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Courts can sanction unauthorized practice

An organization that sent brochures to defendants that offered paralegal services, and were designed to undermine their confidence in their attorneys, constituted the unauthorized practice of law, the Seventh Circuit held on April 24.

However, the court held that, absent a finding of contempt, a district court could only impose remedial sanctions on the organization, and not punitive ones.

Willard Johnson, facing criminal charges in the Southern District of Illinois, was represented by court-appointed counsel, Philip J. Kavanaugh III.

National Legal Professional Associates (NLPA) is an Ohio-based organization providing pretrial, sentencing and post-conviction consulting services, and H. Wesley Robinson is NLPA’s “Admin-istrative Director and Director of Case Analysis and Research.”

Robinson was permanently disbarred in Ohio in 1985 for mail fraud, and has never been licensed in any other state, and no one else in the organization is a licensed attorney either.

According to the record, NLPA sends promotional literature to inmates de-signed to undermine their confidence in their attorneys. For example, one brochure states, “you, and perhaps even your attorney, are now sailing into previously uncharted waters,” and suggests that NLPA’s services will protect defendants from “mistakes most often made by defendants under pressure from their own lawyers and the government.”

Another states, “A word of warning: If, after having reviewed this information, you are interested in having [NLPA] assist your counsel with your case, keep in mind that many attorneys become extremely paranoid when they know that their client is considering asking NLPA to become involved in working on the ‘defense team.’ [I]f your attorney appears reluctant to have NLPA become involved, or if he tells you he ‘knows everything’ and that there is nothing NLPA could bring to your defense team, you need to give serious thought to his real motive for making such a statement . … Keep in mind, this is your life and you as the defendant have every right to have as much assistance from any source that you deem appropriate. [sic] Your attorney works for you, you do not work for him. Therefore, should you decide to have NLPA assist you, when you speak with your attorney about this matter, be firm in explaining to him that although you appreciate all that he is doing to try and help, you want to have NLPA involved in the case and that you, as his client, are instructing him to work with us.”

Johnson requested that Kavanaugh hire NLPA to assist him, but Kavanaugh refused. Johnson then filed a complaint with Illinois’ attorney discipline commission, prompting Kavanaugh to move to withdraw as Johnson’s counsel.

Judge G. Patrick Murphy heard the motion, and became concerned that NLPA’s actions may have interfered with Kavanaugh’s representation. Murphy stated, “Well I’ll tell you. This is about — there is a group from Cincinnati, and frankly, I’ve had them before, and they’re, at best, dimwits, and they give advice to these defendants, who, God bless them, don’t know any better, and they muck up the cases, and they’re never here when you need them, and I’m full of it, and I’m going to prepare the necessary orders, and I’m going to have whoever they are in Court for practicing law here in Illinois through the mail. I’m going to have them here, and they’re going to be sitting right in front of me, and I’m going to have some questions of them.”

Murphy accordingly issued an order to show cause why NLPA and Robinson should not be held in contempt of court for engaging in the unauthorized practice of law and why the court should not issue a cease and desist order against their practicing law in the Southern District of Illinois.

What the court held

Case: U.S. v. Willard Johnson, No. 02-1334.

Issue: Does a court have inherent authority to impose sanctions for unauthorized practice of law?

Does mailing promotional materials designed to undermine criminal defendants’ confidence in their attorneys constitute the unauthorized practice of law?

Does a court have authority to prohibit such promotional materials and order disgorging of fees from previous cases?

Holding: Yes. Any unauthorized practice of law interferes with the court’s functioning.

Yes. Such materials improperly invert the attorney-client-paralegal dynamic.

Yes. Such sanctions are remedial, rather than punitive, and can be imposed even in the absence of egregious conduct.

Murphy also ordered Robinson to bring a list of all cases in the district in which NLPA had advised or contacted criminal defendants.

At the hearing to show cause, Murphy did not hold NLPA in contempt, but did determine that they had engaged in the unauthorized practice of law in cases other than Johnson’s, reasoning that the practical effect of the unsolicited marketing activities targeting criminal defendants was to interfere with the attorney-client relationship.

