Court supports unauthorized practice petition

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The state Supreme Court unanimously voted on March 8 to support in principle a petition filed by the State Bar of Wisconsin that would clearly define what constitutes the unauthorized practice of law.

According to attorney Thomas D. Zilavy, who presented the petition to the court, the bar receives a steady stream of complaints about unlicensed professionals providing legal services.

“There has to be a rule defining the unauthorized practice of law and some pragmatic way for dealing with problems that crop up,” said Zilavy.

Some of the most egregious examples cited at a recent hearing included so-called “notarios” who offer legal-related services to primarily Spanish-speaking immigrants and title insurance companies that draft warranty deeds for home closings.

Kenosha real estate attorney Gregg N. Guttormsen said that some people rely on title companies to handle everything from mortgage satisfaction documents to land agreements, which can lead to problems.

A title company may mistakenly attach the seller or grantor’s name to a contract, rather than its own, which leaves the individual vulnerable to any liability claims.

“Certainly, that goes above and beyond what they [title companies] are licensed for and they are putting people at risk with no accountability should something go wrong,” Guttormsen charged.

The petition proposes sanctions against those engaged in the unauthorized practice of law that include cease and desist orders, civil actions and injunctive relief.

Too many exemptions

Some attorneys questioned the scope of the petition, which includes more than 20 exemptions for various professions.

Realtors, certified public accountants and banks are among those requesting exemptions from the rule. Attorneys for these professions argued at the hearing that they are sufficiently monitored by the Department of Regulation & Licensing or other administrative bodies.

“We have a system in place,” said attorney Hannah L. Renfro, on behalf of the Wisconsin Realtor’s Association. “And there is no evidence that the system is broken.”

Attorney J. Steven Heil suggested that the “laundry list” of exceptions renders the proposal “meaningless.”

“To have an administrative body or agency funded to try and enforce this thing would be a waste of money,” he said.

The petition, which first came before the court in 2007, calls for the Office of Lawyer Regulation (OLR) to provide a half-time staff member to investigate complaints and recommend sanctions. At the hearing, Zilavy estimated the cost would be no more than $120,000 per year, paid for by an annual assessment of “$5 to $7” per attorney.

He also estimated that “15 to 25” incidents would be investigated annually.

Lawyer protection?

The justices debated whether a court-supervised entity should handle enforcement. Justice Ann Walsh Bradley suggested that the bar take on the responsibility, but other members of the court expressed concern about a conflict of interests.

“The public will just say ‘oh, lawyers get to prosecute other people because they just want them out of their turf,’” Justice Patience D. Roggensack said.

Attorney and licensed insurance agent David M. Werwie also questioned the need for a rule, given that Wis. Stat. 757.30 already permits criminal prosecution of individuals who engage in the unauthorized practice of law.

Offenses are punishable by a fine of up to $500, one year in prison, or both.

But several supporters of the petition noted that district attorneys rarely have the time or resources to prosecute UPL violators.

Nevertheless, Werwie said, “the statute itself is not useless” and if there is a need to develop something further, it should be done through the Legislature.

Otherwise, he said, there is a risk that the rule will be viewed as more of a benefit for lawyers and less as protection for consumers.

“The State Bar came in and said we would hear from interest groups,” Werwie said. “Well, the largest interest group is the State Bar.”

Guttormsen conceded that places like title insurance companies can and do take business away from lawyers, but he said that concern is secondary to protecting the public.

He and Heil noted that attorneys attend law school for a reason.

“But if you are going flat out waive the license requirement and allow anyone to practice if they feel they are competent to do so,” said Guttormsen, “then what’s the point in having a law license?”