Ethical Issues in Consumer Financial Services Litigation

NON‐RESOURCE ALLOCATING BUSINESS
ASSOCIATIONS AND THE ETHICS OF
AVOIDING CONSUMER FINANCE LITIGATION
Christopher L. Peterson
Associate Dean for Academic Affairs
Professor of Law

… OR …
Christopher L. Peterson
Associate Dean for Academic Affairs
Professor of Law

USING BULLSHIT FINANCIAL COMPANIES
TO AVOID LAWSUITS AND TAXES
Christopher L. Peterson
Associate Dean for Academic Affairs
Professor of Law

Is there something unsavory about using passive
business entities to evade consumer finance
litigation and tax liability?
OVERVIEW
I. Economic and Philosophical Background
(a) Harry G. Frankfurt – “On Bullshit”
(b) Ronald H. Coase – “The Nature of the Firm”
II. The Nature of Bullshit Companies –two examples:
(a) “REMIC” Special Purpose Vehicles
(b) Mortgage Electronic Registration System, Inc.
III. Toward Greater Candor in Consumer Financial
Business Entity Formation

What is bullshit? – Philosopher’s View
(Princeton U. Press - 2005)
Opening Passage:
“One of the most salient features of
our culture is that there is so
much bullshit. Everyone knows
this. Each of us contributes his
share. But we tend to take the
situation for granted. …”

What is bullshit? – Philosopher’s View
(Princeton U. Press - 2005)
Opening Passage:
“One of the most salient features of
our culture is that there is so
much bullshit. Everyone knows
this. Each of us contributes his
share. But we tend to take the
situation for granted. …”

What is bullshit? – Philosopher’s View
(Princeton U. Press - 2005)
Lies as distinguished from bullshit:
“The liar makes his statement in a
certain state of mind—namely,
with an intention to deceive.”

What is bullshit? – Philosopher’s View
(Princeton U. Press - 2005)
Lies as distinguished from bullshit:
“The liar makes his statement in a
certain state of mind—namely,
with an intention to deceive.”

What is bullshit? – Philosopher’s View
(Princeton U. Press - 2005)
Bullshit statements are: “grounded
neither in a belief that it is true
nor, as a lie must be, in a belief
that it is not true. It is just this
lack of connection to a concern
with truth—this indifference to
how things really are—that I
regard as of the essence of
bullshit.”

What is bullshit? – Philosopher’s View
(Princeton U. Press - 2005)
Bullshit statements are: “grounded
neither in a belief that it is true
nor, as a lie must be, in a belief
that it is not true. It is just this
lack of connection to a concern
with truth—this indifference to
how things really are—that I
regard as of the essence of
bullshit.”

What is a firm? – Economist’s View
• R.H. Coase, The Nature of the
Firm, 4 ECONOMICA 386 (1937).

What is a firm? – Economist’s View
• R.H. Coase, The Nature of the
Firm, 4 ECONOMICA 386 (1937).
– “An economist thinks of the
economic system as being coordinated
by the price mechanism
and society becomes not an
organization but an organism. The
economic system “works itself.”

What is a firm? – Economist’s View
• R.H. Coase, The Nature of the
Firm, 4 ECONOMICA 386 (1937).
– “An economist thinks of the
economic system [is] coordinated
by the price mechanism
and society becomes not an
organization but an organism. The
economic system “works itself.”

What is a firm? – Economist’s View
• R.H. Coase, The Nature of the
Firm, 4 ECONOMICA 386 (1937).
– “A firm … consists of the system of
relationships which comes into
existence when the direction of
resources is dependent on an
entrepreneur.”

What is a firm? – Economist’s View
• R.H. Coase, The Nature of the
Firm, 4 ECONOMICA 386 (1937).
– “A firm … consists of the system of
relationships which comes into
existence when the direction of
resources is dependent on an
entrepreneur.”

What is a bullshit firm?

What is a bullshit firm?
‐‐ A business entity recognized by the law
as such that does not actually allocate
resources outside the price mechanism.

Securitization of Residential
Mortgages Relied on Using Bullshit
Companies
1. REMIC Special Purpose Vehicles.

In traditional
financing
originators,
brokers, sellers,
underwriters,
trustees, and
servicers were all
part of the same
company.

In traditional
financing
originators,
brokers, sellers,
underwriters,
trustees, and
servicers were all
part of the same
company.

In structured
finance the real
owner of the
assets is a trust
that has no
purpose other
than serving as
an owner of the
assets.

Securitization of Residential
Mortgages Relied on Using Bullshit
Companies
1. REMIC Special Purpose Vehicles.
2. Mortgage Electronic Registration
System, Inc.

• 20,000 vice
presidents
• No
employees
• “owns” about
60% of
residential
mortgages/
deeds of trust
• Has no assets
other than
liens

MERS, Inc. to
Wells Fargo, N.A.

MERS, Inc. to
Wells Fargo, N.A.
“Tom” as
“Certifying officer”
for MERS

MERS, Inc. to
Wells Fargo, N.A.
“Tom” as
“Certifying officer”
for MERS
July 14, 2010

Designates
eTitle Insurance
Agency as a new
trustee

Designates
eTitle Insurance
Agency as a new
trustee
“Tom” as:
‐‐ attorney in fact for
Wells Fargo, NA; and
‐‐Attorney in Fact for
US Bank as Trustee
for a 2006 Citigroup
REMIC Trust

July 14, 2010
Designates
eTitle Insurance
Agency as a new
trustee
“Tom” as:
‐‐ attorney in fact for
Wells Fargo, NA; and
‐‐Attorney in Fact for
US Bank as Trustee
for a 2006 Citigroup
REMIC Trust

Notice of default
initiating a non‐
judicial
foreclosure

Notice of default
initiating a non‐
judicial
foreclosure
“Tom” as:
authorized officer of
eTitle Insurance
Agency, Trustee

Notice of default
initiating a non‐
judicial
foreclosure
“Tom” as:
authorized officer of
eTitle Insurance
Agency, Trustee
July 14, 2010

Toward Candor on the Nature of Business Identity
• “A concurrent conflict of interest exists if:
– (1) The representation of one client will be directly adverse
to another client; or
– (2) There is a significant risk that the representation of one
or more clients will be materially limited by the lawyer’s
responsibilities to another client, a former client or a third
person or by a personal interest of the lawyer.” Utah
Supreme Court Rules of Professional Practice §13‐1.7
• U.S. Bank, N.A. v. Emmanuel, et. al., 2010 WL
1856016, at 4 (N.Y.Sup.) (unpublished opinon)

So what?
1. Built inflexibility into the system.
2. Led to unaccountable institutions.
3. Facilitated underestimation of risks.
The greatest danger for the bullshiter is that he
looses touch with reality

--Benjamin • “[I]n Franklin, the 1789
world nothing
can be said to be certain
except death and taxes.”
“REMIC” Special Purpose Vehicles:
– are not affected by dissolution of
loan originators or depositors.
– do not have to pay taxes.

Ethical Issues in
Consumer Financial Services
Litigation
American Bar Association Annual Conference
August 9, 2010
Business Law Section
Consumer Financial Services Subcommittee
Advertisements by Consumer
Bankruptcy Attorneys
Consumer bankruptcy attorneys advertising bankruptcy
related services must identify themselves as a “debt
relief agency” and make disclosures required by 11
U.S.C. 528 because they are reasonably related to the
Government’s interest in preventing consumers from
deception.
Milavetz, Gallop & Milavetz, P.A. v. United States, 130
S. Ct. 1324, 1341 (U.S. 2010)
Google Adwords
Internet Advertising
6/25/2010
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Internet Advertising
Google Adwords
RPC 7.2
“Lawyers are not permitted to pay others for channeling
professional work. Paragraph (b)(1), however, allows a
lawyer to pay for advertising and communications
permitted by this Rule, including the costs of print
directory listings, on-line directory listings, newspaper
ads, television and radio airtime, domain-name
registrations, sponsorship fees, banner ads, and group
advertising.”
ABA Model RPC 7.2, Comment 5 (2004)
Internet Advertising
Google Adwords – Content of Ad
RPC 7.1
Internet Advertising
Google Adwords – Content of Ad
RPC 7.1 - PRE-2002
A lawyer shall not make a false or misleading
communication about the lawyer or the lawyer's
services services. A communication is false or misleading if it:
(b) is likely to create an unjustified expectation about
results the lawyer can achieve. . .
ABA Model RPC 7.2(b), (pre-2002)
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Internet Advertising
Google Adwords – Content of Ad
RPC 7.1 - Current
A lawyer shall not make a false or misleading
communication about the lawyer or the lawyer's
services services. A communication is false or misleading if it
contains a material misrepresentation of fact or law, or
omits a fact necessary to make the statement
considered as a whole not materially misleading.
ABA Model RPC 7.1 (2002)
Internet Advertising
Google Adwords – Content of Ad
RPC 7.1
“An advertisement that truthfully reports a lawyer's
achievements . . . may be misleading if presented so as
to lead a reasonable person to form an unjustified
expectation that the same results could be obtained for
other clients in similar matters without reference to the
specific factual and legal circumstances of each client's
case. . .”
“The inclusion of an appropriate disclaimer or qualifying
language may preclude [such] a finding . . .”
ABA Model RPC 7.1, Comment 3 (2004)
Internet Advertising
Google Adwords – Content of Ad
RPC 7.1
Accurate factual information is permissible if made with
appropriate disclaimers.
Peel vv. Attorney Registration & Disciplinary Comm'n Comm n,
496 U.S. 91 (1990)
Ibanez v. Florida Board of Accountancy, 512 U.S. 136,
129 L. Ed. 2d 118 (1994)
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Internet Advertising
Google Adwords – Content of Ad
RPC 7.1
Statements about a Lawyer's past successes, even if
true, are inherently misleading and create unjustified
expectations of future performance
performance.
Bd. of Comm'rs on Grievances & Discipline Op.
2000-6, 2000 WL 1872572 (OH. Dec. 1, 2000).
Matching Sites
Internet Advertising
Site draws prospective clients through its
own “Search Engine Optimization” (SEO)
technologies.
Once the prospective client enters the
Matching Site, the methods of delivery of
prospective clients to prospective lawyers
differs.
Internet Advertising
“Non-Exclusive Match Model”
Prospective clients are referred to lawyers based on
geographic area and practice area.
Potentially there are several lawyers within any
geographic and practice area competing for the same
prospective client.
Lawyers pay a flat subscription fee.
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“Exclusive Match Model”
Internet Advertising
Prospective clients are referred to a lawyer who has
purchased the exclusive rights to a particular geographic
area for particular practice area area. No competition
between attorneys.
Cost of service tied to number of “results”.
Provides a “call center” that “reaches out to prospective
clients immediately to stop their search for legal services
and connect them with your law firm.”
“Targeted Match Model”
Internet Advertising
Zelotes v. Rousseau, et al, Statewide Grievance Committee,
Complaint 09-0412 (Conn. Feb 8, 2010)
“Targeted Match Model”
Internet Advertising
Letter dated March 3, 2010 from Washington State Bar Assoc., Office of Disciplinary
Counsel to Zenas Zelotes, Closing Investigation
6/25/2010
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Debt Settlement and Associating
with Non-Lawyers
California Issues an “Ethics Alert”
Debt Settlement and Associating
with Non-Lawyers
California Issues an “Ethics Alert”
Debt Settlement and Associating
with Non-Lawyers
California Issues an “Ethics Alert”
Over 2,000 active investigations concerning loan
modification practices
6/25/2010
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Debt Settlement and Associating
with Non-Lawyers
In re Eric Douglas Johnson, State Bar of California,
Hearing Dept. – Los Angeles, 10-TE00615-RAH (May
18, 2010)
Lawyer associating with non-attorney “legal
organizations” disbarred for aiding and abetting in UPL,
sharing fees with non-attorneys and misrepresentation.
Supervision
RPC 5.3 - Responsibilities Regarding Non-Lawyer
Assistants
RPC 55.5 5 - Assisting in the Unauthorized Practice of Law
Supervision
Debt Collection Attorneys
Structure of practice can include many non-attorneys
being supervised by one attorney. The practice may
include the sending of numerous letters demanding
payment of debt, telephone communications with
debtors to obtain settlements and other non-litigation
related practices.
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Supervision
Debt Settlement Agencies
Non-attorney organizations engage attorneys to perform
loan modification or debt settlement services for clients.
Structure of practice can include a non non-attorney attorney referral
network.
Supervision
Arizona
Attorneys engaged in debt collection disciplined when
non-attorney staff appropriated client funds. The basis
for discipline was that the attorneys played no
supervisory i role l in i the h collection ll i practice. i AAn
attorney
violates RPC 5.3 when they take “no precautionary
steps whatsoever” in supervising non-lawyer staff,
“regardless of whether or not the non-lawyer assistants
misbehave.” Matter of Miller, 178 Ariz. 257, 872 P.2d
661 (1994); Matter of Galbasini, 163 Ariz. 120, 786 P.2d
971 (1990).
Supervision
Pennsylvania
Paralegal may send a demand letter provided an
attorney has supervised and reviewed the paralegal’s
work o for o accu accuracy acy aand d co completeness. p ete ess
Phila. Eth. Op. 90-5 (1990)
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Supervision
South Carolina
Non-lawyers may not draft legal documents, institute,
negotiate, or settle lawsuits without the proper
supervision of a lawyer lawyer.
S.C. Bar Ethics Adv. Op. # 91-18.
MJP/UPL Issues
Debt Collection and Debt Settlement
Sending letters outside your jurisdictions
Collecting/Settling debt outside your jurisdictions
Vicarious Liability
Arizona
RPC 5.3 does not impose vicarious liability for nonattorney
misdeeds. “An attorney who supervises a nonlawyer
associate is not required to guarantee that the
associate i will ill never engage i in ‘i ‘incompatible’ ibl ’ conduct, d
for that would be tantamount to vicarious liability.” Matter
of Galbasini, 163 Ariz. 120, 786 P.2d 971 (1990).
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Fee Sharing
Fee Sharing
RPC 1.5 – Division of Fees
RPC 5.4 – Professional Independence of a Lawyer
Requirements vary among jurisdictions.
Fair Debt Collection Practices Act
15 U.S.C 1692
Debt collection attorneys subject to regulation.
Applicable to obligations incurred for personal, family or
household use.
Strict liability.
Fair Debt Collection Practices Act
15 U.S.C 1692
Concept of an attorney having “meaningful involvement”
in the handling of a collection account.
Miller v. Upton, 687 F. Supp. 2d 86 (E.D.N.Y. 2009)
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Fair Debt Collection Practices Act
15 U.S.C 1692
Concept of an attorney having “meaningful involvement”
in the handling of a collection account.
Greco v. Trauner, Cohen & Thomas, L.L.P., 412 F.3d
360 (2d Cir. 2005)
Lesher v. Law Office of Mitchell N. Kay, P.C., 2010 U.S.
Dist. LEXIS 58263 (M.D. Pa. June 14, 2010)
Fair Debt Collection Practices Act
15 U.S.C 1692
Violation of FDCPA as a basis for attorney discipline.
In the matter of Jack H. Boyajian, Supreme Court of
New Jersey Disciplinary Review Board, 08-264 (March
12, 2009)
Fair Debt Collection Practices Act
15 U.S.C 1692
Regulation of Attorneys.
“To the extent the FDCPA imposes some constraints on
a lawyer's advocacy on behalf of a client, it is not unique;
lawyers have a duty, for instance, to comply with the law
and standards of professional conduct.”
Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA,
130 S. Ct. 1605, 1607 (2010)
6/25/2010
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Fair Debt Collection Practices Act
15 U.S.C 1692
Regulation of Attorneys.
“If the law firm can be punished for making a good-faith
legal error, then to be safe an attorney must always stick
ttothe th mostt ddebtor-friendly bt f i dl interpretation i t t ti off th the statute, t t t
lest automatic liability follow if some later decision
adopts a different rule. This dynamic creates serious
concerns, not only for the attorney-client relationship but
also for First Amendment rights.”
Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA,
130 S. Ct. 1605, 1635 (2010) (dissent)
Fair Debt Collection Practices Act
15 U.S.C 1692
Plaintiff’s attorneys.
Duplicative claims among various cases.
Consumer Protection Laws
Diverse rationale among jurisdictions regarding
application to lawyer’s activities
– constitution v. legislature
– business v. practice
Standing
Substantive
– Fraud rather than negligence
– Causation
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Consumer Protection Laws
State ex rel. Doyle v. Frederick J. Hanna & Associates,
P.C., Ga., --- S.E.2d ----, 2010 WL 2243255 (2010).
Beyers v. Richmond, 594 Pa. 654, 937 A.2d 1082
(2007) (2007).
Fair and Accurate Credit Transaction Act
72 Fed.Reg. 63,718 (Nov. 9, 2007).
American Bar Ass'n v. Federal Trade Commission,
671 F.Supp.2d 64 (D.D.C.2009).
Elder Abuse
The Elder Abuse Act
– Protects elderly and dependent adults from
wrongful appropriation of property
– Fee recovery
– No confidential settlement
Wood v. Jamison, 167 Cal.App.4th 156, 83
Cal.Rptr.3d 877 (2008).
6/25/2010
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Th
Parting Notes
The Disciplinary Board of the Supreme Court of
Pennsylvania, Attorney E-Newsletter, March 2010
6/25/2010
15

