LegalMatch: Business Law

When it Comes to Fill-In-The-Blanks Legal Documents, Buyer Beware

Lawyers can be expensive. That’s no secret. It’s also arguable that, for many simple legal matters, a lawyer might not be necessary. Simple wills and uncontested divorces are common examples.

As a result, an industry specializing in pre-printed legal forms for things like quitclaim deeds, wills, and uncontested divorces has popped up. These forms have been available in office supply stores for years, but the Internet has really let the industry take off, with companies allowing consumers, for much less than a lawyer would charge, to simply plug their information into a website, pay the fee, and receive a printed copy in the mail, or print it themselves. At that point, they usually just have to sign the documents, and maybe have them notarized.

This is a pretty sweet deal…assuming that the results are always flawless. A recent story in the New York Times, however, shows that this is not the case. The author tested out 4 popular online services for drafting legal documents. She used each one of them to draft a will, and then had an experienced estate planning lawyer go over them. The lawyer found holes in every one of the documents, though found that 3 of them were good enough that they probably wouldn’t cause any major problems. But the last line of the story really sums up the problem – a layperson probably doesn’t know enough about the law to spot the holes in these cookie-cutter legal documents, and they don’t know what to look for. Essentially, they don’t know what they don’t know.

Barring some fundamental remaking of our legal system, people are always going to make wills, get divorced, file for bankruptcy, and apply for trademarks, among other things. And some might argue that many attorneys charge far too much for these relatively simple tasks, considering the amount of work they require. In this economy, the opportunity to get the same results at a fraction of the price is more tempting than ever.

However, if there are any significant problems with a legal document, the long-term cost can be much greater than what it would have cost to hire a lawyer in the first place. Consumers will either find their intentions completely frustrated because a will, or other legal document, turns out to be invalid, or they’ll have to hire a lawyer to clean up the mess.

This possibility, and the fact that some people believe that they’ve already been harmed by using such documents, has led to a class-action lawsuit against LegalZoom, the biggest player in the industry, alleging that it has engaged in the unauthorized practice of law. To an outside observer, this could look a lot like an entrenched, protectionist, change-averse profession trying to stamp out competition and stifle innovation. I can’t read minds, so I don’t know the motivations of the lawyers in this lawsuit, but I wouldn’t be surprised if they were motivated, in part, by self-interest.

But if the case has merit, so what? After all, lawyers have to put food on the table, just like everyone else. Now, I’m not saying that they, or members of any other profession, have a right to do this by stifling legitimate competition, but if their clients have legitimate claims, the fact that the outcome sought by the plaintiffs might be beneficial to the legal industry should not be relevant.

What is relevant is the question of whether or not these services engage in the unauthorized practice of law. And that’s a tough question. Basically, if you provide legal advice, you are practicing law. If you provide legal information, you’re not.

The differences between these two concepts are subtle, but crucial. Legal information is simply telling a person what the law is, and then leaving the recipient of the information to decide what they want to do with that knowledge. Legal advice, on the other hand, goes a step further. It involves telling the recipient what the law is (or simply knowing what the law is), applying it to the recipient’s unique factual situation, then telling them what they should do.

Do pre-printed legal forms count as legal information, legal advice, or something else? An argument can certainly be made that these forms do constitute legal advice – they involve the synthesis of many different laws into a usable document, applicable to a person’s particular factual situation.

Of course, it could also be argued that these documents are just statements of what the law is, leaving the purchaser to make their own decisions based on that information. Whatever the case, we should find out fairly soon, when this case is resolved.

But in the meantime, what should we take away from this? Well, if you have a fairly simple legal problem, and want to solve it as cheaply as possible, ask yourself: what would it cost me if I did every single thing wrong in solving this problem, and the exact opposite of what I intended came to pass (we’ll call this “A”)? Then you should look at what it costs to hire a lawyer (“B”). If A > B, it’s probably a good idea to seek the help of a lawyer experienced in the relevant area of law.

