Wisconsin Lawyer: The Unauthorized Practice of Law: Court Tells Profession, Show us the Harm:

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    The Unauthorized Practice of Law: Court Tells Profession, Show us the Harm

    Before it will act, the Wisconsin Supreme Court wants the State Bar of Wisconsin to gather demonstrable evidence that additional regulation of the unauthorized practice of law is needed. The court recently asked lawyers for quantifiable evidence not only of the harm inflicted on the public when nonlawyers practice law but also of the nature and extent of the harm. Members should submit data by Dec. 31.

    Andrew ChevrezThomas Zilavy

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    Wisconsin LawyerWisconsin Lawyer
    Vol. 78, No. 10, October 2005

    The Unauthorized Practice of Law:
    Court Tells Profession, Show Us the Harm

    Before it will act, the Wisconsin Supreme Court wants the State Bar of Wisconsin to gather demonstrable evidence that additional regulation of the unauthorized practice of law is needed. The court recently asked lawyers for quantifiable evidence not only of the harm inflicted on the public when nonlawyers practice law but also of the nature and extent of the harm. Members should submit data by Dec. 31.

    U P L

    by Thomas D. Zilavy & Andrew J. Chevrez

    When nonlawyers practice law, their "clients" - the public - can be harmed. The State Bar has responded to this harm by petitioning the Wisconsin Supreme Court for a clear definition of the unauthorized practice of law (UPL) and a regulatory system to administer and enforce rules against UPL. Although the court denied the Bar's latest petition, in a memo to its order, the court explained why:

    "The court takes seriously the petitioners' assertion that it has received increasing numbers of complaints from victims of fraudulent practices allegedly committed by non-lawyers offering legal services. However, before this court can contemplate a recommendation that it establish a regulatory framework to administer and enforce rules on the unauthorized practice of law, it needs demonstrable evidence that additional regulation is truly needed. The court recommends that the State Bar of Wisconsin ... document complaints or concerns received from members of the public. Quantifiable evidence that a problem not only exists, but the nature of the problem and its extent, will be of significant value to this court. ...


    Thomas D. ZilavyThomas D. Zilavy is chair of the State Bar UPL Policy Committee.

    Andrew J. ChevrezAndrew J. Chevrez is a member of the committee, as are attorneys Helen Marks Dicks, Robert C. Leibsle, Thomas J. Basting Sr., John R. Zwieg, Michelle A. Behnke, and State Bar staff Jason Westphal and Cathleen Dettmann.

    "We also ask that the State Bar assist this court by identifying emerging consumer protection issues involving the practice of law. The practice of law is changing, and technology is evolving rapidly. For example, the prevalence of `on-line' legal advice and legal forms on the Internet is a comparatively recent development with significant implications for the `unauthorized practice of law.' ...

    "Although we deny the Petition today, we anticipate that the State Bar might establish its own task force to study the issue and submit a petition addressing the issues set forth herein at some future date."

    The following explains the background and scope of the issue and, more importantly, how your participation can aid the court in its deliberations.

    The Situation

    Most states, including Wisconsin, permit only licensed lawyers to practice law. Licensure and regulation by the Wisconsin Supreme Court are primarily intended to assure consumers that lawyers admitted to practice in our state possess a minimum level of ongoing competency and to provide a potential remedy should a consumer be harmed by a lawyer's unethical or incompetent behavior.

    However, the kind of activity that constitutes the practice of law and is reserved for licensed lawyers is not spelled out clearly by statute or court rule. Until recently, in many states including Wisconsin, the kinds of activities that constitute the practice of law often were defined on a case-by-case basis in the course of litigation _ a disjointed approach that led to more confusion. While other states have moved to define these kinds of activities, Wisconsin continues to rely on a case-by-case approach. Charlatans who inflict harm on the public either through their lack of training in the law or intent to defraud have capitalized on these ambiguities.

    Although many states including Wisconsin have criminalized UPL, district attorneys often are reluctant to prosecute wrongdoers. Some states have concluded that to properly and effectively protect the public interest regarding UPL, it is necessary to create a comprehensive and clear definition of the practice of law and to provide for noncriminal methods of enforcement. Several states have already accomplished this by supreme court rule.