Ethical Issues in Consumer Financial Services Litigation
ABA Annual Conference
August 9, 2010
Donald Maurice, Maurice & Needleman, P.C.
Assisting and Supervising Non-Lawyers
Conduct surrounding the supervision of staff and the
authority of staff to undertake actions without attorney
permission
Model Rules Applicable
Rule 5.3 Responsibilities Regarding Non-lawyer
Assistants
With respect to a non-lawyer employed or retained by or associated with a
lawyer:
(a) a partner, and a lawyer who individually or together with other lawyers
possesses comparable managerial authority in a law firm shall make
reasonable efforts to ensure that the firm has in effect measures giving
reasonable assurance that the person's conduct is compatible with the
professional obligations of the lawyer;
(b) a lawyer having direct supervisory authority over the non-lawyer shall
make reasonable efforts to ensure that the person's conduct is compatible with
the professional obligations of the lawyer; and
(c) a lawyer shall be responsible for conduct of such a person that would be a
violation of the Rules of Professional Conduct if engaged in by a lawyer if:
(1) the lawyer orders or, with the knowledge of the specific conduct, ratifies
the conduct involved; or
(2) the lawyer is a partner or has comparable managerial authority in the
law firm in which the person is employed, or has direct supervisory authority
over the person, and knows of the conduct at a time when its consequences
can be avoided or mitigated but fails to take reasonable remedial action.
RPC 5.5 Assisting in the Unauthorized Practice of Law
(a) A lawyer shall not practice law in a jurisdiction in violation of the
regulation of the legal profession in that jurisdiction, or assist another in
doing so.
State Commentary

Arizona
Attorneys engaged in debt collection disciplined when non-attorney staff
appropriated client funds. The basis for discipline was that the attorneys
played no supervisory role in the collection practice. An attorney violates RPC
5.3 when they take “no precautionary steps whatsoever” in supervising nonlawyer
staff, “regardless of whether or not the non-lawyer assistants
misbehave.” Matter of Miller, 178 Ariz. 257, 872 P.2d 661 (1994); Matter of
Galbasini, 163 Ariz. 120, 786 P.2d 971 (1990).
RPC 5.3 does not impose vicarious liability for non-attorney misdeeds. “An
attorney who supervises a non-lawyer associate is not required to guarantee
that the associate will never engage in ‘incompatible’ conduct, for that would
be tantamount to vicarious liability.” Matter of Galbasini, 163 Ariz. 120, 786
P.2d 971 (1990).
California
Does not adopt RPC 5.3. In “Discussion: Rule 3-110,” Comment 1 provides
that the duties set forth in 3-110 include “the duty to supervise the work of
subordinate attorney and non-attorney employees or agents.” There is no
rule pertaining to the duty to establish safeguards, except that DR 4-101(D)
states that a lawyer “shall exercise reasonable care to prevent his employees,
associates and others whose services are utilized by him from disclosing or
using client confidences or secrets of a client;" and, DR 7-107(J) provides that
"[a] lawyer shall exercise reasonable care to prevent his employees and
associates from making an extrajudicial statement that he would be
prohibited from making under DR 7-107."
Non-attorneys may draft pleadings and conduct preparatory work so long as
there is attorney supervision. O.C. Op. 94-002.
California RPC 1-300(A) is substantially similar to Model RPC 5.5(b) and
California RPC 1-300(B) is substantially similar to Model RPC 5.5(a).
District of Columbia
Attorney whose trust account defalcated by former secretary violated RPC
5.3. “Courts view holding money in trust for clients is a nondelegable fiduciary
responsibility that is not excused by ignorance, inattention, incompetence or
dishonesty. Although lawyers may employ non-lawyers to assist in fulfilling
this fiduciary duty, lawyers must provide adequate training and supervision to
ensure that ethical and legal obligations to account for clients’ monies are
being met.” In re Cater, 887 A.2d 1 (DC 2005)
Florida
Attorney disciplined for failing to have enacted safeguards to prevent theft of
client funds. Florida Bar v. McAtee, 601 So. 2d 1199 (Fla. 1992).
Maryland
Comment 2 to Maryland RPC 5.3
Paragraph (a) requires lawyers with managerial authority within a law firm to
make reasonable efforts to establish internal policies and procedures designed
to provide reasonable assurance that non-lawyers in the firm will act in a way
compatible with the Maryland Lawyers’ Rules of Professional Conduct.
2

A lawyer must supervise the work delegated to paralegals and retain
responsibility for it. "The level of supervision may vary, depending on the type
of work involved and the competence of the legal assistant, but it must
always be present." Non-lawyer assistants may not accept cases, provide
legal advice or make legal decisions. Attorney Grievance Comm'n v. Hallmon,
343 Md. 390, 397 (1996).
Michigan
Client Contact: A lawyer may not delegate to a non-lawyer responsibility for
client contact where the lawyer never met the client or discussed his
representation directly with the client. RI-128. A lawyer may not delegate to a
non-lawyer responsibility for initiating attorney-client relationships. RI-191.
New Jersey
Paralegal’s unsupervised work constitutes the assisting in the unauthorized
practice of law. In re Opinion No. 24, 128 N.J. 114, 123 (1992).
The governing provisions are presently found in RPC 5.3(a)
and (b) . . . and in 5.5(b) relating to the unauthorized
practice of law . . . The spirit of these provisions requires
that the signature on correspondence with tribunals, clients,
and attorneys representing opposing interests be confined
to that of the responsible attorney. Such a rule has several
beneficial effects including the following: It avoids the
opportunity or temptation for the non-lawyer assistant to
step over the line by rendering legal advice, for example in
the interpretation of the meaning or effect of legal
documents. Second, it enables the responsible attorney to
keep abreast of the matter by controlling important
correspondence and so performing his essential function as
the responsible attorney including his obligation of close
supervision of the activities of the legal assistant. Third, it
further emphasizes the notion that it is the attorney and not
the legal assistant who is the responsible advisor or actor in
the matter, and fourth it tends to maintain direct contact
between the attorney and his client, the attorney and his
adversary, and the attorney and the tribunal so that there
can be no question or excuse regarding the origin of or the
responsibility for the subject matter of the correspondence.
We stress again, as in our earlier opinion, that a non-lawyer
assistant or paralegal "...should never perform services
which involve the exercise of the professional judgment of a
lawyer, nor should he advise clients with respect to their
legal rights, nor should the activities of a paralegal in any
way modify or interfere with direct attorney-client
relationships or those between an attorney and his opposing
attorney." Opinion 296 Supplement, supra.
Even here, however, we should not and do not intend to bar
a non-lawyer assistant's signature on correspondence
consisting exclusively of purely routine matters such as a
3

equest to a court clerk for a docket sheet or inquiring as to
a court calendar or consisting simply of a covering letter
forwarding a document originating elsewhere.
Opinion 611, ADVISORY COMMITTEE ON PROFESSIONAL ETHICS, February
18, 1988
New York
“A lawyer often delegates tasks to clerks, secretaries, and other lay
persons. Such delegation is proper if the lawyer maintains a direct
relationship with the client, supervises the delegated work, and has
complete professional responsibility for the work product. This
delegation enables a lawyer to render legal service more
economically and efficiently.” EC 3-6
Pennsylvania
Rule 5.3 Differences from Model Rule
Although similar to Model Rule 5.3, the Pennsylvania Rule requires partners in
law firms to affirmatively establish measures to ensure that each person's
conduct is compatible with the professional obligations of the lawyer and any
lawyer with direct supervisory authority over a non-lawyer must make
reasonable efforts to ensure that person's conduct is compatible with the
professional obligations of the lawyer.
Paralegal may send a demand letter provided an attorney has supervised and
reviewed the paralegal’s work for accuracy and completeness.
Phila. Eth. Op. 90-5 (1990)
Non-lawyer may not routinely generate and send demand letters with
attorneys name and facsimile signature without attorney approval. Doing so
violates RPC 5.3, 5.5 and 8.4. Attorney can be held liable for the ethical
transgressions of non-attorney staff.
You have requested an opinion on the following facts: To facilitate
his collection efforts, a non-lawyer employee of a department of an
insurance holding company is considering using a form demand
letter. Independent of in-house counsel, the non-lawyer intends at
his sole discretion to routinely generate and mail the letter, even
though it will bear the letterhead and facsimile signature of inhouse
counsel.
* * *
The Committee is of the opinion that [RPC 5.3, 5.5 and 8.4] would
be violated by the proposed conduct. If an in-house counsel
permits his name and facsimile signature to be used by a nonlawyer
in a completely unsupervised setting, this would be aiding
that non-lawyer in the unauthorized practice of law. This issue is
not a new one to ethics committees across the country, and many
have held that such action does constitute the unauthorized
practice of law (see Virginia State Bar opinion 586; North Dakota
State Bar opinion 39; New York City Bar Association 80-26;
Maryland State Bar opinion 83-71; Illinois State Bar opinion 85-7).
4

