Treating the UPL epidemic
By William C. Bovender

The unauthorized practice of law (UPL) by companies and individuals offering advice, services, and documents has reached almost epidemic proportions.

For many years, the legal profession has been reluctant to attack the problem out of fear that enforcement efforts would be viewed solely as acts of economic self-interest. Even attempts by the Tennessee Bar Association (TBA) to enforce statutes dealing with UPL have met with relative indifference by many lawyers and jurists assigned to hear the cases.

In one less than celebrated civil action brought by the TBA some years ago against a management consulting firm, the trial judge lost the court file and all exhibits when they “fell from a pontoon boat” into the deepest section of Norris Lake in Anderson County, Tennessee. The case concluded with the entry of a nonsensical order.

The facts of the matter are that UPL is a serious consumer protection issue, and the Tennessee Rules of Professional Conduct place an ethical obligation on lawyers “… not [to] … assist a person in the performance of activity that constitutes the unauthorized practice of law.”[1]

Hence, all Tennessee lawyers are obliged to take steps to stop UPL when evidence exists that same is occurring.

A growing problem
In recent years, it seems every Tom, Dick and Harriet have gotten into consulting and service businesses that either constitute the practice of law or the law business or that are so close, the border is invisible. Tax consultants, document production “mills” such as “We the People,” and numerous title insurance and closing companies have sprung up offering services or advice that cannot be differentiated from the services offered by licensed lawyers. In Mexico, “notarios publicos” are legal officials who authenticate documents and provide advice. In the United States, supposed “notarios” have opened store fronts, offering similar services to Latin American immigrants. They prey on fear and ignorance, and the advice they render often leads to bad, if not tragic, results.

It is the need for protection of the public that has prompted action by the Office of the Tennessee Attorney General, the Tennessee General Assembly, the Tennessee Bar Association and various local bars around the state.

Why prohibit UPL?
Some ultra-free market advocates have asserted the practice of law should be wholly unregulated — in essence, “let the buyer beware.” The more rational arguments that favor UPL statutes include (1) protection of legal services’ consumers from the unqualified, the uneducated, and just plain crooks, (2) protection of the integrity of the nation’s real estate registration process, and (3) assuring that litigants in both criminal and civil settings are afforded due process of law by being adequately and competently represented.

In the real estate area, the courts of some states have recognized that the preparation of a deed, which is not reviewed by a licensed attorney, constitutes UPL.[2] On the other hand, a Michigan court has determined that preparation of deeds has become so standardized that such transactions require only ordinary intelligence rather than legal training.[3] However, that same Michigan decision found that a violation of the UPL statutes does occur when a person counsels another in matters that require “… the use of legal knowledge and discretion.”[4]

Critics of UPL statutes would allow the cost of services to determine the level of competency of the person performing services. In other words, if you want advice and representation in divorce and child custody proceedings, but you don’t want to pay “lawyer prices,” you should be able to hire non-licensed advocates to provide advice or forms. The problems with these assertions begin with basic due process issues and end with results that place additional burdens on judges, who are forced to assume the position of judge and advocate for those being incompetently represented.

UPL statutes do not perpetuate a “monopoly” for the legal profession anymore than similar statutes that seek to protect the public from the unauthorized practice of medicine perpetuate a monopoly for physicians. No one desires to have a nurse perform brain surgery. Similarly, a paralegal must not be allowed to represent a criminal defendant whose freedom is in jeopardy.

While there are areas where the lines can become blurred, such as paying human resources personnel to perform employee opinion surveys, which are then used to determine whether a union organizing campaign is underway at a company, the advice that results from an interpretation of those opinion surveys falls under the definition of the practice of law. Such advice should only be rendered by a licensed attorney.

While there may be room for debate as to what does or does not constitute the practice of law, virtually every state has UPL statutes. This reflects a collective determination by state lawmakers, including the Tennessee General Assembly, that the public needs and desires protection from those who would hold themselves out as competent in an area of law when they have neither the educational nor practical experience necessary.

The statute
Tennessee’s statutory prohibitions against UPL has resided for years at Tenn. Code Ann. § 23-3-101 et seq. (and statutory predecessors). Legal practice has traditionally been divided into two categories: “Law Business” and “Practice of Law.”[5] Judges, chancellors, court clerks, sheriffs and other executive officers were prohibited from practicing law in the courts of the state by the enforcement statutes.[6] The bulk of the statutes had been directed at the activities of lay persons. However, the statutory scheme was deemed insufficient, requiring amendment.

