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Ethics Ruling Drives Clients Into the Arms of Legal Zoom

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Via Michael Frish of the Legal Profession Blog comes another stupid ethics decision destined to put the kibosh on unbundled legal services and drive clients straight into the arms of Legal Zoom.

Briefly, the sad facts. The lawyer who is the subject of the ethics decision is a solo practitioner serving the Polish community in Chicago. Client walks into the lawyer’s office, and asks the lawyer to draft a power of attorney and quitclaim deed. The client explained that his friend was in the hospital and wanted to give the client his house and property. The lawyer – without speaking to the client’s friend or investigating the friend’s competency – drafted the documents and charged $200.

It’s not hard to guess what happened next: the client subsequently took the documents, forced the friend to sign them in front of a notary – and subsequently depleted the bank accounts and took possession of the house contrary to his friend’s wishes. The client’s fraud was discovered by the friend’s doctor who reported the matter to the Public Guardian’s office (PGO). The PGO filed suit to recover the house and brought a malpractice action against the lawyer, which yielded an $80,000 settlement.

The matter was also reported to the Illinois Attorney Registration and Disciplinary Committee (ARDC) where the hearing board found that the lawyer had not committed any ethics violations as he owed no duty to the friend. But the Administrator objected, and the Review Board, in a 2-1 ruling decided to reprimand the lawyer. The majority ruled that the lawyer did indeed owe a duty to the friend because he was the intended beneficiary of the power of attorney. As such, the majority concluded that the lawyer should have done more to investigate the friend’s competency or the reason that the client was seeking a power of attorney.  The majority also ruled that the lawyer was incorrect to assume that the client would not be able to misuse the forms since a notary would need to execute them.

Given that the lawyer was only reprimanded, what’s the big deal. Plenty, explained the dissenter – Robert M. Henderson.

As the hearing panel majority recognized, Respondent did nothing but prepare a document according to a statutorily-defined format. There is no suggestion that the document was prepared carelessly or inaccurately. The service Respondent provided his client was simply the preparation and delivery of a document that was not executed in Respondent’s presence and might not have been executed for week, months, years, or ever.

I believe my colleagues’ opinion will have negative and far-reaching ramifications beyond this matter. If a client asks a lawyer to prepare a power of attorney for the client’s mother or father, must the lawyer investigate and determine whether the client’s parent is competent to give power of attorney? When asked to prepare a power of attorney, must a lawyer anticipate all potential problems that could arise before preparing the power of attorney? Are we requiring a lawyer to both predict and prevent fault, even criminal conduct, by the client? Must the lawyer continually monitor to see that the third party is competent at some undetermined future date when the power of attorney is executed? Must the lawyer convince caregivers to provide information about the health of the third party without any evidence of the relationship between the lawyer and the third party? Under my colleagues’ reasoning, the answer to these questions would be yes. The duties placed on lawyers by the majority’s opinion are onerous and unreasonable.

I also am concerned that the majority’s ruling will spell the end of affordable powers of attorney, and possibly even lawyer-prepared powers of attorney. Lawyers will be loath to take on potential liability if they are held responsible for their clients’ actions. In this same vein, I believe the majority’s opinion will establish an unreasonably high standard of practice that will be used in malpractice litigation.

Mr. Henderson is my new hero!  Imagine – an ethics regulator who actually gets that disciplinary decisions have far-reaching consequences.  Already, most lawyers are reluctant to provide unbundled services like completing or making small modifications to a form agreement without undertaking extensive research regarding all of the client’s motives and needs. After a ruling like this, I can’t see any lawyer touching a matter like this one with a ten-foot pole. Moreover, the lawyer already suffered the consequences of his action in the malpractice suit.  Yet negligent conduct (and I’m willing to concede that this lawyer probably didn’t make the smartest decision) doesn’t always equate to unethical conduct and the decision to reprimand seems more like piling on than anything else.

Many lawyers will never find themselves in the situation of the unfortunate disciplined lawyer because they don’t want to be bothered with handling $200 form preparation. But for lawyers who for whatever reason are willing to take on these matters, this ruling is a disaster, leaving honest clients who can’t afford to pay top dollar for a lawyer with no other option but Legal Zoom.

 

Illustration courtesy of Shutterstock

  • Sandy Woessner

    Clients don’t even need to pay for these documents anymore. The MN state court website and the Attorney General both have power of attorney forms online. Plus, twice in the last year or so I have had clients come back to me and say that the financial institution they are dealing with needs a letter from me affirming that the POA is valid under state law and properly executed. Seems like an obvious CYA move on the part of the institution. Who needs that?

  • Edward H. Adamsky

    The Power of Attorney is one of the most important documents that I draft for clients and I charge highly for it. The drafting part is important, but the counseling and discussion, and particular decision-making that goes on prior to the drafting is highly valuable and vital. I will not draft a Power of Attorney for a person I have not met and counselled. This is an aspirational standard of NAELA. Clients can choose between a cheap or free form online (which won’t be as good as mine by a long shot) and accept whatever comes from that or they can consult with a lawyer and fully understand what they are doing along with getting a particularized document made just for them. It is up to us lawyers to communicate the value difference to prospective clients. Nevertheless, this ethics ruling seems wrong in that the attorney did not violate any ethical rule.

  • lawyer 1996

    Totally ridiculous. A gun shop can sell a gun and ammunition to a guy who comes in dressed in camouflage muttering about Squeaky Fromme, and as long as he passes the basic background check, there is no recourse. An attorney fills out some basic forms and he is liable? It never ceases to amaze me. I defend attorneys as a small part of my practice, and I guarantee that absent some compelling facts not mentioned in this article, NY would toss both the lawsuit and the complaint. NJ is tougher, but I think they would toss both as well.

  • This goes to show how invaluable it is to have good counsel from the start. We service clients throughout the country and find that many would have saved a lot of money and headache if they sought professional help before trying to do it on their own.

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