Independent of the unauthorized practice of law issue, an attorney
who improperly permits his name and signature to be used in a
letter that he has no knowledge about or approval of, is violating
Rule 8.4(c), which in turn violates Rule 5.3(c)(1).
The Committee strongly urges that the proposed conduct should
not be permitted by the in-house counsel, and stresses the
importance of an attorney knowing and approving specific
correspondence which bears his signature.
Phila. Eth. Opinion 90-24 (December 1990)
Rhode Island
Allowing a collection agency to send payment demand letters using an
attorneys letterhead, directing the responses to the demand letters to the
collection agency and thereafter having the collection agency to contact the
debtors violates RPC 5.5. Further, compensating the attorney would violate
5.4 (sharing legal fees with a non-lawyer), 7.1 (a false or misleading
communication about the lawyer or his services and 4.1 (making a knowing
misstatement to a third-party). Ethics Advisory Panel Opinion #93-52, August
25, 1993.
South Carolina
Non-lawyers may not draft legal documents, institute, negotiate, or settle
lawsuits without the proper supervision of a lawyer. S.C. Bar Ethics Adv. Op.
# 91-18.
Texas
“Paragraph (b) of Rule 5.05 does not prohibit a lawyer from employing
the services of paraprofessionals and delegating functions to them. So
long as the lawyer supervises the delegated work, and retains
responsibility for the work, and maintains a direct relationship with the
client, the paraprofessional cannot reasonably be said to have engaged
in activity that constitutes the unauthorized practice of law.” Comment
4, Texas Rules, Rule 5.05(b)
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Unauthorized Practice of Law
Utilization of Law License and Law Firm as Leverage for
Nationwide Debt Collection Practice – Cross-Border Issues
Model Rules Applicable
Rule 5.5 Unauthorized Practice of Law;
Multijurisdictional Practice of Law
(a) A lawyer shall not practice law in a jurisdiction in violation of the
regulation of the legal profession in that jurisdiction, or assist another in
doing so.
(b) A lawyer who is not admitted to practice in this jurisdiction shall not:
(1) except as authorized by these Rules or other law, establish an office or
other systematic and continuous presence in this jurisdiction for the practice of
law; or
(2) hold out to the public or otherwise represent that the lawyer is admitted to
practice law in this jurisdiction.
(c) A lawyer admitted in another United States jurisdiction, and not
disbarred or suspended from practice in any jurisdiction, may provide legal
services on a temporary basis in this jurisdiction that:
(1) are undertaken in association with a lawyer who is admitted to practice in
this jurisdiction and who actively participates in the matter;
(2) are in or reasonably related to a pending or potential proceeding before a
tribunal in this or another jurisdiction, if the lawyer, or a person the lawyer is
assisting, is authorized by law or order to appear in such proceeding or
reasonably expects to be so authorized;
(3) are in or reasonably related to a pending or potential arbitration,
mediation, or other alternative dispute resolution proceeding in this or another
jurisdiction, if the services arise out of or are reasonably related to the lawyer's
practice in a jurisdiction in which the lawyer is admitted to practice and are not
services for which the forum requires pro hac vice admission; or
(4) are not within paragraphs (c)(2) or (c)(3) and arise out of or are
reasonably related to the lawyer's practice in a jurisdiction in which the lawyer
is admitted to practice.
(d) A lawyer admitted in another United States jurisdiction, and not
disbarred or suspended from practice in any jurisdiction, may provide legal
services in this jurisdiction that:
6

(1) are provided to the lawyer's employer or its organizational affiliates and
are not services for which the forum requires pro hac vice admission; or
(2) are services that the lawyer is authorized to provide by federal law or other
law of this jurisdiction.
Model Code of Professional Responsibility, Ethical
Consideration EC 3-9:
Regulation of the practice of law is accomplished principally by the
respective states. Authority to engage in the practice of law conferred in
any jurisdiction is not per se a grant of the right to practice elsewhere, and
it is improper for a lawyer to engage in practice where he is not permitted
by law or by court order to do so. However, the demands of business and
the mobility of our society pose distinct problems in the regulation of the
practice of law by the states. In furtherance of the public interest, the legal
profession should discourage regulation that unreasonably imposes
territorial limitations upon the right of a lawyer to handle the legal affairs of
his client or upon the opportunity of a client to obtain the services of a
lawyer of his choice in all matters including the presentation of a contested
matter in a tribunal before which the lawyer is not permanently admitted to
practice.
a. What Constitutes UPL? State by State Determination
“‘Multistate or interstate practice by attorneys in this country is
an expanding phenomenon. While no published quantitative data
specifically support that assertion, a variety of established or
verifiable facts exist that make the inference virtually
indisputable. First is the increased mobility . . . of legal problemsolvers,
problem-bringers and hence the legal problems
themselves. Second, an outgrowth of the first set of facts is the
increasing degree of uniformity of our laws, to a point where we
are now commonly confronted with model codes, uniform state
acts, federal practice rules (often copied by states) and similar
substantive and procedural developments. Third, partly a
response to the first two sets of facts and partly a reflection of
the growing general complexity of our society, is the gradual
change in the character of law practice from a generalist skill to
an increasingly specialized one; hence the emergence of lawyers
regarded and operating as . . . specialists . . . equipped to cope
with problems that transcend jurisdictional boundaries and the
legal competence of local generalists.’ Brakel & Loh, Regulating
the Multistate Practice of Law, 50 WASH.L.REV. 699, 699-700
(1975) (footnote omitted).” Leis v. Flynt (1979) 439 U.S. 438,
450 (dissent) (addressing Ohio Court’s ability to limit criminal
defendant’s choice of counsel to an Ohio attorney).
i. Implication of being admitted to practice in an
unlicensed jurisdiction
7

N.J. Eth.Op. 533 (July 5, 1984) 114 N.J.L.J. 1, 1984 WL 140933
(N.J. Adv. Comm. Prof. Eth.) states standard is “unsophisticated
member of the public” when referring to implications drawn by
letterhead.
ii. Commentary
Alabama
Threats of legal action by collection agencies constitute UPL.
Berk v. State ex. rel. Thompson (1932) 225 Ala. 324.
California
Out of state attorney sending demand letter to opposing party in
California action constitutes UPL, as does initiating arbitration
proceedings. Birbrower, Montalbano, Condon & Frank v.
Superior Court 17 Cal.4th 119, 131 (Cal. 1998).
Connecticut
The giving of legal advice constitutes the practice of law.
Statewide Grievance Committee v. Patton (1996) 239 Conn.
251, 254.
Iowa
The implied representation that a letter demanding the payment
of an alleged indebtedness of a debtor of a collection agency's
customer is the act or is sent at the direction of an attorney,
who does not sign the letter, constitutes UPL. Bump v. Barnett,
(Iowa 1944) 16 N.W. 2d 579.
Maryland
Advising clients and preparing legal documents. Kennedy v. Bar
Ass’n (Md. 1989) 561 A.2d 200, 200.
But no UPL when personal injury attorney hired to represent
injured parties with respect to accident that occurred in
Maryland, who was not licensed in Maryland, who conducted
extensive investigation to analyze claims and preserve evidence,
and who then asked a Maryland attorney to assist in the
prosecution of the case. Somuah v. Flachs (Md. 1998) 721 A.2d
680.
Massachusetts
Threats of legal action by collection agencies constitute UPL. In
Re Lyon (Mass. 1938) 16 N.E.2d 74.
8

Michigan
Letter demanding payment from debtor of a collection agency's
customer which impliedly represents the letter is from an
attorney or sent at the direction of an attorney, who does not
sign the letter, constitutes UPL. Bay County Bar Association v.
Finance System, (Mich. 1956) 76 N.W.2d 23.
Missouri
Threats of legal action by collection agencies constitute UPL.
State ex rel. McKittrick v. C. S. Dudley & Co., 102 S.W. 2d 895
(1937), cert. denied, 302 U.S. 693.
Montana
The implied representation that a letter demanding the payment
of an alleged indebtedness of a debtor of a collection agency's
customer is the act or is sent at the direction of an attorney,
who does not sign the letter, constitutes UPL. State ex rel.
Freebourn v. Merchants' Credit Service (Mont. 1937) 66 P.2d
337.
New Jersey
Collecting on a judgment is the practice of law. N. J. Unauth.
Prac. Comm. Op. 37 (2001) (noting that a non-attorney who
accepts assignments of judgments for the purpose of collecting
and sharing the proceeds with the assignor, engages in the
unauthorized practice of law).
Pursuant to Art. VI, §2, 3 of the New Jersey
Constitution of 1947, the Supreme Court has exclusive
and plenary jurisdiction to regulate the practice of law.
The “Court's power over the practice of law is complete”
and includes “the power to permit the practice of law
and prohibit its unauthorized practice.” In re Opin. No.
26 of the Committee on Unauth. Pract., 139 N.J. 323,
326 (1995). The practice of law by an individual or
entity not licensed to do so is unauthorized and
proscribed by R. 1:21-1(a).
One who seeks to collect a judgment makes use of the
courts and thus engages in activity which entails
“specialized knowledge and ability” and constitutes a
“litigious” practice. As such, the activity would plainly
constitute the practice of law. New Jersey State Bar
Ass'n v. Northern New Jersey Mortgage Associates, 32
N.J. 430, 437 (1960) and Stack v. P.G. Garage, Inc., 7
N.J. 118, 120-121 (1951).
9

Interviewing and counseling clients, preparing and signing
documents to or on behalf of clients, negotiating with lawyers.
In re Jackman (N.J. 2000) 165 N.J. 580, 586-87 (decision
premised on the fact that the out of state attorney, who no
longer had an active law license in any state, had practiced at a
law firm for 7 years without a New Jersey law license).
But see Appell v. Reiner (1964) 43 N.J. 313 (New York attorney
represented New Jersey resident in financial negotiations with
New York and New Jersey creditors because legal services
between New York and New Jersey creditors were interwoven
and the largest creditor was in New York). Although the conduct
was undoubtedly the practice of law in this Court’s eyes, there
are unusual situations within which a strict adherence to such a
principle is not in the public interest. The Court explained that
recognition much be given to the numerous multistate
transactions arising in modern times. Requiring New Jersey
counsel for the New Jersey debts and New York counsel for the
New York debts would have been grossly impractical and
inefficient.
N.J. Unauth. Prac. Op. 8 (Feb. 10, 1972) 95 N.J.L.J. 105, 1972
WL 19654, *2 (N.J. Comm. Unauth. Prac.): Letter sent by an
attorney or at the direction of an attorney “usually stating that
legal consequences will flow from the nonpayment of the debt or
from the institution of legal action to collect the debt” is the
unauthorized practice of law. In other words, advising a debtor
of the legal consequences of nonpayment leaves the impression
of attorney involvement, which will constitute UPL unless it is a
sent by a New Jersey attorney. The Unauthorized Practice
Committee concluded that the operation of a debt collection
business constitutes the practice of law when it involves threats
of legal action or the implied representations of legal action or
the implied representation that an attorney has evaluated the
claim and found legal process warranted.
New York
Counseling clients in New York office on Mexican law. In re Roel
(1958) 3 N.Y.2d 224.
Negotiating three legal matters in Illinois and offering legal
opinion regarding such matters for a New York client by a
Pennsylvania attorney. Ginsburg v. Fahrney (Sup. Ct. 1965)
258 N.Y.S.2d 43.
Ohio
Ohio Rule of Professional Conduct 5.5(c) states that a lawyer
who is admitted in another U.S. jurisdiction may provide legal
services on a temporary basis in Ohio if the services are
10

undertaken in association with a lawyer who is admitted to
practice in Ohio and who actively practices in the legal matter.
Ohio Revised Code § 4705.07 – A person not licensed in Ohio
cannot hold himself or herself out as an attorney at law.
“Holding out” includes the use of the work “lawyer,” “attorney at
law,” counselor at law,” “law,” “law office,” in connection with
the non-licensed person’s name in any writing, the purpose of
which is to induce others to believe that the person is an
attorney.
But see Office of Disciplinary Counsel v. Brown (1992) 61 Ohio
Misc.2d 792, 794: attorney who circulated resume and applied
for lawyer positions with the State did not commit UPL as it did
not involve the rendering of advice.
Oklahoma
The implied representation that a letter demanding the payment
of an alleged indebtedness of a debtor of a collection agency's
customer is the act or is sent at the direction of an attorney,
who does not sign the letter, constitutes UPL. State Bar of
Oklahoma v. Retail Credit Ass'n. (Okla. 1934) 37 P.2d 954.
Pennsylvania
Signage identifying office as a law office, business cards
identifying person as a lawyer, phone book listing as lawyer,
stationary identifying person as lawyer, admitted to practice in
United States District Court for the Eastern District of
Pennsylvania, and other courts, but not in the Commonwealth of
Pennsylvania, appearance in the Eastern District of Pennsylvania
district court, negotiate settlement with a Pennsylvania company
regarding a personal injury accident in Pennsylvania. Ginsburg v.
Kovrak (1958) 392 Pa. 143. – May not have been rightly
decided.
b. Mailing letter into jurisdiction in which attorney does not
have license.
State Commentary
California
Designation of licensed status in California, use of term “of
counsel” on correspondence and business cards, and listing a
South Carolina address as “administrative office” constituted UPL
in California and South Carolina. In the Matter of Wells (Review
Dept. 2006) 4 Cal. State Bar Ct. Rptr. 896, 903.
Illinois
11

Letters from an out of state attorney to in-state residents
soliciting personal injury cases constitutes at least a tentative
offer to provide legal services within the state, and therefore,
sending such letters constitutes engaging in the unauthorized
practice of law. ISBA Advisory Op. on Prof. Conduct, Op. 94-02
(1994) 1994 WL 904175.
Ohio
Referencing “General Counsel” when not licensed in Ohio
constitutes directly and indirectly holding out as an attorney.
Cleveland Bar Association v. Misch (Ohio 1998) 695 N.E.2d 244,
247.
c. If standard includes implied representation of legal action,
use of a disclaimer negate implication.
Connecticut
Commentary to Conn. Rule of Professional Conduct 7.1: “The inclusion
of an appropriate disclaimer or qualifying language may preclude a
finding that a statement is likely to create unjustified expectations or
otherwise mislead a prospective client.”
d. Network of Attorneys.
Some states have specific requirements for out of state
firms with attorney licensed in state
If firm has “offices” in multiple states through a network
of attorneys, what are the supervision responsibilities –
does the office need to be supervised by an in-state
attorney?
Florida
UPL if operating an interstate law firm in Florida without a partner of the
firm who is a member of the Florida Bar assuming responsibility for its
supervision. Florida Bar v. Savitt (Fla. 1978) 363 So.2d 559.
New Jersey
New Jersey attorney must be actively responsible for out-of-state firm’s
practice in New Jersey and must maintain bona fide office. N.J. Eth. Op.
550 (Jan. 24, 1985).
e. Other Cross-border issues
i. Arbitration
12