It is against this backdrop that the TBA urged significant changes to the UPL statutes that were enacted during the 2006 General Assembly. Several code sections were amended to enhance the crimes, offenses, fines and penalties, and certain enforcement procedures, including Tenn. Code Ann. § 23-3-103(1)(a):

No person shall engage in the ‘practice of law’ or do ‘law business,’ or both, as defined in § 23-3-101, unless such person has been duly licensed therefore, and while such person’s license therefore is in full force and effect, nor shall any association or corporation engage in the ‘practice of the law’ or do ‘law business,’ or both, as defined in A § 23-3-101. However, nonresident attorneys associated with attorneys in this state in any case pending in Tennessee who do not practice regularly in this state will be allowed as a matter of courtesy to appear in such case in which they may be thus employed without procuring a license, when introduced to the court by a member in good standing of the Tennessee bar if all the courts of the resident state of the nonresident attorney grant a similar courtesy to attorneys licensed in this state.[7]

Also under Tenn. Code Ann. § 23-3-103, enforcement actions may be initiated by the attorney general, an organized bar association of a municipality or multi-county region having a population in excess of 100,000, and by “any organized statewide bar association, primarily representing plaintiff attorneys and having no locally-based affiliate organization.”

In addition to injunctive relief, civil penalties have been increased from a maximum of $4,000 to $20,000.[8]

The 2006 amendments also clarified the private right of action in favor of

… [a]ny person who suffers a loss of money or property, real, personal, or mixed, or any other article, commodity, or thing of value wherever situated, as a result of action or conduct by any person that is declared to be unlawful under §§ 23-3-103, -104, and 108.[9]

Under this new private enforcement section, a plaintiff who suffers injury may recover up to treble actual damages, treble damages for the amount paid for the services and “such other relief” as the court considers necessary and proper,[10] including injunctive relief.[11] A three-year statute of limitations, which begins to run from the “discovery of the unlawful act or conduct,”[12] controls.

Tennessee attorney general enforcement
The attorney general has filed various actions that have resulted in injunctive relief effectively putting document-production factories, such as “We the People,” out of business in Tennessee.[13] The attorney general’s office Web site at http://www. attorneygeneral.state.tn.us/cpro/upl.htm offers information on UPL and allows a complainant to download a complaint form, which then is mailed to the AG’s office. The complaint form is reviewed and action is taken, if deemed proper, following an investigation of the complaint.

Notarios
In 2002, because the activities of unlicensed notarios were seen to be preying upon uninformed and vulnerable immigrants, the TBA wrote and passed consumer protection provisions into the law on notaries public. These provisions were beefed up this year through the addition of language making clear the prohibition on advising on federal immigration law by unlicensed notaries.

Local bar association efforts
The Memphis, Knoxville and Chattanooga bar associations have utilized varying procedures for dealing with UPL complaints. Memphis has a UPL Committee that receives and investigates complaints, attempts to foster settlements, makes referrals to the attorney general, or may even initiate enforcement actions. Knoxville and Chattanooga, likewise, have UPL Committees that receive and investigate complaints and make determinations as to whether matters should be referred to the attorney general.

TBA efforts
For its part, the Tennessee Bar Association has been active in the UPL area for years. Most recently, it played a leading role in assisting in the drafting of the changes to the UPL statutes discussed above. Also, in late 2004, a Special Committee on Unauthorized Practice of Law was convened at the request of then-TBA President Charles W. Swanson to review how UPL enforcement might be enhanced to better protect Tennessee consumers.

That committee, chaired by Harry Ogden of the Knoxville Bar, focused on two areas: how UPL complaints were being handled by local bar associations statewide, and the extent of the UPL problems in the state. After surveying local bar associations, it became clear there was no uniform procedure for receiving and handling UPL complaints. As mentioned, the larger bar associations had formal committees. Local bar associations in smaller cities and rural areas had no procedures whatsoever.

Hence, with the assistance of the office of the attorney general and various district attorneys general, the committee drafted and adopted a sample protocol (see sidebar). The report of the Special Committee and the Sample Protocol were received, adopted and approved by the TBA Board of Governors in June 2006.

A Real Estate Subcommittee was formed by the Special UPL Committee to examine the particular problems present in that area of the law. Chaired by James T. DuBois of the Maury County Bar, the subcommittee determined that the unauthorized practice of law had significantly increased in areas such as the rendering of title opinions and preparation of deeds, deeds of trust, leases, easements, restrictions, and buy-sell contracts. Estate planning, the preparation of trust documents, and the practice of tax law were also recognized as activities that fell under the definition of “Law Business” or the “Practice of Law”[14] and that were consistently offered to the public by persons and firms not licensed to practice law.

