Allow nonlawyers to keep providing mundane legal services

THE ISSUE The Hawaii State Bar Association is proposing that nonlawyers not be allowed to select, draft or complete legal documents for clients.

Hawaii's lawyers are asking the state Supreme Court to approve a protectionist rule aimed at eliminating competition from nonlawyers performing the simplest legal chores. The American Bar Association rejected such a "model" rule after a protest from the Justice Department and the Federal Trade Commission. Hawaii's high court should do the same.

Like other states, Hawaii prohibits lay persons from practicing law, punishing offenders by up to a year in jail and a $2,000 fine. The Hawaii State Bar Association is proposing that the unauthorized practice of law include "selecting, drafting or completing documents that affect the legal rights of another person."

Such a rule was adopted by the Washington Supreme Court in 2002, as an ABA task force proposed a similar model for other states to follow. In a letter to the national association, Justice's antitrust division and the FTC objected. They defended consumers considering "all relevant factors in selecting a service provider, such as cost, convenience and the degree of assurance that the necessary documents and commitments are sufficient" in areas where "formal legal training" is unnecessary for the provider.

The letter said it "is impossible to develop an exhaustive list of all the instances of lawyer-nonlawyer competition that might be eliminated" as a result of such a prohibition. For example, it said, Realtors "routinely fill out and explain purchase and sale agreements," and consumers use inexpensive electronic software to complete wills, trusts and other legal documents provided by nonlawyers.

Others that could be affected by such a prohibition are tenants' associations informing members of renters' rights, human resources employees advising their bosses of state labor laws or safety regulations, and income tax preparers, accountants and investment bankers advising clients about various laws, according to the letter. Doctors could be forbidden from providing living will forms to patients without going through a lawyer.

Betty Marais, a former paralegal and legal secretary whose Honolulu company, Legal-Ez, prepares documents for divorces, living trusts, wills and incorporation of businesses for clients, told the Star-Bulletin's Ken Kobayashi that such a prohibition would shut her business down.

Processing of application and issuing of car insurance policies now handled by nonlawyers would have to be turned over to attorneys, and the extra cost "would be passed on to the policy holders," said John Schapperle, president of the Hawaii Insurers Council.

The ABA backed away from the task force's initial proposal, finally agreeing five years ago to urge states to craft their own definitions of unauthorized practice of law. Instead of allowing nonlawyers to help clients fill out mundane documents, Hawaii's bar association is proposing that the state Supreme Court adopt the Washington state rule -- the same as that rejected as a model by the ABA -- at what would be the soaring expense for consumers.