State Commentary
California
Representing client in private arbitration constitutes the practice of
law. Birbrower, Montalbano, Condon & Frank v. Superior Court 17
Cal.4th 119, 133-34 (Cal. 1998)
Illinois
Representing client in private arbitration is not the practice of law.
Colmar, Ltd. v. Fremantlemedia No. America, Inc. (Ill.App. 1 Dist.
2003) 344 Ill.App.3d 977, 988-89.
New Jersey
An out-of-state attorney may represent a party in an arbitration
proceeding conducted under the auspices of the AAA in New Jersey if
there has not been a complaint filed in New Jersey on the issue and if
the attorney is admitted and in good standing in another jurisdiction.
New Jersey Supreme Court Committee on Unauthorized Practice Op.
No. 28 (1994) 1994 WL 719208
An out-of-state attorney may appear in an AAA arbitration, as noted in
the earlier opinion, except the requirement that no related action was
pending in the attorney's state of admission is eliminated in light of
Model Rule of Professional Conduct 5.5. The Model Rule of
Professional Conduct 5.5(c)(1) through (6) provides additional
requirements, the most important of which is that the out-of-state
attorney must register with the Clerk of the Supreme Court, authorize
the Clerk to accept service of process on the attorney's behalf, and
comply with New Jersey Rules regarding registration and fees. These
requirements are therefore added to Opinion 28 in this Supplemental
Opinion. New Jersey Supreme Court Committee on Unauthorized
Practice Op. Modified No. 28 (2004).
New York
Representing client in private arbitration does not constitute the
practice of law. See Williamson v. John D. Quinn Const. Corp. (S.D.N.Y.
1982) 537 F.Supp. 613, 616; Prudential Equity Group, LLC v. Ajamie
538 F.Supp.2d 605, 608-09 (S.D.N.Y. 2008).
Model Rules of Prof'l Conduct R. 5.5 allows out of state attorneys to
represent clients in arbitrations
AAA Rules do not require the party’s representative to be a lawyer.
ii. Mediation
13

New Jersey
Whether a multi-jurisdictional practitioner may represent an existing
out-of-state client in mediation in New Jersey is akin to representation
in arbitration. An out-of-state attorney may participate in mediation
and may prepare an order for the court reflecting a memorandum of
understanding/agreement reached in mediation, provided that the outof-state
attorney has satisfied the requirements of RPC 5.5. New
Jersey Supreme Court Committee on Unauthorized Practice Op.
Modified No. 28 (2004).
Fee Sharing
Permissible Between Lawyers When Certain Conditions Are
Satisfied. Not Permissible Between a Lawyer and Non-Lawyer.
Model Rules Applicable
Rule 1.5: Fees
(e) A division of a fee between lawyers who are not in the same firm may be
made only if:
(1) the division is in proportion to the services performed by each lawyer or
each lawyer assumes joint responsibility for the representation;
(2) the client agrees to the arrangement, including the share each lawyer
will receive, and the agreement is confirmed in writing; and
(3) the total fee is reasonable.
Rule 5.4: Professional Independence of a Lawyer
(a) A lawyer or law firm shall not share legal fees with a non-lawyer, except
that:
(1) an agreement by a lawyer with the lawyer's firm, partner or associate
may provide for the payment of money, over a reasonable period of time
after the lawyer's death, to the lawyer's estate or to one or more specified
persons;
(2) a lawyer who purchases the practice of a deceased, disabled, or
disappeared lawyer may, pursuant to the provisions of Rule 1.17, pay to the
estate or other representative of that lawyer the agreed-upon purchase
price;
14

Commentary
(3) a lawyer or law firm may include non-lawyer employees in a
compensation or retirement plan, even though the plan is based in whole or
in part on a profit-sharing arrangement; and
(4) a lawyer may share court-awarded legal fees with a nonprofit
organization that employed, retained or recommended employment of the
lawyer in the matter.
Comment 7 to Model Rule 1.5
A division of fee is a single billing to a client covering the fee of two or
more lawyers who are not in the same firm. A division of fee facilitates
association of more than one lawyer in a matter in which neither alone
could serve the client as well, and most often is used when the fee is
contingent and the division is between a referring lawyer and a trial
specialist. Paragraph (e) permits the lawyers to divide a fee either on
the basis of the proportion of services they render or if each lawyer
assumes responsibility for the representation as a whole. In addition,
the client must agree to the arrangement, including the share that each
lawyer is to receive, and the agreement must be confirmed in
writing. Contingent fee agreements must be in a writing signed
by the client and must otherwise comply with paragraph (c) of
this Rule. Joint responsibility for the representation entails financial
and ethical responsibility for the representation as if the lawyers were
associated in a partnership. A lawyer should only refer a matter to a
lawyer whom the referring lawyer reasonably believes is competent to
handle the matter. See Rule 1.1.
Arkansas
Follows the Model Rule 1.5(e).
“The agreement, which is to be signed by the attorneys and the client,
provides a legal basis for the client to sue either attorney for alleged
malpractice committed by the other. In effect, the agreement says that the
attorneys are treating themselves as ad hoc partners in a single firm for this
particular representation for both malpractice litigation and disciplinary
proceedings.” Ark. Bar. Assn. Op. 92-01.
Follows the Model Rule 5.4(a).
Arizona
Follows the Model Rule 1.5(e).
California
In dicta the Court of Appeals opines that fee-splitting agreements are
enforceable only if all the participating attorneys are admitted to the Arizona
bar (can be by pro hac vice). Peterson v. Anderson, 155 Ariz. 108, 745 P.2d
166 (App. 1987).
Follows the Model Rule 5.4(a).
15

California RPC 2-200(A)(1),(2), permits division of fees with attorneys not in
the same firm when “(1) The client has consented in writing thereto after a
full disclosure has been made in writing that a division of fees will be made
and the terms of such division; and (2) The total fee charged by all lawyers
is not increased solely by reason of the provision for division of fees and is
not unconscionable as that term is defined in rule 4-200.” Pure referral
fees, where no services are performed, are permitted (California RPC 2-
200(B)) if the arrangement is permissible under California RPC 2-200(A) or
with respect to the sale of a law practice under California RPC 2-300. See,
Moran v. Harris, 131 Cal.App.3d 913, 916, 182 Cal.Rptr. 519 (4th Dist.
1982); contra, contra, Altschul v. Sayble, 83 Cal.App.3d 153, 147 Cal.Rptr.
716(2nd Dist. 1978); LACBA, Formal Ethics Opinion No. 503 (January 24,
2000) (finding that the payment of a flat referral fee by the payor lawyer
prior to receiving any fee from the client, could not comply with California
RPC 2-200(A) and, therefore was impermissible).
California RPC 1-320(A) prohibits fee-sharing with non lawyers except under
specified exceptions. Further prohibits compensation to non-lawyers
(California RPC 1-320 for the “purpose of recommending or securing
employment . . . by a client (California RPC 1-320(B)) or for publicity
(California RPC 1-320(C)).
Connecticut
Differs from the Model Rule 1.5(e) in that lawyers are not required to provide
services proportionate to the fee obtained or assume responsibility for the
representation. Pinney, Payne, Van Lenten, Burrell, Wolfe, & Dilamn, P.C., v.
Heering, No. CV980332191S, 2000 WL 1475548 (Conn.Super. Sept. 21,
2000).
Follows the Model Rule 5.4(a).
An arrangement by which an attorney and a collection agency would advance
costs for the client and then equally split the fee on recovery, was found
impermissible. The attorney should deduct his fee from the recovery and then
send the balance to the collection agency to be disbursed pursuant to the
agreement between the collection agency and the client. Informal Opinion 99-
25 (1999).
District of Columbia
Differs from the Model Rule 1.5(e) in that lawyers are required to make more
explicit disclosures to clients concerning the fee-sharing arrangement.
Follows the Model Rule 5.4(a).
Delaware
Differs from the Model Rule 1.5(e) in that lawyers are not required to provide
services proportionate to the fee obtained or assume responsibility for the
representation. The Delaware Rule also differs from the interpretation of
Comment 7 to the Model Rule in not requiring disclosure to the client of what
share of the fee each lawyer will receive.
Illinois
16

Illinois RPC 1.5(f)–(i) Differs from the Model Rule 1.5(e) in that lawyers are
required to make more explicit disclosures to clients concerning the feesharing
arrangement. Illinois RPC 1.5(e) does permit referral fees if the
receiving lawyer discloses the referral fee agreement to the client. The
disclosure must advise of the amount of the fee and must be in writing. The
referral fee does not have to be proportionate to the services and the
receiving attorney is not required to assume responsibility for the
representation.
Maryland
Fee sharing agreement disclosure to the client may be made without
describing the allocation of the services to be performed, provided that the
fee-split is identified in a written agreement with the client and each lawyer
assumes joint responsibility for the representation, the client is advised, does
not object and the total fee is reasonable. MSBA Eth. Op. 87-37 (1987).
Michigan
Follows the Model Rule 5.4(a). A lawyer may not pay fee to a for-profit
institution for the receipt of cases. R-8.
New Jersey
Follows the Model Rule 1.5(e), but referral fees are strictly prohibited except
under certain circumstances. NJ RPC 7.2(c) and 7.3(d). Referral fees are
permitted for attorneys certified by the New Jersey Supreme Court Board in a
specialty, and then only under certain conditions. New Jersey Court R. 1:39-
6(d).
With respect to non-attorneys, follows the Model Rule. Also, when a fee is
paid to an attorney for work done for the attorney’s client, or the client is
directly paid the attorney’s fees, the client cannot retain any portion of the
fee. Attorneys fees that are paid “in whole or part for the client’s legal
expenses . . . [must be] actually incurred in the specific matter for which they
are paid. N.J. Advisory Comm. on Professional Ethics Op. 669 (Nov. 2, 1992);
N.J. Advisory Comm. Op. 93 (Apr. 21, 1966). Non-attorneys sharing in legal
fees are subject to a disorderly persons offense. N.J.S.A. 2C:21-22.
New Mexico
Follows the Model Rule 1.5(e), but also places restrictions on referral fees.
Section 36-2-31 NMSA 1978 (1991 Repl. Pamp.).
New York
DR 2-107 [1200.12] Division of Fees Among Lawyers
A. A lawyer shall not divide a fee for legal services with another lawyer who is
not a partner in or associate of the lawyer's law firm, unless:
1. The client consents to employment of the other lawyer after a full
disclosure that a division of fees will be made.
2. The division is in proportion to the services performed by each lawyer or,
by a writing given the client, each lawyer assumes joint responsibility for the
representation.
17

Ohio
3. The total fee of the lawyers does not exceed reasonable compensation for
all legal services they rendered the client.
New York - DR 3-102 [1200.17] Dividing Legal Fees with a non-lawyer.
A. A lawyer or law firm shall not share legal fees with a non-lawyer, except
that:
1. An agreement by a lawyer with his or her firm, partner, or associate may
provide for the payment of money, over a reasonable period of time after
the lawyer's death, to the lawyer's estate or to one or more specified
persons.
2. A lawyer who undertakes to complete unfinished legal business of a
deceased lawyer may pay to the estate of the deceased lawyer that
proportion of the total compensation which fairly represents the services
rendered by the deceased lawyer.
3. A lawyer or law firm may compensate a non-lawyer employee, or include
a non-lawyer employee in a retirement plan, based in whole or in part on a
profit-sharing arrangement.
Follows the Model Rule 1.5(e). Appears to discourage referral fees. Bd. of
Comm'rs on Grievances & Discipline Op. 92-1, 1992 Ohio Griev. Discip. LEXIS
20 (Feb. 14, 1992); Bd. of Comm'rs on Grievances & Discipline Op. 91-5,
1991 Ohio Griev. Discip. LEXIS 25 (Feb. 8, 1991).
Oregon
Departs from Model Rule 1.5(e). Only requires “(1) the client gives informed
consent to the fact that there will be a division of fees, and (2) the total fee of
the lawyers for all legal services they rendered the client is not clearly
excessive.” ORPC 1.5(d).
Pennsylvania
Departs from Model Rule 1.5(e). Only requires “(1) the client is advised of
and does not object to the participation of all the lawyers involved, and
(2) the total fee of the lawyers is not illegal or clearly excessive for all legal
services they rendered the client.” PARPC 1.5(e). Pure referral fees are
permitted (referral fee to estate of lawyer who referred clients during his
lifetime permissible if client consents and the total fee is not excessive)
Phila. Bar Ass'n Prof. Guidance Comm. Op. 92-1 (1992). Referral fees paid
to disbarred or suspended attorneys are impermissible if the attorney was
not “in good standing” at the time the referral arrangement was made.
Phila. B.A. Prof. Guid. Comm. Op. 89-26 (1989); see Phila. B.A. Prof. Guid.
Comm. Op. 93-3 (1993).
Follows the Model Rule 5.4(a) including the exceptions -- in the event of a
practicing lawyers death or retirement. Pa. Eth. Op. 93-113 (1993).
18

