lawyers, if the lawyers are not allowed to continue to charge such excessive fees in a significant number of cases. Although it has written frequently on the issue of contingent fee levels, and it is now appearing in front of a body considering the regulation of contingency fees, Public Citizen offers no recommendations for preventing excessive fees, righting the balance of information, or policing the over-reaching p/i bar. For another example, see the Public Citizen Fact Sheet, Capping Attorneys Fees: A Way To Keep Injured People Out Of Court (6/21/01).
Independent Voice? Why is Public Citizen so reticent, despite it customary outspoken insistence on consumer rights? On its website, PC trumpets that it “is an independent voice for citizens in the halls of power. We take NO government or corporate money.” What it does not say, of course, is “we take no trial lawyer money.” Has PC been co-opted, like the Democratic Party and much of the liberal not-for-profit sector, which are addicted to the funds received from generous trial lawyers and their PACS? Are unethically high contingency fees an important part of Public Citizen’s own resources for carrying on its mission?
Given the initially one-side approach of Public Citizen in its opposition to the Common Good proposal, ethicalEsq challenges Public Citizen to supplement its statement to the Utah State Bar and any other state considering the Common Good Petition, by outlining and supporting policies that will preserve what is good about the contingency fee system, while helping to avoid the unfair enrichment of lawyers at the expense of their suffering, injured and often twice-victimized clients.
In our Posting dated 6/12/03, called UnCommonly Good Advice on Contingency Fees, we modestly stated that:
ethicalEsq has the perfect plan to avoid adoption of the Common Good proposal in the 13 states where petitions are pending, or anywhere else. If p/i lawyers, bar associations, disciplinary committees, the courts, and the entire legal profession simply follow these suggestions, there will be no reason to make the changes proposed by Common Good to the existing rules of ethics. Indeed, this blawg will be the first to say just that. It’s easy:
(1) Start to follow and enforce the current rules concerning the proper use of contingency fees. Stop the denial or flouting of these obligations, which were clearly spelled out in the American Bar Association’s Formal Ethics Opinion 94-389, based on long-established principles, Rules and Commentary. Opinion 94-389 isn’t available online from the ABA, but I have summarized it quite fairly in a Prairielaw.com column and here:
The Ethics Opinion states that a contingency fee “does not violate ethical standards as long as the fee is appropriate in the circumstances and reasonable in amount, and as long as the client has been fully advised of the availability of alternative fee arrangements.”
According to Op. 94-389, a long list of relevant factors needs to be discussed with every client in every case, and “a lawyer who always charges the same percentage of recovery regardless of the particulars of a case should consider whether he is charging a fee that is, in an ethical context, a reasonable one.” In short, the choice to use a contingency fee belongs to the client and any percentage fee charged should reflect how likely the client is to win, how much money is likely to be rewarded and collected, and how much work the lawyer is likely to have to do (that is, the apparent risk taken by the lawyer).
(2) Because the requirements are almost universally ignored by lawyers and their watchdogs, it’s time to follow this recommendation from Op. 94-389:
“[A]ny lapse from the applicable requirements by some members of the profession suggests that the profession should redouble its efforts to assure that the ethical obligations associated with entering into a contingent fee arrangement are fully understood and observed.”
This means creating CLE seminars, articles and brochures, and imposing some actual attorney discipline. It should also mean going to the public to let consumers know their rights, because that knowledge will allow clients to protect themselves and spur fee competition among p/i lawyers. To show good faith and effort, mandatory statements of client rights should be promulgated, to ensure that each prospective client has enough information to make a smart choice in bargaining for a fair contingency fee or for another arrangement, such as paying by the hour. And,
(3) Publically reject the ABA’s recent changes to Rule 1.5 of the Model Rules of Professional Responsibility that were clearly made to protect lawyers from the ethical and fiduciary obligations required in Op. 389. (See my Open Letter to the FTC) Opt out of the Ethics 2000 conspiracy by specifically asking the ruling body in each local jurisdiction to keep the current version Rule 1.5. [see the article, The Continuing Assault on the Citadel of Fiduciary Protection: Ethics 2000’s Revision of Model Rule 1.5 (2003 U.Ill.L.Rev. 1181 [Number 5]), by Cardozo Law Professor Lester Brickman, which is discussed in this post, dated Jan. 28, 2004.]
I’ve laid down the gauntlet, Public Citizen. Let’s see whose side you’re really on.
See our version of The Injured Consumers’ Bill of Rights for Contingency Fees, which is based on the requirements set forth in ABA Ethics Op. 94-389 and in the Florida Bar’s fee rules. Also, see our 4-part essay on contingency fees (economics and ethics).
July 15, 2003
Pro Bono is Not the Answer to the Access Problem
The Washington Supreme Court is about to rule on the issue of mandatory pro bono service for members of the Washington Bar. (See yesterday’s How Appealing, which pointed to this article in the Seattle Post-Intelligencer, also dated 7/14/03.) Forcing lawyers to work pro bono (that is, free — for the good of the public) is not the answer to the crisis that exists for millions of Americans needing access to the legal and justice system or simply needing to solve everyday legal issues. The best way to ensure that the non-rich — Americans of low and moderate income and wealth — have access to necessary legal and judicial services is to give them the ability to represent themselves, rather than solely using lawyers.
By combining the existence of a literate public with computer technology, and with lawyers willing to “unbundle” their services and perform discrete tasks for clients who want to handle their own legal matters, we can now make it possible for self-help law to be a viable option for solving most of the legal problems of most Americans. (Of course, it is just that potential that worries the legal profession, which continues to expand, while becoming in many ways obsolete. The response so far has been an attack on nonlawyer services and the de minimis provision of free services.)
