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Justices rule on trust mill UPL case

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The Indiana State Bar Association has won an unauthorized practice of law action against an estate planning services company, but wasn't able to completely sway the state's highest court that all "costs and expenses" should be completely granted for the prosecution of the case.

Ruling per curiam this afternoon, the Indiana Supreme Court issued a significant UPL decision in State of Indiana, Ex. Rel. Indiana State Bar Association v. United Financial Systems Corp. No. 84S00-0810-MS-551. The court had heard oral arguments in December.

Justices ordered United Financial Systems, which is based in Indianapolis, to stop engaging in any conduct that might be considered UPL, and that the company should have been on notice about the unauthorized nature of its conduct after a previous ruling in 2006. The justices also ruled that the ISBA is entitled to certain statutory attorney fees and that disgorgement of the fees United Financial Services received because of its UPL should be returned.

Most of the financial aspects of the case go back to Senior Judge Bruce Embry from Miami Superior Court, who is the commissioner hearing the action.

In October 2008, ISBA filed the action against United Financial and accused it of operating a trust mill operation that engaged in unauthorized practice of law and wrongly collected more than a $1 million from at least five families throughout the state. The company argued that it hadn't been engaged in UPL, and that it's made changes in recent years to correct whatever activity might have been interpreted that way.

But the justices disagreed.

"We are convinced, however, that UFSC's business model has marginalized the attorney's role to such a degree as to cross the line of permissible practices," the court wrote. "We are also convinced that the changes UFSC indicates it has made to its business model in Indiana since the filing of the verified petition are cosmetic at best and are not remotely sufficient to prevent its business model from running afoul of the prohibition against the unauthorized practice of law."

Deciding on relief, the court relied on its past decision in State ex rel Indiana State Bar Ass'n v. Northouse, 848 N.E.2d 668 (Ind. 2006), that addressed the issue of disgorgement - or returning the ill-gotten fees.

"Notwithstanding the potential availability of other civil remedies, we believe the disgorgement or a similar form of restitutionary remedy serves as a more reliable and effective deterrent against the unauthorized practice of law," the court wrote. "Persons or companies should be deterred from the unauthorized practice of law irrespective of the actual harm their conduct may cause, and the fact that some of the persons who have purchased estate plans from UFSC may have received a product adequate for their needs does not alter the illegality of UFSC's conduct."

By order, the company must notify all of its Indiana estate plan customers going back to 1995, as well as those since the Northouse ruling in 2006 about possibly receiving money back.

The justices found against the ISBA in its argument that Administrative Disciplinary Rule 24 should be expanded to include attorneys fees for the "costs and expenses," finding that Indiana Code 34-52-1-1 permits an award of attorney fees in civil actions that occur because of the claims.

The ISBA may get a portion of the $19,500 it spent on attorney fees directly stemming from United Financial's claims about past and current settlements, but that is up to Judge Embry to determine on remand. The commissioner will also determine what amount of the $11,093 and $25,882 the ISBA should get for other aspects of prosecuting the case.

All of the justices agreed, except that Chief Justice Randall T. Shepard noted that he would have granted ISBA's request for fees incurred in this prosecution.

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  1. Video pen? Nice work, "JW"! Let this be a lesson and a caution to all disgruntled ex-spouses (or soon-to-be ex-spouses) . . . you may think that altercation is going to get you some satisfaction . . . it will not.

  2. First comment on this thread is a fitting final comment on this thread, as that the MCBA never answered Duncan's fine question, and now even Eric Holder agrees that the MCBA was in material error as to the facts: "I don't get it" from Duncan December 1, 2014 5:10 PM "The Grand Jury met for 25 days and heard 70 hours of testimony according to this article and they made a decision that no crime occurred. On what basis does the MCBA conclude that their decision was "unjust"? What special knowledge or evidence does the MCBA have that the Grand Jury hearing this matter was unaware of? The system that we as lawyers are sworn to uphold made a decision that there was insufficient proof that officer committed a crime. How can any of us say we know better what was right than the jury that actually heard all of the the evidence in this case."

  3. wow is this a bunch of bs! i know the facts!

  4. MCBA .... time for a new release about your entire membership (or is it just the alter ego) being "saddened and disappointed" in the failure to lynch a police officer protecting himself in the line of duty. But this time against Eric Holder and the Federal Bureau of Investigation: "WASHINGTON — Justice Department lawyers will recommend that no civil rights charges be brought against the police officer who fatally shot an unarmed teenager in Ferguson, Mo., after an F.B.I. investigation found no evidence to support charges, law enforcement officials said Wednesday." http://www.nytimes.com/2015/01/22/us/justice-department-ferguson-civil-rights-darren-wilson.html?ref=us&_r=0

  5. Dr wail asfour lives 3 hours from the hospital,where if he gets an emergency at least he needs three hours,while even if he is on call he should be in a location where it gives him max 10 minutes to be beside the patient,they get paid double on their on call days ,where look how they handle it,so if the death of the patient occurs on weekend and these doctors still repeat same pattern such issue should be raised,they should be closer to the patient.on other hand if all the death occured on the absence of the Dr and the nurses handle it,the nurses should get trained how to function appearntly they not that good,if the Dr lives 3 hours far from the hospital on his call days he should sleep in the hospital

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