Rhode Island
Follows the Model Rule 1.5(e). A certain departure is permitted: fee may be
divided without regard to work performed if there is a written agreement with
the client and the attorneys assume joint responsibility. RI Eth. Op. 97-16
(1997).
Follows the Model Rule 5.4(a).
South Carolina
Follows the Model Rule 1.5(e).
Follows the Model Rule 5.4(a).
Texas
Departs from the Model Rule. Texas Rule 1.04(f) provides that lawyers who
are not in the same law firm may not enter into an agreement for a division
of a fee unless:
(1) the division is:
(i) in proportion to the professional services performed by each
lawyer;
(ii) made with a forwarding lawyer; or
(iii) made, by written agreement with the client, with a lawyer who
assumes joint responsibility for the representation;
(2) the client is advised of, and does not object to, the participation of
all the lawyers involved, and
(3) the aggregate fee does not constitute an "illegal" or
"unconscionable" fee.
Client disclosure is not required where the association between the forwarding
and the receiving attorney will not result in the “further disclosure of client
confidences” or have a “financial impact” upon the client. Texas Rule 1.04,
Comment 10.
Substantially follows the Model Rule 5.4(a).
19

The following materials are reprinted from Ronald Mallen & Jeffry
Smith, Legal Malpractice, 2010 Edition, with the permission of the
publisher and the authors. This paper contains the revisions and
additions for the 2011 edition, which will not be published until 2011.
This is provided for the use of the participants in this
program and other usage is subject to the copyright of Thomson/West
Publishing.
9:5. Consumer protection statutes
Preliminary Considerations. Commencing in about 1960, the states began
enacting statutes to provide a cause of action for consumers, who claimed to
have been injured by unfair or deceptive business practices. 1 Whether a statute
applies to lawyers depends on the language. For example, some statutes
expressly exclude lawyers. 2 If the statute is silent, common-law principles and
policy considerations may control. This section discusses only those statutes that
have been the subject of published decisions involving lawyers.
The first reported decision that applied unfair or deceptive practice trade
legislation to an attorney's conduct was in 1975 by a Texas appellate court. 3 The
court affirmed an injunction against an attorney in an action brought by the state
for participating in a real estate development scam. A 1979 Louisiana court of
appeals decision concerned two attorneys who sought an injunction against two
other attorneys for misleading advertisements. 4 Although the appellate court
declined relief, the court said that the advertising of legal services was “trade or
commerce.”
In 1981, the Texas Supreme Court in DeBakey v. Staggs held that
attorneys were providers of “services” within the meaning of the Deceptive Trade
1 Parker, Watkins & Noffke, A Rose is a Rose—or is It? Fiduciary and DTPA
Claims Against Attorneys, 35 St. Mary's L.J. 823 (2004); Attorney Liability Under
Deceptive Trade Practices Acts, 15 Rev. Litigation 397 (1996); Lovett, State
Deceptive Trade Practice Legislation, 46 Tul.L.Rev. 724 (1971).
2
Ohio Rev. Code § 1345.01(A); N.C. Gen. Stat. § 75–1(b) and Md. Code Ann.
Com. Law § 13–104.
3
Bourland v. State, 528 S.W.2d 350 (Tex. Civ. App. Austin 1975), writ refused
n.r.e., (Feb. 4, 1976) (restitution also ordered).
4 Reed v. Allison & Perrone, 376 So. 2d 1067 (La. Ct. App. 4th Cir. 1979). See
also, Likover v. Sunflower Terrace II, Ltd., 696 S.W.2d 468 (Tex. App. Houston
1st Dist. 1985) (attorneys' fees).

Practices Act. 5 Favorably citing to literature urging such liability, 6 the court
affirmed a statutory award of treble damages for mishandling a change of name
proceeding. 7
Some support for the application of such statutes to lawyers was found in
the United States Supreme Court's 1975 decision of Goldfarb v. Virginia State
Bar, 8 which refused to exempt the legal profession from the antitrust laws
because of the commercial aspects of the practice of law. In an action
concerning deceptive fee practices, the Connecticut Supreme Court also drew an
analogy from the application of the Federal Trade Commission Act to other
professions. 9
5 605 S.W.2d 631 (Tex.Civ.App.1980), writ refused but per curiam opinion issued
612 S.W.2d 924 (Tex.1981). See also, Mackie v. McKenzie, 890 S.W.2d 807 (Tex.
1994); Sample v. Freeman, 873 S.W.2d 470 (Tex. App. Beaumont 1994), writ
denied, (Sept. 22, 1994) (missed statute of limitations); Trevino v. Brookhill
Capital Resources, Inc., 782 S.W.2d 279 (Tex. App. Houston 1st Dist. 1989), writ
denied, (Apr. 11, 1990) (liability for unilaterally taking attorneys' fees out of
escrow funds); Hartsough v. Steinberg, 737 S.W.2d 408 (Tex. App. Dallas 1987),
writ denied, (Jan. 6, 1988) (claim for void divorce barred by statute of
limitations).
6 Applicability of the Texas Deceptive Trade Practices Act to Attorneys, 30 Baylor
L.Rev. 65 (1978); The Texas Deceptive Practices Consumer Protection Act:
Application to Professional Malpractice, 8 St. Mary's L.J. 763 (1977). See also,
New Threat to Attorneys? N.J. Court: Lawyers Liable for Consumer Fraud, ABA
J., Dec. 1988, at 17.
7 Damages were $420, trebled, and attorneys' fees of $1,000 were awarded. The
court oerved that, although physicians had been exempted from the Act, an
amendment to exempt other professionals had been tabled.
8 Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S. Ct. 2004, 44 L. Ed. 2d 572,
1975-1, 1975-1 Trade Cas. (CCH) &p; 60355 (1975). See also, Bates v. State Bar
of Arizona, 433 U.S. 350, 97 S. Ct. 2691, 53 L. Ed. 2d 810, 2 Media L. Rep.
(BNA) 2097, 1977-2, 1977-2 Trade Cas. (CCH) &p; 61573 (1977).
9 Heslin v. Connecticut Law Clinic of Trantolo and Trantolo, 190 Conn. 510, 461
A.2d 938 (1983). The inclusion of the entrepreneurial aspects of the practice
does not extend to negligence claims. Beverly Hills Concepts, Inc. v. Schatz and
Schatz, Ribicoff and Kotkin, 247 Conn. 48, 717 A.2d 724 (1998).

An amendment to the Texas statute, pertaining to actions filed after
September 1, 1996, exempts “a claim for damages based on the rendering of a
professional service, the essence of which is the providing of advice, judgment,
opinion, or similar professional skill.” 10 The exceptions concern conduct that is
not negligent or professional, or is unconscionable. 11 The DPTA allows recovery
10 Vernon's Tex. Bus. & Com. Code Ann. §17.49 (as amended 2001):
(c) Nothing in this subchapter shall apply to a claim for damages based on the
rendering of a professional service, the essence of which is the providing of
advice, judgment, opinion, or similar professional skill. This exemption does not
apply to:
(1) an express misrepresentation of a material fact that cannot be characterized
as advice, judgment, or opinion;
(2) a failure to disclose information in violation of Section 17.46(b)(23);
(3) an unconscionable action or course of action that cannot be characterized as
advice, judgment, or opinion;
(4) breach of an express warranty that cannot be characterized as advice,
judgment, or
(5) a violation of Section 17.46(b)(26).
(d) Suection (c) applies to a cause of action brought against the person who
provided the professional service and a cause of action brought against any
entity that could be found to be vicariously liable for the person's conduct.
See In re Frazin, 2009 WL 1037574 (Bankr. N.D. Tex. 2009); Tolpo v.
Decordova, 146 S.W.3d 678 (Tex. App. Beaumont 2004) (alleged negligent
preparation of sales contract); Gion v. Ellis, 58 S.W.3d.3d 818 (Tex.App.2001)
(misrepresentation regarding whether expert witness was to be paid out of
client's share of settlement); Stafford v. Lunsford, 53 S.W.3d 906 (Tex. App.
Houston 1st Dist. 2001); Goffney v. Raon, 56 S.W.3d 186 (Tex. App. Houston
14th Dist. 2001); Kahlig v. Boyd, 980 S.W.2d 685 (Tex. App. San Antonio 1998);
Garrett v. Giblin, 940 S.W.2d 408 (Tex. App. Beaumont 1997) (no
unconscionable action or misrepresentation).
11 James V. Mazuca and Associates v. Schumann, 82 S.W.3d 90 (Tex. App. San
Antonio 2002) en banc; Goffney v. Raon, 56 S.W.3d 186 (Tex. App. Houston
14th Dist. 2001) (inadequate trial preparation did not suffice); Streber v. Hunter,
221 F.3d 701, 55 Fed. R. Evid. Serv. 376 (5th Cir. 2000) (could proceed on
misrepresentation that action was filed and was being prosecuted); Delp v.
Douglas, 948 S.W.2d 483 (Tex. App. Fort Worth 1997), reversed on other
grounds, 987 S.W.2d 879 (Tex. 1999) (perceived misrepresentations); Latham v.
Castillo, 972 S.W.2d 66 (Tex. 1998).

of economic and mental anguish damages for “unconscionable action or course
of action.” Much of the Texas case law discussed in this section pre-dates the
amendment. 12
Application to Lawyers. There has been hesitancy to apply the consumer
protection statutes to the professional aspects of the practice of law. The starting
point for analysis is the language of the statute. 13 The courts usually have found
the jurisdiction's statute not to be applicable to the professional aspects of the
practice of law. 14 Because of the lack of a uniform statutory approach, there is
12
The statute grandfathered all cases brought before September 1, 1996. In re
Simmons, 205 B.R. 834 (Bankr. W.D. Tex. 1997).
13 Georgia has a statute specifically prohibiting false advertising by attorneys.
O.C.G.A. § 10–1–427.
14 Alaska-- Contra, Pepper v. Routh Crabtree, APC , 219 P.3d 1017,
2009 WL 3924933 (Alaska 2009) (applied to debt-collection lawyers
for litigation activities; Noerr-Pennington immunity not applicable).
Ark.—Preston v. Stoops, 2008 WL 2287217 (Ark. 2008).
Colo.—Crowe v. Tull, 126 P.3d 196 (Colo. 2006) (false statements in
advertising with intent to defraud).
Conn.— Tatum v. Oberg, 650 F.Supp.2d 185, 2009 WL 2840722
(D.Conn.2009) (did apply to billing for services allegedly not performed); In re
Enron Corp. Securities, Derivative & “"ERISA'' Litigation, 511 F. Supp. 2d 742
(S.D. Tex. 2005) (Connecticut law); Anderson v. Schoenhorn, 89 Conn. App. 666,
874 A.2d 798 (2005); Suffield Development Associates Ltd. Partnership v.
National Loan Investors, L.P., 260 Conn. 766, 802 A.2d 44 (2002) (allegations
regarding wrongs while representing their clients is not included within the act);
Beverly Hills Concepts, Inc. v. Schatz and Schatz, Ribicoff and Kotkin, 247 Conn.
48, 717 A.2d 724 (1998) (malpractice not included); Heslin v. Connecticut Law
Clinic of Trantolo and Trantolo, 190 Conn. 510, 461 A.2d 938 (1983);
Fla.-- But see, Kelly v. Palmer, Reifler, & Associates, P.A., --- F.Supp.2d --
--, 2010 WL 111492 (S.D.Fla.2010) (lawyers not expressly exempted).
Ga.-- State ex rel. Doyle v. Frederick J. Hanna & Associates, P.C., Ga., ---
S.E.2d ----, 2010 WL 2243255 (2010) (did not apply to debt collection but the
court said that it was not deciding whether the statue applies to commercial or
entrepreneurial activity)

Ill.— Wilbourn v. Advantage Financial Partners, LLC, 2010 WL 1194950
(N.D.Ill.2010) (mortgage scam); Cripe v. Leiter, 184 Ill. 2d 185, 234 Ill. Dec.
488, 703 N.E.2d 100 (1998), Lurz v. Panek, 172 Ill. App. 3d 915, 123 Ill. Dec.
200, 527 N.E.2d 663 (2d Dist. 1988); Guess v. Brophy, 164 Ill. App. 3d 75, 115
Ill. Dec. 282, 517 N.E.2d 693 (4th Dist. 1987); Frahm v. Urkovich, 113 Ill. App.
3d 580, 69 Ill. Dec. 572, 447 N.E.2d 1007 (1st Dist. 1983).
Kan.—See Campbell v. Hubbard, P.3d, 2009 WL 1868679 (Kan.App.2009)
(action barred by statute of limitations).
Mass.—In re Sunshine Three Real Estate Corp, 426 B.R. 6
(Bkrtcy.D.Mass.2010); Boston Property Exchange Transfer Co. v. Iantosca,
F.Supp.2d, 2010 WL 638352 (D.Mass.2010); Lingis v. Waisbren, N.E.2d, 2009
WL 3321444 (Mass.App.2009) (dismissed for lack of statutorily required written
demand 30 days before filing action); Sears, Roebuck & Co. v. Goldstone &
Sudalter, 128 F.3d 10 (1st Cir. 1997) (Massachusetts law); Tetrault v. Mahoney,
Hawkes & Goldings, 425 Mass. 456, 681 N.E.2d 1189 (1997); First Enterprises,
Ltd. v. Cooper, 425 Mass. 344, 680 N.E.2d 1163 (1997).
Minn.—Meyer v. Dygert, 156 F. Supp. 2d 1081 (D. Minn. 2001) (cause of
action against lawyer-shareholder regarding sale of mortgage notes, which would
be common-law fraud).
Mont.—Matthews v. Berryman, 196 Mont. 49, 637 P.2d 822 (1981).
N.H.—Averill v. Cox, 145 N.H. 328, 761 A.2d 1083 (2000), as modified on
denial of reconsideration, (Nov. 22, 2000); Rousseau v. Eshleman, 128 N.H. 564,
519 A.2d 243 (1986).
N.J.—Waterloov Gutter Protection Systems Co., Inc. v. Aolute Gutter
Protection, L.L.C., 64 F. Supp. 2d 398 (D.N.J. 1999) (act did not apply to
investments in start-up companies, though the court thought it could apply to
lawyers); Vort v. Hollander, 257 N.J. Super. 56, 607 A.2d 1339 (App. Div. 1992)
(not applicable to fee dispute).
N.Y.— Denenberg v. Rosen, --- N.Y.S.2d ----, 2010 WL 27096 (N.Y.A.D. 1
Dept.2010) (professional services claims does not meet the consumer-oriented
requirement of GBL 349 and 350); Nardella v. Braff, 621 F. Supp. 1170 (S.D.
N.Y. 1985).
N.C.—Reid v. Ayers, 138 N.C. App. 261, 531 S.E.2d 231 (2000) (North
Carolina Debt Collection Act).

