ILNews

Justices consider 'costs' in UPL action

Back to TopCommentsE-mailPrintBookmark and Share
The Indiana State Bar Association wants the state's highest court to define the term "costs and expenses" as it's never done before, and in doing so order a company being prosecuted for the Unauthorized Practice of Law to have to pay those fees and disgorge any profits it shouldn't have made in the first place.

Hearing arguments today in State of Indiana, Ex. Rel. Indiana State Bar Association v. United Financial Systems Corp., No. 84S00-0810-MS-551, justices considered an issue of first impression on how far its scope extends in interpreting Administrative Disciplinary Rule 24, and what statutory considerations are involved in this litigation about whether an estate planning company engaged in unlawful legal work.

The ISBA initiated the action in October 2008 against estate planning service United Financial Systems in Indianapolis, accusing it of operating a trust mill operation that engaged in unauthorized practice of law and wrongly collected more than $1 million from at least five families located throughout the state. Acting as special commissioner in the case, Senior Judge Bruce Embrey from Miami Superior Court issued a report in July to the Indiana Supreme Court that included 266 findings and conclusions of law about the company's practice, and after supplemental briefing the justices set the matter for oral argument.

What's at issue in this case is an ISBA request for a disgorgement of fees and reimbursement of the unlawful money the company collected. The organization paid almost $36,965 in legal expenses on this case, according to court records.

The ISBA has never settled a UPL case in exchange for money from an individual or corporation accused of violating the state provisions, and no costs or fees have ever been received by the ISBA in the course of processing these cases, according to Indianapolis attorney Kevin McGoff who represents the state bar association.

"The bar believes that 'costs and expenses' hasn't been previously defined, and we think that attorney fees should be included here in this case," McGoff told the justices, pointing out that ISBA is only one of the three Indiana entities able to prosecute a UPL action but that it doesn't have any staff to handle those issues as the Attorney General's Office and Indiana Supreme Court Disciplinary Commission have. "Given the uniqueness of these proceedings... this would be an exception that wouldn't be a blanket rule that goes outside UPL cases. This wouldn't open the floodgates."

United Financial attorney Suzanna Hartzell-Baird with Bose McKinney & Evans argued that neither amount is appropriate in this case, and ordering any attorney fees or disgorgement would conflict with common law and precedent from the U.S. Supreme Court - specifically because it would be considered a sanction, and the company had received no notice so this goes against ex post facto law present in criminal cases. The company wasn't aware that could be possible when it engaged in litigation, so that might have influenced the decision to litigate, she said. She also disagreed with the commissioner's findings that United Financial had engaged in any frivolous or baseless claims, something she challenged justices to determine for themselves in reviewing the record.

Ordering disgorgement and awarding attorneys fees would have a chilling effect, Hartzell-Baird said.

Justices wondered about the implications this could have on the traditional American rule of not awarding these attorneys fees as part of the costs and expenses, and if it should be considered a cost of doing business. Justices Theodore Boehm and Frank Sullivan pondered whether disgorgement is considered a penalty, as Hartzell-Baird contended, or whether it was simply a return of money that any company engaged in UPL shouldn't have received in the first place.

Don Lundberg, executive secretary of the Disciplinary Commission that's admitted as amicus curiae, urged the court to narrowly craft a rule so that it doesn't impact the Disciplinary Commission or Attorney General's Office in future UPL actions. He also said it's appropriate for the court to exercise disgorgement power since that serves as a deterrent and public protection against future UPL.

This was one of two cases the Supreme Court heard arguments on today. The other was Wayne D. Kubsch v. State of Indiana, No. 71S00-0708-PD-335, a post-conviction relief appeal involving Kubsch's three murder convictions and death sentence.
ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Indiana State Bar Association

Indianapolis Bar Association

Evansville Bar Association

Allen County Bar Association

Indiana Lawyer on Facebook

facebook
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. Hello currently just withdrew from laporte county drug court and now I have lost the woman I love which also was in drugcourt and was put in jail without a,lawyer presentfor her own safety according to the judge and they told her she could have a hearing in two weeks and now going on 30days and still in jail no court date and her public defender talks like he,s bout to just sell her up the river.

  2. I just wanted to point out that Congressman Jim Sensenbrenner, Senator Feinstein, former Senate majority leader Bill Frist, and former attorney general John Ashcroft are responsible for this rubbish. We need to keep a eye on these corrupt, arrogant, and incompetent fools.

  3. Well I guess our politicians have decided to give these idiot federal prosecutors unlimited power. Now if I guy bounces a fifty-dollar check, the U.S. attorney can intentionally wait for twenty-five years or so and have the check swabbed for DNA and file charges. These power hungry federal prosecutors now have unlimited power to mess with people. we can thank Wisconsin's Jim Sensenbrenner and Diane Feinstein, John Achcroft and Bill Frist for this one. Way to go, idiots.

  4. I wonder if the USSR had electronic voting machines that changed the ballot after it was cast? Oh well, at least we have a free media serving as vicious watchdog and exposing all of the rot in the system! (Insert rimshot)

  5. Jose, you are assuming those in power do not wish to be totalitarian. My experience has convinced me otherwise. Constitutionalists are nearly as rare as hens teeth among the powerbrokers "managing" us for The Glorious State. Oh, and your point is dead on, el correcta mundo. Keep the Founders’ (1791 & 1851) vision alive, my friend, even if most all others, and especially the ruling junta, chase only power and money (i.e. mammon)

ADVERTISEMENT