Of course if B > A, using pre-printed legal forms might be for you. Just remember, every single factual situation is different, and they can’t all neatly fit into a simple questionnaire. If you decide to use these forms, it’s probably a good idea to have a lawyer at least review them before you rely on them to produce the desired legal outcome.

After all, when it comes to something like a will, you might only get one shot to get it right.

By: Rusty Shackleford

Lawyers Should Stick To Lawyering

Let me qualify that title: if you’re a lawyer and want to become a Psychic Friend, you should probably not pretend that you’re providing legal advice. If you want to make a full career change, maybe you should hand in your law license, just be to be on the safe side.

That’s because lawyers, when engaged in the practice of law, are bound by strict ethical rules requiring them to be completely honest with their clients, and only give them advice based on the facts of their case, and the applicable law. Psychics also purport to give their clients useful advice, though the assertion that they actually do this is, to be charitable, questionable.

So, what happens when a lawyer acts as both an attorney as well as a channel to the supernatural realm? In one case, it resulted in a state bar telling an attorney under its jurisdiction to pick a job, and stick with it.

A lawyer in Arizona is facing disciplinary action, and a possible 6-month license suspension, after convincing her client that she was possessed by the client’s deceased wife. Apparently, the lawyer and the client exchanged emails which contained vague references to sexual activities, presumably between the lawyer and the client. Under the laws and ethical rules of almost every state, sexual conduct between an attorney and a client is usually prohibited.

Both the lawyer and the client testified that they both genuinely believed that the lawyer was possessed by the deceased wife, and the discipline authorities didn’t get into the question of whether or not this is true. This is a good idea, because while there is almost no empirical evidence that psychic powers are real, the old “prove that they aren’t real!” argument, while illogical, can seriously bog down a debate or investigation into the question of whether or not ethics violations occurred.

It should be noted that the disciplinary board was able to recommend suspension because the attorney misled it in an earlier, unrelated, hearing about her belief that she channeled the dead wife, and not specifically because of her claim that the channeling happened.

Still, this story raises some interesting issues about when a lawyer’s personal beliefs (and, as I’m sure you assume, lawyers span the ideological spectrum, just like any other group of people) might interfere with their job.

Suppose a lawyer genuinely believes that he or she is psychic, and that valuable evidence can be obtained by holding a séance, and asking (for example) the victim in a murder case who the murderer is. Obviously, any “evidence” gathered in this manner would be completely inadmissible, and rightly so. We simply have no way of knowing for sure, one way or another, if it’s authentic (unless there’s obvious evidence that the whole thing was faked). With other types of evidence, such as documents, photographs, physical evidence, etc., authenticity can usually be verified with some degree of certainty. Obviously, if you’re a criminal defendant, you probably don’t want your fate to rest on the feelings of somebody who claims, with no possible verification, to be a psychic.

One could also see this being a big problem in probate cases – when the validity or intent of a decedent’s will is being determined. Suppose there are two children of the decedent, and the will clearly leaves a large sum of money to one of them, but it’s not clear which one. A probate court will have to determine the likely intent of the decedent at the time the will was written. Do we want cases like this determined by a lawyer who claims that he or she spoke to the decedent from beyond the grave, and the decedent clearly told the lawyer that he intended to leave the money to the lawyer’s client?

What if the lawyer for the other child makes the exact same claim, except to say that the decedent said that he wanted to leave the money to that lawyer’s client? Even if you assume that one of the lawyers is definitely psychic, there’s absolutely no way to determine which one is telling the truth. You can see why such evidence never gets anywhere near a courtroom.

This case is different, however. It wasn’t clear why the lawyer claimed to have “channeled” the deceased wife of her client, but it apparently wasn’t to gather evidence, or influence a court in any way. Perhaps it was a form of grief counseling? Even if the lawyer isn’t really channeling anyone, it might provide some emotional benefit to the client, helping him obtain closure, if he honestly believes that he’s talking to his wife. And if the lawyer honestly believes this as well, what’s the harm?