    The Court Has Jurisdiction to Define the Practice of Law

    Other states have already recognized the extent of the harm to the public caused by UPL and have proceeded to deal with the problem by clearly defining the kinds of activities that constitute the practice of law. Twenty-five states and the District of Columbia have already proceeded to adopt a definition of the practice of law,1 and 14 of those jurisdictions have done so by supreme court rule.2  To protect the public, the State Bar of Wisconsin has been proactive in seeking an effective UPL definition and policy, rather than waiting for one to evolve through litigation.

    It is well settled law that the Wisconsin Supreme Court has the sole and exclusive authority to regulate the practice of law in Wisconsin.3 In fact, the court also has held that it has the authority to regulate nonlawyers who practice law in Wisconsin.4 The court regulates lawyers through a series of comprehensive rules that establish standards for a person to operate as a lawyer in Wisconsin and that control the conduct of lawyers in practicing law. The rules provide that only those persons who are "admitted to practice in Wisconsin can practice law." None of the court's rules, however, define what kind of activities constitute the practice of law. The court's rules do prohibit a lawyer from engaging or assisting another in the unauthorized practice of law,5 but they do not describe what would be UPL.

    The Wisconsin Legislature in Wis. Stat. section 757.30 has made it a crime to practice law without a license, but the statute's definition of UPL is vague and, as a result, is rarely enforced. The statute begs the question of exactly what kind of activities constitute the practice of law.

    Over the years the court has on occasion decided whether conduct is or is not the practice of law given the particular limited facts of the case before it. As such, the case law in Wisconsin does not present a clear definition of the kinds of activities that constitute the practice of law. Defining the practice of law on a case-by-case basis lends little guidance and emboldens those nonlawyers who exploit consumers by providing services that skirt the line. The result is that the public is left unprotected because the court's overall regulatory scheme is diluted and ineffective.

    A son who had financial power of attorney for his parents approached a real estate agent saying that his parents wished to transfer the title of their property to the son. Without consulting either party listed on the deed or reading the power of attorney document, which did not allow for making gifts, the real estate agent drew up the papers and transferred the property to the son/agent. The son later evicted his parents from the home.

    An elderly couple attended a seminar on how to avoid probate and inheritance taxes. After being thoroughly frightened by the salesman, the couple bought a trust from him for $5,000. When the husband died, the wife discovered that no assets had been transferred to the trust, with the result that the trust did not help the wife avoid probate. Most of the couple's assets could have been titled jointly so that probate would never have been an issue. Their estate was not large enough to have had inheritance tax liabilities. The couple in effect spent $5,000 for useless legal-looking documents.

    A Wisconsin couple wished to divorce amicably, and they thought they could cut costs by using the services of a "divorce mediator," a person who had a Ph.D but was not an attorney. When the mediator drafted the couple's marital settlement agreement, costly mistakes were made when trying to divide the couple's jointly owned businesses, resulting in frustrating and expensive litigation just a few years later.

    A Wisconsin surveyor, who was not a lawyer, drafted for a landowner an easement that inadvertently affected a neighbor's property. When confronted with the problem, the surveyor realized she did not know how to fix the problem, and the local DA was unwilling to prosecute under the unauthorized practice of law statute, section 757.30. The neighbor was forced to hire an attorney and file a civil lawsuit to solve the problem.

    An investment advisor assisted a couple in transferring their assets to their children, promising that the transfer would mean the government would pay for the sick husband's nursing home care. When the wife applied for Medicaid for her husband, the couple was told they would have an extended period of ineligibility for Medicaid due to the divestment of assets. The investment advisor suggested the children pay for the nursing home care and said he could not remedy the situation.

    State Bar Experience with UPL

    It is important to understand that the State Bar, created by supreme court rule, has no authority to deal with the conduct of nonlawyers who engage in UPL. Since approximately 1992, a State Bar committee consisting of volunteer lawyers has served as an informal repository of sporadic complaints about nonlawyer conduct in Wisconsin, which conduct probably constituted UPL. Those earlier complaints were forwarded by lawyers who learned of the incidents from their clients. The State Bar committee would consider the facts presented and in appropriate cases refer matters to district attorneys, the Wisconsin Department of Justice, or the Wisconsin Department of Agriculture, Trade and Consumer Protection. Those officials and agencies have cooperated with the State Bar in attempting to deal with the referrals, but they too have sometimes been stymied in resolving consumer complaints due to the lack of a clear definition of the practice of law either by supreme court rule or statute.

