Hamilton Herald Masthead


Front Page - Friday, February 13, 2015

The unauthorized practice of law in Chattanooga

Problems ... and solutions

Paul Hatcher

The purpose of this monthly column is to discuss problems common to Chattanooga attorneys. To the extent a personal opinion occasionally slips out, such opinions do not reflect the opinions of the Board of Governors of the Chattanooga Bar Association or of the Hamilton County Herald.

The Jan. 29, 2015 edition of the Wall Street Journal featured an op-ed by one Tom Gordon, the director of a consumer advocate group called Responsive Law, entitled “Hell Hath No Fury Like a Lawyer Scorned.” The point of the article was to praise non-licensed paralegal services and to criticize bar associations and state attorneys general for bringing suits against unauthorized practitioners. It calls for an end of the attorneys’ control of legal services, and for the repeal of state laws prohibiting the unauthorized practice of law.

To support his argument that cheap, unlicensed businesses provide legal services as well as attorneys, the author gives as an example a case involving a mother in Watertown, N.Y., who wanted to change her teenage daughter’s last name. She went to a non-lawyer shop called “Legal Docs by Me” and told the manager that “her ex-husband had never been part of their now-teenage daughter’s life, though the girl still bore his last name as an unwelcome reminder of their painful history. All her daughter wanted for Christmas that year was to be able to take the name of her step-father instead.”

She had consulted with an attorney who had estimated legal fees of over $1,000, but the non-lawyer Legal Docs By Me outfit only charged $249. The “name change was completed in a few weeks, in plenty of time for a merry Christmas,” says Mr. Gordon.

The article ignores the due process and legal competency issues which most attorneys would spot immediately. Assuming something resembling a court order actually exists, did the ex-husband receive notice and an opportunity to be heard? Does the name change violate an existing parenting plan? Was a guardian ad litem appointed to protect and evaluate the interests of the minor child? For $249, we can assume the worst.

There are several issues a guardian ad litem would investigate before reporting to the court as to the best interests of the minor child: First, since the “name change” did not rise to the level of an adoption, has the child alienated her father while gaining no legal commitment from the step-father? Does this “Christmas wish” truly reflect the child’s wishes, or does it say more about the mother and step-father’s wishes than it does about the child? Would the child be better served to delay such a drastic measure until she reaches adulthood?

The article, contrary to its intention, reinforces my predisposed opinion that persons who are legally trained and certified in the law render better legal services than those who are not, in the same way that one would rather have one’s kidney removed (assuming such a procedure were medically indicated) by a licensed surgeon than by, well, some dude.

Illegal services are now only a click away, as the Internet is making it easier for illegal providers to operate and then skedaddle when necessary. There are non-lawyer paralegal services here in Chattanooga which you can find on Craig’s list and other sites. Often, the only contact information provided is a phone number; no names or addresses are listed. One can assume that once the pressure hits, the perpetrator simply changes the number and posts another ad elsewhere. A large online document preparation service called LegalZoom faces unauthorized practice suits in several states, including our own.

U.S. Trustee Kim Swafford tells me that, “For several years, the U.S. Bankruptcy court had a problem with paid paralegals preparing petitions for debtors to file themselves. Invariably, exemptions would not be right or judgments would not be shown. A few years ago, Congress amended Section 110 of the Bankruptcy Code to address this, providing penalties and refunds from preparers of erroneous petitions. So, this is not nearly the problem it used to be, but we still see it, and anytime we have a pro se debtor, we question them about who prepared their documents.

“Another problem is with companies who advertise that they will renegotiate your mortgage. Once the negotiations break down, they then charge the debtor $800 to $2,000 for a blank bankruptcy petition, instructing them to file this to stop the foreclosure. They don’t tell the debtor that they only have ten days thereafter to complete and file all the schedules. When we see these filings, we demand and receive refunds from the mortgage negotiation companies.”

In Tennessee, the definition of unauthorized practice is clear, and an illegal practitioner knows or should know he is violating the law. The line is crossed when the unlicensed perpetrator engages in the “practice of law” or “law business.” The practice of law is defined as the appearance as an advocate or the drafting of papers in connection with any court proceedings. Law business entails legal advice and counseling, legal document drafting, and legal negotiations, in exchange for valuable consideration. TCA 23-3-101 et seq.

In addition to civil liability, violators commit a Class A misdemeanor. Action against such perpetrators may be brought by the state’s attorney general, by a local bar association, or by the state bar association. In practice, the bar associations, including our own, have committees charged to report violations to the state attorney general, who then handles the prosecution.

As might be expected due to language barriers, unlicensed law practice is prevalent in the Hispanic community. In 2013, the attorney general’s office obtained a judgment against one Martha Salazar, doing business as Comunidad Hispana in Nashville, enjoining her from practicing law without a license and ordering a full refund of all fees received, as well as full restitution for those who were damaged by her services.

Some local attorneys have recently expressed concern regarding attorneys from other states who are not licensed Tennessee lawyers but advertise here to attract Tennessee clients. One such attorney promotes his own name, but a fine print disclaimer indicates that he is not handling the case at all. It is being farmed out to associated lawyers. Such advertising is, at best, misleading. If such unlicensed attorneys are providing legal advice and are engaging in legal negotiations, they are violating TCA 23-3-103.

Tricia Dennis is on the board of the Chattanooga Trial Lawyers Association. She believes the state should protect the consumer from “lawyers not licensed in this state, coming in with massive advertising campaigns, soliciting clients. From a functional standpoint, these lawyers fail to inform their prospective clients that the lawyers are not licensed in this state and therefore cannot take their case to trial. Insurance adjusters are well aware of the limited ability of these lawyers to follow through with his or her threat to go to trial. Thus, all too often, the unfortunate client is stuck with a much lower settlement offer than he or she would have had by choosing a Tennessee licensed lawyer.”

Our law license assures Tennessee consumers that we have a basic level of training and competence as required by the State of Tennessee, and that we have access to the courts. That license is a valuable asset to us as lawyers, but it is valuable to the public as well. We should not take it for granted, and the public should be reminded of its value. For the sake of our profession and for the protection of the public, we must seek out and prosecute violations.

Most of us have dealt with home-made legal documents such as wills and operating agreements, either by re-drafting them, or as often, litigating them. Do-it-yourselfers usually end up calling us eventually. My dad would never call a plumber until water was spewing all over the house, and like plumbers, we repair botched work. We can’t stop the do-it-yourselfers, but we must diligently pursue the illegal practitioners.

Says Ms. Dennis, “Paralegals advertising on Craig’s List claim they can handle aspects of a divorce at rates well below those rates charged by a lawyer. Of course, rarely is there a simple divorce, and when the matter goes south, as is frequently the case, the person duped by the paralegal is out money she can ill-afford and stranded in a type of legal limbo.”

I suspect, with some chagrin, that the Watertown, N.Y., client who sought her daughter’s name change will eventually be back in a lawyer’s office on that same issue, and she will end up paying twice.

Paul Hatcher is an attorney with Duncan, Hatcher, Hixson & Fleenor, and the 2015 president of the Chattanooga Bar Association. Contact him at phatcher@duncanhatcher.com.