It appears that numerous title and closing companies have opened around the state, preparing documents and rendering title opinions, without the supervision of, or review by, a licensed lawyer. As pointed out by the subcommittee, in one five-month period in 2005, in Maury County alone, 457 deeds and 52 deeds of trust were prepared and recorded by non-lawyers. The increasing preparation of real property-related documents by non-lawyers has disastrous potential. Entire sub-divisions are threatened by the shoddy work of unlicensed tinkerers.

Recognizing that UPL complaints and problems are on the rise, the TBA Board of Governors decided to convert the Special Committee on UPL Enforcement into a standing committee of the TBA known as the “Standing Committee on the Protection of the Public from the Unauthorized Practice of Law.”

Summary
Lawyers who oppose the unauthorized practice of law will always be vulnerable to the criticism that they are merely protecting their own self-interest. The Tennessee General Assembly has determined that consumers should be protected from the unscrupulous who would prey on the public. Lawyers are required to be licensed and to remain competent by completing yearly continuing education requirements. Lawyers are subject to both disciplinary actions and professional malpractice suits when they fail to meet the standards of their profession. Unlicensed advisors and document preparers would be regulated by no one without UPL statutes, leaving the public wholly without recourse or protection.

Tennessee lawyers have an ethical obligation to combat UPL and all local bar associations should adopt and implement the Sample Protocol for Handling UPL Complaints (see sidebar).

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Notes

1. Tennessee Rules of Professional Conduct, Rule 5.5.
2. Toledo Bar Association v. Chelsea Title Agency of Dayton Inc., 100 Ohio St. 3d 356, 2003 Ohio 6453 (2003); In re UPL Advisory Opinion 2003-2, 277 Ga. 472 (Ga. 2003).
3. Dressel v. AmeriBank, 468 Mich. 537 (2003).
4. Id., at 566.
5. Tenn. Code Ann. § 23-3-101(1) and (2) [(1) “Law Business” means the advising or counseling for a valuable consideration of any person, -as to any secular law, or the drawing or the procuring of or assisting in the drawing for a valuable consideration of any paper, document or instrument affecting or relating to secular rights, or the doing of any act for a valuable consideration in a representative capacity, obtaining or tending to secure for any person, any property or property rights whatsoever, or the soliciting of clients directly or indirectly to provide such services; (2) “Practice of Law” means the appearance as an advocate in a representative capacity or the drawing of papers, pleadings or documents or the performance of any act in such capacity in connection with proceedings pending or prospective before any court, commissioner, referee or any body, board, committee or commission constituted by law or having authority to settle controversies, or the soliciting of clients directly or indirectly to provide such services;].
6. Tenn. Code Ann. § 23-3-102.
7. Tenn. Code Ann. § 23-3-103(1)(a).
8. Tenn. Code Ann. § 23-3-103(c)(1) and (d)(1).
9. Tenn. Code Ann. § 23-3-1 12(a)(1).
10. Tenn. Code Ann. § 23-3-1 12(a)(3).
11. Tenn. Code Ann. § 23-3-1 12(a)(5).
12. Tenn. Code Ann. § 23-3-112(d).
13. State of Tennessee v. Vincent Gould et al, Chancery Court for Davidson County, Twentieth Judicial District at Nashville, No. 04-727-lV.
14. Tenn. Code Ann. § 23-3-101(1) and (2).

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Sample Protocol for Handling UPL Complaints
Drafted and adopted by the TBA Special Committee on UPL

1. Receive written complaint
2. Investigate complaint (and, if appropriate, consult with attorney general)
3. Recommend action
   1. No action
   2. If action
      1. Meeting with defendant
      2. Letter to defendant
      3. More formal meeting with defendant
         1. Reach written agreement
         2. Report to attorney general results of meeting
      4. Refer to (as appropriate)
      1. Board of Professional Responsibility
      2. District attorney general, and/or
      3. Attorney general

• • •

William C. Bovender, a partner in the Kingsport/Johnson City firm of Hunter, Smith & Davis, is a former member of the TBA House of Delegates, served as a member of the Special Committee on UPL Enforcement and is serving as chair of the newly created Standing committee on the Protection of the Public From the Unauthorized Practice of Law. He received his law degree from the University of North Carolina.