    The State Bar determined that there has to be a more direct way to protect the public from the harm caused by the unauthorized practice of law.

    Recent History in Petitioning the Court

    In 2003 the State Bar petitioned the Wisconsin Supreme Court requesting that the court appoint a committee to develop a proposed supreme court rule defining the practice of law and creating a system for administering the new rule. The court held public hearings on the State Bar's petition in 2003 and in 2004. The court requested that the State Bar submit as a supplement to its 2003 petition a more definitive mission statement of the committee to be appointed by the court.

    The court recently rejected the State Bar's supplemental petition, and thereby the Bar's original petition, primarily because the petition lacked substantial evidence in the form of actual examples demonstrating that the lack of a practice of law definition is detrimental to the public interest. As quoted at the beginning of this article, the court suggested in a memorandum that the State Bar collect evidence of instances in which the unauthorized practice of law harmed members of the public and that the State Bar devise a new rule for dealing with the problem. The court expects the State Bar to re-petition the court with appropriate evidence of public harm and a proposed solution to the problem. In devising a solution, the court suggested the State Bar involve other interested parties, such as the Board of Bar Examiners, the Office of Lawyer Regulation, the Department of Regulation and Licensing, and other agencies that may receive consumer complaints about UPL.

    Accordingly, the State Bar has launched an initiative to collect examples of the unauthorized practice of law that have harmed consumers, with the intention of presenting the evidence to the court. That's where you come in. The State Bar needs its members to provide examples to add to the body of evidence by Dec. 31, 2005. The committee will assess the collected evidence in January and, when it has collected sufficient evidence, the Bar will petition the court requesting that the court adopt a new rule defining the practice of law in Wisconsin and creating a method to administer and enforce the new rule.

    In terms of enforcement methods, the State Bar believes that it is in the public's best interests that noncriminal remedies should be available to deal with cases involving UPL. Such enforcement methods could include negotiated settlements, cease and desist orders, civil contempt proceedings, and civil forfeitures.

    How You Can Provide Examples

    The State Bar's UPL Policy Committee will follow up on the court's suggestions, beginning with collecting your examples of how UPL has harmed the public.

    Your input is critical. Members who have personal knowledge, or who have clients who have knowledge, of instances they believe are examples of UPL, are urged to report the facts and circumstances to the UPL Policy Committee. If you question whether an incident is an example of UPL, please report the incident and let the committee decide whether to include it with the evidence to be presented to the court. Either the member or the client can make the report.

    A report form is available online in downloadable fillable Word format and in printable PDF format, at www.wisbar.org/upl. Submit your reports of incidents by Dec. 31, 2005 to: UPL Policy Committee, State Bar of Wisconsin, P.O. Box 7158, Madison, WI 53708-7158; or fax to (608) 257-4343. Direct questions to org cdettmann wisbar Cathleen Dettmann, at (800) 728-7788, ext. 6045.

    1The jurisdictions that have adopted a definition of the practice of law are: Alabama, Alaska, Arizona, Colorado, District of Columbia, Hawaii, Idaho, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina, Utah, Virginia, Washington, West Virginia, and Wyoming. "2004 Survey of Unlicensed Practice of Law Committees," monograph, American Bar Association, December 2004.

    2The jurisdictions that have adopted a definition of the practice of law by supreme court rule are: Alaska, Arizona, District of Columbia, Idaho, Kentucky, Louisiana, Maryland, Mississippi, Nebraska, Utah, Virginia, Washington, West Virginia, and Wyoming. "2004 Survey of Unlicensed Practice of Law Committees," monograph, American Bar Association, December 2004.

    3See State ex rel. Reynolds v. Dinger, 14 Wis. 2d 193, 109 N.W.2d 685 (1961).

    4See State ex rel. State Bar of Wisconsin v. Keller, 16 Wis. 2d 377, 114 N.W.2d 796 (1962).

    5SCR 20:5.5.




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