In Re McCarthy
- Reporters:
- , , ,
- Before:
- Hargrove
MEMORANDUM DECISION
JOHN J. HARGROVE, Bankruptcy Judge.
At issue is whether the activities of Chris Carson (“Carson”) d/b/a Able Legal Clinic
This court has jurisdiction to hear this matter pursuant to
FACTS
On January 28, 1992, the debtor, acting
pro se,
filed her Chapter 7 bankruptcy petition. On April 1, 1992, creditor ITT Financial Services (“ITT”) moved to dismiss the debtor’s Chapter 7 case on the grounds that the debtor failed and refused to file her Statement of Intention relative to collateral securing ITT’s loan as required by § 521(2)(A) and‘(B) of the Bankruptcy Code and
At the May 8, 1992 hearing, on ITT’s motion to dismiss, the court found that the debtor’s schedules listed ITT’s debt as unsecured; that the lack of compliance with § 521 had prompted ITT to file its motion to dismiss; and that the security agreement attached to ITT’s pleadings indicated that ITT did not hold a purchase money security agreement. The court explained to the debtor that ITT held a non-purchase money security agreement. The court further explained that the debtor could possibly avoid ITT’s lien pursuant to
At the hearing, the court inquired as to whether the debtor had received any assistance in preparing her bankruptcy pleadings. The debtor testified that Able Legal Clinic assisted her in the preparation of her pleadings and specifically named Carson as the individual whom she met with. The debtor indicated that she paid Carson and/or Able Legal Clinic approximately $400.00 or $450.00 for their services, plus the filing fee. The debtor explained that after she found out about the Statement of Intention she asked Carson about it and he said “oh, don’t worry about it.” After receiving ITT’s motion to dismiss, the debt- or took it to Carson and at that time he said, “oh, we have to file for that.” The debtor also testified that Carson never asked for any documentation regarding her loan with ITT and that she did not know the difference between a secured or unsecured debt.
The court rescheduled ITT’s hearing for June 5, 1992, and allowed the debtor until May 15, 1992, to file her Statement of Intention. The debtor filed her Statement of Intention on May 1, 1992. On June 10, 1992, the court sua sponte filed an order to show cause ordering Able Legal Clinic to appear before the court to show cause why Carson had not complied with § 329 of the Bankruptcy Code, why the court should not permanently enjoin him from engaging in the unauthorized practice of law, and why the court should not order remittance to the debtor of all fees collected in relation to her bankruptcy case. The United States Trustee joined the court’s order.
In response, Carson filed several pleadings including the debtor’s declaration. The debtor declared that besides discussing the completion of the bankruptcy forms, Carson provided her with a list of California exemptions which they discussed, before she selected the exemptions she felt were applicable.
Carson acknowledged that he owns and operates a paralegal/secretarial service doing business as Able Legal Clinic and that
DISCUSSION
A. UNAUTHORIZED PRACTICE OF LAW.
On the one hand, Carson declares that he is only a “public scrivener” in that he merely types the petition, schedules and statement of affairs without rendering any legal opinions. Carson acknowledges that he is not licensed to practice law, and denies doing so. Carson claims that the debtor, as an attorney pro se, not his service, took on the ultimate responsibility to make sure that the papers were properly filled out and the proper laws were complied with. In addition, Carson states that failure to advise the debtor that she needed to file a § 521 Statement of Intention is even more proof that he was a typing service and was not engaged in the unauthorized practice of law.
On the other hand, Carson declares that he has attempted to keep current on the laws regarding bankruptcy and acknowledges that he was not current on the requirement regarding the filing of the § 521 Statement of Intention. Carson contends that he was unaware that the § 521 Statement of Intention had to be filed in the case because the debtor had informed him that all her furniture and household items were free and clear of liens. Carson assures the court that there will be no more problems with regard to any of his clients failing to file the § 521 Statement of Intention. Carson points out that he has filed several § 521 Statements on behalf of his debtor/clients in bankruptcies subsequent to this one. Finally, Carson contends that debtors who act completely on their own without any assistance will have more problems in court than those who retain the assistance of a paralegal service.
One court recently commented on the acceptable practices for typing services:
Providing copies of the Official Forms necessary to filing a petition for bankruptcy relief is a legitimate and necessary service to the public. Similarly, a typing service that consists of solely transcribing written information furnished by clients is a service that may be legitimately provided by non-attorneys. In re Bachmann, 113 B.R. 769, 774 (Bankr.S.D.Fla.1990). Even the “sale of printed material purporting to explain bankruptcy practice and procedure to the public” is permissible. Id.
