TROY KING: Ad insults pro-bono lawyers
Birmingham News
June 26, 2010
In a misguided and desperate attempt to influence voters, Attorney General Troy King in the last weeks of the recent primary campaign ran an ad criticizing his opponent, Luther Strange, for being a former partner in a firm that provides free legal advice to Death Row prisoners.
As the chief legal officer of our state, King should compliment the many lawyers and firms in this state, including the Bradley Arant firm, that provide free legal advice to those who cannot afford to pay for such services, including Death Row inmates.
Indeed, it is an insult to all of the lawyers of this state for King to run such an ad.
The president of the Alabama Bar Association, Tom Methvin, has made encouraging and crediting lawyers for providing what is called pro bono (free) legal services a centerpiece of his term in office. That is leadership which honors the legal profession.
King's ads were a disservice to all lawyers, to the office he holds and to himself.
A.H. Gaede Jr.
Mountain Brook
- - -
Scruggs: A vile aftertaste lingers – [Editorial]
Jackson Clarion-Ledger (Mississippi)
June 26, 2010
The federal investigation into former Oxford trial lawyer Richard "Dickie" Scruggs has now ended.
But like someone who has eaten a bad meal, a vile aftertaste lingers for the Mississippi electorate.
The Scruggs affair shook the foundations of Mississippi's trust in the state's judicial system. Evidence of judicial bribery and intrigue that rivaled a John Grisham novel proved to be real and it will take some time for the reputation of the state's legal system to fully recover.
But the fruits of the federal investigation helped with that. Powerful, influential people went to prison.
Scruggs, his law firm associate Sid Backstrom, Booneville attorney Joey Langston, New Albany attorney Tim Balducci and former state auditor Steve Patterson all pleaded guilty in connection with federal judicial bribery charges in two separate investigations.
Scruggs drew a maximum five-year sentence after pleading guilty to scheming to pay Lafayette County Circuit Judge Henry Lackey $40,000 to rule in Scruggs' favor in a $26.5 million legal fees dispute involving Hurricane Katrina litigation.
Scruggs' son Zach pleaded guilty to a lesser charge in connection with the same judicial bribery probe that brought down his famous father.
Langston pleaded guilty in a separate case from Scruggs and is also cooperating in a case involving an alleged conspiracy between him and Scruggs to win a favorable ruling from former Hinds County Circuit Judge Bobby DeLaughter.
DeLaughter reported to prison Jan. 4 to serve an 18-month sentence for lying to the FBI in a judicial corruption investigation that also toppled Scruggs.
Prosecutors said Scruggs used DeLaughter's friend and former boss, ex-Hinds County District Attorney Ed Peters, to persuade the judge to rule in his favor in a civil case. Scruggs allegedly offered DeLaughter a chance to be recommended for a federal judgeship by former Sen. Trent Lott, Scruggs' brother-in-law.
The downfall of Scruggs - once the most feared and capable trial lawyer in the country - is Shakespearian tragedy. From the heights of wealth, fame and power to shuffling along in leg irons in a prison jumpsuit, Scruggs' story is a cautionary tale - or should be.
What the Scruggs investigation revealed most clearly is the need for interest, introspection and careful choices during judicial elections. Scruggs represented the down side.
But on the up side, there was Judge Lackey - honest, honorable and not for sale. Mississippi voters should cling to that fact and seek other jurists like him.
- - -
State Supreme Court works to improve access to legal aid for lower-income residents
By Richard Locker, Memphis Commercial Appeal (Tennessee)
June 22, 2010
NASHVILLE – The Tennessee Supreme Court took several steps today in its efforts to improve access to legal aid in civil matters for lower-income people, including more “plain language” forms for filing civil actions without attorneys.
The court also endorsed guidelines designed to increase the help that court clerks can offer litigants who represent themselves, scheduled a statewide pro bono “summit” for next January and announced plans to develop a website with resources for self-represented litigants and pro bono lawyers.
Those efforts are part of the court’s Access to Justice initiative, launched in December 2008 to help lower-income Tennesseans facing civil (non-criminal) legal issues but who cannot afford attorneys. The court created an Access to Justice Commission to develop a broad plan, which was submitted to the court April 1.
In a brief State Capitol ceremony attended by dozens of lawyers this afternoon, Chief Justice Janice M. Holder of Memphis and her four state Supreme Court colleagues formally adopted the four goals recommended by the commission and detailed specific steps to accomplish each of them.
The measures announced today follow other steps the five justices have taken over the past year, including adding a provision in statewide court rules that recommend all lawyers perform at least 50 hours of pro bono, or free, legal work per year and giving lawyers additional credit against their annual continuing legal education requirements.
“Lack of equal access in our civil courts remains one of the most pressing issues facing our court system today,” Holder said. “It is a common misconception that low-income citizens are entitled to legal assistance in civil matters. However, only Tennesseans who meet criteria based on federal poverty guidelines are eligible for free legal assistance in resolving civil disputes.”
She said Tennessee’s 81 federally funded legal aid attorneys can serve only one out of five persons who qualify and request help.
“Thousands more who fall just outside the income guidelines are unable to afford representation when faced with a life-altering legal event,” Holder said.
She said the court will adopt a series of forms, written on fifth- to eighth-grade reading levels and acceptable for use across the state, that will enable people without lawyers to complete some civil legal transactions on their own – including, for example, a divorce case for a couple without children.
“They (the commission) will start with the most simple forms and then work their way to the more complex. They will be very user-friendly. There are even instructions about court decorum – what you do and what you don’t do in court,” the chief justice said after the ceremony.
Memphis lawyer George T. “Buck” Lewis, co-chairman of the Access to Justice Commission, said the court today “adopted a multi-phased strategic plan” whose details “were distilled from a list of about 175 ideas. These today represent the best and the ones that have the most impact the quickest.”
---
Feinberg Ramps Up $20 Billion Compensation Fund
By NEIL KING JR., The Wall Street Journal
June 21, 2010
Calamities and Kenneth Feinberg have a way of finding each other.
As soon as the Deepwater Horizon drilling rig sank and triggered a huge oil spill in the Gulf of Mexico in April, Mr. Feinberg started mulling how an avalanche of claims by economic victims could be handled. Less than two weeks ago, BP PLC called to offer him a job doing just that. Last week, BP and President Barack Obama jointly chose him as administrator of an unprecedented $20 billion compensation fund.
