Voght, F. Brook

English

bepress Legal Repository

Unauthorized Practice of Law: New Approach for Giving Guidelines to Be Used in General Business Transactions

University of Florida Levin College of Law

Florida Law Review Volume 21 Issue 4 Article 11 March 1969 Unauthorized Practice of Law: New Approach for Giving Guidelines to Be Used in General Business Transactions F. Brook Voght Follow this and additional works at: https://scholarship.law.ufl.edu/flr  Part of the Law Commons Recommended Citation F. Brook Voght, Unauthorized Practice of Law: New Approach for Giving Guidelines to Be Used in General Business Transactions, 21 Fla. L. Rev. 566 (1969). Available at: https://scholarship.law.ufl.edu/flr/vol21/iss4/11 This Case Comment is brought to you for free and open access by UF Law Scholarship Repository. It has been accepted for inclusion in Florida Law Review by an authorized editor of UF Law Scholarship Repository. For more information, please contact kaleita@law.ufl.edu. UNIVERSITY OF FLORIDA LAW REVIEWUNAUTHORIZED PRACTICE OF LAW: NEW APPROACH FORGIVING GUIDELINES TO BE USED IN GENERALBUSINESS TRANSACTIONSIn re The Florida Bar, 215 So. 2d 613 (Fla. 1968)By joint petition and waiver of adversary procedural provisions,' theFlorida Bar Association and a securities brokerage firm sought to resolvecommon areas of disagreement. Their petition was for a determination ofwhether certain of the firm's activities, performed in an advisory capacityincidental to its primary business, constituted the unauthorized practice oflaw. Pursuant to its exclusive jurisdiction over unauthorized practice of lawcases,2 the Florida supreme court rendered a consent decree3 enumeratingthe permissible4 and impermissible5 activities of securities brokers and HELD,1. In re The Florida Bar, 215 So. 2d 613 (Fla. 1968).2. [Hereinafter cited as UPL cases].3. BLAcK's LAw DIcrIONARY 499 (4th ed. 1951). A consent decree is: "One enteredby consent of the parties; it is not properly a judicial sentence, but is in the nature of asolemn contract or agreement of the parties, made under the sanction of the court, andin effect an admission by them that the decree is a just determination of their rights uponthe real facts of the case, if such facts had been proved."4. In re The Florida Bar, 215 So. 2d 613, 614 (Fla. 1968). Securities brokers wereallowed these activities: (a) ask specific facts regarding his customers' assets; (b) ask aduly licensed broker to (i) execute simple forms relating to transfer of ownership ofsecurities; (ii) execute or help execute simple printed withdrawal and reinvestment planssupplied by mutual fund companies; (iii) execute or help execute simple printed forms set-ting up mutual funds for minors when no successor beneficiary or future interest is involved;(iv) complete other simple forms incidental to purchase or transfer of securities; (v) executeor help execute Internal Revenue service approved forms relating to the "Keogh" plan; (c)generally discuss the income and gift tax effects on sale, purchase, transfer, or ownershipof investments; (d) give customers factual information needed for preparation of alltax returns; (e) inform customers of the common and usual methods of security ownershipregistration; (f) discuss registration of ownership of clients' investments with their at-torneys; (g) assist clients' attorneys in specific distribution and liquidation of clients'estates, carrying out all of the attorney's specific instructions; (h) generally discuss federaland local estate and inheritance taxes with customers, without becoming specific; (i) lectureon finance, economics, investments, general principles of taxation, and common methods ofsecurity ownership; (j) in a general manner, discuss principles of law; (k) discuss theinvestment end of self-employed and corporate profit sharing and