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Tuesday, 18 January 2011 19:00

Many are charged, few understand

 

In a confusing decision, the Supreme Court of Massachusetts found real estate attorney Joseph Shanahan guilty of the unauthorized practice of law for offering real estate consulting services. The court did not find that Shanahan misrepresented himself as a lawyer, nor that he performed the work of a lawyer while acting as a consultant, but found him guilty anyway based on the theory that because Shanahan used his previous experience as a lawyer to help his clients, he was engaged in the practice of law. The court reached this conclusion despite the fact that the same services offered by Shanahan, had they been provided by a non-lawyer, would not have constituted the unauthorized practice of law.
 
As the court explained in its ruling, "[b]ecause of the difficulty in doing so, this court has never delinated the exact contours of what amounts to the practice of law." In other words, you can still be charged with unauthorized practice of law -- that part is easy apparently -- just don't expect to have the Massachusetts Supreme Court explain what that means.
 
Read a blogpost about the decision here.
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The Massachusetts Supreme Judicial Court (SJC) yeserday issued a ruling on whether lawyers are required to be present at real estate closings. In Real Estate Bar Association v. National Estate Information Services, the Court held that, although non-lawyer "conveyancing" companies that provide closing services are not practicing law, they nevertheless are prohibited from providing closing services, because those must be provided by a lawyer. Major media outlets have covered the ruling as the resolution of a turf battle between lawyers and non-lawyers in providing services. That's certainly one aspect of the case, but it also has important implications for legal consumers in Massachusetts, both in real estate transactions and in other legal matters.

Our position is the same as the Federal Trade Commission's: "Permitting competition by lay services allows consumers to consider more relevant factors in selecting a provider of settlement services, such as cost, convenience, and the degree of assurance that the necessary documents and commitments are sufficient." We are encouraged, however, by the Court's recognition that a lawyer's role in a closing is  "not only the presence but the substantive participation of an attorney on behalf of the mortgage lender." In other words, lawyers must provide actual legal services at a closing so that consumers who are forced to pay for the lawyer receive something beyond his or her mere presence.

The Court also made some encouraging pronouncements about what activities may be undertaken by non-lawyers. One of the arguments frequently made by lawyers trying to retain their monopoly is that if a service includes even one element that must be performed by a lawyer, then all elements of the service must be performed by a lawyer. When courts interpret definitions of the practice of law, it's important that they recognize that lawyers provide a wide range of services, but that only a subset of those services are exclusive to lawyers The Court applied that principle correctly here, recognizing that many of the activities involved in conveyancing are not considered the practice of law, and that "the talismanic invocation of the word 'conveyancing' is not sufficient to require that all of them be performed by or under the supervision of an attorney."

In sum, while the Massachusetts high court failed to take the large pro-consumer step of forcing Massachusetts to join several other states in allowing non-lawyer closings, it did establish a principle limiting when consumers can be forced to hire a lawyer.

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The hotly contested Senate race in Massachusetts recently touched the legal world. Critics accuse Democratic candidate Elizabeth Warren of engaging in the unauthorized practice of law in Massachusetts because she wrote a number of amicus briefs filed in federal appeals court from her office at Harvard Law School. State ethics rules prohibit a lawyer who is not licensed in state from establishing “an office or other systematic and continuous presence in this jurisdiction for the practice of law.”
 
While Warren’s work on corporate bankruptcy cases may seem removed from the legal needs of everyday people, this incident illustrates a broader concern: many state ethics rules are still based around the idea that a lawyer’s practice is inexorably linked to their physical location. What matters is not the lawyer’s familiarity with state law or whether they are licensed to appear in court, but where the desk they worked at was physically located.
 
As Responsive Law has previously noted, basing a system around an attorney’s office address hinders consumers’ access to legal resources. Consumers across state lines are prevented from seeking out otherwise competent and accredited attorneys if that attorney isn’t near a certain location. For example, if a person in Connecticut goes into foreclosure, they could not have their longtime attorney work on the case if the attorney is currently attending a conference in Massachusetts. Even if the attorney is registered with the Connecticut Bar and familiar with Connecticut law, the attorney cannot provide services in Massachusetts unless they have an office there. In order to do any work on the foreclosure case, the attorney must drop everything and return to Connecticut. The consumer either would have wait and hope for the attorney’s speedy return or go through the process of finding another attorney. These restrictions diminish access to legal resources by making it inconvenient and expensive to conduct legal business across state lines by forcing attorneys to constantly travel instead of working online.
 
These days, both consumers and attorneys are constantly on the move. Rules that hold that a physical office is integral to the practice of law restrict access and raise the costs of legal services whiling doing nothing to protect consumers from actual frauds and charlatans.  This system should be abandoned for one that allows for better virtual access to law. An attorney’s competence and familiarity with the law, and not the location where they do their research and writing, should be the relevant factor when a consumer decides whose legal service is best for them. At a time when legal resources are prohibitively expensive and inaccessible to so many, states like Massachusetts should adopt rules that drive down costs through competition and enhance consumer choices. Consumers should not have their choices artificially restricted based on where a lawyer has their mail delivered.
 
Will Downes, a law student at Georgetown University Law Center, is a Responsive Law intern.
 
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