The Washington lawyer and arbitration guru is now racing to speed up the system that BP initially put in place to compensate tens of thousands of Gulf residents and businesses for their financial injuries. It's a task he predicts will outstrip in complexity all the other victims' funds he has run, from the Agent Orange liability litigation in the 1980s to the $7 billion for victims of the September 2001 terror attacks.
What makes this case all the harder to handle is that it remains an unfolding disaster. "Until the oil stops, this is an ongoing tort. We just can't say what the final size of claims will be," Mr. Feinberg said in an interview. "The sheer scope of this is something we haven't seen before."
Two days after BP and the White House agreed on June 16 to set up an independent claims fund, Mr. Feinberg flew to the region, first to Mississippi and then Louisiana. Mr. Feinberg met Monday with BP executives in Houston to work out details for taking over the claims process. He is set to travel next to Alabama and Florida.
The fund he is set to administer has a number of oddities. It was created as a voluntary compact between the U.S. government and BP, but without any act of Congress, executive order or other legal anchor. Mr. Feinberg will have complete latitude to determine the fund's operations, including all key decisions as to who gets money and in what amounts.
Industry Uses Drill Ban as Exhibit A Stiffer Rules Will Squeeze Smaller Players Since his appointment, Mr. Feinberg has said repeatedly that he would neither take orders from the White House nor BP. But he said that Mr. Obama did give him one instruction: to get payments out quickly.
After meeting with Mississippi Gov. Haley Barbour on Friday, the 64-year-old Mr. Feinberg warned of the high potential for fraudulent claims in the same breath as he urged anyone who thinks they may be eligible to step forward. Getting people to apply in the first place is his first big hurdle.
BP Has Paid $2 Billion for Spill So FarAccess thousands of business sources not available on the free web. Learn More "You'd be amazed how many people don't come forward," he said. "They procrastinate, they worry, they doubt they will qualify, they don't trust the process, whatever."
BP has faced heavy criticism for lapses leading up to the disaster and for failing to prepare for a spill of this size. But Mr. Feinberg praised the company for its work in getting a claims process running swiftly. For at least another month, Mr. Feinberg will be advising BP on ways to speed up payments and make the process more transparent. He said he hoped to assume all responsibilities by August.
In seven weeks, BP has written 31,000 checks worth $104 million to Gulf Coast fishermen, shrimpers and others whose work has been cut short by the spill. A team of nearly 1,000 clerks and adjusters are processing claims in 33 field offices from Louisiana to Florida.
"BP deserves a fair amount of credit here," Mr. Feinberg says. "This is the first time I know of where a company has implemented a whole process like this in the midst of an ongoing crisis."
The son of a tire salesman and a bookkeeper from Brockton, Mass., Mr. Feinberg makes his case in the heavy twang of south Boston. A former chief of staff to the late Sen. Ted Kennedy, he went on to become one of the country's most prominent arbitrators. After a rough start, he earned wide respect for how he handled the survivors and families of those killed on 9/11. The Treasury Department appointed him last year to monitor executive pay at companies that had received federal bailout money during the financial crisis.
"Ken is accustomed to handling these sort of issues without emotion," said former Attorney General John Ashcroft, who appointed Mr. Feinberg to run the 9/11 fund. "He was very good at distinguishing the deserving from the undeserving."
Doing the same along the Gulf Coast could be his biggest challenge. Can a motel 100 miles from the coast file for diminished revenues? What about a restaurant in Atlanta now having to pay more for shrimp?
And what about a New Orleans strip bar called the Mimosa Dancing Girls, which has put in a claim for a slump in sales? Asked about that one Monday on "Good Morning America," Mr. Feinberg said he was "very dubious about that claim," but didn't want to prejudge it.
As a rule, Mr. Feinberg said, he will turn to state law for guidance on which types of claims to honor and which to dismiss.
In the end, one aim of the fund—and a prime reason BP agreed to it—will be to minimize lawsuits against the company. To do that, Mr. Feinberg will offer big lump-sum payments to workers and businesses as an enticement to stay out of court.
"At some point, I will have to make an offer—'You take this amount in full satisfaction of your claim, but only if you waive your right to future litigation,'" Mr. Feinberg said. "And if I package it right, people will see that it makes no sense to fight it out in court."
- - -
Lawyers don't behave like banks – [Op-ed]
Carolyn B. Lamm, National Law Journal
June 21, 2010
One day, you arrive at your office to discover that your usual methods of practicing law and managing a firm have been turned upside down. You are current on ethics and your state's code of professional conduct. Your files and financial practices are in order. But now, a vaguely worded provision in the newly implemented financial reform legislation has thrown you into a complicated new federal regulatory scheme overseen by a new consumer protection agency supposedly designed to oversee banks and financial services providers. The legal profession's independence has been seriously weakened. And you are facing a raft of new federal bureaucratic requirements.
If you cannot envision this occurring in your practice, the American Bar Association encourages you to take another look at language included in the Senate version of the Consumer Financial Protection Act of 2010, H.R. 4173, that a conference committee is attempting to reconcile with the House-passed version of the bill. The new consumer financial protection entity is tasked with regulating anyone offering "a consumer financial product or service."
SENATE VERSION AT ISSUE
There is an exemption for lawyers engaged in the practice of law contained in both versions of the bill. The House bill contains a broad lawyer exemption; however, the Senate version of the exemption contains a subsequent provision that excludes practically everything that was initially exempted. The ABA is deeply concerned that the language of the exclusion — if not properly addressed in conference — will, overnight, create federal regulation of lawyers completely contrary to hundreds of years of common law tradition and dramatically increase administrative time and costs for firms large and small.
How sweeping is the Senate's language? Sweeping enough that litigators, tax lawyers, transactional attorneys, family law specialists, bankruptcy lawyers, estate lawyers and general practitioners are among those who should be worried. Sweeping enough that any lawyer who administers a client retainer or other trust account, handles escrow or transmits funds to a third party to complete a transaction or a settlement for an individual client should be concerned. And the provisions would apply not only to lawyers, but also to their paralegals, legal secretaries and other law firm employees as well.
