People Ex Rel. Chicago Bar Ass'n v. Goodman ( 1937 )

On leave granted, the relator, the Chicago Bar Association, filed in this court an information detailing certain acts on the part of the respondent which the relator alleges constitute the practice of law and for which the respondent should be held in contempt of this court. The respondent has filed his motion to strike the information, and also a plea of estoppel. The motion to strike is in the nature of a demurrer. It challenges (1) the sufficiency of the information as a pleading, (2) the jurisdiction of this court and (3) that the activities charged do not constitute the practice of law.

The information avers that Goodman is not a lawyer. He has offices in Chicago in and from which he engages in the business of handling and adjusting workmen's compensation claims. He obtains business by a widespread plan of solicitation which includes advertisement in the telephone directory, cards, circulars, letters and radio announcements. He carries on his business under various titles, including "The Injured Workingmen's Adjustment Bureau," "Injured Workmen's Bureau," "The Public Bureau of Investigation and Adjustments," and "Workingmen's Adjustment Bureau."

The information further charges that respondent has adjusted over 8200 workmen's claims and, by means thereof, has collected $4,000,000 on behalf of injured workmen; that he is at present handling compensation claims at the rate of over 750 annually, which involve over $400,000. All claims are taken by respondent on a contingent fee basis, usually twenty per cent of the amount of recovery. After respondent obtains a contract of employment from the injured workman, he negotiates for settlement with the employer or insurance carrier. If a settlement is effected, he prepares and files a petition with the Industrial Commission and obtains an order approving the settlement, including a lump-sum to be paid, if that is part of the agreement. In case no settlement is reached, he prepares and files a claim for adjustment and brings it to hearing before an arbitrator of the commission. On such hearing he presents the evidence and endeavors to obtain a settlement or an award. In the event an award is allowed and an appeal is taken to the Industrial Commission as a whole, he follows the matter. In the vast majority of the cases all the foregoing services are performed by the respondent, Goodman, or his lay employees. Only when an especially difficult question of law or fact arises, or when appeals are taken to the circuit court, does he employ a member of the bar. The percentage of respondent's cases represented by attorneys is very small. When he discovers that the claim of his client is enforcible at common law, and not under the Workmen's Compensation act, he negotiates for a settlement thereof. If a settlement is not reached, he causes suit to be filed at law. He employs an attorney for that purpose.

The respondent, in support of his charge that the information is insufficient, urges that it is not sufficiently specific in stating the time and place when, where and how the claims were disposed of, persons involved therein, and where such causes were tried, if there was a trial, which it is claimed constitute the practice of law. The information stated the offense charged so plainly and specifically that the nature thereof, and the acts alleged to constitute the offense, could be understood readily by the respondent. The detailing of the particulars would have made the information prolix. Moreover, by reason of the nature of the offense alleged, the activities of the defendant, averred to constitute the unlawful practice of law by him, rested within his knowledge, so that a general statement of the charge was sufficient. It was unnecessary to plead the evidence. The information was sufficiently specific. People v. Colegrove,354 Ill. 164; Lincoln Park Coal Co. v. Wabash Railway Co. 338 id. 82;State of Illinois v. Illinois Central Railroad Co. 246 id. 188 (236, 7.)

The power to regulate and define the practice of law is a prerogative of the judicial department as one of the three divisions of the government created by article 3 of our constitution. The legislative department may pass acts declaring the unauthorized practice of law illegal and punishable. Such statutes are merely in aid of, and do not supersede or detract from, the power of the judicial department to control the practice of law. (In re Day, 181 Ill. 73; R.I. Bar Ass'n v.Automobile Service Ass'n, 179 A. 139.) The power is inherent in this court to prescribe regulations for the study of law and the admission of applicants for the practice of that profession. (People v. Peoples StockYards State Bank, 344 Ill. 462; In re Day, supra.) It follows, as an incident to such power, that this court has jurisdiction to discipline or disbar, for cause, attorneys licensed by it. It would be an anomalous situation if a layman actively engaged in the practice of law, in defiance of the requirements necessary therefor announced by this court, could stay the hand of the court from suppressing his illegal acts. The practice of law, both in courts and out of courts, by one not licensed, is an illegal usurpation of the privilege of an attorney and is a contempt of this court. People v. Chicago Motor Club, 362 Ill. 50; People v. Motorists Ass'n, 354 id. 595; People v. Real EstateTax-Payers, 354 id. 102; People v. Peoples Stock Yards StateBank, supra.