There simply will never be enough pro bono lawyers, hours or resources to service the majority of Americans who cannot afford attorneys. A pro bono mandate, or even a nation-wide volunteer program to greatly increase the amount of pro bono services performed or financed by attorneys, can only amount to a small bandage for a deeply wounded system, and an ineffective balm for a profession’s guilty conscience.As attorney-professor Russell Engler has pointed out, our courts are being flooded with the unrepresented, and studies show that 80% or more of the legal needs of the poor and working poor currently are unmet in the United States. Ralph Warner (lawyer-turned-Self-Help-guru at nolo.com) estimates that “over 150 million citizens of the ‘Land of the Free’ are legally disenfranchised” from our expensive, inaccessible court system. Faced with a massive access and affordability problem, attorney Stephen R. Elias, has explained his perspective (in the Nolo Democracy Corner opinion piece Eliminate Bias Against People Who Represent Themselves) on what’s wrong with the pro bono approach):
Some court administrators, judges and even lawyers through their trade groups (called bar associations) have in recent years begun to get a glimmer that American courts face a huge citizen access problem. Unfortunately, they tend to think it’s a problem money will fix. As a result, they often focus their efforts on proposals to provide people who can’t afford lawyers with free (again, they insist on calling it pro bono) legal help. This response is almost hilariously wrong. Not only does it overlook the fact that poor and rich alike have a constitutional right to use America’s courts without an intermediary, but it also wrongly assumes that Americans need more lawyers, when in fact they need more access to an unbiased legal system. Of course, it’s no coincidence that lawyers tend to see self-representation as a poor peoples’ problem — after all, in their view everyone else who has a legal access problem should solve it by hiring one of them.
Law books and legal information and legal forms are no longer found only in lawyers’ offices and law libraries. The average American is not an illiterate serf who cannot understand and handle — with a little bit of guidance — most of his or her own everyday legal problems. Put bluntly: given the right tools and minimal assistance, the average American consumer doesn’t need lawyers to solve most legal problems and shouldn’t have to pay a “lawyer tax” everytime he or she has a legal problem. [Your editor once again suggests reading his 2000 Prairielaw.com article “Supersize Small Claims,” for an ardent discussion of the access problem and one possible solution. It is reproduced here.]
I’m not saying the legal profession has no role to play in providing and ensuring universal access to the American legal system. It should not pack its brief cases and go — but, it should roll up its sleeves and go to work on behalf of consumers of legal services, and it must be willing to change some of its practices and attitudes about serving low and middle income Americans.For, example, check out the tremendous work of the Self-Represented Litigant Task Force of the State of Maine, which was honored earlier this year by the ABA. As their January ’03 press release explained:
“The Task Force’s mission has been to develop programs and craft policies to meet the needs of self-represented litigants. To accomplish this goal, the Task Force advanced “unbundled” legal services, allowing self-represented litigants to obtain quality legal advice on a limited and affordable basis. Unbundled services are provided when a lawyer partners with a client to accomplish discrete tasks rather than to provide complete representation.
“The Task Force drafted changes to Maine’s ethics and civil procedure rules, designed to enable lawyers to participate in the delivery of unbundled services. In addition to the rule changes, the Task Force actively promotes unbundling as a method of expanding the practice of law.”
For more on unbundling, and how it can help both lawyers and consumers, I suggest reading Unbundling Legal Services, by Dianne Molvig, in The Wisconsin Lawyer, Vol. 70, No. 9, Sept. 1997. Molvig points out, “The irony of the situation is clear: More people aren’t hiring attorneys, often hurting themselves in the process, while attorneys need more work. Can anything be done to bring these two tendencies into alignment? Many attorneys think something can be done – if a few innovations, like unbundling, work their way into the practice of law.”
Bar groups and law firms that are really serious about alleviating the access problems, should also surf over to:
– The Pro Se Law Center, whose website is designed as a resource center on self-representation in civil legal matters. It provides a collection of materials and resources that can be used to create legal service delivery systems that are based on the concept of “pro se” or “self” representation within federally funded legal services programs, courts, pro bono programs, and other community-based programs. Especially, delve into the links to court pro se sites state by state — to see what other states are already doing to provide meaningful self-help assistance (through computers, personnel, brochures, hot-lines, directories of attorneys who unbundle, and more) and to consider what your state or county can and should be doing. – The pioneering self-help centers provided by the courts in Arizona’s Maricopa County (with information and over 400 court forms available online, covering domestic violence, family law, guardianship, estate, dependency, small claims, and tax appeal); and throughout Florida (with comprehensive family law assistance). Also, see the brand new Center for Self-Representation.in the Lake County (Illinois Courthouse (mentioned in our posting on 7/13/03), and Wisconsin Self-Help Center (discussed in our 7/8/03 posting). – The website of the ABA Standing Committee on the Delivery of Legal Services, which has the “mandate to improve the delivery of legal services to the public, with a concentration on those of moderate income.” [Note, however, the irony that the Committee’s Pro Se page says “Individuals with legal problems are encouraged to discuss those problems with a lawyer.”]I in no way mean to discourage individual lawyers who have special causes they want to assist with pro se efforts, or who want to use their legal talents to help the needy. Nevertheless, consumer advocates, judges, court administrators, and civic-minded bar associations across the country have come to the conclusion that the most effective way to improve access to the American justice system is to spend public and private dollars and resources helping consumers solve their own legal problems, rather providing lawyers for them. Update (Aug. 22, 2003): Thanks to Jerry Lawson at eLawyer Blog for quoting from and pointing his visitors to this posting. That site is a great source of information on using the internet to serve the needs of the modern client and marketplace. Also, check out the Unbundled Legal Services site for extensive materials on the theory, ethics, and practice of unbundled (discrete task) legal services. Update (Feb. 9, 2004): See NH Report Recommends Strong Program for Pro Se Litigants, which discusses a Jan. 2004 Report by a NH Supreme Court Task Force, which stated: “All of the suggestions within this report however, are grounded on the single principle that meaningful access to justice in today’s world means a clear recognition by those involved in the system that many of our constituents want to go it alone when they come to court. Our obligation is to give these citizens the help they want, need and deserve.”