Lawyers working as financial services providers and outside the normal confines of the lawyer-client relationship should not be sheltered from the new federal rules. All of us in the profession also expect our state disciplinary systems to move forcefully against lawyers who violate the rules. In fact, a growing list of state courts and bars in regions afflicted with nonlaw businesses that appear to offer legal help to consumers have aggressively stepped up disciplinary activity against lawyer involvement in such entities. Lawyers should not be allowed to trade on their legal credentials and put their own financial interests ahead of their clients'.
This kind of state-level enforcement is more focused, effective and faster than a web of new federal agency rules and regulations could ever be.
The House's version of the bill does appropriately define when and how someone with a law license who engages in true financial activities outside of the lawyer-client relationship might fall under the purview of the new consumer financial protection entity, without imposing an overlay of federal regulations on lawyers who are engaged in the everyday practice of law.
Lawyers and law firms are urged to let their representatives and senators know of their concerns as soon as possible so that our voices are heard before this issue is resolved.
The ABA's concern over this potential inadvertent overregulation of the profession is just the latest in a recent spate of similar federal regulatory issues on which the ABA has vigorously engaged. For decades, the ABA has taken the lead in opposing federal legislation and proposed rules that would impose excessive federal regulations on lawyers engaged in the practice of law and has fought to preserve the American legal profession's long, proud and successful history of appropriate independence and state discipline. It's a fight we're proud of, and one that we'll continue.
Carolyn B. Lamm is the president of the American Bar Association and a partner in White & Case's Washington office.
- - -
Tipping the Scales: In the South Women Have Made Huge Strides in the State Judiciaries
By Mark Curriden, ABA Journal
July 2010
Once a year, the chief justices of the Southern state supreme courts gather to share experiences, learn from judicial educators, discuss trends that are common in the court systems of the Deep South and seek solutions. Last year, when the elite group of jurists gathered in Nashville, Tenn., they recognized that they themselves are a trend: Eight of the 13 Southern states—Alabama, Florida, Georgia, Louisiana, North Carolina, South Carolina, Tennessee and Texas—have female judges leading their courts of last resort—more than any region in the country.
"We all looked at each other and noticed that there were a lot of us,” says Tennessee Supreme Court Chief Justice Janice Holder. “While it wasn’t a coordinated event, it didn’t just happen either.”
Twenty states across the nation now have a woman serving as chief justice—more than at any time in the history of the United States.
In fact, women compose 26 percent of state judiciaries, compared with 22 percent of the federal judiciary, according to The American Bench: Judges of the Nation, a new report by Forster-Long Inc.
Women now make up 48 percent of law school graduates and 45 percent of law firm associates, according to the report.
Nowhere have the gains in gender diversity been greater than in the South. Four of the states in that region—Florida, Georgia, Kentucky and South Carolina—have as high or higher percentages of women on their state courts as do California, Connecticut, Illinois, Michigan and New Jersey, all of which are considered much more liberal or progressive in seeking diversity.
But it is in the Southern supreme courts where the gender diversity is most obvious and publicly displayed.
“I ask people if they know how many women chief justices there are, and they answer two or three,” says Alabama Chief Justice Sue Bell Cobb. “When I tell them, they are shocked. But it really blows them away when I tell them how many there are of us in the South.”
Former Georgia Chief Justice Leah Ward Sears, who retired last summer, had the same experience.
“The South often gets a bad rap for race and gender,” says Sears, who was her state’s first female chief justice and second African-American justice. “But I would go to New York and tell people that I was chief justice, and they would be floored.”
Nine of the 13 state supreme courts in the South have multiple women as justices, as does the District of Columbia. Five states have three or more—the Texas Court of Criminal Appeals, which is that state’s court of last resort on criminal matters, has four female judges. Tennessee is one of three states with a majority of women on its supreme court.
Michigan and Wisconsin are the other two. Two states have no women as justices, and neither—Idaho and Indiana—is in the South.
Before 1990, there had only been eight female chief justices in the nation’s history. The first was Arizona Chief Justice Lorna Lockwood, a great-niece of Abraham Lincoln, who was chosen by her peers on the Arizona Supreme Court in 1965.
PUSHING FOR PROGRESS
Florida Chief Justice Peggy A. Quince says the growing numbers of women serving as chief justice in their states is something that comes out of many reforms, but especially several originating within the legal profession in the last few decades.
“By 1990, a Florida Supreme Court commission on gender bias had released its final report cataloging in withering detail the ways that discrimination against women was both tacitly and explicitly enforced in the legal profession,” she says. “This report directly led to a number of changes in rules of court, statutes and common practices that sped the rate of reform.”
The Florida commission, for example, found that the state’s judicial nominating commissions generally applied different standards to male and female judicial candidates, such as giving greater weight to traditionally “male” areas of practice and being unduly concerned with the child care arrangements of female candidates. The result, the commission found, was that women were not appointed to judgeships in numbers proportionate to their membership in the bar.
As a result of the gender bias report, the Florida JNCs changed their rules to require that each candidate be given the option to identify their own race, ethnicity and gender. All the completed addendums also are forwarded to the governor, whether or not the applicant is nominated.
The Florida Code of Judicial Conduct also now prohibits judges from being members of any organization that practices invidious discrimination. Many other state supreme courts created similar gender bias task forces during this time period to examine how women were treated in the court system. As a result, more women were appointed or elected to the bench; and, over time, a well-established network of female mentors and role models emerged in the profession.
“The fact that so many women now serve or have recently served as chief justice in their states is the result of these decades of work,” Quince says. “They have reached levels of seniority and built professional networks that have placed them in these roles as leaders.”
Georgia Supreme Court Chief Justice Carol Hunstein, who chaired Georgia’s gender bias task force, agrees, but also points out that each of the eight Southern chief justices took different routes to get where they are.
The chief justices in Florida and Tennessee were appointed by the governor, ran in retention elections, and then were elected chief by their colleagues. In Louisiana, the chief justice was elected by a district in the state and then promoted to chief due to seniority on the supreme court. The Alabama chief justice and Texas Court of Criminal Appeals presiding judge were chosen directly by the citizens in statewide partisan elections. North Carolina’s chief justice was initially elected to the state supreme court and was then appointed chief justice by the governor. The South Carolina legislature appoints its chief justice.
While supreme court justices in Georgia run statewide in nonpartisan elections, the tradition has been for the justices to retire during the middle of their term, allowing the governor to fill the spot with an appointment. The Georgia justices then internally select one of themselves to be chief, usually based on seniority.