pension funds; (1) ad-vertise services relative to individual financial analysis and general tax considerations ofinvestments.5. In re The Florida Bar, 215 So. 2d 613 (Fla. 1968). Securities brokers were deniedthese activities: (a) legally advising, directly or indirectly, in any matters concerning legalinstruments or documents used in inter vivos or after death disposition of property; (b)advertising the services named in (a) above; (c) legally advising, directly or indirectly, ofthe consequences of joint ownership, holding property out of state, or the effect of Floridalaw on one no longer able to manage his affairs; (d) legally advising, directly or indirectly,of the use of different devices for disposing of property upon death; (e) sponsoring orholding meetings for discussion of the legal principles forbidden in (a) and (c) above;(f) offering, directly or indirectly, to give legal advice to anyone of the public; (g) offeringestate analysis services that involve providing specific legal advice in relation to specificcircumstances of a client's estate.[Vol. xxi1Voght: Unauthorized Practice of Law: New Approach for Giving GuidelinesPublished by UF Law Scholarship Repository, 1969CASE COMMENTSthat securities brokers were perpetually restrained and enjoined from con-ducting the named unauthorized activities.6With the exception of one Connecticut case, 7 there has been no previousjudicial consideration of unauthorized practice of law by securities brokers.The securities business has always been one with many legal ramifications,and there has long been a need for authoritative decision concerning thelegally permissible activity of stockbrokers incidental to their function ofmarketing securities. However, because of the omnipresence of law inpractically all matters concerning securities transactions, any attempt toprescribe definitive bounds for the various agents of brokerage houses andmutual fund companies would seem to be a difficult task for the courts. Inthe investment realm only a thin line often separates businessmen function-ing legally in their professional capacities and those participating in activitiesthat constitute unauthorized practice of law.Perhaps the greatest deficiency of lay specialists is their inability to seelegal problems outside the area of their particular competence., Theypossess expertise in a particular area that they may know, in legal termseven better than a practicing attorney; but they do not have the broad over-view of the law so necessary to prevent legal contingencies from arising as aresult of shallow legal perception. 9 Most bar associations recognize this view,but they are countered by an opposing argument that is essentially threefold:First, professional businessmen, such as realtors and stockbrokers, reasonablydesire to give their clients the impression that they are completely capableof managing all business matters they conduct without any outside help.'0Second, since bar associations have long allowed them to perform theseborderline legal activities, it may be unjust to prevent them from continu-ing.". Closely related to this second argument is the contention that legalassociations are not properly furnishing low-cost legal aid needed for meniallegal tasks, and since this type work is almost clerical in nature, there is noharm in lay practitioners performing these acts as incidental to their primarybusiness.22Despite these arguments on both sides, and the fact that numerous pro-fessions are permitted to perform insignificant legal favors for their clientsevery day, there are many areas of business where lines should be drawn toprevent undue harm to the general public from unauthorized practice bythose legally untrained.The unauthorized practice of law area is exceedingly difficult to coverwith a set of guidelines because of the fine distinctions that must necessarily6. 