It Depends Whose Fees Are Being Gored in Atlanta’s Lawyer-Tax Case
One can’t help but smile over the battle for fees and class size being waged in Fulton County Georgia’s Superior Court. When lawyers make up the plaintiff class, such a fight was surely inevitable. Here are the opening paragraphs from an article in today’s Fulton County Daily Report describing the scene (from law.com
Georgia’s Supreme Court declared the City of Atlanta’s $400 per lawyer annual occupation tax unconstitutional in March, but lawyers now are fighting over fees, tax refunds and interest potentially worth more than $20 million.
In Fulton Superior Court Judge Rowland W. Barnes’ courtroom last week, the dispute escalated into a clash of titans as name-brand trial lawyers, big firm partners and city attorneys sparred over how many lawyer-members of the class action qualify for refunds — an issue that directly affects how much all this will cost the city. They also fought over how much of the potential pot of gold the two plaintiffs’ lawyers should get.
Two of Georgia’s top trial lawyers, Bobby Lee Cook and Thomas W. Malone, were called as experts to testify that the 33.3 percent in legal fees requested by lawyers for the class was fair and reasonable. . . . .
If this doesn’t whet you interest, you need a little more caffeine this morning. May the most ethical lawyer win.
July 14, 2003
Improving Lawyer Fee and Retainer Agreements
The Law Practice Today blog, which is sponsored by the ABA Committee on Law Practice Management, has a new and useful posting entitled Build a Better Fee Agreement, by David Bilinsky and Reid Trautz (posted 7/10/03). The tips are excerpted from the April 2003 edition of Law Practice Magazine.
The article states, with brief explanations, that a comprehensive written fee agreement between lawyer and client should do the following:
- Define the scope of your services.
- Define the timing of your services.
- Explain the fee arrangement.
- State examples of the services to be billed to the client.
- Explain the client’s obligation for costs.
- Explain your billing practices.
- Allow your client time to question your bill.
- Consider a fee arbitration provision.
If you want to go further to create a thorough and balanced fee/retainer agreement, I suggest clicking here and downloading the Model Client-Attorney Agreement created in 2000 by HALT. As explained in the preface to the document (which includes model sections for agreements using hourly, contingent or flat fee arrangements), the contract was:
[D]esigned to secure the rights and stipulate the responsibilities of both the attorney and client. It is also meant to serve as a discussion document by which the client may learn enough about a particular attorney’s business practices to make an informed choice as a consumer of legal services.
Use of the following contract (or a modified version of it) is, of course, a decision to be made entirely by the client and attorney. However, HALT’s research has shown that most disputes between clients and attorneys could have been avoided if the nature of their relationship had been made explicit at the outset. If your attorney refuses to sign or draft a document such as this, ask why. The answers will tell you whether or not the attorney is the sort you want to employ.
It might also help the lawyer decide what sort of attorney he or she wants to be.
July 13, 2003
IL & Md Lawyer Groups Win First “Judee” Awards
Weakend Special: The Illinois State Bar Association and the Maryland Trial Lawyers Association have been chosen as the first-ever recipients of the ethicalEsq Judas ESQariot Award, in recognition of their exceptional efforts to promote the financial interests of lawyers, while purporting to protect consumers of legal services. Named in honor of the famous biblical character (who got 30 pieces of silver for his betrayal), Judees will be granted whenever especially deserving lawyer groups come to the attention of ethicalEsq.
Announcing the awards, weblawg spokesperson Jackie Cliente gushed: “At a time when a growing number of courts and legislatures are trying to make the legal system more accessible and affordable for low and middle income Americans, it is very inspiring to see that some lawyers have the courage to openly practice traditional guild and cartel values, in order to protect their privileged place in society and in the economy. We can only summarize a few of the reasons for giving Judees to ISBA and MTLA.” They include:
Illinois State Bar Association : Over the past year, ISBA has passionately sought to protect consumers from the dangers of the Unauthorized Practice of Law and low-cost legal services. It has sought legislation expanding the definition of UPL and allowing county bar associations to directly sue to stop instances of unauthorized practice. (See the April 1, 2003 edition and the May 15, 2003 edition of the ISBA Bar News).
With the new millennium, ISBA’s members found themselves faced with the prospect of losing more and more business to self-help internet sites, books, and computer programs. More important, in early 2003, they faced the imminent opening, at the Lake County Courthouse in Waukegan, IL, of a well-designed, user-friendly, computer-based Center for Self-Representation. Accessible at County Law Library terminals, or through the internet, the Lake County self-help resources currently cover only small claims, but are expected to soon include simple divorce matters. Acting boldly, ISBA took extraordinary measures to preserve the values it holds most dear. (Legal Reformer, HALT, Spring 2003, at 3 ) Using modern technology to assert their old-fashioned First Amendment rights, ISBA announced in a Feb. 2003 press release [no longer available online] that it was launching a paid tv advertising campaign “to encourage consumers to use a professional lawyer rather than a self-help type of service for their legal services.” The press release explains:
“Themed ‘Lawyer in the Box,’ the thirty-second television spot uses humor to deliver its message that the type of cookie-cutter approach available through the Internet or from do-it-yourself software cannot substitute for the quality services performed by a trained, experienced attorney. The ads will run in all media markets in the state.” (You can [no longer] see the 30-second ad by clicking here.)
