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Consumers need services provided by nonlawyers


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POSTED: Wednesday, January 28, 2009

A recent study found that more than three-fourths of Hawaii's poor or moderate-income people are unable to pay for a lawyer when they need one. Meanwhile, a rule that would cut into their ability to hire a nonlawyer to perform simple legal chores is being proposed to the state Supreme Court. The proposal is insensitive to people's needs, especially during the financial crisis, and should be rejected.

Hawaii law makes it a misdemeanor for a person to engage in the practice of law without a license, but it does not say precisely what constitutes practicing law. Accountants, insurance companies, real estate agents and paralegals now routinely prepare documents for clients but those activities could be outlawed by adoption of the rule.

The protectionist rule proposed by the Hawaii Bar Association would prohibit nonlawyers from "selecting, drafting or completing documents that affect the legal rights of another person or entity." When enacting the law in 1955, legislators stated that lawyers should have a lock on activities that require "the use of any degree of legal knowledge, skill or advocacy." Common sense allows nonlawyers to perform services that the proposal would confine to licensed attorneys.

Several states have adopted similar restrictions but the Department of Justice's antitrust division and the Federal Trade Commission objected to a "model" provision considered by the American Bar Association. In a letter to the association, the agencies noted that "consumers generally benefit from lawyer-nonlawyer competition in the provision of certain services."

A letter to the Supreme Court by Jeffrey H.K. Sia, last year's Hawaii bar president, cites no harm in the way nonlawyers service clients in performing quasi-legal functions. Likewise, other states that have adopted such a restriction did so after providing "no factual evidence and little evaluation of how the ability of lay services had actually hurt consumers," the Justice Department and FTC stated in the letter to the ABA.

"Without a showing of likely harm restraining competition in a way that is likely to hurt consumers by raising prices and eliminating their ability to choose among competing providers is unwarranted," the agencies stated in the letter.

The agencies added that they were "unaware of any showing of likely harm that would justify a broad definition of 'the practice of law' that would effectively preclude many nonlawyers from providing efficient services that are beneficial to consumers and serve the public interest."

Chief Justice Ronald T.Y. Moon told young lawyers in a 2007 speech that surveys show the public has disrespect for lawyers "because the public perceives lawyers as unethical and greedy and that lawyers cost too much, make too much money or are not doing enough to help those who can't afford an attorney." No wonder.