215 So. 2d 613 (Fla. 1968).7. Grievance Comm. v. Dacey, 154 Conn. 129, 222 A.2d 339, 22 A.L.R.3d 1092 (1966).8. Note, The Unauthorized Practice of Law by Laymen and Lay Associations, 54 CALm.L. R v. 1331, 1334 (1966).9. Id.10. Note, The Unauthorized Practice of Law in Florida, 16 U. FLA. L. Rav. 600, 605(1964).II. Id.12. Id. Note, supra note 8, at 1364.1969)2Florida Law Review, Vol. 21, Iss. 4 [1969], Art. 11https://scholarship.law.ufl.edu/flr/vol21/iss4/11UNIVERSITY OF FLORIDA LAW REVIEWbe made. The fact that impermissible activities are enjoined with theprotection of the general public primarily in mind 3 must nevertheless bebalanced with the layman's need for quasi-legal self-service without undueexpense or loss of time. Some courts have allowed laymen to completesimple documents, 14 while others have prohibited all lay drafting of docu-ments, regardless of the degree of difficulty."s The practice of laymen advisingspecifically on the particular facts of a customer's legal circumstances isscorned both by states that take the case-by-case approach 16 and by thoselaying down guidelines for an entire profession.17 That the layman gives hislegal aid free of any additional cost to his customer,' or in the form ofsuggestions with encouragement to consult an attorney, 9 does not preventhis acts from being unauthorized practice of law. The general approachestablished by the instant case and by most unauthorized practice of lawdecisions in other jurisdictions is that for a business activity to be allowed,the legal element must not only be incidental to the general activity butmust be insubstantial; it must be general and not specific.20Florida has a relatively short history of unauthorized practice of law cases.The first cases of unauthorized practice were instigated in 1934 and wereunreported. 2 1 In 1939, the Florida supreme court established the policy thatthe judiciary had the inherent power to assume full responsibility for admis-sions, disbarment, and regulation of the unauthorized practice of law. 2 Thepower of the supreme court in this area is clearly delegated to the FloridaBar Association in article XVI, section 2, of the Integration Rule of theFlorida Bar.2 3 With the establishment of this authority and power in thejudicial branch to enforce its decrees through injunction, fine, or incarcera-13. The Florida Bar v. Town, 174 So. 2d 395 (Fla. 1965); State ex rel. Florida Barv. Sperry, 140 So. 2d 587, 595 (Fla. 1962); Kentucky State Bar Ass'n v. Holland, 418 S.W.2d674 (Ky. 1967).14. Merrick v. American Sec. & Trust Co., 107 F.2d 271, 277 (D.C. Cir. 1939), cert.denied, 308 U.S. 625 (1940); Detroit Bar Ass'n v. Union Guardian Trust Co., 282 Mich. 216,228-29, 276 N.W. 365, 369 (1937).15. Washington State Bar Ass'n v. Washington Ass'n of Realtors, 41 Wash. 2d 697, 251P.2d 619 (1952). Compare State Bar of Ariz. v. Arizona Land Title & Trust Co., 90 Ariz.76, 366 P.2d 1 (1961), with Pioneer Title Ins. & Trust Co. v. State Bar of Nev., 74 Nev. 186,326 P.2d 408 (1958) and People v. Lawyers' Title Corp., 282 N.Y. 513, 27 N.E.2d 30(1940).16. Grievance Comm. v. Dacey, 154 Conn. 129, 222 A.2d 339, 340 (1966); Green v.Huntington Nat'l Bank, 4 Ohio St. 2d 78, 212 N.E.2d 585 (1965).17. Oregon State Bar v. John H. Miller & Co., 235 Ore. 341, 385 P.2d 181 (1963); StateBar of Ariz. v. Arizona Land Title & Trust Co., 90 Ariz. 76, 366 P.2d 1 (1961).18. Oregon State Bar v. John H. Miller & Co., 235 Ore. 341, 385 P.2d 181 (1963). Seealso Darby v. Mississippi State Bd. of Bar Admissions, 185 So. 2d 684, 685 (Miss. 1966); TheFlorida Bar v. Keehley, 190 So. 2d 173 (Fla. 1966).19. Oregon State Bar v. John H. Miller & Co., 235 Ore. 341, 385 P.2d 181, 182 (1963).20. Id.21. Cutler, The Development of Florida UPL Cases, 39 FLA. B.J. 997 (1965).22. In re Florida State Bar Ass'n, 134 Fla. 851, 186 So. 280 (1938).23. Integration Rule of the Florida Bar, art. XVI, 2. provides: "The Florida Bar, asan official arm of this Court [Florida Supreme Court], is charged with the duty of in-vestigating matters pertaining to the unauthorized practice of law."