In modern times the affairs of the people requiring the services of a lawyer have become more intricate and complex, demanding a corresponding increase in the standards of the profession through preliminary education and a lengthened and more diversified course of study by those who would engage in the practice. Administrative law, although of comparatively recent growth, is recognized today as an important branch of the law. Classes for the study thereof are now taught in many of our leading law schools. Relatively speaking, not many years ago that part of a legal education was unknown to the curriculums of law colleges. In addition to the rigid educational requirements, the applicant must possess a good moral character. These prerequisites are not for the purpose of creating a monopoly in the legal profession nor for its protection, but are for the better security of the people against incompetency and dishonesty. (People v. Alfani, 227 N.Y. 334, 125 N.E. 671; In reOpinion of Justices (Mass.) 194 N.E. 313.) The right to practice law is in the nature of a franchise, but the holder thereof may not incorporate himself and assign his franchise to such corporation and pass the right on to others. The privilege to practice law is personal to the holder of the right.

In People v. Peoples Stock Yards State Bank, supra, at page 475, the court stated that the definition of the practice of law therein set forth was substantially correct. This court and other courts have always been reluctant to adopt an all inclusive definition of the term "practice of law." It has been held that "persons acting professionally in legal formalities, negotiations or proceedings by warrant or authority of their clients" are engaged in the practice of law. (In re Duncan, 83 S.C. 186,65 S.E. 210, 18 Ann. Cas. 657.) Likewise it has been decided that,(a) giving an opinion as to the right to maintain an action against another, (b) furnishing legal services, or giving advice to others on questions of law and (c) soliciting, settling or adjusting personal injury claims, constitute the practice of law.(Fitchette v. Taylor, 191 Minn. 582, 254 N.W. 910, 94 A.L.R. 356.) The procuring of an agreement enabling an unlicensed person to control the negotiations and the litigation that might follow on the failure of the negotiations, and the hiring of licensed attorneys to conduct litigation for others, for the financial profit of the hirer, has been defined as the practice of law.(Smallberg v. State Bar of California, 212 Cal. 52, 297 P. 532;Howe v. State Bank of California, id. 222, 298 P. 25; In reOtterness, 181 Minn. 254, 232 N.W. 318, 73 A.L.R. 1319; Hightower v. Detroit Edison Co. 262 Mich. 1, 247 N.W. 97.) For cases holding to the same effect, in principle, see In re Co-OperativeLaw Co. 198 N.Y. 479, 92 N.E. 15; Berk v. State, 225 Ala. 324,142 So. 832, 84 A.L.R. 740; Creditors National Clearing House v.Bannwart, 227 Mass. 579, 116 N.E. 886.

One who, for a fee, contingent or otherwise, advises others as to their legal rights, the method to be pursued, the forum to be selected and the practice to be followed for the enforcement of such rights, is engaged in the practice of law. In re Shoe Manf. Protective Ass'n, (Mass.)3 N.E.2d 746; In re Maclub of America, 3 N.E.2d 272.

It is urged that the practice by the respondent before the Industrial Commission is before an administrative body, and that the respondent, therefore, is not practicing law because he is not before a court. That precise question is one of first impression in this court. It is elementary that a great portion of the present day practice of law is conducted outside the court room. The respondent urges that because the legislative act relating to the Industrial Commission grants to that body the right to promulgate rules governing the procedure before it, and the commission has adopted a rule permitting a party to appear before it by his attorney or "agent," that he, as agent of the claimant, may lawfully appear before the commission as the representative of the client and try his claim there. Even though the Industrial Commission is merely an administrative body, yet, if what the respondent did for a fee, in the presentation of and hearing of a petitioner's claim before that body, amounted to the practice of law, a rule of the commission purporting to grant him that privilege is of no avail to him. The General Assembly has no authority to grant a layman the right to practice law. (In reDay, supra.) It follows that any rule adopted by the commission, purporting to bestow such privilege upon one not a duly licensed attorney at law, is void. Nor can the General Assembly lawfully declare not to be the practice of law, those activities the performance of which the judicial department may determine is the practice of law.