In re Herren, 138 B.R. 989, 994 (Bankr. D.Wyo.1992). However, the pleadings and transcripts of both the May 8, 1992, and the November 17, 1992 hearings, indicate that Carson did more than merely type the bankruptcy forms as claimed.
Moreover, the name of Carson’s business, Able Legal Clinic, undoubtedly implies more than typing is being provided to clients. The court takes judicial notice of the fact that Carson advertises his business in the 1992 Pacific Bell SMART Yellow Pages under the heading “Legal Clinics” right along with other clinics that offer legal services through licensed attorneys. The court also takes judicial notice of the fact that Able Legal Clinic was not listed under the heading of either “Secretarial Services” or “Word Processing.”
As to what constitutes the practice of law, the recognized rule in California is:
[A]s the term is generally understood, the practice of law ... includes legal advice and counsel and the preparation of legal instruments and contracts by which legal rights are secured although such matter may or may not be pending in a court, [citations omitted].
In re Glad, 98 B.R. 976, 977 (9th Cir.BAP 1989); In re Anderson, 79 B.R. 482, 484 (Bankr.S.D.Cal.1987) (quoting People v. Sipper, 61 Cal.App.2d Supp. 844, 846, 142 P.2d 960 (1943)).
Further, according to the debtor’s testimony, she asked Carson about the Statement of Intention and he told her “don’t worry about it.” The debtor also testified that she took ITT’s motion to dismiss to Carson and at that time he said, “oh, we have to file for that.” Any advice regarding whether or not to file a Statement of Intention clearly requires the use of legal judgment including legal knowledge, training, skill, and ability beyond that possessed by the average lay person. For example, the § 521 Statement of Intention requires advice regarding reaffirmation, redemption, or rejection and their consequences. In re Backmann, 113 B.R. 769, 773 (Bankr.S.D.Fla.1990). The court concludes, therefore, that Carson’s actions in preparing the § 521 Statement of Intention constitute the unauthorized practice of law.
Carson declared that he has attempted to keep current on the laws regarding bankruptcy and acknowledges that he was not current on the requirement regarding the filing of the § 521 Statement of Intention. But if Carson is merely a typing service that may solely transcribe written information furnished by clients, why does Carson need to keep current on bankruptcy law?
Similarly, Carson can hardly be said to have been acting as a mere scrivener when he prepared the debtor’s declaration and points and authorities in opposition to ITT’s motion to dismiss that pleaded in affirmative defense “
Carson also provided the debtor with a list of California exemptions which he discussed with her for purposes of preparing the Chapter 7 petition. Although Carson states that the debtor chose her exemptions, it appears that by providing the list of exemptions to the debtor and discussing them with her, Carson must have made inquiries and answered questions to enable the debtor to make her choices. In his supplemental points and authorities Carson contends that discussing is not the same as advising. In support, Carson cites to
Webster’s New Collegiate Dictionary
which defines “discuss” as “to investigate by reasoning or argument ... to talk about.” Carson also cites
Black’s Law Dictionary
which describes “advice” as “view, opinion; information; the counsel given by lawyers to their client; an opinion expressed as to wisdom of future conduct.” The court, however, sees no need to engage in hair splitting definitions. To investigate by reasoning or argument is precisely what a lawyer does. A lawyer generally investigates the facts and the law in order to
Lastly, Carson’s fees are inconsistent with that of typing services. The United States Trustee presented evidence in declaration form that two local typing services would have charged an average maximum fee of $53.75 for typing the debtor’s petition, schedules and statement of affairs which is well below Carson’s fees.
Accordingly, the court concludes that Carson engaged in the unauthorized practice of law.
B. SECTION 329.
Carson admits not complying with
C. THE APPROPRIATE REMEDY.
The final issue to be resolved is the appropriate remedy to be imposed as a result of Carson’s unauthorized practice of law and violations of
The court recognizes that there may be few attorneys available to represent debtors in this fee range and is sympathetic to the needs of indigent debtors.
In re Bachmann,
113 B.R. 769, 775 (Bankr. S.D.Fla.1990). The court notes that the California legislature has wrestled with the idea of licensing legal technicians for some time. Nonetheless, the education and training, enforcement of regulations, and the scope of practice for legal technicians lies within the purview of the legislature and not this court. Thus, Carson’s assurances to the court that there will not be any more problems -with regards to filing a
CONCLUSION
This Memorandum Decision constitutes findings of fact and conclusions of law pursuant to
APPENDIX
The Appendix consists of a copy of Able Legal Clinic’s yellow page advertisement.
Notes
. To the extent notification deadlines to Pacific Bell permit.