With refreshing candor now often absent from bar pronouncements, the Association’s Board of Governors stated in a Resolution of Appreciation adopted in May for outgoing ISBA President Loren Golden (ISBA Bar News, June 16, 2003), that “the top concerns of the practicing bar are the economics of the practice and the image of the profession.” Since the television ad campaign plays an important part in achieving those goals, the Chicago Tribune reports that ISBA will resume the ads as soon as funds are available. (Low-cost Web divorces under fire: Online process has lawyers up in arms, by Rachel Osterman, Chicago Tribune, July 5, 2003, reprinted at HALT.com)
In addition, in his valedictory “love letter” to the Association’s members, the ISBA Bar News, June 16, 2003) outgoing ISBA President Loren S. Golden said he had asked “the members and staff of the ISBA to explore new horizons for the betterment of our members, the public and our system of justice.” He went on to say:
“Together we explored . . . the use of television as a means to educate the public that before they use ‘the lawyer in a box,’ they should instead hire an ISBA attorney who is committed to financial responsibility, continuing legal education and the dedication and passion (there I said it again) needed to represent clients with unequaled skill and the utmost respect.”
Golden then concluded by saying he believed that the Lawyer in a Box ads “will ultimately be a positive benefit to our members and act as a further incentive to other attorneys to join the ISBA.” That’s right: When nonmembers see that ISBA is willing to sponsor ads knocking self-help centers, they will surely want to join the Association.
No more needs to be said to explain why the Illinois State Bar Association so well deserves our Judas Esqariot Award.
Maryland Trial Lawyers Association The Association is being recognized for its tireless efforts to protect the consumers of Marlyand from the destructive expansion of the State’s small claims court jurisdiction. MTLA’s willingness to spend its political and financial capital in this cause, over several years, was extraordinary.
The story of MTLA’s valiant efforts to resist court reform hysteria in the Maryland legislature can be found in a Baltimore Sun article (April 4, 2002), in an op/ed piece from the Washington Post (June 2, 2002), and on the website page of HALT’s Small Claims Reform Project. Gov. Parris N. Glendening’s Veto Message (May 17, 2001) also generously credits MTLA for his decision to veto legislation that would increase the dollar limits in Maryland small claims courts. The basic tale:
In the 2001 and 2002 legislative sessions, both houses of the Maryland legislature unanimously passed legislation to increase the ceiling on small claims awards from $2500 to $5000. The legislators apparently agreed with “reform” elements, such as HALT, who argued that the low Maryland limit (which had not been increased in over a decade and was 8th lowest in the nation) now made small claims court useful for matters involving only relatively trivial sums.
As HALT counsel argued in the Washington Post:
Both consumers and businesses often face disputes involving amounts as high as $10,000 or $20,000 — sums too large to be written off but not large enough to merit hiring an attorney, because the attorney’s fee would eat up most of any money awarded by the court. A logical venue for such cases is small claims court [which is] designed for people representing themselves in cases with simple issues.
In both legislative sessions, then-Governor Glendening vetoed the Small Claims legislation, due to a concern that the change might “unfairly prejudice plaintiffs by limiting their rights,” agreeing with the Maryland State Bar Association’s “reluctance to change jurisdictional amounts unless supported by substantial evidence that such a change is warranted,” and closing with the statement that “This concern prompted the Maryland Trial Lawyers’ Association to request a veto of this bill.”
After the second veto, the Baltimore Sun noted that “In 1998, the trial lawyers association donated $12,000 – the maximum it could give legally – to Glendening’s campaign. The organization spent $100,000 on radio ads attacking the governor’s opponent in the race.”
In 2003, due to no fault on the part of MTLA, a new governor took office, and a similar bill again passed unanimously in both houses. As HALT explains, “Governor Robert Ehrlich signed the bill into law in an April 22 ceremony, raising the state’s small claims ceiling from the eighth-lowest in the country to just above the national median of $4,500. The increase takes effect on October 1, 2003.”
Although MTLA did not ultimately prevail, we believe it has demonstrated the spirit and tenacity embodied by the Judas Esqariot Award and we are proud to choose MTLA as one of our two initial honorees.
- Unlike the episodes described above, it is anticipated that most Judee awards will include victories for the Award winners and defeat for so-called consumer interests. No matter the outcome, your “Suggestions” for Judee nominees will be much appreciated. Please explain the basis of your nomination, including facts, with appropriate links, if available.
- Check out the JuDee Pamphleteering Citation given to the New York Bar Association.
Update: Click on the Comments link below this item to see the response of MyShingle.com‘s Carolyn Elefant to our treatment above of ISBA’s tv ads. MyShingle had a favorable reaction to the ISBA ads in this posting. Naturally, your Editor replies with his usual pithiness.
ethicalEsq?ethicalEsq?ethicalEsq?
Welcome (somewhat belatedly) to Blog 702 and thanks to its editor, Peter B. Nordberg, for putting us on its blawgroll.