diverse rationale regarding application to lawyers' activities.
Nevertheless, a negative conclusion can follow from an analysis based on
whether and to what extent the state's legislature is empowered to regulate the
legal profession. All states govern lawyer advertising by ethics rules derived from
the ABA Model Rules, the former ABA Model Code, and specially-crafted rules, as
in California and New York. Legal fees and engagement agreements often are
the subject of not only ethics rules but also, frequently, specific legislation or
rule. Thus consumer protection legislation may expressly overlap with such
standards and may impliedly conflict with the judicial regulation of the
profession.
The issue came before the Pennsylvania Supreme Court in a 2007
decision, which held that the consumer protection statutes did not apply to
Ohio—Burke v. Gammarino, 108 Ohio App. 3d 138, 670 N.E.2d 295 (1st
Dist. Hamilton County 1995).
Pa.—Beyers v. Richmond, 594 Pa. 654, 937 A.2d 1082 (2007).
S.C.—See Cowart v. Poore, 337 S.C. 359, 523 S.E.2d 182 (Ct. App. 1999)
(concurring opinion).
Tex.— Cunningham v. Hughes & Luce, L.L.P., S.W.3d 2010 WL 108170
(Tex.App.2010) (allegedly unconscionable fee); In re Frazin, 2009 WL 1037574
(Bankr. N.D. Tex. 2009); Vinson & Elkins v. Moran, 946 S.W.2d 381 (Tex. App.
Houston 14th Dist. 1997), writ dismissed by agreement, (Mar. 26, 1998).
Vt.—Kessler v. Loftus, 994 F. Supp. 240 (D. Vt. 1997), citing Whitcomb v.
Davis, No. 179–10–930sCV, 1 Vt. Trial Ct.Rep. 113 (Vt.Super. Nov. 5, 1996) and
Jackson v. Triggs, No. S503–94–CnC, 1 Vt. Trial Ct.Rep. 69 (Vt.Super. April 10,
1996).
Wash.—Jeckle v. Crotty, 120 Wash. App. 374, 85 P.3d 931 (Div. 3 2004)
(claim by nonclient); Meryhew v. Gillingham, 77 Wash. App. 752, 893 P.2d 692
(Div. 1 1995), reconsideration filed, (May 26, 1995); Quinn v. Connelly, 63 Wash.
App. 733, 821 P.2d 1256 (Div. 1 1992); Ikuno v. Yip, 912 F.2d 306, R.I.C.O. Bus.
Disp. Guide (CCH) P 7546 (9th Cir. 1990); Haberman v. Washington Public Power
Supply System, 109 Wash. 2d 107, 744 P.2d 1032, Blue Sky L. Rep. (CCH) P
72662 (1987), opinion amended, 109 Wash. 2d 107, 750 P.2d 254 (1988); Short
v. Demopolis, 103 Wash. 2d 52, 691 P.2d 163 (1984).

claims of lawyer misconduct in the disbursement of settlement funds. 15 The court
reasoned that state constitution empowered the court, not the legislature, to
govern the conduct of lawyers within the Commonwealth. The court held that
inconsistent legislation would be unconstitutional, also noting that the ethics
rules, which it had adopted, expressly governed the conduct alleged by the
plaintiff. The Arkansas Supreme Court applied similar reasoning in reaching the
same conclusion concerning an action against an Oklahoma lawyer who filed a
medical malpractice action in Arkansas, which was dismissed because he was not
authorized to practice law in the state. 16
In a 2010 decision concerning alleged abusive debt collection practices,
the Georgia Supreme Court held the Fair Business Practices Act of 1975, on its
face, did not purport to apply to lawyers, and commented that only the Court in
its inherent power and in administration of the Rules of Professional Conduct had
authority to regulated the legal profession. 1 The court further said, ““the
representation of clients by a law firm does not come within the FBPA even if
certain services were provided by non-lawyers within the firm and could have
been offered by a company without any attorneys. If Appellee's employees
engaged in wrongful conduct against debtors, the remedy must be found outside
the FBPA.” 2 Because the Act did not apply, the court said it did not need to
decide whether
The New Hampshire Consumer Protection Act does not apply to trade or
commerce “under laws as administered by any regulatory board,” thereby
exempting lawyers because of regulation by a professional conduct committee. 17
A suequent decision explained that regulation of the profession, not the license
to practice, was the controlling criterion. 18
In some jurisdictions, the application of a statute depends on the
15 Beyers v. Richmond, 594 Pa. 654, 937 A.2d 1082 (2007).
16 Preston v. Stoops, 2008 WL 2287217 (Ark. 2008).
1 State ex rel. Doyle v. Frederick J. Hanna & Associates, P.C., Ga., --- S.E.2d ----,
2010 WL 2243255 (2010).
2 --- S.E.2d at ___, 2010 WL 2243255 at ___.
17 Rousseau v. Eshleman, 128 N.H. 564, 519 A.2d 243 (1986).
18 Averill v. Cox, 145 N.H. 328, 761 A.2d 1083 (2000), as modified on denial of
reconsideration, (Nov. 22, 2000), disapproving Gilmore v. Bradgate Associates,
Inc., 135 N.H. 234, 604 A.2d 555 (1992) (overruled by, Averill v. Cox, 145 N.H.
328, 761 A.2d 1083 (2000)) (real estate).

distinction between the professional and entrepreneurial aspects of the practice
of law. The Washington Supreme Court distinguished between the “business”
and the “practice” of law, holding that its statute applied to the “entrepreneurial
aspects” of the practice of law, such as pricing, billing and collecting for legal
services. 19 A legal malpractice claim or one attacking the exercise of professional
judgment does not meet the qualification of “trade or commerce.” 20 In another
case, the Washington Supreme Court held that the failure to reveal conflicts of
interest could fall within the statute when done for the entrepreneurial purpose
of obtaining clients. 21 Billing practices are within the statute. 22 A claim of
defamation by an adversary in litigation was neither an entrepreneurial nor a
commercial endeavor under the Washington statute. 23 Similarly, alleged
solicitation of clients by improper means to sue the plaintiff involved professional
services, which did not fall within the statute. 24
A Washington federal district court held a practice was only “unfair or
deceptive" within the statute if it could deceive a sutantial portion of the public. 25
Thus, the adverse tax consequences suffered by a member of a very small group
19 Meryhew v. Gillingham, 77 Wash. App. 752, 893 P.2d 692 (Div. 1 1995),
reconsideration filed, (May 26, 1995); Quinn v. Connelly, 63 Wash. App. 733,
821 P.2d 1256 (Div. 1 1992); Short v. Demopolis, 103 Wash. 2d 52, 691 P.2d
163 (1984). See Washington Lawyers Under the Purview of the State Consumer
Protection Act—the “Entrepreneurial Aspects” Solution, 60 Wash.L.Rev. 925
(1985).
20 Quinn v. Connelly, 63 Wash. App. 733, 821 P.2d 1256 (Div. 1 1992); Ikuno v.
Yip, 912 F.2d 306, R.I.C.O. Bus. Disp. Guide (CCH) P 7546 (9th Cir. 1990);
Haberman v. Washington Public Power Supply System, 109 Wash. 2d 107, 744
P.2d 1032, Blue Sky L. Rep. (CCH) P 72662 (1987), opinion amended, 109 Wash.
2d 107, 750 P.2d 254 (1988).
21 Eriks v. Denver, 118 Wash. 2d 451, 824 P.2d 1207 (1992).
22 Cotton v. Kronenberg, 111 Wash. App. 258, 44 P.3d 878 (Div. 1 2002).
23 Demopolis v. Peoples Nat. Bank of Washington, 59 Wash. App. 105, 796 P.2d
426 (Div. 1 1990).
24 Jeckle v. Crotty, 120 Wash. App. 374, 85 P.3d 931 (Div. 3 2004).
25
Swartz v. KPMG, LLC, 401 F. Supp. 2d 1146 (W.D. Wash. 2004), aff'd in part,
rev'd in part, 476 F.3d 756, R.I.C.O. Bus. Disp. Guide (CCH) P 11232, 99
A.F.T.R.2d 2007-974 (9th Cir. 2007).

of multi-millionaires was not protected by the Act. In contrast, a Pennsylvania
federal district court upheld a cause of action under the state's consumer fraud
action based on alleged fraud claims by a law firm that induced the plaintiffs to
invest in an abusive tax shelter. 26
Illinois 27 and Ohio 28 courts have held that their state statutes do not apply
to claims of legal malpractice, fiduciary breach or misrepresentation. A 1993
Arizona federal court decision, construing Illinois law, said that the statute could
apply to lawyers' conduct in suing an economic consulting firm, allegedly to
punish the firm for supporting adverse parties in security class actions brought
by the lawyers. 29 The court reasoned that the contention involved the “business”
practice of law rather than the rendition of legal services. In 1998, however, the
Illinois Supreme Court held that the statute did not apply to business practices,
such as overbilling. 30 The West Virginia Unfair Trade Practices Act, which
governed the “business of insurance,” did not apply to the conduct of defense
counsel, which had been hired by an insurer. 31
In a 2005 decision, the Colorado Supreme Court refused to exempt
26 Amato v. KPMG LLP, 433 F. Supp. 2d 460, 97 A.F.T.R.2d 2006-2889 (M.D. Pa.
2006), order vacated in part on reconsideration, 98 A.F.T.R.2d 2006-6167, 2006
WL 2376245 (M.D. Pa. 2006).
27 Lurz v. Panek, 172 Ill. App. 3d 915, 123 Ill. Dec. 200, 527 N.E.2d 663 (2d Dist.
1988); Guess v. Brophy, 164 Ill. App. 3d 75, 115 Ill. Dec. 282, 517 N.E.2d 693
(4th Dist. 1987); Frahm v. Urkovich, 113 Ill. App. 3d 580, 69 Ill. Dec. 572, 447
N.E.2d 1007 (1st Dist. 1983).
28 Gugliotta v. Morano, 161 Ohio App. 3d 152, 2005, 2005-Ohio-2570, 829
N.E.2d 757 (9th Dist. Summit County 2005) (whether legal services were
involved can be an issue of fact); Burke v. Gammarino, 108 Ohio App. 3d 138,
670 N.E.2d 295 (1st Dist. Hamilton County 1995).
29
In re American Continental Corporation/Lincoln Sav. & Loan Securities
Litigation, 845 F. Supp. 1377 (D. Ariz. 1993).
30 Cripe v. Leiter, 184 Ill. 2d 185, 234 Ill. Dec. 488, 703 N.E.2d 100 (1998), and
the companion case at Cripe v. Leiter, 291 Ill. App. 3d 155, 225 Ill. Dec. 348,
683 N.E.2d 516 (3d Dist. 1997). The court explained that it regulated lawyers
and that the statute did not reference lawyers.
31 Rose ex rel. Rose v. St. Paul Fire and Marine Ins. Co., 215 W. Va. 250, 599
S.E.2d 673 (2004).

conduct constituting the practice of law from the Colorado Consumer Protection
Act. 32 The client alleged that he hired the law firm based on its commercials that
the firm always will “obtain as much as we can, as fast as we can" and, “In a
wreck, get a check." The client complained that the firm advised him to settle his
personal injury claim for $4,000, though he had over $17,000 in medical and
rehabilitation costs and lost over $7,000 in wages. The court said that the Act
applied to the specified conduct, even if it involved the practice of law. The court
oerved, however, that rarely would a legal malpractice claim also enable a claim
under the Act. A damage claim under the Act differs since it does not concern
the standard of care but whether there were fraudulent misrepresentations of
ability or the quality services. In a 2009 decision, the Alaska Supreme Court held
that the statute could apply to litigation conduct of a debt-collection law firm. 3
The court refused to apply the Noerr-Pennington doctrine to conduct that
included communicating directly to the debtor, who was represented by counsel.
New York's General Business Law provides a private remedy only if the
conduct has broad impact on consumers at large. 33 Thus, the statute did not
apply to a claim of malpractice for missing a statute of limitations, a wrong
involving a private relationship. 34 Attorneys acting as “de facto corporate officers”
of insurance companies could be sued personally in both Montana and
Washington. 35 Oregon's Unlawful Trade Practices Act did not apply to a lawyer
who borrowed money from a client, whatever the intended use. 36 Connecticut's
Unfair Trade Practices Act requirement of “immoral, unethical, oppressive or
unscrupulous” conduct was not met by allegations of a conflict of interests. 37 The
32 Crowe v. Tull, 126 P.3d 196 (Colo. 2006).
3 Pepper v. Routh Crabtree, APC , 219 P.3d 1017, 2009 WL 3924933 (Alaska
2009).
33
N.Y.Gen.Bus.Law § 349: Scheiner v. Wallace, 955 F. Supp. 232 (S.D. N.Y.
1997); Nardella v. Braff, 621 F. Supp. 1170 (S.D. N.Y. 1985).
34 Nardella v. Braff, 621 F. Supp. 1170 (S.D. N.Y. 1985).
35 Jackson v. Kroll, Pomerantz and Cameron, 223 Mont. 161, 724 P.2d 717
(1986); Gould v. Mutual Life Ins. Co. of New York, 37 Wash. App. 756, 683 P.2d
207 (Div. 1 1984).
36
Roach v. Mead, 76 Or. App. 83, 709 P.2d 246, Blue Sky L. Rep. (CCH) P 72318
(1985), decision aff'd, 301 Or. 383, 722 P.2d 1229 (1986).
37
S.M.S. Textile Mills, Inc. v. Brown, Jacoon, Tillinghast, Lahan and King, P.C.,
32 Conn. App. 786, 631 A.2d 340 (1993).