“The women chiefs tend to have gotten to the position differently from men,” says Holder, who couldn’t even get a job as a lawyer out of law school. “Women came up through the system the hard way. You have to develop skills to survive and to get to the next level.”
THE POLITICS OF CHANGE
But the common denominator for the eight Southern chief justices is politics. At a time when bar associations and advocates of judicial independence decry judicial elections as improperly influencing the rule of law, it is those exact politics that are credited for the success of these eight female chief justices.
For example, then-Gov. Zell Miller of Georgia called it “good politics” when he appointed Justices Hunstein and Sears in the early 1990s. And Chief Justice Jean Hoefer Toal had served 13 years in the South Carolina legislature when that body selected her to serve on the state’s highest court in 1988 and then promoted her to chief in 2000.
“We’ve hit the 21st century and women are the majority—the majority of college students, the majority of law students, the majority of new lawyers and, most importantly, the majority of voters,” says Celinda Lake, who is a political adviser and pollster for Cobb, Hunstein and Sears.
“The voters recognize qualities in judicial candidates that the legal and political elites don’t,” Lake says. “The elites disqualify a candidate for not going to the right law school or being editor of law review. The people want judges who are good listeners and thoughtful, and women are very strong with voters in those characteristics.”
Lake says that women who are judicial candidates have to overcome one common public bias to win at the ballot box over dads and college-educated men.
“The hardest bias to overcome is toughness, which is laughable if you know any of these chief justices personally,” says Lake.
In each of Lake’s three successful Southern state supreme court elections, she focused on the stories of the three women.
She points to the 2006 re-election campaign of Justice Hunstein, who was challenged by a former Bush administration lawyer who was backed by pro-business interests. Lake pushed Hunstein’s life story of overcoming polio, handling two bouts of bone cancer, having a leg partially amputated, being a single mother of three whose husband died leaving her in near poverty, and working her way through college and law school.
Hunstein’s campaign also displayed her toughness, running television advertisements pointing out that her opponent’s mother had sued him for taking her money, and that his sister had accused him of threatening to kill her. And she strongly countered attacks that she was soft on crime by showing statistics that she sided with the prosecution as often or more often than her fellow justices.
The result: Justice Hunstein won re-election with 63 percent of the vote and won all 159 counties in Georgia.
“The voters in Georgia, given the opportunity to elect in an open seat, have, in the last two elections, chosen women candidates for the court of appeals,” says Chief Justice Hunstein.
LIVING TESTIMONY
The five Southern chief justices who agreed to be interviewed for this article concur that diversity on the bench is as important today as ever before.
“In a real sense, a judge’s life experience can serve as a lens to magnify what others cannot see,” says Chief Justice Quince.
“I think of the case decided last year by the U.S. Supreme Court involving a 13-year-old girl forced to undergo a strip search based on scant evidence of misconduct. Some of the questions at argument suggested that the male justices saw this procedure as little different than changing for gym class.
“But Justice Ruth Bader Ginsburg commented that her male colleagues had never been 13-year-old girls and simply did not understand the degree of humiliation involved. And the court’s majority agreed that the search was unconstitutional. To me, that ex ample illustrates why a diversity of life experience is crucial for a bench that reflects our larger society and its concerns.”
DIVRSITY ON THE BENCH
Diversity in the Legal Profession:The Next Steps, a report released in March by the ABA’s Presidential Diversity Commission, says lack of diversity “can malign the legitimacy of not only lawyers, but the law itself.” Among the commission’s recommendations, it urges that judges and state bar associations lobby their states to make judicial appointments more transparent. It suggests that state and local governments modify selection and screening criteria to aid the recruitment of more women and minorities to the bench.
Today, at least 25 states have more women on the state bench than the federal bench in their state, and 31 percent of all sitting state supreme court justices are women.
---
Baker Donelson dedicated to Pro Bono Service
Throughout his term as President of the Alabama State Bar, Tom Methvin has encouraged lawyers throughout the state to support Access to Justice. A key initiative has been an emphasis on pro bono service and participation in the Volunteer Lawyers Program. Mr. Methvin would like to recognize an outstanding commitment to pro bono service by a firm with offices in Birmingham. In 2008, Baker, Donelson, Bearman, Caldwell & Berkowitz PC, established a firm-wide pro bono initiative. Baker Donelson attorney Lisa W. Borden was named the firm’s Pro Bono Shareholder, a new position, where she is national coordinator of the firm’s pro bono programs and initiatives. “It is unique that a firm and a lawyer place such importance on pro bono service that they dedicate themselves to it exclusively,” Methvin said. “I’d just like to take a moment to commend them for their commitment to the ideal of true access to justice for all.” In addition to its Birmingham office, Baker Donelson operates 15 offices throughout the Southeast and in Washington, D.C.
Watch out for third-party 'recovery firms,' bar says – [Op-ed]
By KEITH B. NORMAN, Special to the Press-Register
June 11, 2010
As Gulf Coast residents struggle with the impact of the BP oil spill, they need to be alert to possible illegal activities being conducted by out-of-state claims adjusters.
In some reported cases, these adjusters are offering to settle damage claims related to the oil spill. Alabama does not license claims adjusters, so any claims settled by such third-party recovery firms are considered to be the "unauthorized practice of law," which is subject to criminal prosecution.
Anyone assisting third-party adjusters attempting to settle claims on behalf of claimants could also be charged with aiding and abetting in this illegal activity.
Claimants filing their own claims with BP are not in danger of being prosecuted, of course.
The Alabama State Bar is serious about its responsibility to protect the public and to ensure that people understand their legal rights.
While the Oil Pollution Act and related federal laws can be complicated, filing a damage claim related to the BP oil spill is free, and help with this process is available through a number of reputable resources.
If someone tries to charge a fee to initiate a claim, we urge people to say "no" and report it to the Alabama State Bar general counsel's office (334-269-1515) or the attorney general's office (334-242-7300).
The process for filing a free claim begins with calling the BP hotline at 800-440-0858, where people will be assigned a claim number.
For people who have already retained counsel, the Alabama Claims Assistance Team can assist their attorney with submitting a claim to BP. The information and assistance that the ACAT members may provide is limited to the submission of claims and is not legal advice.
All claimants, potential claimants and/or their designated representatives seeking the assistance of the ACAT in submitting a claim to BP must understand and acknowledge that any information and/or assistance provided by the ACAT members shall not be considered as legal representation.