July 11, 2003
Self-Regulating Softies in San Antonio
I guess they haven’t heard of tough love over at the Texas State Bar. As covered yesterday at Overlawyered.com and today at The Legal Reader, three San Antonio lawyers, who were caught faking evidence and trying to bribe witnesses in a $2 billion suit against Chrysler, are being sued now by DaimlerChrysler in an attempt to hold law firms accountable for lawsuit abuse. Back in 2000, an appellate court imposed sanctions of about $900,000 against the three lawyers from San Antonio’s Kugle Law Firm, and
Reading the stories, your Editor wondered just what the Texas State Bar has done to discipline the three wayward bar members. Like other news sources, the New York Times, had noted that “The senior lawyer at the firm, Robert A. Kugle, has been suspended from the Texas bar.” (Adam Liptak, “Law Firm Is Sued Over Conduct in Liability Case”, New York Times, July 10, 2003.) Since suspension sounds rather inadequate, I pointed my browser at the Texas State Bar site to see if I could find out more. Here’s what I learned:
has indeed been suspended from practice in Texas, but it is an Administrative Suspension:
“Current Status Detail: Administrative Suspension. This attorney has been suspended by the State Bar of Texas for an Administrative reason. The suspension may be the result of one or more of the following: Failure to pay Inactive or Active Membership Dues Failure to pay Attorney Occupational Tax MCLE requirements non-compliance Texas Guaranteed Student Loan Default Failure to pay Child Support.“
Andrew E. Toscano is still “Eligible to Practice in Texas” (although news accounts say he’s moved to Mexico). Toscano’s Discipline History Detail shows “None on File — This Attorney’s status record indicates no prior disciplinary actions.”
Robert L. (Trey) Wilson III, appears to be employed at the San Antonio Law Firm of Louis T. Rosenberg, P.C, and remains “Eligible to Practice in Texas.” Like Toscano, his Discipline History Detail states “None on File — This Attorney’s status record indicates no prior disciplinary actions.”
We at ethicalEsq? get accused of being too tough on lawyers. But, it seems clear that the Texas State Bar has been a wee bit too soft on attorneys who have disgraced themselves and abused the justice system in an attempt to get very rich very quickly. Is it any wonder a recent study found
that over two-thirds of Americans lack confidence in the integrity of the lawyer discipline system? [See In the Interests of Justice: Reforming the Legal Profession (2000) by Stanford Law Professor Deborah Rhode.] Neither the urge to let your colleagues “save face,” nor the desire to conserve bar counsel resources, should prevent any state bar from taking tough, public disciplinary action against lawyers who have so outrageously and infamously shamed our profession.- Two Cents
P.S. As reported today by The Southern California Law Blog and the Sacramento Bee, the California State Bar has done a far more admirable job of policing its bar members’ conduct in another infamous case of lawsuit abuse. The SoCal Law Blog has pithily described the case: “The largest State Bar investigation in California history will close now that the three Trevor Law Group attorneys who twisted California’s unfair business practices law to extort money from small businesses resigned their legal licenses rather than face a trial before the State Bar.” That’s more like it.
July 9, 2003
A Blogger’s Dream (Shattered)
Weakday Special. It was unprecedentedly wonderful: My humble little blawg had thousands of hits before noon yesterday. Yes, a blogger’s dream come true, and things got really exciting as the evening came and the hits counter (on the Harvard Weblog Rankings page) neared and passed into the 5-digit range, and finally peaked at nearly 11,000 before midnight. In just one day, during my 6th week as a blawgger, I had doubled my all-time hits. And my hurried, on-vacation posting yesterday morning (about efforts to aid pro se litigants) wasn’t even particularly inspiring. It had already been a special day — on vacation in a sleepy Village, visiting an adoring niece and nephew and spending a rare afternoon with my twin brother. Honestly, though, I started to suspect something might be amiss at about 4 PM, when we returned from viewing The Phillips Collection exhibit at Buffalo’s Albright-Knox Art Gallery (a nostalgic treat, reminding me of 20 years of visits to the Phillips over two decades of residence in Washington, D.C.). You see, I noticed that Derek Slater’s copyright/internet blawg A Copyfighter’s Musings was also spectacularly popular, with over 40,000 hits by the end of the afternoon (57,000 by the end of the day). Just maybe, these weren’t actual page hits, I surmised, with my usual intuitive prowess. Unable to solve the riddle, I posted a question about it with the Harvard-Weblog-Support Group at Yahoo!. So far, I’ve only had one response, but it sounds quite probable. Blogger Bob Bennett, editor of the popular Robert John Bennett Blog (which features installments of his draft novel The End is Where We Start From) wrote from Munich and suggested: “Maybe some weird attempt to hack into a computer associated with the Law School? If so, web pages concerned with topics like ethics or fighting computer piracy might be likely targets.” I’ll probably never know the answer. I do know that my contentment over averaging 300+ hits a day has been sadly undermined. The dream has perhaps turned into a recurring nightmare of raised-but-unmet expectations. And my totals and averages will be suspect from now on. (Sigh). Supreme Serendipity
July 8, 2003
More Help for the Self-Represented
This morning’s JURIST Paperchase notes that courts are responding to the increased numbers of pro se litigants by holding educational conferences, such as a recent one held in Tennessee (as covered in the Leaf-Chronicle on July 7, 2003) and creating informational websites (such as the useful Wisconsin Self-Help Center, which has recources for people considering or in the process of representing themselves). I’ll have much more to say about this healthy trend — brought on in most states by necessity rather than virtue, and by the courts rather than the bar — when I return from a short vaction later this week. Meanwhile, check out an article from Nolo.com on making the courthouse more user-friendly; my own article Supersize Small Claims
ethicalEsq?ethicalEsq?ethicalEsq?
Thanks to Jerry Lawson at net.law.blog for adding us to their select blawgroll.
July 7, 2003
From “Zealous” to “Honorable” — What’s in a Word?
With much fanfare (but little press), the Arizona Supreme Court announced last month that it had made “a historic and significant” one-word change in the Arizona Rules of Professional Conduct that would give a new meaning to what it means to be a lawyer. As explained in its press release (June 6, 2003):
In response to a comprehensive two-year study by a State Bar committee on ethical review, the Arizona high court this week removed the obligation of an attorney to be a “zealous” advocate of his/her client and substituted to “act honorably” in the furtherance of a client’s interests.