In this case, not much, apparently. But there are plenty of good reasons why a lawyer should leave the grief counseling or psychic channeling (if that’s what the client wants) to somebody else. Lawyers and grief counselors often perform roles that are diametrically opposed – attorneys usually have to keep their emotions out of a case, and advise their clients based on their best understanding of the facts and the law, not their feelings. Counselors, on the other hand, necessarily have to be empathetic (or at least sympathetic) with their clients.

Both professions can perform equally-important functions, but they’re just too different, and their objectives too opposed, for one person to fill both roles, for the same client.

By: Rusty Shackleford

And for My Next Trick, I'll Make Your Law License Disappear!

Practicing law isn’t for everyone. Most people who aren’t cut out to be lawyers (and that says nothing bad about a particular person), intuitively know this, and never go to law school in the first place, instead heading to careers in other fields. For some people, however, the only way to find out that something isn’t for you is to try it.

The Supreme Court of Wisconsin just ruled that a lawyer who apparently disappeared off the face of the Earth should be disbarred, and revoked his law license. All of this was done without the lawyer being present to explain himself, because he apparently left the country, and could not be found.

Attorneys have many ethical duties to their clients. One of the most important is the duty to regularly communicate with their clients, and keep the client apprised of the progress of their case. Failure to do so constitutes a serious ethical violation, and possibly malpractice.

Obviously, some legal matters move slowly, and an attorney with a heavy caseload can’t be expected to update clients every day, especially if nothing significant has happened with their case. However, they do have to respond to client inquiries in a reasonable period of time, and update clients about any significant developments.

By simply disappearing without telling anyone where he was going, or even that he was leaving, the attorney did a serious disservice to his clients. If any of their claims became time-barred (the relevant statute of limitations expired) due to the attorney’s inaction, you can bet that he would be facing a serious malpractice suit, as well as discipline from his state’s relevant licensing authority.

Furthermore, this attorney actually had the audacity to abscond with some of his clients’ money, which he did not earn. One common arrangement for paying attorneys is known as “retainer.” The client pays the attorney a significant chunk of money up front, and the attorney then draws from that fund as they bill for their work. If they resolve the matter without going through the entire retainer, it is supposed to be refunded in full to the client. The same goes for if the attorney terminates the lawyer-client relationship before the retainer is depleted (though he can, of course, keep any money which he actually earned and billed for).

This attorney, in addition to leaving his clients hanging with respect to their legal matters, actually took a good deal of their unused retainers with him, which, in addition to being a crime, is also an ethics violation, subjecting an attorney to discipline. In fact, mishandling (though not necessarily outright stealing) of a client’s money is one of the most common causes for disbarment and discipline of lawyers. This often happens through negligence, and is not deliberate, but it’s dealt with severely in either case.

One really has to wonder why a lawyer, who ran his own practice which appeared to have been at least moderately successful, would simply disappear without telling anyone. While this lawyer was a solo practitioner, he did share office space with other attorneys (though they were not associated with him professionally), and they quickly noticed his absence. After all efforts to contact him failed, they found a journal in his desk. His last entry didn’t say much, but it did say that he was “abandoning his life as he knew it.” It quickly became apparent that he left the country, but there is apparently no way to know where he went.

This is, obviously, a bizarre story. It’s hard to imagine what was going through this man’s head when he decided to abandon a profession he spent years, and huge amounts of work, getting into, not to mention his entire life at home. It’s one thing to work a few years in a profession and decide that you don’t like it. In those cases, most people simply (well, it’s not a “simple” process, but you know what I mean) try to work their way into a new field, hopefully one which they find more fulfilling. Leaving everyone you know behind with no word on where you are seems like throwing the baby out with the bathwater.

Now, if this guy wanted to quit the legal profession and leave the country, nobody should try to stop him. It’s his life, after all. However, there is a right way and a wrong way to do these things. He did it the wrong way. As an attorney, he swore an oath to serve his clients’ interests, even if it’s to his personal detriment. It is decidedly not in a client’s interest to simply stop working on their case, and leave them hanging with no clue as to what just happened.