By making procedural and strategic recommendations to clients, Murphy concluded that NLPA indirectly pressured defense attorneys to pursue certain courses of legal action, because an attorney who refused to comply with the legal advice risked losing the confidence and the employ of his client.

Murphy then placed restrictions on NLPA’s activities in the Southern District of Illinois, and ordered that $22,177 in fees received by NLPA be paid to the court as a monetary sanction.

The fees were then returned to the defendants who had paid them, but $7,000 could not be returned because of their unavailability. Murphy ordered the $7,000 be disbursed to the Greater East St. Louis Community Fund, a community services organization.

NLPA appealed, but, in a decision by Judge Bauer, the Seventh Circuit affirmed everything except the transfer of the $7,000 to the fund.

Inherent Power

The court determined that federal district courts have inherent power to determine that a party engaged in the unauthorized practice of law and impose sanctions.

The court noted that, among the inherent powers incidental to all courts is the authority to “control admission to its bar and to discipline attorneys who appear before it,” and to “sanction for conduct which abuses the judicial process.” (cites omitted).

The court concluded, “It follows logically that a federal court’s power to regulate and discipline attorneys appearing before it extends to conduct by nonlawyers amounting to practicing law without a license. Moreover, considering the serious threat that the unauthorized practice of law poses both to the integrity of the legal profession and to the effective administration of justice, resort to the inherent powers … is an appropriate remedial measure.”

The court found no conflict between the exercise of such powers and the state’s power to punish the unauthorized practice of law, stating, “So long as the inherent powers are exercised in harmony with applicable statutory or constitutional alternatives, then the latter need not displace the former.”

Unauthorized Practice

The court then affirmed the finding that NLPA had engaged in the unauthorized practice of law. Looking to Illinois law, the court found that providing any advice or service “requiring the use of any legal skill or knowledge, … the legal effect of which, under the facts and conditions involved, must be carefully determined,” amounts to practicing law.

Only under the direct supervision of an attorney may such functions be performed by a paralegal. NLPA, however, prepared pretrial motions and performed other services, not merely without attorney supervision, but, in some cases, in contravention of attorney oversight.

The court also found the promotional literature alone was sufficient to find that NLPA “improperly inverted the attorney-client-paralegal dynamic.” The court reasoned, “Once Appellants, through their aggressive marketing techniques, undermined a defendant’s confidence in his or her counsel, and then exploited those doubts to make strategic recommendations to — and, in the words of the district court, ‘to foist their services upon’ — both client and counsel, any appearance of attorney supervision became meaningless.”

Accordingly, the court affirmed that NLPA had engaged in the unauthorized practice of law.

Sanctions

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Seventh Circuit Court of Appeals

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Case Analysis

The court then held that, on these facts, only remedial, and not punitive, sanctions could be imposed, stating, “Of particular relevance here is the apparent absence of any bad faith on the part of Appellants, despite the dubiousness — both legally and ethically — of their ‘paralegal’ activities. Generally, the harshest of sanctions based on inherent powers have been upheld only in situations involving bad faith, contumacy, or egregious misconduct. (cites omitted). Conversely, misconduct that is merely questionable warrants a less severe sanction (no matter how ‘dimwitted’ the offenders or how badly they ‘muck up the cases’). In its finding that Appellants were engaged in the unauthorized practice of law, the district court did not indicate that they acted in bad faith; nor do we discern any such indication. Moreover, we note that the record of the district court proceedings reflects Appellants’ sustained cooperation throughout. These factors militate in favor of imposing more moderate sanctions.”

The court concluded, however, that the restrictions imposed by Judge Murphy, to the extent that he placed restrictions on their activities and ordered the return of fees received, were remedial and not punitive. However, the court concluded that the fees received from clients who could not be located could not be transferred to the community services fund.

The court concluded that, insofar as the order does not compensate any individual who paid for unauthorized legal services, the sanction is punitive, and must be reversed in the absence of a finding of contempt. Accordingly, the court reversed this portion of the order, and directed that the clerk of court for the district to return the $7,000 to NLPA.

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David Ziemer can be reached by email.

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