- According to Arizona Supreme Court Vice-Chief Justice Ruth McGregor, “Arizona is the first state in the country to make this crucial rule change.” . . . “We are advised that this definitional change will also be considered by the American Bar Association,” says McGregor. “This change may appear to be subtle,” explains Chief Justice Jones, “but in fact, it’s a very significant foundational change in the Rules of the Court, and one that is designed to send a distinct message to attorneys.”
The term “zealous” was eliminated from the preamble, because it was erroneously being used by some attorneys to defend behavior that was seen as unprofessional and potentially belligerent, according to one committee member. “Jones explains that the State Bar committee’s recommendation . . . harkens back to a time when lawyers were closely identified as officers of the court. As such, they were duty bound to represent their clients with personal and professional ethics and integrity in mind.”
The changes in the Preamble (sections 1, 2, 8, 9) will go into effect on December 3, 2003, as part of a comprehensive set of changes to Arizona’s Rules for lawyer conduct.
What do you think? Will this make any difference in how law is practiced? I looked up the relevant definitions on OneLook.com:
Quick definitions: zeal noun: (1) excessive fervor to do something or accomplish some end; (2) a feeling of strong eagerness (usually in favor of a person or cause)
Quick definitions: zealous adjective: marked by active interest and enthusiasm
Quick definitions: honorable adjective: (1) showing or characterized by honor and integrity; (2) not disposed to cheat or defraud; not deceptive or fraudulent; (3) adhering to ethical and moral principles; (4) deserving of esteem and respect
It’s sort of hard not to like the word “honorable” (and the related adverb “honorably”). On the otherhand, the active interest and enthusiasm that comes with the word “zealous” isn’t so bad either, especially if you remove the notion of excessiveness or zealotry. If other states and the ABA are thinking about a similar change, they might consider the phrase “with zeal and honor” (or “zealously and honorably”).
My biggest problems with the word change from zealous to honorable are:
- The two years of effort spent on this project might have been far better spent addressing the profession’s inability to provide for the legal needs of low and moderate income Americans. I have this concern whenever I hear about vasts amount of legal and judicial talent laboring over the need for “civility” in the profession. A few good disciplinary actions or contempt of court orders would go much further to reign in inappropriate lawyer behavior than editing the Preamble to the Rules of Conduct.
- The tone of the Press Release suggests that the focus of the change is far more on the “dignity of the profession” than on the effects of what I call “the zealous advocate excuse” on clients. I wish Chief Judge MacGregor had said something like “We are especially concerned that lawyers have been using the excuse of zeal to increase their income by (a) providing clients with unnecessary services; (b) antagonizing the opponents (client and counsel) with excessive, unreasonable positions, demands and posturing;” and (c) irresponsibly prolonging adversarial proceedings, when compromise and settlement were in the client’s best interests.
update (July 9, 2003): Supreme Serendipity. Driving back home from Western New York this afternoon, I suddenly realized that I had forgotten a very important meaning for the word “honorably” when I made my posting on Sunday about the Arizona Supreme Court decision to replace the word “zealously” with “honorably” in the Rules of Professional Conduct. Just by chance, I was listening to the audiobook by Bill Bonanno entitled Bound by Honor: A Mafioso’s Story. (1999, Simon & Schuster Audio Div.)
In the book, Mr. Bonanno (son of the legendary godfather Joe “Bananas” Bonanno) stresses his own connections and life in Arizona, and Mob influence in the State, while describing what it means to be a “man of honor.” With my own Sicilian ancestry, I shouldn’t have overlooked this special meaning of honor — giving due respect to people of authority and power, while brooking no disrespect to yourself (and seeking revenge when necessary). We definitely need to consider this special definition, when assessing the possible ramifications of Arizona’s one-word amendment to the Rules of Conduct. Thank goodness, I pulled that cassette case off the Library shelf before taking my two-day vacation. Serendipity Rules!
P.S. I’ve never been to Arizona, and this blawg is not supposed to be focused on that State. AZ just seems to do a lot of interesting things relating to lawyer ethics. Please send me news from your State about changes, proposals, opinions, etc., that seem to important to how legal ethics affect consumers of legal services.
Update: Walter Olsen at Overlawyered.com discusses this topic in a posting made on July 17, 2003. He’s hoping the word change will produce meaningful results, as “Time and again, in our experience, the putative obligation to represent clients in a “zealous” fashion has proved the last resort of the scoundrel litigator and ethical edge-skater.”