Connecticut statute does not apply to professional negligence, 38 but it did apply
to alleged misrepresentations regarding the fees to be charged. 39 The Montana
Supreme Court declined to apply the state's act for a myriad of reasons, none of
which concerned whether the statute applied to lawyers. 40 New Jersey's
Consumer Fraud Act did not apply to lawyers' services. 41
Under the Massachusetts statute, the lawyer must have been acting in a
business context. 42 The statute requires written notice at least 30 days before
filing an action. 4 Billing practices fall within the statute. 43 A worker's
compensation insurer could proceed under the statute for an allegedly fraudulent
claim. 44 Massachusetts' clients were entitled to recover multiple damages from
attorneys for withholding the clients' funds. 45 Even assuming that negligence met
38 Tatum v. Oberg, F.Supp.2d, 2009 WL 2840722 (D.Conn.2009); Vanacore v.
Kennedy, 86 F. Supp. 2d 42 (D. Conn. 1998), aff'd, 208 F.3d 204 (2d Cir. 2000),
citing Haynes v. Yale–New Haven Hosp., 243 Conn. 17, 699 A.2d 964 (1997)
(medical malpractice).
39 Tatum v. Oberg, F.Supp.2d, 2009 WL 2840722 (D.Conn.2009) (alleged billing
for services not performed); Updike, Kelly and Spellacy, P.C. v. Beckett, 269
Conn. 613, 850 A.2d 145 (2004) (alleged bait-and-switch-tactic).
40 Matthews v. Berryman, 196 Mont. 49, 637 P.2d 822 (1981).
41 N.J.S.A. 56:8–1, et seq. Vort v. Hollander, 257 N.J. Super. 56, 607 A.2d 1339
(App. Div. 1992) (cross-complaint).
42 Frullo v. Landenberger, 61 Mass. App. Ct. 814, 814 N.E.2d 1105 (2004) (failed
to prove an injury loss, however); Sears, Roebuck & Co. v. Goldstone & Sudalter,
128 F.3d 10 (1st Cir. 1997) (Massachusetts law); Tetrault v. Mahoney, Hawkes &
Goldings, 425 Mass. 456, 681 N.E.2d 1189 (1997); First Enterprises, Ltd. v.
Cooper, 425 Mass. 344, 680 N.E.2d 1163 (1997).
4
Lingis v. Waisbren, N.E.2d, 2009 WL 3321444 (Mass.App.2009) (no discussion
of the merits under the statute of a wrongful dismissal claim).
43 Sears, Roebuck & Co. v. Goldstone & Sudalter, 128 F.3d 10 (1st Cir. 1997)
(Massachusetts law; unsutantiated charges resulted in award of attorneys' fees).
44 St. Paul Fire and Marine Ins. Co. v. Ellis & Ellis, 262 F.3d 53 (1st Cir. 2001).
45
Doucette v. Kwiat, 392 Mass. 915, 467 N.E.2d 1374 (1984) (withheld money
demanding payment of exorbitant fee).

the unfair or deceptive act requirement of the Massachusetts statute, a plaintiff
must prove that the conduct caused injury. 46 The resolution of the claim is for
the court. 47
Before the amendment, Texas lawyers could be liable under the statute
for mishandling client funds. 48 Also, they frequently were sued for errors in the
rendition of legal services. 49 There was, however, no remedy for a false
statement by a lawyer in court that he was “ready” for trial. 50 A different result
occurred based on a misrepresentation that a case was pending, when, in fact, it
was not pending because the lawyer failed to file the case within the statute of
limitations. 51 The implied warranty provisions of the Texas statute do not include
professional conduct. 52
Procedural Considerations. Jurisdiction may be a preliminary issue, if the
defendant-attorneys are not residents of the state. 53 Under the Texas long-arm
statute, neither services rendered exclusively outside the state, telephone calls to
the client, nor a listing in a legal directory were sufficient contacts for jurisdiction
over Oklahoma attorneys. 54
46 Frullo v. Landenberger, 61 Mass. App. Ct. 814, 814 N.E.2d 1105 (2004) (failed
to prove injury); McCann v. Davis, Malm & D'Agostine, 423 Mass. 558, 669
N.E.2d 1077 (1996) (failed to prove causation of damages).
47 Meyer v. Wagner, 429 Mass. 410, 709 N.E.2d 784 (1999).
48
Barnard v. Mecom, 650 S.W.2d 123 (Tex. App. Corpus Christi 1983), writ
refused n.r.e., (Sept. 14, 1983) (misuse of trust funds).
49 E.g., Perez v. Kirk & Carrigan, 822 S.W.2d 261 (Tex. App. Corpus Christi
1991), writ denied, (July 1, 1992) (willful fiduciary breach by disclosing of client's
statements to district attorney who prosecuted for involuntary manslaughter
charges).
50 Heath v. Herron, 732 S.W.2d 748 (Tex. App. Houston 14th Dist. 1987), writ
denied, (Jan. 20, 1988).
51 Latham v. Castillo, 972 S.W.2d 66 (Tex. 1998).
52 Dyer v. Shafer, Gilliland, Davis, McCollum & Ashley, Inc., 779 S.W.2d 474
(Tex. App. El Paso 1989), writ denied, (Feb. 14, 1990); Willis v. Maverick, 760
S.W.2d 642 (Tex. 1988).
53 See § 35:2, infra, Jurisdiction—Preliminary considerations.
54 Myers v. Emery, 697 S.W.2d 26 (Tex. App. Dallas 1985).

Public policy factors can be a consideration. For that reason, a Texas
appellate court held that a cause of action for malpractice in defense of a
criminal action, otherwise precluded by public policy considerations, could not be
brought under the Deceptive Trade Practices Act. 55
The statute may provide a remedy for the successful defendant attorney.
For example, the Texas statute allows recovery of reasonable attorneys' fees
where the action was groundless, brought in bad faith or for harassment. 56
Standing to Sue and Privity. The identity of the persons allowed to sue, a
privity concept, depends on the language of the statute. Most of the reported
decisions are under Texas law. The Texas statute excludes certain entities from
being plaintiffs. A business whose assets exceed $25,000,000 may not be a
plaintiff under the statute. 57
Under the Texas statute, the claimant must be a consumer. 58 Typically,
this limits the statute's application to clients. 59 A person can be a consumer, even
55 Peeler v. Hughes & Luce, 868 S.W.2d 823 (Tex. App. Dallas 1993), writ
granted, (June 22, 1994) and judgment aff'd, 909 S.W.2d 494 (Tex. 1995).
56
Tex. V.T.C.A., Bus. & C. § 17.50(c). Schlager v. Clements, 939 S.W.2d 183
(Tex. App. Houston 14th Dist. 1996), writ denied, (Mar. 27, 1997).
57 Vernon's Tex. Bus. & Com. Code Ann. §17.45. The statute's exclusion also
applies to an entity controlled by such a business. See Transport Indem. Co. v.
Orgain, Bell & Tucker, 846 S.W.2d 878 (Tex. App. Beaumont 1993), writ denied
with per curiam opinion, 856 S.W.2d 410 (Tex. 1993). The limitation, however,
did not apply to the entity acting in a representative or derivative capacity for the
former client. NationsBank of Texas, N.A. v. Akin, Gump, Hauer & Feld, L.L.P.,
979 S.W.2d 385 (Tex. App. Corpus Christi 1998).
58 Ortiz v. Collins, 203 S.W.3d 414 (Tex. App. Houston 14th Dist. 2006), reh'g
overruled, (Aug. 10, 2006) (negotiations to settle litigation is not a consumer
transaction); Hackfeld v. Hurren, 167 B.R. 429 (W.D. Tex. 1991), aff'd, 961 F.2d
213 (5th Cir. 1992) (not extended to borrower regarding bank's lawyer's failure
to notify broker of settlement).
59 Laughlin v. Bergman, 962 S.W.2d 64 (Tex. App. Houston 1st Dist. 1997)
(represented plaintiff and the corporation, which removed him as an officer);
Guest v. Cochran, 993 S.W.2d 397 (Tex. App. Houston 14th Dist. 1999) (will
beneficiary); Querner v. Rindfuss, 966 S.W.2d 661 (Tex. App. San Antonio
1998); Thompson v. Vinson & Elkins, 859 S.W.2d 617 (Tex. App. Houston 1st

if a third party paid for the services. 60 That was not true, however, of an indigent
client, who received gratuitous services. 61 A third party who received an
erroneous opinion letter from attorneys regarding the client's contractual rights
was not a “consumer” within the meaning of the statute since the plaintiff did
not “purchase or lease” the attorney's services. 62 Estate beneficiaries were not
entitled to sue the client's or the executor's lawyers. 63 A Texas lawyer,
representing a buyer who performed legal work gratuitously and incidental to a
loan for the lenders, was not liable to them as “consumers,” but could be liable
for negligence. 64
Some Texas decisions had extended privity to nonclients. A Texas federal
court held that investors in oil and gas limited partnerships were “consumers” of
“services” within the meaning of the Texas statute. 65 A person, who allegedly
received tax advice that was primarily intended to benefit her husband, could
Dist. 1993), writ denied, (Mar. 9, 1994) (trust beneficiary suing attorneys for
trust).
60 Burnap v. Linnartz, 38 S.W.3d 612 (Tex. App. San Antonio 2000) (issue of fact
concerning standing); Wright v. Gundersen, 956 S.W.2d 43 (Tex. App. Houston
14th Dist. 1996) (principle recognized but will was prepared for client, not the
beneficiary).
61 Rayford v. Maselli, 73 S.W.3d 410 (Tex. App. Houston 1st Dist. 2002).
62 First Mun. Leasing Corp. v. Blankenship, Potts, Aikman, Hagin and Stewart,
648 S.W.2d 410 (Tex. App. Dallas 1983), writ refused n.r.e., (Nov. 2, 1983) and
(abrogated on other grounds by, McCamish, Martin, Brown & Loeffler v. F.E.
Appling Interests, 991 S.W.2d 787 (Tex. 1999)).
63 Querner v. Rindfuss, 966 S.W.2d 661 (Tex. App. San Antonio 1998); Wright v.
Gundersen, 956 S.W.2d 43 (Tex. App. Houston 14th Dist. 1996) (testator's
attorney); Vinson & Elkins v. Moran, 946 S.W.2d 381 (Tex. App. Houston 14th
Dist. 1997), writ dismissed by agreement, (Mar. 26, 1998) (executor); Izen v.
Nichols, 944 S.W.2d 683 (Tex. App. Houston 14th Dist. 1997) (executor).
64 Roberts v. Burkett, 802 S.W.2d 42 (Tex. App. Corpus Christi 1990).
65 Marshall v. Quinn–L Equities, Inc., 704 F. Supp. 1384, Fed. Sec. L. Rep. (CCH)
P 94812 (N.D. Tex. 1988).

state a cause of action under the Texas statute. 66 The cause of action, however,
is not assignable. In 2004, the Texas Supreme Court found the legislative history
and policy considerations to be persuasive reasons to preclude an assignment of
the DTPA claim. 67
Most courts have construed the state's statute to require that the claimant
be a client. 68 That result usually follows where the statute refers to a
“consumer.” Under Massachusetts law, a client whose lawyer prepared joint wills
for him and his wife did not thereby become a purchaser of his wife's will. 69
Massachusetts requires that the conduct meet the statute's “trade or commerce”
requirement, which may create an issue of fact. 70 Under a Florida statute, a
corporation that hired a lawyer to prosecute commercial litigation was not a
“consumer.” 71
A former adversary in litigation did not meet the statutory definition of
being a consumer of goods or services. 72 Connecticut's statute did not apply to
66 Parker v. Carnahan, 772 S.W.2d 151 (Tex. App. Texarkana 1989), writ denied,
(Dec. 19, 1990).
67 PPG Industries, Inc. v. JMB/Houston Centers Partners Ltd. Partnership, 146
S.W.3d 79, 54 U.C.C. Rep. Serv. 2d 166 (Tex. 2004) (no lawyer defendant).
68 In re Sunshine Three Real Estate Corp, 426 B.R. 6 (Bkrtcy.D.Mass.2010);
Tetrault v. Mahoney, Hawkes & Goldings, 425 Mass. 456, 681 N.E.2d 1189
(1997); Field v. Kearns, 43 Conn. App. 265, 682 A.2d 148 (1996); Larsen
Chelsey Realty Co. v. Larsen, 232 Conn. 480, 656 A.2d 1009 (1995); Robertson
v. Gaston Snow & Ely Bartlett, 404 Mass. 515, 536 N.E.2d 344 (1989); Krawczyk
v. Stingle, 208 Conn. 239, 543 A.2d 733 (1988).
69 Levin v. Berley, 728 F.2d 551 (1st Cir. 1984). The court remanded the issue of
whether the wife's cause of action survived and passed to her executor,
questioning whether the estate suffered damages.
70
Brown v. Gerstein, 17 Mass. App. Ct. 558, 460 N.E.2d 1043 (1984), relying
upon Guenard v. Burke, 387 Mass. 802, 443 N.E.2d 892 (1982).
71 LJS Co. v. Marks, 480 F. Supp. 241 (S.D. Fla. 1979) (thereby, the court
expressly avoided deciding whether the statute could apply to lawyers).
72 First Enterprises, Ltd. v. Cooper, 425 Mass. 344, 680 N.E.2d 1163 (1997);
Beecy v. Pucciarelli, 387 Mass. 589, 441 N.E.2d 1035 (1982) (citing text). The
statute was amended in 1983 to eliminate the purchase or sale requirement. But