If he wanted to quit the profession and skip town, he could have avoided burning a lot of bridges if he’d just been willing to put in the effort to wrap up his current clients’ cases, transfer as many as he can to other attorneys, and stop taking new clients. It would have taken a little time and effort, but the guy was a lawyer; he should be used to putting time and effort into things. And that says nothing about the worry he likely caused his friends and family, if he had any.

A person such as this should, of course, not be allowed to practice law. Clients place their attorneys in positions of great trust. For that reason, everything should be done to ensure that only the most trustworthy individuals are allowed to become lawyers. Lawyer jokes notwithstanding, most state licensing authorities do a pretty good job of this. However, some bad apples inevitably slip through the cracks.

It’s very clear that this guy didn’t want to be a lawyer anymore, so it’s not likely that being disbarred is going to bother him too much. Of course, having all this stuff on record will probably subject him to significant lawsuits by his former clients, and possibly criminal charges, if he ever returns to the U.S. So, wherever he is, I hope (for his sake) that he isn’t regretting his decision.

By: Rusty Shackleford

Avoid Legal Liability with a Non Engagement Letter

Prospective clients can come from anywhere: at a cocktail party, through other clients, on the phone, and even through an internet matching service.  The increase in use of electronic communications and decreasing personal contact can lead to misunderstandings about when and whether the attorney-client relationship begins. 

Creating an engagement letter that sets forth the duties and obligations which the lawyer will perform for the client as well as pricing and compensation can help to solve any misunderstandings that occur in the newly formed attorney-client relationship.

But perhaps more important than an engagement letter is a nonengagement letter that does the opposite- to advise the client that he is not your client.  An effective nonengagement letter for the client would advise the individual to seek representation elsewhere.  An effective engagement letter on the lawyer side would clarify a potential misrepresentation problem which would serve to limit potential malpractice claims.

There is a big difference between giving legal advice (alert: you are entering into an attorney-client relationship) and simply providing legal information.  The difference can lead to malpractice suits in addition to the fact that you will likely have to put in the time to represent that client.

I think there is a great temptation to want to take every client that walks in the door and when asked about a legal issue, to answer it.  The problem is that in doing so it makes a lawyer subject to an unwanted client relationship and makes the client receive less than superior representation; this is really a lose-lose situation.  Clarity and communication are key to ensuring that people are getting (and not getting) what they want!

By: Violet Petran

When Lawyers Go Bad

That headline is probably the last thing you would want to read about your attorney. Although lawyers often serve as the brunt of the joke, they provide an invaluable service to the public in advocating their client’s rights. However, there are some lawyers that do not always have their client's best interests in mind.

Named one of the "top young lawyers of 2005," Steve Caley was on his way up in Arkansas law. He is now on a fast and very public decline. He has recently been convicted of stealing $9.3 million from an escrow fund containing proceeds from a class-action settlement, and has been sentenced to serve 86 months in prison. He was convicted of wire fraud and failure to safely hold settlement money. This case is not the norm (thank goodness) and the increasing threat of attorney malpractice has forced attorneys to be more careful, and that is a good thing.

As with doctors, different types of lawyers are more susceptible to malpractice claims than others. At the top of the list are plaintiff lawyers, and more specifically personal injury cases, which account for 25% of the overall attorney malpractice cases. One article noted that plaintiff's lawyers are more likely to be sued by their clients because the client has high expectations that they will win and when that does not happen, the lawyer is the first person they blame.

That makes sense as people do not enter into a lawsuit thinking they are going to lose. People also feel that a jury is usually plaintiff biased, especially when it comes to cases in which an individual is suing a large corporation or when there are injuries involved. However, just because a plaintiff is disgruntled does not necessarily mean that they will win on their claim, as there are standards they must meet.

Communication is key. I think that clients need to be fully involved in their relationship with their attorney and that type of participation should be a good approach to making sure that your lawyer is always working with your best interest in mind.