- - -
Keith B. Norman is executive director of the 16,000-member Alabama State Bar.
- - -
Firm’s Paper Trail Targeted - Lawsuits challenge LegalZoom document business
By Alfred Lee, Los Angeles Business Journal
Monday, June 14, 2010
Since 2001, LegalZoom.com has sold customized legal documents online to people who want to do anything from forming a business, to writing a will, to getting a divorce – without going to the trouble, or cost, of hiring a lawyer.
The Hollywood company has been a success, growing from a startup run out of a Wilshire Boulevard condo to an operation of nearly 400 employees doing business in all 50 states.
Along the way, there have been grumblings by some in the legal profession that LegalZoom is unfairly moving in on their territory. Now, a pair of legal challenges is questioning whether LegalZoom’s business model is even lawful.
Class-action lawsuits in Los Angeles and Missouri have been filed that accuse the company of offering legal services without a license. The company had faced questions about its business model before, but had never been sued over it. The firm’s increasing visibility seems to be making it more of a target.
“I’m not certain why all these lawsuits have been brought in this time frame, but I would have to say the company is (increasingly) a recognized name brand when it comes to delivery of legal services by a nonlawyer, and that could be a factor,” said Chas Rampenthal, LegalZoom’s general counsel and vice president of product development, who denied the allegations.
The legal challenges come amid recently announced plans to open an expansion office in Austin, Texas, that would potentially house hundreds of employees. Those plans have not been curtailed by the lawsuits.
Gillian Hadfield, a law and economics professor at USC who studies legal markets, said the suits are a sign that the growing company is ruffling feathers.
“I would not take it as an indicator that they’re doing bad stuff,” Hadfield said. “I’d take it as an indicator that they’re challenging the status quo.”
Consumers who go to LegalZoom’s website can fill out customizable legal forms online that are checked for errors by customer service employees who make follow-up phone calls as needed. The package for incorporating a business, for example, can cost as little as $139. In comparison, “a lawyer would charge you approximately $1,480 for the standard incorporation package,” the website states.
The Los Angeles Superior Court lawsuit, filed May 27, alleges that LegalZoom misleads consumers by advertising its services as “attorney-quality” and seeks “an order prohibiting defendants from engaging in the unauthorized practice of law.” The case was filed on behalf of a San Francisco woman named Katherine Webster, who claims she bought a living trust on behalf of her uncle that turned out to be so problematic she had to hire an attorney to fix it.
The Missouri case, filed earlier this year, also seeks to bar LegalZoom from “unlawful practice” of the law in that state, and cites a cease-and-desist letter sent by the North Carolina Bar to LegalZoom. Despite the cease-and-desist order, Rampenthal said LegalZoom continues to operate in North Carolina.
The lawsuits, though, pose a serious challenge to LegalZoom, because a loss in either California or Missouri could invalidate its business model there and open it up to similar challenges in other states, said Bernard Resser, an attorney at Century City-based Rutter Hobbs & Davidoff and who is experienced in class-action cases and unfair competition. But a victory could also further legitimize the business moving forward.
“Their entire business is threatened if it’s deemed unlawful practice of the law,” Resser said. “If they overcome the injunction, that certainly clears the way for their operations and continued success.”
Success story
LegalZoom is a classic success story that has been well documented. Attorneys Brian Liu and Brian Lee quit their jobs at high-profile law firms, teamed with Web developer Eddie Hartman, and turned to friends and family for $250,000 in seed money to launch the company out of Lee’s condo in 2000.
They were able to bring in Robert Shapiro, the former O.J. Simpson lawyer who has become the public face of the company, as a majority shareholder after pitching him the idea on a cold call.
The website went live in 2001 while the founders were still in the condo. About 2003, the company moved out of a 900-square-foot office on Larchmont Boulevard to its current headquarters on Hollywood Boulevard, where its 400 employees are spread across five floors of a building.
LegalZoom, which began running television and radio commercials starring Shapiro more than three years ago, claims it’s served more than 1 million customers.
LegalZoom is “still evaluating our options” regarding a possible move out of the city of Los Angeles to avoid a new higher tax rate, spokesman Scott MacDonnell said.
The company succeeded, Hadfield believes, because it was able to fill an important gap in the legal marketplace for affordable services.
But Tim Van Ronzelen, an attorney at one of five law firms representing plaintiffs in the Missouri case, said that LegalZoom violates Missouri law, which has a statute barring legal document preparation by nonlawyers.
“What LegalZoom does in Missouri is they charge money for preparation of legal documents without having a legal license,” he said.
The law governing how much assistance can be provided by nonlawyers in the preparation of legal documents varies state by state but generally bars any kind of advice, Hadfield said.
So for example, in California, “legal document assistants” who meet a minimum level of experience or education and are registered in their counties are allowed to help customers prepare documents. That includes helping people understand the form but prohibits them from helping fill it in. They also cannot tell clients what forms they might need or what might be the legal effect of a filing.
Consumers can opt for self-help books or software that provides documents that are similar to a legal version of TurboTax. But even those types of services have had their own legal battles.
Nolo Press, a Berkeley publisher that publishes books of legal forms, famously fought off a number of legal challenges, and even had to get a state law passed in Texas in the 1990s to protect it and similar business from accusations of practicing law without a license.
“There’s a huge gap in what the market’s able to provide to help people to navigate the legal world,” said Hadfield, who supports more affordable services and does not believe the L.A. case has merit.
“We should make it easier for companies like LegalZoom to operate in a way that’s fairly priced and sufficiently protective of consumers’ interests, not harder,” she said.
No ‘bright line’
The L.A. case has a long way to go. LegalZoom has not yet filed a response to the recent lawsuit, and it can sometimes take well over a year to have a case certified for class-action status.
The status is only given when a plaintiff can show enough of a common link with multiple other plaintiffs who would benefit from a combined single lawsuit. Such status also encourages law firms to handle complaints that otherwise might not be financially worthwhile to pursue.
Resser said the plaintiffs’ attorneys may face trouble in getting certified as a class-action case.
That’s because the L.A. case primarily argues that LegalZoom’s alleged misrepresentations of itself as “attorney-level” led their client to purchase a bad living trust. But it sues on behalf of anyone in the state who’s purchased a living trust or will, regardless of whether they were duped by LegalZoom’s alleged misrepresentations or whether their product ended up being problematic.
