Keep Your Friends Close and the Laymen Closer: State Bar Associations Can Combat the Problems Associated With Nonlawyers Engaging in the Unauthorized Practice of Estate Planning Through a Certification System

• Publication year: 2022

43 Creighton L. Rev. 855. KEEP YOUR FRIENDS CLOSE AND THE LAYMEN CLOSER: STATE BAR ASSOCIATIONS CAN COMBAT THE PROBLEMS ASSOCIATED WITH NONLAWYERS ENGAGING IN THE UNAUTHORIZED PRACTICE OF ESTATE PLANNING THROUGH A CERTIFICATION SYSTEM

KEEP YOUR FRIENDS CLOSE AND THE LAYMEN CLOSER: STATE BAR ASSOCIATIONS CAN COMBAT THE PROBLEMS ASSOCIATED WITH NONLAWYERS ENGAGING IN THE UNAUTHORIZED PRACTICE OF ESTATE PLANNING THROUGH A CERTIFICATION SYSTEM

Michael S. Knowles

I. INTRODUCTION

In 2005, the Legal Services Corporation reported that at least eighty percent of lower-income Americans' legal needs are not being fulfilled.(fn1) Many authors have assigned the lack of affordable options for legal services to regulations on the practice of law.(fn2) These authors have explained that regulations on the practice of law increase the price of legal services because such regulations limit the number of individuals authorized to furnish legal services.(fn3) Given that a significant number of lower-income Americans cannot afford to obtain legal services from an attorney, nonlawyers have marketed various self-help estate-planning instruments as a less expensive alternative to hiring an attorney for estate-planning services.(fn4) These self-help estate-planning instruments include interactive estate-planning computer software and pre-printed fill-in-the-blank estate-planning documents.(fn5) However, one court noted that these self-help estate-planning instruments have injured consumers because such instruments are not tailored specifically to each individual consumer.(fn6) For example, in reviewing the terms of a self-help estate-planning instrument executed by Mr. and Mrs. Garwood, the Supreme Court of Wyoming noted that the "Garwoods had the misfortune to fall victim to an itinerate hawker of fill-in-the-blank, one-size-fits-all, trust forms. The materials were ill-suited to the Garwoods' needs and have served to squander a significant portion of their hard-earned life savings on legal proceedings and attorney's fees."(fn7) Although many jurisdictions have employed various methods to prevent nonlawyers from engaging in the practice of law, the recent trend of do-it-yourself estate planning has yielded many out-of-court instances of the unauthorized practice of law.(fn8)

This Article proceeds in three sections.(fn9) First, this Article's Background explores regulations on the practice law and the unauthorized practice of law.(fn10) The Background includes an overview of the American Bar Association's involvement in the regulation of nonlawyers engaging in the practice of law.(fn11) Additionally, the Background examines the practice of law, including an overview of various jurisdictions' methods of regulating the practice of law and regulatory systems from Nebraska, Illinois, and Arizona.(fn12) The Background concludes by examining issues of unauthorized practice of law created by the modern trend of do-it-yourself estate planning.(fn13) Next, this Article's Argument asserts that many of the current approaches to regulating the practice of law do not adequately address issues of unauthorized practice of law surrounding nonlawyer involvement in estate-planning activities.(fn14) This Argument then elucidates three reasons why jurisdictions should embrace, rather than resist, nonlawyers selling estate-planning instruments by assigning state bar associations the task of establishing and managing a certification system for nonlawyers providing such instruments.(fn15) First, the Argument opines that states need to assign state bar associations the task of establishing and managing a certification system because the current methods employed to regulate the practice of law do not sufficiently protect consumers from potentially incompetent nonlawyer-provided estate-planning services.(fn16) Second, the Argument provides that states need to assign state bar associations the task of establishing and managing a certification system because nonlawyer-provided estate-planning services would increase access to the justice system.(fn17)Third, the Argument opines that states need to assign state bar associations the task of establishing and managing a certification system so that certified nonlawyers are held responsible for their estate-planning services.(fn18) Finally, this Article concludes that states need to assign state bar associations the task of establishing and managing a certification system to vindicate the purported justifications for regulating the practice of law.(fn19)

