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Are Solos in Debt At Disciplinary Risk?

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Last week, Above the Law’s Elie Mystal posted about a frighteningly out-of-touch Ohio Supreme Court decision which held that a recent law school graduate lacked the character, fitness and moral qualifications to take the bar exam.

Was the applicant a killer, drug addict or wife-beater? Nope. Just a 34-year old dad and former self-supporting stockbroker with $170,000 in student loan debt — all but $20,000 of that amount attributable to law school. The Applicant had worked part-time throughout law school at the Public Defender’s Office, earning $12 an hour, and continued in that position after graduation, hoping that if he passed the bar, he could secure full-time employment. Instead of allowing the Applicant to sit for the bar exam – which might have given him a shot at a full time job – the Ohio court criticized the Applicant for failing to find better paying full time employment to pay off his debts. The court then concluded that because of the Applicant’s debt and lack of a plan to satisfy his financial obligations, that he be required to wait and re-apply for the February 2011 bar exam.

It’s hard to grasp the court’s logic in making it more difficult for the Applicant to take the bar. After all, where could he find higher paid work as an attorney without bar membership? Even most contract lawyering positions require a license. Moreover, it’s not clear where the court believed that this Applicant could find a job in this economy. True, he worked as a stockbroker but that was back in the mid-2000s, before he entered law school. Just like the legal profession, the financial industry has downsized as well.

What’s most frightening about this decision, though, is that it could be used to prevent new lawyers from starting their own firms. Just as the Ohio court made a judgment that the Applicant’s career choice of working at the Public Defender was not financially sound, a similar judgment could be made about an entrepreneurial graduate who wants to start a firm. A disciplinary committee might argue that a graduate deeply in debt who willingly accepts the risk of soloing right out of law school instead of settling for a job as a contract lawyer or a paralegal or some other non-lawyer position to pay down debt lacks the fitness or judgment to sit for the bar. A decision like this wouldn’t surprise me either – after all, most disciplinary committees are comprised of small-minded, well-connected lawyers who seek to preserve the status quo because it inures to their advantage. I could easily see a committee trying to make it more difficult for new grads to set up shop, because it would result in more competition for a smaller pool of clients.

Hopefully, the Ohio court’s decision is some kind of strange anomaly rather than another hurdle to make life more difficult for today’s graduates.

  • I’ve recently had a number of attorneys suggest that the amount of debt new attorneys carry opens a myriad of ethical challenges. To the extent this is true, it further infuriates me that bodies like the Ohio Supreme Court would wield its power to keep a new attorney from practicing rather than to pressure the ABA–the one organization in the country (aside from the schools themselves, of course) that has any power to mitigate this crisis at all. State bar associations, state supreme courts, and state attorney regulation organizations should organize to apply a sustained and powerful pressure to create a better system for the future of the legal system.

  • Ben

    It makes sense to me. Borrower is slave to the lender. He made a terrible decision to enslave himself Sally Mae. How is a attorney suppose to serve his client when he is enslaved to another master. He has no plan to break the bonds of his slavery other to be a free attorney. This guy is a liability on the legal profession. He has already proved that he can’t evaluate the risk associated with decision making.

  • This really hits on the pro bono argument. Lets not work to serve the community when we should be working for the all mighty dollar!

  • Bruce Godfrey

    I will reluctantly play “Committee’s Advocate.”

    Of interest from the opinion:

    Although the applicant lives with his nine-year-old daughter and her mother in the mother’s home and contributes minimally toward the household expenses, he has been unable to make any payments on his student loans, which began to come due in July 2009. He has also been unable to meet his credit-card obligations since approximately
    December 2008, and one creditor has obtained a default judgment against him.
    {¶ 6} The applicant has contemplated filing bankruptcy and has
    submitted a letter from his bankruptcy attorney dated January 29, 2010, advising
    of the applicant’s intent to file a voluntary petition under Chapter 13 of the
    Bankruptcy Code. The applicant testified that during the pendency of the
    bankruptcy proceeding, the payments on his student loan obligation would be
    greatly reduced. This strategy would give him time to obtain full-time
    employment once he passes the bar and to get his financial affairs in order. The
    panel found, however, that as of the May 27, 2010 hearing date, the bankruptcy
    petition had not been filed. Moreover, the panel observed that the only debt that
    could be discharged in a bankruptcy proceeding would be the applicant’s $16,500
    in consumer debt, as the applicant’s $170,000 in student loans are
    nondischargeable in bankruptcy. Noting that the applicant has no plan or ability
    to pay these debts, the panel recommended that his application be denied, but that
    he be permitted to reapply for the February 2011 bar examination.

    An attorney who could be making some money as a stockbroker, but is working only part-time for $12/hour, and is getting default judgments and looking to file a Chapter 13 before even beginning to earn, arguably constitutes an escrow violator waiting to happen. The decision is harsh but it arguably sends a signal flare to the entire profession: law isn’t just a business but aspects of the practice of law require commercial financial discipline.

    It’s not that hard to avoid a DEFAULT judgment on a credit card; meeting with a creditor’s lawyer will usually allow a reasonable payment plan and just filing an answer and showing up will avoid a default. I don’t want to bar anybody from the profession, but I would have been happier if they had admitted him conditionally upon a promise to get personal financial counseling and to get full-time employment.

    As for pro bono work, those who are drowning have no business serving as lifeguards.

  • Jenn

    I agree, hopefully Ohio’s courts decision is a anomaly rather that just another hurdle like all the hurdles you go through when searching the Ohio court’s decision is some kind of strange anomaly rather than
    another hurdle to make life more difficult for today’s graduates, jeez.

  • Jenn

    I agree, hopefully Ohio’s courts decision is a anomaly rather that just
    another hurdle like all the hurdles you go through when searching the Ohio death records .

  • This is the dumbest thing I have ever heard (not really, but close). You’re basically saying that people with huge student loans that they can’t necessarily pay off immediately after graduating from school are not qualified to practice the law. If that’s the case, then we pretty much have to bar 75% of the graduating law students for the next 5 years or so. In America today, there’s barely 20 people who aren’t up to their eyeballs in debt (personal or student loans). And contrary to what they tell prospective law students, they can’t all have Biglaw jobs at 125K per year. Indeed, MOST of them will never even get to sniff those jobs. 

    Just because a person took the risk of going into debt to get a better education and then found that it was more difficult than he expected (or than he was told) to find a good job doesn’t mean that he isn’t qualified or that he is automatically going to be a lawyer who violates ethics rules. 

    And how does preventing him from sitting for the bar help him to get out of that situation? The more I think about it, the angrier I get. This court is actually PREVENTING him from advancing because they don’t like the fact that he has debt. I think the court should try and find some actual attorneys who are committing ethical violations, instead of picking on this person who has a 9 year old, and is working in the PUBLIC DEFENDER office. Way to promote public service, Ohio court.   

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