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Justices consider 'costs' in UPL action

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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.
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  1. It appears the police and prosecutors are allowed to change the rules halfway through the game to suit themselves. I am surprised that the congress has not yet eliminated the right to a trial in cases involving any type of forensic evidence. That would suit their foolish law and order police state views. I say we eliminate the statute of limitations for crimes committed by members of congress and other government employees. Of course they would never do that. They are all corrupt cowards!!!

  2. Poor Judge Brown probably thought that by slavishly serving the godz of the age her violations of 18th century concepts like due process and the rule of law would be overlooked. Mayhaps she was merely a Judge ahead of her time?

  3. in a lawyer discipline case Judge Brown, now removed, was presiding over a hearing about a lawyer accused of the supposedly heinous ethical violation of saying the words "Illegal immigrant." (IN re Barker) http://www.in.gov/judiciary/files/order-discipline-2013-55S00-1008-DI-429.pdf .... I wonder if when we compare the egregious violations of due process by Judge Brown, to her chiding of another lawyer for politically incorrectness, if there are any conclusions to be drawn about what kind of person, what kind of judge, what kind of apparatchik, is busy implementing the agenda of political correctness and making off-limits legit advocacy about an adverse party in a suit whose illegal alien status is relevant? I am just asking the question, the reader can make own conclsuion. Oh wait-- did I use the wrong adjective-- let me rephrase that, um undocumented alien?

  4. of course the bigger questions of whether or not the people want to pay for ANY bussing is off limits, due to the Supreme Court protecting the people from DEMOCRACY. Several decades hence from desegregation and bussing plans and we STILL need to be taking all this taxpayer money to combat mostly-imagined "discrimination" in the most obviously failed social program of the postwar period.

  5. You can put your photos anywhere you like... When someone steals it they know it doesn't belong to them. And, a man getting a divorce is automatically not a nice guy...? That's ridiculous. Since when is need of money a conflict of interest? That would mean that no one should have a job unless they are already financially solvent without a job... A photographer is also under no obligation to use a watermark (again, people know when a photo doesn't belong to them) or provide contact information. Hey, he didn't make it easy for me to pay him so I'll just take it! Well heck, might as well walk out of the grocery store with a cart full of food because the lines are too long and you don't find that convenient. "Only in Indiana." Oh, now you're passing judgement on an entire state... What state do you live in? I need to characterize everyone in your state as ignorant and opinionated. And the final bit of ignorance; assuming a photo anyone would want is lucky and then how much does your camera have to cost to make it a good photo, in your obviously relevant opinion?

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