July 6, 2003
New Model Rules Support Offering No-Frills Services
Caroln Elefant over at MyShingle.com has added some thoughts to yesterday’s discussion between ethicalEsq? and Stuart Levine of Tax and Business Law Commentary concerning the provision of lower-cost, no-frills services to clients. In her posting, titled Cost Benefit Analysis of Client Services, Carolyn notes that large firms could not afford to offer basic level service packages, but that “Economically speaking, solo and small firm lawyers who operate under different financial models could theoretically make money off basic services.” Her concern, however, is with potential malpractice liability: “But until someone can provide assurances that we won’t be sued for malpractice for rendering second tier service at a correspondingly lower cost, we solo and small firm attorneys can’t afford to offer this type of service either.” This being the U.S.of A., no one can ever assure against being sued. But, I believe that good arguments exist to protect a lawyer offering no-frills services that are requested by a client and agreed to by the client after being informed of options and risks. For example, beyond the lawyer’s broad ethical responsibility to make legal services available to the financially challenged, current Rule 1.2(c), as adopted in most states, already explains that “A lawyer may limit the objectives of the representation if the client consents after consultation.” More important, the new Model Rules of Professional Conduct include revisions that were specifically intended, according to the Ethics 2000 Reporter, “to provide a framework within which lawyers may expand access to legal services by providing limited but nonetheless valuable legal service to low or moderate-income persons who otherwise would be unable to obtain counsel.” Thus, a sentence was added to Commentary 5 of new Model Rule 1.1 on Competence, explaining that “An agreement between the lawyer and the client regarding the scope of the representation may limit the matters for which the lawyer is responsible. See Rule 1.2(c).” More directly, Model Rule 1.2(a) and (c) were revised to clarify the ability of lawyer and client to limit the scope of representation, if the limitation is “reasonable under the circumstances and the client gives informed consent”: RULE 1.2: Scope of Representation and Allocation of Authority Between Client and Lawyer The Commentary to new Model Rule 1.2 is also illuminating and helpful: Commentary Agreements Limiting Scope of Representation [6] The scope of services to be provided by a lawyer may be limited by agreement with the client or by the terms under which the lawyer’s services are made available to the client. When a lawyer has been retained by an insurer to represent an insured, for example, the representation may be limited to matters related to the insurance coverage. A limited representation may be appropriate because the client has limited objectives for the representation. In addition, the terms upon which representation is undertaken may exclude specific means that might otherwise be used to accomplish the client’s objectives. Such limitations may exclude actions that the client thinks are too costly or that the lawyer regards as repugnant or imprudent. [7] Although this Rule affords the lawyer and client substantial latitude to limit the representation, the limitation must be reasonable under the circumstances. If, for example, a client’s objective is limited to securing general information about the law the client needs in order to handle a common and typically uncomplicated legal problem, the lawyer and client may agree that the lawyer’s services will be limited to a brief telephone consultation. Such a limitation, however, would not be reasonable if the time allotted was not sufficient to yield advice upon which the client could rely. Although an agreement for a limited representation does not exempt a lawyer from the duty to provide competent representation, the limitation is a factor to be considered when determining the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation. See Rule 1.1. [emphasis added] My disagreement with the Ethics 2000 treatment of fees is no secret. However, I support this attempt to make legal services more accessible and affordable, by clarifying that lawyers and clients may reasonably limit the scope of representation, so long as the client makes an informed decision. Attorneys wishing to serve clients of low or moderate means should find considerable protection and encouragement in the new version of Model Rule 1.2, and should make sure it is quickly adopted in their State — and perhaps further strengthened with more explicit language in the Rule or its Commentary. Informational campaigns might also be used to let the public know that lawyers offer choices, with levels of service from “Cadillac” to “Kia” to “Karmann Ghia.”
July 5, 2003
One Blogger’s UPL is Another Blogger’s Consumer Choice
Earlier this week, I complained about ethics actions in Arizona and North Carolina that limit the ability of consumers to choose and use nonlawyer providers of law-related services. At the same time (July 3, 2003), Stuart Levine was using his TaxBiz blog Tax & Business Law Commentary to praise an Ohio Supreme Court decision,
Here are the only facts stated in the Verne Court’s decision:
“Respondent, Leonard P. Verne Jr., is a certified public accountant (“CPA”). In 1997, two men who were operating a power-washing company discussed with respondent how best to structure their business. Although respondent has never been admitted to the practice of law in Ohio or any other jurisdiction, he drafted articles of organization, using forms available from the Secretary of State’s office as a baseline, to establish the business as a limited liability company (“LLC”).
“In early 2000, after the partners had a falling out, one of the them consulted an attorney who was also a CPA about how to structure the company’s future business transactions. The attorney reviewed the documents of organization that respondent had prepared and filed. He discovered that no operating agreement had been executed between the two partners, an omission that commentators caution against.” [emphases added]
Stuart offers some thoughtful commentary, stating: “In fact, as the opinion reveals, Verne’s sins that caused his clients serious harm were not found in the simple document that he drafted, but in the complex document that he didn’t even think about. Verne failed as a lawyer because he apparently did not even attempt to explain to his clients the importance of addressing and memorializing the various elements of their deal.”
Stuart also brings up another important issue: “Going one step further, however, a more difficult issue underlies this case. What should it cost to form a relatively simple business deal? . . . In forming a business, lawyers face the problem of how detailed an operating agreement (or shareholders’ agreement or partnership agreement or lease or etc.) needs to be in order to meet the needs of the client and, to cover all of their bases, there is a tendency to “overlawyer” a deal.
We don’t have enough facts here to do the “public interest” balancing of potential harms and benefits to consumers that the FTC and DOJ have suggested should be used when deciding what activity constitutes the practice of law (discussed in our posting of July 3rd). There are things we need to know before deciding whether the Verne decision is pro-consumer or merely pro-lawyer:
- did the clients know CPA Verne was not a lawyer?
- did Verne suggest that they see a lawyer or consider issues such as having an operating agreement drawn up? Despite Stuart’s assumption, the Court does not tell us.
- in that community, would two guys putting together a “power-washing” business usually seek a full-service, bells-and-whistles package of incorporation services and documents? or just the simplest and cheapest form of incorporation possible?
- in that community, would the typical attorney be likely to peform any more services than Verne did (using the same off-the-shelf form) as the basis of setting up a business similar in size and complexity to this power-wash business?
- what did Verne charge them and what would an attorney have charged for comparable services?
- did Verne’s clients stress their tiny budget and limited needs when asking for his help?
- did Verne’s clients ask their new lawyer to file the grievance complaining of unauthorized practice, or was that done on the lawyer’s initiative?
If Verne never held himself out as being an attorney and he reminded his clients that they might want to consider getting legal advice or having additional documents drafted for their business, he may have been giving them just what they wanted and needed — and chose — given their situation and their willingness to risk future problems. Calling what Verne did “the unauthorized practice of law” rather than the “lawful provision of law-related services” might be doing a great dis-service to every tiny business hoping to stretch each of its start-up dollars. What the Verne decision will surely do is to help maintain or increase the level of lawyer fees in Ohio.