[Vol. XXI3Voght: Unauthorized Practice of Law: New Approach for Giving GuidelinesPublished by UF Law Scholarship Repository, 1969CASE COMMENTStion24 the Florida Bar, upon becoming fully integrated in 1949,25 began tomove slowly in the direction of limiting the existence of unauthorized prac-tice of law by laymen. This resulted in the preparation of guidelines for useby the different professions in performing legal activities incidental to theirbusiness affairs.Although Florida attorneys have initiated a number of unauthorizedpractice of law cases covering areas such as real estate transactions,2 patentservices,2 7 business counseling,28 title insurance,29 out of state attorneys,30notaries public,31 disbarred attorneys,32 and estate planning services33 theirapproach to this broad field has been a somewhat random case-by-case delinea-tion, which has failed to draw firm lines for businessmen to use in their work.Except for the area of real property conveyancing, 34 this approach has leftimportant gaps in the law. Two such untouched areas are in the realms oftax and estate law.35Of the two important gaps in Florida unauthorized practice of law deci-sions, the one most in need of filling prior to the present case was that ofestate planning. Although the area of income tax counseling involves manylegal technicalities, there has been ample litigation in other states3 0 to givecertified public accountants in Florida fairly clear guidelines. In addition,closer cooperation exists between accountants and lawyers as exemplified bytheir joint publication of guidelines.37The securities area, on the other hand, has shown little evidence of doserapport with the legal profession. There is no indication that brokers havebeen obstinate or hostile; rather they have not been presented with oppor-24. FLA. CONST. art. V, §23 (1885).25. Petition of Fla. State Bar Ass'n, 40 So. 2d 902 (Fla. 1949).26. State of Ila. ex rel. Bodner v. Florida Real Estate Comm'n, 99 So. 2d 582 (Fla.1956); Keyes Co. v. Dade County Bar Ass'n, 46 So. 2d 605 (Fla. 1950); Cooperman v. Guaran-tee Abstract Co., 5 Fla. Supp. 38 (6th Cir. 1953); Cooperman v. Guarantee Abstract Co., 3Fla. Supp. 195 (6th Cir.1953).27. State ex rel. The Florida Bar v. Sperry, 140 So. 2d 587 (Fla. 1962), rev'd, 373 U.S.379 (1963).28. The Florida Bar v. Keehley, 190 So. 2d 173 (Fla. 1966); The Florida Bar v. Town,174 So. 2d 395 (Fla. 1965); Petition of Kearney, 63 So. 2d 630 (Fla. 1953).29. The Florida Bar v. Columbia Title, 197 So. 2d 3 (Fla. 1967); The Florida Bar v.McPhee, 195 So. 2d 552 (Fla. 1967); Dade-Commonwealth Title Ins. Co. v. North DadeBar Ass'n, 152 So. 2d 723 (Fla. 1963).30. Walker v. Walker, 123 So. 2d 692 (Fla. 1960).31. The Florida Bar v. Fuentes, 190 So. 2d 748 (Fla. 1966).32. The Florida Bar v. Roberts, 161 So. 2d 211 (Fla. 1964).33. The Florida Bar v. Goodrich, 212 So. 2d 764 (Fla. 1968).34. Keyes Co. v. Dade County Bar Ass'n, 46 So. 2d 605 (Fla. 1950); cf. Cooperman v.West Coast Title Co., 75 So. 2d 818, 819 (Fla. 1954).35. Note, The Unauthorized Practice of Law in Florida, 16 U. FiA. L. Rnv. 600, 610,618 (1964).36. Gardener v. Conway, 234 Minn. 468, 48 N.W.2d 788 (1951); Agran v. Sharipo, 127Cal. App. 2d Supp. 807, 273 P.2d 619 (Super. Ct. 1954); Lowell Bar Ass'n v. Loeb, 315 Mass.176, 52 N.E.2d 27 (1943).37. Statement of Principles Relating to Practice in the Field of Federal Income Taxation,37 A.B.A.J. 517 (1951).1969]4Florida Law Review, Vol. 21, Iss. 4 [1969], Art. 11https://scholarship.law.ufl.edu/flr/vol21/iss4/11UNIVERSITY OF FLORIDA LAW REVIEWtunities to work with