“They may end up with a class where the majority of class members may not have a claim,” Resser said. “I think there’ll be a big fight over whether this deserves class certification.”
The Missouri case, which sues on behalf of everyone in that state who has used the service, has yet to receive class-action certification as well. A judge recently denied a motion by LegalZoom’s attorneys to move that case to California, leaving the company until June 16 to file an answer or another motion.
Both sides in each case could potentially have good arguments.
“Once you tell someone, ‘Oh, you’ve entered everything correctly and this is legally enforceable,’ that seems like it could be legal advice,” Resser said. “But it isn’t a bright line.”
- - -
Additional courtroom unlikely until October
By Nick Duke, Troy Messenger
June 15, 2010
A new jury trial courtroom at the Pike County Courthouse could be on the way, but it will likely have to wait until October for construction to begin.
Pike County Circuit Judge Jeff Kelley addressed the Pike County Commission at its meeting Monday night, but no vote of action was taken.
“We were just trying to get a feel for their willingness to assist in the near future,” Kelley said.
Commission Chairman Jimmy Barron said after conferring with other commissioners, the commission is on board with the project, but that it will wait until its new budget is approved in October before officially committing.
There is a small possibility that the project could get underway soon with a promise of reimbursement by the commission in October, but Kelley said such an arrangement is unlikely.
“It’s possible that could happen, but I doubt that it will happen,” Kelley said.
“We would probably have to have the full funding available before we would start the project.”
Kelley said without funding in place, the project would likely have to wait until the next budget hearings to start the construction efforts.
“We’ll probably wait at least until the next budget hearings so we can have some assurance that we are in the budget,” Kelley said.
The proposed location for the courtroom is the current location of the law library at the Pike County Courthouse. The estimated total cost of the project is roughly $29,000.
The commission is being asked to provide $13,000 for the courtroom, while Kelley and other judges have secured $16,000 for the project.
The majority of the money that has been secured comes from the law library fund, while $1,000 of it will come from the district attorney’s office.
The law library fund is funded through court filing fees, and is not specific to simply law libraries. Rather, the funds can be used for a myriad of court improvements. The project is not expected to deplete the fund.
Kelley also said the current plans call for some books and bookshelves to remain in the courtroom so that a law library will remain in the courthouse.
However, most law research is currently done using online services, a feature that could be included in the new courtroom for the public.
“The Alabama State Bar provides free online service to the members of the bar, so one thing we may have to do is get the bar to set up some kind of access for the public at the courthouse,” said Malcolm McSwean, President of the Pike County Bar Association.
The new courtroom would assist in alleviating scheduling difficulties and workloads since it would provide more flexibility.
“Hopefully, this will come through,” McSwean said.
“It’s a desperate need. There’s no way Judge Kelley could have stressed that enough during the meeting Monday night.”
We can’t schedule all the judges here right now. That’s what slows us down considerably in getting cases heard and judges scheduled.”
McSwean said the additional courtroom would make the scheduling of trials much easier, enabling more cases to be heard at a time.
“One of the beauties of this project is that we don’t have to schedule around other judges, and that really does make a difference in getting things accomplished,” McSwean said.
Kelley said the potential project could be an opportunity for many different interests to cooperate on one common need.
“It’s something we need desperately, what with the increase in cases recently,” Kelley said.
“It’s a great opportunity to work together and it’ll be a win-win situation for everybody.”
Barron, meanwhile, said the commission is likely to lend its eventual financial support.
“The commission is pretty much on board with the project, but we just didn’t want to commit at the moment,” Barron said. “Right now, we just don’t want to dip into our general fund.”
- - -
Rule would bar lawyers' 'false statements' about the system - An advertisement criticizing divorce courts at heart of suggestion
By Pamela Manson, The Salt Lake Tribune (Utah)
06/15/2010
An advertisement for a law firm alleging that divorce courts are unfairly stacked against fathers has prompted a proposal that many lawyers say would violate their free speech rights.
The proposal would prohibit lawyers from knowingly making false statements about the judicial system.
The attorneys say the proposed amendment to the Utah State Court Rules of Professional Conduct is overly broad and too vague. They question who would decide if a statement is false when a lawyer directs criticism at the judicial branch in general, rather than at an individual judge.
"By discouraging criticism of an imperfect system (no system is perfect), the judicial system stands to lose critical information that can help it improve," wrote lawyers with the Office of Legislative Research and General Counsel, who were speaking for themselves, not the Legislature.
The American Civil Liberties Union of Utah said it would be difficult for a lawyer to determine the truth or falsity made about a "system."
At the close of the comment period on Monday, the proposal to change Rule 8.2 -- posted at www.utcourts.gov/resources/rules/comments -- had no online defenders. Several lawyers who commented on the rule change online said they were not told about the reasons behind it.
Lawyer Michael Coombs said the change has "enormous potential to be used for great mischief and harm." Attorney R. Clayton Huntsman said attempting to regulate comment "smacks of totalitarianism and repression."
And attorney Charles Schultz asked: "Before they are permitted to enter a court building, will lawyers be required to kneel, and give thanks for being permitted to associate with such a holy and venerated institution as the judicial system?"
Rick Schwermer, assistant administrator of the Administrative Office of the Courts, said the amendment was drafted by a subcommittee of the Supreme Court's Advisory Committee on the Rules of Professional Conduct.
The Supreme Court has not seen the proposal, Schwermer said, and taking comments is just the first step in the process. The amended rule will go to the advisory committee, which could forward it to the high court as written, rewrite it or drop it.
The amendment also encourages attorneys to defend the judicial system when it is unjustly criticized.
Utah State Bar President Stephen Owens said the group's leadership has not taken a stand on the issue yet.
"I have been contacted by several members of the bar concerned about the potentially overly broad language of the rule change," Owens said.
He also said, "In general, as officers of the court, lawyers are expected to respect our judicial system and its judges."
- - -
U.S. Circuit Court of Appeals in Chicago decides Wisconsin judges can join political parties
By Carrie Antlfinger, Associated Press writer
June 16, 2010
Wisconsin judges can join political parties but cannot endorse partisan candidates for office or solicit campaign donations, a federal appeals court ruled Monday.
The decision of the 7th U.S. Circuit Court of Appeals in Chicago restores two of the three state rules struck down last year by U.S. District Judge Barbara Crabb, who had found they violated judges' First Amendment rights to free speech and improperly kept information from voters.