Update (2:30 PM, 7/5/03): Stuart Levine responded quickly and thoughtfully at Tax & Business Law Commentary to this posting [talk about overlawyering, why aren’t we both doing something more likely to result in the “pursuit of happiness” on this holiday weekend?]. Here are his remarks:
More on Verne
David Giacalone at ethicalEsq has offered some comments on my posting Putting Strains on My Friends about the Verne opinion. Although I agree with most of what he has to say (he does a good job, for instance in detailing most of the salient facts that were not presented in the opinion), I have one area of disagreement.
Specifically, Dave states that “[i]f Verne never held himself out as being an attorney and he reminded his clients that they might want to consider getting legal advice or having additional documents drafted for their business, he may have been giving them just what they wanted and needed — and chose — given their situation and their willingness to risk future problems.” (Emphasis is Dave’s.) I’m not at all certain that this clears Verne under the circumstances.
One of the lessons I learned in law school is that it is less important to know the answer to a question than it is to know the correct questions to ask. Theoretically at least, lawyers are by training supposed to be able to ask the right questions. Accountants, as to the majority of issues that go into operating agreements, for instance, simply do not have this training.
I think that Dave is on the right track when he suggests various elements of cost benefit analysis that should go into the decision as to whether Verne should be penalized for his actions or omissions. However, in many cases, even highly skilled and experienced counsel do not have the knowledge to make the appropriate cost benefit analysis. By way of example, assume that most small businesses, such as Verne’s clients, typically rely on a form LLC operating agreement that does little more than restate the default provisions in the state’s LLC act. Is the lawyer who prepares such a document (i) underlawyering, (ii) overlawyering, or (iii) getting it just right. As I suggested in my first post, I really don’t know the answer to this question.
Asking the right questions is indeed at the core of stumbling toward the right answers (my major piece of work at the FTC was entitled “The Right Questions”). But, sometimes the client has the answer already and the lawyer needs to abide by it (with appropriate c/y/a disclaimers). If a client says “I only have enough money for the barebones form LLC, and I will take the risk of any underlawyering,” the lawyer should be allowed and willing to undertake that simple service and assignment.
Just like the consumer who can only afford the cheap used car or can’t afford extended warranty coverage on a new computer, consumers needing econo-legal services should be able to make that “choice” in the marketplace — using lawyers or other providers competent to meet their limited demands.
Too often, the bar seems to have only One Question in mind when deciding on the definition of the practice of law (or any other rule of conduct): “How will this affect the profession’s pocketbook?” ethicalEsq? is going to keep on asking: “How does this affect the overall interests of the consumer of legal services?” Of course, I don’t pretend to always have the correct (nor the only) answers.
July 3, 2003
Nonlawyers Still Closed Out of N.C. Closings, Except for Ministerial Tasks
Ethical Lawyering Today reports that “the North Carolina State Bar has dropped a prior requirement that a lawyer be physically present at all real estate closings, announcing that a lawyer-supervised nonlawyer may handle closings.” (Early July, 2003 edition) According to the N.C. State Bar 2002 Formal Ethics Opinion 9 (Jan. 24, 2003), a nonlawyer supervised by a lawyer may present and identify the documents that must be signed in a real estate transaction closing, point out where signatures are needed, assure they are properly signed, and handle receipt and disbursement of closing funds. Indeed, per the simultaneously released N.C. State Bar Authorized Practice Advisory Opinion 2002-1 (Jan. 23, 2003) (“Opinion 2002-1”), a nonlawyer unsupervised by a member of the N.C. bar may also perform those basically ministerial duties as a “closer.” However, Opinion 2002-1 reiterates that a nonlawyer may not “handle” a residential real estate closing for one or more of the parties to the transaction, as most of the tasks involved are deemed by statute to be the practice of law. So, the N.C. State Bar did back down somewhat from two prior ethics opinions after “a year of study,” and apparently gave some consideration to a joint FTC/DOJ letter objecting to the prior opinions. But, it did not go as far as recommended by the federal agencies in allowing lay “closers” not supervised by lawyers to handle real estate closings — especially those involving refinancing rather than the purchase of property. Among other points, the FTC & DOJ stated in their Letter that prohibiting lay closers would (a) injure consumers who prefer the package of services, convenience and cost offered by nonlawyers, and (b) be likely to raise attorney closing costs by preventing competition. The agencies pointed out that “The use of lay closers has reduced costs to consumers in other parts of the country.” They also referred to a 1995 action by the New Jersey Supreme Court that, after a 16-day investigatory hearing, rejected an ethics opinion that would have eliminated lay closings. Citing both a N.C. Supreme Court decision and the New Jersey decision, the agencies explained that the conclusion as to whether particular activities amount to the unauthorized practice of law must be based on the “ultimate touchstone” of the public interest, and that “In determining how best to protect the public interest, the Committee should balance the harm that would be caused by banning lay settlements against the harm that might be caused by permitting them.” In footnote 2 of Opinion 2002-1, the N.C. State Bar sheepishly points out that it is the State General Assembly and the Supreme Court that ultimately decide what constitutes the practice of law. Before we absolve the organized bar from any responsibility, however, we need to know what role it played in having the expansive definition of unauthorized practiced passed into law. ethicalEsq?‘s Editor humbly opines that it is part of the profession’s duty to consumers of legal services and the legal system to:
from nonlawyers in situations where there is no record of significant harm to consumers — especially where informed consumers can make their own cost-benefit analysis concerning the choice between lawyers and lay providers.