the purchase and sale of securities. 73
Florida’s Deceptive and Unfair Trade Practices Act (“FDUTPA”) 5 applied to
a “consumer,” until a 2001 amendment changed the reference to a “person.”
For that reason, a federal district court held that the statute could apply to
persons who received civil demand letters under civil theft recovery acts. 6 The
law firm was entitled to summary judgment, however, because its pursuit of civil
theft remedies did not meet the requirement of “trade or commerce.” The law
firm's offer to settle and release claims for money was not soliciting and offering
a “thing of value” under FDUTPA.
Substantive Requirements. Because the statutes concern deceptive
practices, the litigation of the cause of action depends more on fraud rules than
negligence rules. 74 In Texas, this requires false, misleading or deceptive acts that
are a cause of the plaintiff's injury. 75 The Texas Supreme Court allowed a cause
of action against a lawyer for misrepresenting that he timely filed a medical
malpractice action. 76 The client was not required to prove that the claim was
meritorious, because the damages sought were for emotional distress. A
subsequent appellate decision held that negligent conduct could not suffice for
the required “unconscionable conduct.” 77
cf. Salin v. Shalgian, 18 Mass. App. Ct. 467, 467 N.E.2d 475 (1984) (standing
issue not discussed; action barred by statute of limitations).
73 Andreo v. Friedlander, Gaines, Cohen, Rosenthal & Rosenberg, 660 F. Supp.
1362, Fed. Sec. L. Rep. (CCH) P 93587, R.I.C.O. Bus. Disp. Guide (CCH) P 6727
(D. Conn. 1987).
5 Fla. Stat. § 501.201, et seq.
6 Kelly v. Palmer, Reifler, & Associates, P.A., --- F.Supp.2d ----, 2010 WL 111492
(S.D.Fla.2010).
74
Thomas J. Sibley, P.C. v. National Union Fire Ins. Co. of Pittsburgh, Pa., 921 F.
Supp. 1526 (E.D. Tex. 1996) (regarding La. Rev. Stat. § 1405).
75 E.g., Hall v. Stephenson, 919 S.W.2d 454 (Tex. App. Fort Worth 1996), writ
denied, (Oct. 31, 1996) (failure to show causation); Mackie v. McKenzie, 900
S.W.2d 445, 101 Ed. Law Rep. 491 (Tex. App. Texarkana 1995), writ denied,
(Dec. 7, 1995).
76
Latham v. Castillo, 972 S.W.2d 66 (Tex. 1998). Accord Ballesteros v. Jones,
985 S.W.2d 485 (Tex. App. San Antonio 1998).
77 Ballesteros v. Jones, 985 S.W.2d 485 (Tex. App. San Antonio 1998).

A fraud claim usually does not require expert testimony. Thus,
misrepresentations, concerning the status of an insurance policy, did not require
the presentation of expert testimony under Texas law. 78 Similarly, a Texas
lawyer, who failed to obtain consent for dismissal of a case, and who failed to
inform the client while undertaking related litigation, could be liable for
“misleading, deceptive or unconscionable” practices, for which expert testimony
was not required. 79
The rules of causation typically are those applicable to ordinary torts. 80 A
Texas court held that, to recover for a lost investment, the shopping owner-client
had to prove that the lawyer's conduct was a “producing cause,” that is a
contributing cause to the foreclosure. 81 The evidence was not sufficient, creating
only suspicion and surmise. In a 1997 Texas action, a lawyer, who handled the
sale of a junkyard, was not liable for a groundless lawsuit brought by the buyer
against the client-seller. 82
Under the amended Texas statute, ordinary errors in legal services do not
suffice. Thus, a cause of action was not stated against a lawyer for failing to
refile a dismissed action before the statute of limitations ran. 83 Although an
78 Johnson v. DeLay, 809 S.W.2d 552 (Tex. App. Corpus Christi 1991), writ
denied, (Oct. 23, 1991).
79 Wilson v. Rice, 807 S.W.2d 836 (Tex. App. Waco 1991), writ denied, (Sept. 18,
1991).
80 Smith v. Heard, 980 S.W.2d 693 (Tex. App. San Antonio 1998) (alleged
misrepresentations of qualifications did not cause damage, because the appeal
would not have succeeded); Hall v. Stephenson, 919 S.W.2d 454 (Tex. App. Fort
Worth 1996), writ denied, (Oct. 31, 1996); Haynes & Boone v. Bowser Bouldin,
Ltd., 896 S.W.2d 179 (Tex. 1995) (abrogated by, Ford Motor Co. v. Ledesma,
242 S.W.3d 32, Prod. Liab. Rep. (CCH) P 17894 (Tex. 2007)); Mackie v.
McKenzie, 900 S.W.2d 445, 101 Ed. Law Rep. 491 (Tex. App. Texarkana 1995),
writ denied, (Dec. 7, 1995).
81 Haynes & Boone v. Bowser Bouldin, Ltd., 896 S.W.2d 179 (Tex. 1995)
(abrogated by, Ford Motor Co. v. Ledesma, 242 S.W.3d 32, Prod. Liab. Rep.
(CCH) P 17894 (Tex. 2007)).
82 Rodriguez v. Klein, 960 S.W.2d 179 (Tex. App. Corpus Christi 1997).
83 James V. Mazuca and Associates v. Schumann, 82 S.W.3d 90 (Tex. App. San
Antonio 2002) en banc. The court reversed the award of attorneys' fees and
DPTA damages.

affirmative misrepresentation regarding the status of a lawsuit could fall within
the Act's proscription, the alleged failure to disclose an unauthorized nonsuit was
not equivalent to an affirmative misrepresentation. A 2003 decision held that an
alleged false representation that the lawyer was prepared to go to trial was a
claim for legal malpractice, not within the statute. 84
The statutes specify the remedies, which vary among the jurisdictions.
California's Unfair Competition Law 85 provides a remedy for restitution, but it is
for the individual's claim and is not representative or on behalf of the public. 86
The statutes usually do not limit the defenses available. A common
defense is the statute of limitations. 87 Often, the statute provides for the
limitations period. 88
84 Aiken v. Hancock, 115 S.W.3d 26 (Tex. App. San Antonio 2003).
85 Cal. Bus. & Prof. Code § 17200 et seq.
86 Palmer v. Stassinos, 348 F. Supp. 2d 1070 (N.D. Cal. 2004), order clarified on
reconsideration, 419 F. Supp. 2d 1151 (N.D. Cal. 2005).
87 E.g., Jampole v. Matthews, 857 S.W.2d 57 (Tex. App. Houston 1st Dist. 1993),
writ denied, (Oct. 27, 1993); Burns v. Thomas, 786 S.W.2d 266 (Tex. 1990).
88 Underkofler v. Vanasek, 53 S.W.3d 343 (Tex. 2001). The court held the
common-law tolling principles it adopted in legal malpractice cases, the “Hughes”
rule, did not apply to the DTPA claims.

BIOGRAPHY OF DAVID MELCER
David Melcer is a banking and consumer finance lawyer with specialties in bankruptcies
and collections. Most of his career has been spent as in-house counsel with various banks
and consumer finance businesses, including Discover Card, Greentree Financial, Conseco
Finance, and HSBC Finance Company (formerly Household International). As in-house
counsel he advised financial services companies on legal and compliance issues, was
principal counsel on the developments of new products, handled litigation, and had an
active and complex transactional practice. His current practice at Bass & Associates,
P.C. is primarily in the bankruptcy and collections areas, but he also advises clients on
financial services issues. He is an active speaker to legal and industry groups and is a
member of the American Bar Association Consumer Financial Services Committee
(where he is vice-chair of its Litigation and Arbitration Subcommittee), the Conference
on Consumer Finance Law, and the National Association of Retail Collection Attorneys.
David is licensed to practice in Illinois, Minnesota, and Virginia, and his Arizona
admission is pending.

Short Bio – Christopher L. Peterson, Associate Dean
for Academic Affairs & Professor of Law
CHRISTOPHER L. PETERSON
Associate Dean for Academic Affairs
Professor of Law
Telephone: (801) 581-6655
Facsimile: (801) 581-6897
petersonc@law.utah.edu
Prior to joining the University of Utah, S.J. Quinney
College of Law faculty in 2008, Professor Peterson
taught for five years at the University of Florida, Fredric
G. Levin College of Law. He also served as judicial
clerk for the Honorable Wade Brorby on the United
States Court of Appeals for the Tenth Circuit and then
as a consumer rights attorney for the United States
Public Interest Research Group in Washington, D.C.
While in Washington, he lobbied Congress and federal
regulatory agencies on consumer lending policy. A
recognized authority on consumer finance, Professor
Peterson has appeared before the U.S. Senate
Banking Committee, the House Energy and
Commerce Committee, the Federal Deposit Insurance
Corporation, Federal Reserve Board governors, and at
the White House. He has lectured widely on credit policy, including recent presentations
at Harvard Law School, New York University, and international presentations in Berlin,
Hyderabad, Lima, London, Warsaw, and Zurich. Professor Peterson is widely published,
including a piece discussing subprime home mortgage lending which was named the
outstanding consumer finance law review article of the year by the American College of
Consumer Financial Services Lawyers. In 2007, the National Association of Consumer
Agency Administrators named Professor Peterson the nation’s outstanding consumer
advocate in recognition of his role in promoting an act of Congress limiting the price of
loans made to military service members. As the University of Utah College of Law’s
Associate Dean for Academic Affairs Dean Peterson is responsible for the educational
and training capacity of his college.
Professor Peterson teaches contracts, commercial law, and consumer protection.

Don Maurice practices with the
Philadelphia based law firm of Maurice &
Needleman, whose attorneys specialize in all
areas of creditors’ rights and financial services
litigation throughout the nation. Don has
successfully litigated for the financial services
industry for more than 20 years. Don is AV
rated by Martindale-Hubbell and has been
recognized as a New Jersey Super Lawyer in
Bankruptcy and Debtor/Creditor Law since
2007 and a Corporate Counsel Super Lawyer
since 2009. He is admitted to practice before the
United States Supreme Court, Second and Third
Circuit Courts of Appeals and the State and
Federal courts of New Jersey.
Don Maurice, Esq.
Maurice & Needleman, PC
5 Walter E. Foran Blvd., Ste 2007
Flemington, NJ 08822
(908) 237 4570 (tel)
(908) 237 4551 (fax)
dsm@mnlawpc.com
Website: www.mnlawpc.com

Contact Info
Ronald E. Mallen
Partner
rmallen@hinshawlaw.com
One California Street
18th Floor
San Francisco, CA 94111
415-263-8112 Phone
415-834-9070 Fax
Practice Areas
Professional Liability
Legal Malpractice
Legal Ethics & Professional
Responsibility
Industries
Legal
Education
J.D., University of California,
Hastings College of Law, 1967;
B.S. Stanford University
B.S., Stanford University, 1964
Bar Admissions
1967, California
Courts
Ronald E. Mallen
Practice Focus
Ronald Mallen is nationally recognized for his practice in lawyer
professional liability, risk management and insurance coverage. During
more than 40 years of practice, he has counseled numerous attorneys
on issues of lawyers' professional responsibility.
Mr. Mallen has extensive trial and appellate experience, and has litigated
many legal malpractice claims. His work with professional liability
insurance encompasses coverage issues, litigation and the drafting of
insurance policies.
Professional Background
Mr. Mallen has been listed in “The Best Lawyers in America,” since its
inception and he holds the AV® Peer Review Rating from Martindale-
Hubbell, its highest rating for ethics and legal ability. He is a Fellow of
The American Bar Foundation, a Fellow of the Litigation Counsel of
America and a member of The American Law Institute. He was a
member of the consultative group on the Restatement (Third) of The Law
of Lawyering.
As a recognized leader in the field of lawyer professional liability, Mr.
Mallen has chaired the American Bar Association’s Standing Committee
on Lawyers' Professional Liability and the Association of Professional
Responsibility Lawyers. He was a member of the ABA’s Standing
Committee on Professional Competence, and chaired the ABA Special
Committee on Medical Professional Liability.
Mr. Mallen joined Hinshaw & Culbertson LLP in January 1998. He is the
Leader of the firm’s Lawyers for Professionals Department. Mr. Mallen is
also chair of the annual Legal Malpractice & Risk Management
Conference sponsored by Hinshaw.
Publications and Presentations
In June 2010, Mr. Mallen was elected to a two-year term as Chair of the
Editorial Board for the ABA/BNA Lawyers’ Manual on Professional
Conduct. Since 1977, he has been the co-author of the leading treatise
in the field, the five-volume work, “Legal Malpractice,” and of “The Law
Office Guide to Purchasing Legal Malpractice Insurance,” which are
updated and published annually by Thomson-West Group. Mr. Mallen
also has authored “Preventing Legal Malpractice” (2d ed. 1996). He has
written more than 100 articles on a wide range of topics concerning
lawyers' professional liability and risk management.
Mr. Mallen frequently lectures on lawyer professional liability issues.

U.S. District Court, Northern
District of California 1967
U.S. District Court, Eastern
District of California 1976
U.S. District Court, Central
District of California 1983
U.S. Court of Appeals, Ninth
Circuit 1967
U.S. Court of Appeals, Federal
Circuit 1987