"When judges are speaking as judges, and trading on the prestige of their office to advance other political ends, a state has an obligation to regulate their behavior," the panel wrote. "We thus see a dividing line between the party affiliation rule, which impermissibly bars protected speech about the judge's own campaign, and the public endorsement rule, which addresses a judge's entry into the political arena on behalf of his partisan comrades."
The court also overturned Crabb's decision on fundraising, saying a contribution given to a judge in response to a personal solicitation carries "a greater potential for a quid pro quo and a greater appearance of a quid pro quo than a contribution given to the judge's campaign committee."
State Atty. Gen. J.B. Van Hollen had appealed Crabb's initial ruling, defending state rules he argued promoted impartiality and judicial independence. State Justice Department Spokesman Kevin St. John said Monday they were pleased to have prevailed on two of the three issues, and will consider whether to appeal the 7th Circuit's ruling on party affiliation.
Judicial elections in Wisconsin had been nonpartisan since 1913, and the state's judicial code had prohibited judges from joining parties since 1968. The code was changed in 2004 to bar judges from endorsing partisan candidates and soliciting donations. Rules require judges to raise money through committees; they cannot even sign fundraising letters.
Milwaukee County Judge John Siefert, who filed the initial lawsuit challenging the rules, said judges should be able to raise funds for themselves. He plans to challenge that part of the decision and expects the U.S. Supreme Court to take the case, since two other federal appeals courts already have ruled judges can directly solicit money for their campaigns.
"I believe that judges need to be able to solicit campaign contributions; otherwise these independent expenditure groups hijack the judicial elections, particularly for the state Supreme Court," he said.
Siefert joined the Democratic Party after Crabb's ruling. He said he was pleased that the panel upheld a judge's right to join political parties.
"It upholds the rights of judges to speak out and let the public know where they stand and that's the key thing," he said. "I want the public to know that I was a police officer. I want the public to know that I ran for the Legislature as a Democrat. These are two important things the public needs to know to evaluate me."
The panel said it agreed with Siefert that a party membership ban acted "to prohibit his speech on both his political views and his qualifications for office."
Mike McCabe, of the Wisconsin Democracy Campaign, said the public is best served when judges are independent of political influences. His group advocates campaign finance reform and he suggested Monday that using a system of publicly financing judicial campaigns would keep judges from needing to seek support from special interest groups or engage in private fundraising.
"To say that interest groups have too much influence over judicial elections is undeniably true," McCabe said. "But to offer up as a solution simply more unfettered fundraising by judges is I think something that will end up undermining public confidence in the judiciary."
- - -
Alabama high court hopefuls spend big in off-year
By Eric Velasco, The Birmingham News
June 07, 2010
Spending among all candidates running for Alabama Supreme Court has topped $1 million, but 2010 should be an off year in the nation's most expensive state for seeking a post on the state high court.
Only three of the nine state Supreme Court seats are on the 2010 ballot. One of the incumbents, Justice Tom Parker, also tends not to spend much money in his campaigns, records show.
Last decade, Alabama Supreme Court candidates raised and spent some $41 million, according to the watchdog group Justice at Stake, which tracks the effect of campaign funding on the judiciary.
That is nearly double the spending in Pennsylvania and Ohio, basically tied as the second most-expensive states for high court races from 2000-2009.
"Small change in an Alabama election is big bucks anywhere else," said Charles Hall, Justice at Stake's spokesman. "Alabama is in a class of its own."
So far in the 2010 campaign, nine candidates seeking seats on the Alabama Supreme Court have disclosed spending a combined $1.05 million.
Incumbent Justice Mike Bolin led reported campaign spending, some $550,000 through May 26. But he may have been eclipsed by Tracy Cary, who lost to Bolin in the June 1 Republican primary.
Hours after filing a final pre-primary report saying he had not raised enough money to require public disclosure, Cary got contributions enabling him to buy television ads statewide.
Cary would not disclose the amount, but the Bolin campaign estimated the air time cost was $650,000.
Candidates in the two Republican primaries had a combined $130,000 in cash available to spend as of late May. Spending in the week before the primary, which will be disclosed later in the summer, may push the total to $2 million.
In 2004, the last time these same three seats on the Alabama Supreme Court were on the ballot, candidates spent $7.7 million total, according to Justice at Stake. Two incumbents from the 2004 race, Bolin and Parker, are seeking second terms this year.
"They don't even come close to touching the biggest spenders," Hall said.
In 2004, Bolin spent $1.6 million, while Parker spent $835,000, Hall said.
By contrast, Republican Drayton Nabers spent nearly $5 million and Democrat Sue Bell Cobb some $2.6 million in the 2006 chief justice race, according to the National Institute for Money in State Politics.
Democrat Deborah Bell Paseur spent $2.7 million in the 2008 court race, which she lost .
The 2012 Supreme Court election is expected to be more expensive than the 2010 races.
Two years from now, the chief justice and four associate justice seats are on the ballot. Candidate spending for those five posts was $13.4 million in 2006 and $12.4 million in 2000, according to Justice at Stake.
Alabama is one of 21 states that elects its high-court justices.
The state has several political action committees that exist to funnel money to judicial candidates from insurance, industrial, banking, medical and other corporate interests.
Businesses and the trial lawyers who defend them are primary funders for Republican judicial campaigns, disclosures show.
The trial lawyers who sue corporations, gambling interests and the state teachers' union have tended to back Democrats financially, disclosures show.
No primary rivals
Also driving down spending so far in the 2010 court races is the fact that Republican candidate Kelli Wise and Democrats Mac Parsons, Tom Edwards and Rhonda Chambers had no primary opposition.
Spending, fueled by contributions, should pick up after Labor Day.
Overall, 70 percent to 80 percent of campaign contributions are made in the two months before a general election, said Denise Roth Barber, research director for the National Institute on Monday in State Politics.
"You generally see much more money spent in the general election versus the primary," she said.
- - -
OUR VIEW: Alabama Supreme Court candidates' spending during recent party primaries was a mere drop in the bucket compared to past years, and it was still too much – [Editorial]
Birmingham News
June 9, 2010
Alabama Supreme Court Justice Mike Bolin's campaign spent at least $550,000 just in the Republican primary. (Birmingham News file)This year's tab for Alabama Supreme Court campaigns has already passed the $1 million mark, and it may even be approaching the $2 million mark if the reports of one candidate's unreported last-minute windfall are accurate.