II. BACKGROUND

A. THE PRACTICE OF LAW AND THE UNAUTHORIZED PRACTICE OF LAW IN GENERAL

Generally, the authority to practice law is conferred only to licensed individuals.(fn20) The licensing system for lawyers is the method by which an applicant becomes entitled to engage in the practice of law.(fn21) State bar associations establish licensing requirements to ensure that lawyers practicing within the state's jurisdiction have the character and ability required for the proficient and effective practice of law.(fn22) As part of the licensing system, state bar associations and courts have regulated lawyers through admission requirements and post-admission disciplinary actions.(fn23)

Lawyer admission requirements have generally included minimum levels of education, requiring degrees from an undergraduate college or university and law school.(fn24) Additionally, most jurisdictions require that an applicant pass a written examination designed to establish a minimum level of lawyer competence.(fn25) Furthermore, an applicant's character is subjected to review so as to ensure that the applicant will not use the newly acquired position of power toward unlawful or unethical ends.(fn26) If the applicant is granted the license to practice law, the lawyer is then subjected to standards of care and rules of professional conduct.(fn27) Consequently, an incompetent or unethical lawyer is then subjected to disciplinary actions.(fn28)

However, the law regulating nonlawyer engagement in the practice of law is unsettled in many jurisdictions because nonlawyers are often not subject to the same standards and rules as lawyers.(fn29) Nevertheless, courts in several jurisdictions have maintained that such courts hold an inherent authority to regulate both the practice of law and the unauthorized practice of law.(fn30) However, notwithstanding the broad prohibitions against nonlawyers engaging in the practice of law, nonlawyers have consistently engaged in the practice of law.(fn31)

In response to concern regarding nonlawyer engagement in the practice of law, the American Bar Association created the Commission on Nonlawyer Practice ("the Commission").(fn32) The Commission commenced a national investigation into nonlawyer activity and its effect on the public.(fn33) In 1995, based on the information obtained during the national investigation, the Commission issued a report that restated the information gathered during the investigation and offered recommendations on how states should address problems arising from nonlawyer involvement in legal-related activities.(fn34)

In 2003, the American Bar Association's Task Force on the Model Definition of the Practice of Law ("Task Force") provided a framework for defining the practice of law and recommended that every jurisdiction establish a definition for the practice of law.(fn35) The Task Force stated that each state's judicial branch of government should abolish the traditional case-by-case approach to the practice of law analysis and adopt a formal definition and a regulatory scheme that fosters consumer protection, access to justice, and accountability.(fn36)

1. Consumer Protection

To protect consumers from the harms attendant to nonlawyer involvement in the practice of law, jurisdictions have restricted those who may engage in the practice of law to individuals possessing the character and ability required for the proficient practice of law.(fn37) Testimony given during the American Bar Association Commission on Nonlawyer Practice's ("the Commission") national investigation into nonlawyer involvement in legal-related situations revealed cases in which legal-related services performed by nonlawyers appeared incompetent or sometimes fraudulent.(fn38) In some of these cases, nonlawyers preparing legal documents crossed the line between a mere scrivener and the unauthorized practice of law because the non-lawyer offered legal advice.(fn39) Nonlawyers who furnish legal advice may lack the understanding or training to correctly interpret basic legal issues.(fn40) Consequently, the Commission determined that some nonlawyers have placed consumers at risk by furnishing erroneous information because such information might cause a consumer to forego legal rights.(fn41)

2. Access to the Justice System

Other authors have noted that protecting the public from nonlawyer engagement in the practice of law created problems in accessing the justice system.(fn42) Increasing the scope of what constitutes the practice of law limits competition in the legal-related services market because the more activities included within the definition of the practice of law correspondingly increases the activities prohibited by unauthorized practice of law regulations.(fn43) This increase in prohibition also increases the price of legal-related services because the range of services available to the public is decreased.(fn44)

Accordingly...