organizations of attorneys to determine their permissibleactivities. The present case has made a significant step toward erasing thisarea of uncertainty in the practice of law.As above mentioned, there has been little investigation of securities brok-ers on the part of state bar associations. The primary reason the Floridaand Connecticut bars sought judicial recourse against securities dealers wasto prevent broker dealing in the estate planning area. Other bar associationshave approached the estate planning problem with suits against life insur-ance companies38 and bank trust departments.3 9 The chief difficulty ofregulating the practice of estate planning law by these different businessesseems to be that their agents find it easy to advise40 their customers specificallyon the results that different legal devices will have in the preservation anddistribution of their estates. In some cases they draft the necessary legaldocuments as an activity incidental to their particular business.41 Disturbedby these practices, the different policing organs of state legal systems havehandled the problem through individual adversary cases, 42 declaratoryjudgments, 43 and consent decrees44 that lay definite guidelines. Florida 45 andOregon46 appear to be taking the lead in the utilization of consent decreesin unauthorized practice of law controversies. This is the best way to meetthe problem of informing the laymen of the particular services they mayor may not offer their clients. In Florida, consent decrees will supportapplication of the doctrine of res judicata47 and will therefore provideprecedent for subsequent judgments. In addition, consent decrees avoidmuch ill will.The present case marks a significant step by the supreme court and theFlorida Bar in establishing workable guidelines for the use of businessmenin conducting their daily activities that involve legal implications. Notonly does it lay down workable guidelines for the Florida estate plannerswho are not members of the bar, but it also is a landmark in demonstratingthat the Florida Bar, without compromising its principles, 48 can work with38. The Florida Bar v. Goodrich, 212 So. 2d 764 (Fla. 1968); Oregon State Bar v.John H. Miller & Co., 235 Ore. 341, 385 P.2d 181 (1963).39. Green v. Huntington Nat'l Bank, 4 Ohio St. 2d 78, 212 N.E.2d 585 (1965); Frazeev. Citizens Fidelity Bank & Trust Co., 393 S.W.2d 778 (Ky. 1964); State Bar v. Conn. Bank& Trust Co., 145 Conn. 222, 140 A.2d 863, 69 A.L.R.2d 394 (1958).40. Oregon State Bar v. John H. Miller & Co. 235 Ore. 341, 385 P.2d 181 (1963); StateBar v. Connecticut Bank & Trust Co., 143 Conn. 222, 140 A.2d 863 (1958); Grievance Comm.v. Dacey, 154 Conn. 129, 222 A.2d 339 (1966).41. Grievance Comm. v. Dacey, 154 Conn. 129, 222 A.2d 339 (1966).42. Id.; Arkansas Bar Ass'n v. Union Nat'l Bank, 224 Ark. 48, 273 S.W.2d 408 (1954).43. State Bar v. Arizona Land Title & Trust Co., 90 Ariz. 76, 366 P.2d 1 (1961), modifiedon rehearing, 91 Ariz. 293, 371 P.2d 1020 (1962).44. In re The Florida Bar, 215 So. 2d 613 (Fla. 1968); Oregon State Bar v. John H.Miller & Co., 235 Ore. 341, 385 P.2d 181 (1963).45. In re The Florida Bar, 215 So. 2d 613 (Fla. 1968).46. Oregon State Bar v. John H. Miller & Co., 235 Ore. 341, 385 P.2d 181 (1963).47. 19 FLA. JUR. Judgments and Decrees §273 (1958).48. Petitioners' Brief for Consent Decree at 9, In re The Florida Bar, 215 So. 2d 613(Fla. 1968).[Vol. XXI5Voght: Unauthorized Practice of Law: New Approach for Giving GuidelinesPublished by UF Law Scholarship Repository, 1969

https://scholarship.law.ufl.edu/cgi/viewcontent.cgi?article=2549&context=flr

Unauthorized Practice of Law: New Approach for Giving Guidelines to Be Used in General Business Transactions

Abstract

Similar works

Full text

Available Versions

bepress Legal Repository

University of Florida Levin College of Law