And this is just the amount spent in the party primary phase of the election; the more expensive matchups pitting Republicans against Democrats won't kick into high gear until sometime around Labor Day.
Also, this is expected to be a cheap year as Alabama judicial elections go. Imagine if it were one of the expensive ones.
Actually, you don't need much of an imagination. Just look at real life: In 2006, when the chief justice and four associate justice posts were on the ballot, campaign spending topped $13 million.
This year, only three Supreme Court races are on the November ballot, and several candidates had no primary opposition. So this year's spending may indeed be low. But it's already outrageous.
Republican Supreme Court Justice Tom Parker reported spending $182,000 on his re-election campaign as of late May, while unsuccessful Republican challengers Eric Johnston and James Houts spent $173,000 and $6,200, respectively.
The bigger money was spent on the other contested GOP primary race featuring Republican Justice Michael Bolin. Bolin reported spending $550,000 through late May. His unsuccessful Republican challenger, Tracy Cary, reported he'd neither raised nor spent $25,000 by May 24, but turned around and sank an estimated $650,000 into television airtime. In Cary's case, what's worse than the amount of money involved is the fact that voters had no way of knowing precisely who was bankrolling the effort.
Of course, based on past experience, voters could guess this much: It was someone or some ones with an interest in the court's business.
Every election cycle, the big money fueling Alabama judicial races comes from business interests that want favorable Supreme Court rulings or plaintiff lawyers who want rulings favorable to their side. This year, with the Supreme Court expected to issue a definitive ruling on the legality of electronic bingo, gambling interests could come into play.
In other words, these races are hardly bankrolled by disinterested donors. Alabamians know that, and they presume, with good cause, there's a connection between the dollars and the ultimate decisions made by the court.
Alabama practice falls far outside the norm. Over the past decade, Alabama Supreme Court elections cost $41 million, nearly double the campaigns in the states with the next-highest price tag.
Even if this year's election cycle turns out to be low-cost based on our track record, it's still not good that those with an interest in the courts' business are putting up large sums of cash to elect judges. The high cost of these campaigns is one of the best reasons for Alabama to stop electing judges altogether.
We prefer a system in which judges are appointed through a process that favors merit. Fairly appointed judges could still be accountable to citizens through retention elections in which voters decide who to keep on the bench and who to send packing.
As it stands, our big-money system of picking judges rides on candidates with their hands out and "investors" looking for a good return. It is a gosh-awful way to pick the people who are supposed to be impartial arbiters of justice.
- - -
Appeals Court changes rules to avoid huge fee hike
By Bill Rankin, The Atlanta Journal-Constitution
June 9, 2010
The Georgia Court of Appeals voted on Wednesday to change its rules so litigants can avoid paying a huge fee hike that lawyers and judges said would close the courthouse door to parties pursuing appeals.
"Having weighed all the sides, I think this was the appropriate thing to do," Chief Judge Yvette Miller said. "We see the lion's share of these cases and don't want people to have to pay these prices."
To raise revenues near the end of the General Assembly, lawmakers increased dozens of user fees. This included raising the cost of copying, preparing and certifying an appeal from $1.50 per page to $10 per page. That meant the cost of filing an appeal with a court record totaling 1,000 pages increased from $1,500 to $10,000, a cost many litigants would be unwilling or unable to pay.
Lawmakers have said they were unaware of the ramifications of raising the fees for filing appeals, and some said they did not realize it was a per-page fee hike. The $1.50 per-page fee was distributed to counties where the case was filed. County clerks prepare and certify the records for appeal.
The appeals court's 12 judges voted unanimously to change its rules, after hearing from state bar leaders and Rep. Wendell Willard (R-Sandy Springs), all of whom supported the rule change, Miller said. The Georgia Supreme Court similarly changed its rules a week ago.
Under the new arrangement, lawyers and parties on both sides of an appeal are to work together to prepare the record, instead of having the losing party pay the clerk's office to do it. If there are disputes over the record, the trial judge must step in and resolve them. A number of other states, including South Carolina and North Carolina, allow lawyers prepare their appeals.
"I sincerely applaud the Court of Appeals for taking this action," said State Bar of Georgia president Bryan Cavan, who spoke to the court's judges. "It assures our citizens will have access to justice, including our appellate courts."
Said Michael J. Warshauer, president of the Georgia Trial Lawyers Association,“The court has made this a great day for Georgia and her citizens.”
- - -
FTC Postpones 'Red Flags' Identity Theft Rule
Jenna Greene, National Law Journal
6-01-2010
Under pressure from Congress, the Federal Trade Commission has agreed to postpone enforcement of its "Red Flags" rule that requires lawyers, doctors and other professionals to develop written identity theft prevention programs.
Both the American Bar Association and the American Medical Association have sued the agency, arguing that imposing the identity theft rule requirements on their members is arbitrary, capricious and has no legally supportable basis.
The rule was developed under the Fair and Accurate Credit Transactions Act, in which Congress directed the FTC and other agencies to develop regulations requiring "creditors" and "financial institutions" to address the risk of identity theft.
The FTC considers lawyers and other professionals to be creditors under the act, and required them to implement written identity theft prevention programs to detect the warning signs -- or "red flags" -- of identity theft in their day-to-day operations.
Last August, the ABA, represented pro bono by Proskauer Rose, filed suit in U.S. District Court for the District of Columbia challenging the rule's application to lawyers.
In October, Judge Reggie Walton backed the ABA, saying the FTC had overreached and that applying the rule to lawyers was unreasonable.
The FTC in February said it would appeal the decision.
Last month, the American Medical Association sued the FTC in U.S. District Court, arguing the rule should not apply to physicians either. Sidley Austin's Frank Volpe is representing the AMA.
On Friday the FTC announced that "as the request of several members of Congress," it would delay enforcement of the rule until the end of the year.
"Congress needs to fix the unintended consequences of the legislation establishing the Red Flags Rule -- and to fix this problem quickly. We appreciate the efforts of Congressmen Barney Frank and John Adler for getting a clarifying measure passed in the House, and hope action in the Senate will be swift," FTC Chairman Jon Leibowitz said in a statement. "As an agency we're charged with enforcing the law, and endless extensions delay enforcement."
- - -