Respondent, in support of his position that his acts before the Industrial Commission do not constitute the practice of law, cites Goodman v. Beall, 130 Ohio St. 427, 200 N.E. 470. An examination of that case, in conjunction with the Ohio statutes, shows a marked distinction between the Ohio and Illinois statutes pertaining to the first steps for the recovery of compensation for injuries to workmen. The constitution of the State of Ohio provides that a State insurance fund may be created by means of compulsory contributions by employers, the fund thus established to be devoted to the payment of awards to those workmen injured and the dependents of those killed. (Section 35 of article 2 of the Ohio Constitution.) The General Assembly of Ohio has enacted a statute by which a State insurance fund has been set up. All employers must contribute to the fund. Ohio General Code, secs. 1465-37 to 1465-112.

In Ohio the initial procedure for the allowance of compensation is quite simple. The workman makes his claim upon a blank furnished him by the commission. Upon the filing of the claim the employer makes a report of the injury, accompanied by the attending physician's report. If the commission is satisfied that the claim is just, an award is allowed payable out of the State insurance fund. If not satisfied on the showing made, it may make an independent investigation and for that purpose may appoint a referee who may take evidence. The referee makes his report with his recommendations to the commission. If the commission grants the award, its decision is final. No appeal by the fund is provided. The employer is granted no appeal, because his liability is to pay a fixed amount into the State insurance fund, and hence he has no financial interest in the ultimate disposal of the claim. Up to this point it will be observed that the proceeding is not an adversary one. In the Beall case, supra, the Ohio court held that, in non-adversary proceedings, one who represents the workman in the prosecution of his claim is not engaged in the practice of law. The Ohio act further provides that if the claim be disallowed the workman may file a petition for rehearing. The proceeding then becomes an adversary one. On the hearing upon that petition the Attorney General represents the State fund. Evidence is taken upon the issues made by the petition for rehearing "as in the trial of civil actions." The commission decides the case upon the evidence taken on the rehearing petition. If the award is again refused, an appeal is provided to the court of common pleas having jurisdiction. The commission files with that court the transcript of the record made on the rehearing proceeding. The case is there heard on the evidence taken on the rehearing, and no other evidence. A jury trial is permitted. The Supreme Court of Ohio in the Beall case, supra, said, in discussing the practice under the petition for rehearing (p. 473): "It presents exactly the kind of work for which his [an attorney] training and experience particularly fit him. Such record constitutes the entire evidence upon which the merit or demerits of a claim can be determined by a court and jury. If a record be poorly and inexpertly prepared the rights of interested parties may be seriously prejudiced. Its formation unquestionably comes within any well considered and complete definition of the practice of law."

It is apparent that the proceeding in Ohio, on the petition for rehearing, corresponds with the prescribed practice in this State before the commission for the allowance of workmen's claims, except that when the record is brought into the circuit court, there is no jury trial. Aside from the pleadings, the practice before the commission, the burden of proof and the competency of the evidence are the same as in actions at law for recovery of damages for personal injuries. Sanitary District of Chicago v.Industrial Com. 343 Ill. 236; Western Shade Cloth Co. v.Industrial Com. 325 id. 570; Chicago Daily News Co. v. IndustrialCom. 306 id. 212.

Under the issues made, the respondent, in the business carried on by him, on occasion must decide whether the facts present a given cause of action within the Workmen's Compensation law or the Federal Employer's liability act. To make such decision is often a difficult task and competent lawyers may differ as to the forum in which the redress may properly be sought. Profound lawyers are not to be criticized because they are sometimes puzzled in determining what constitutes interstate transportation as distinguished from intrastate. (Chicago and Illinois Midland Railway Co. v.Industrial Com. 362 Ill. 257; Day v. Chicago and NorthwesternRailway Co. 354 id. 469.) The Workmen's Compensation act frequently involves many delicate questions of law and fact.(Hays v. Illinois Terminal Transportation Co. 363 Ill. 397;Severin v. Industrial Com. id. 217; Forest Preserve District v.Industrial Com. 357 id. 389; LaSalle County Carbon Coal Co. v.Industrial Com. 356 id. 421; Kennedy-Van Saun Corp. v. IndustrialCom. 355 id. 519; Harding Co. v. Industrial Com. 355 id. 139;International Harvester Co. v. Industrial Com. 354 id. 151; Boardof Education v. Industrial Com. 346 id. 505; Stevens v.Industrial Com. id. 495; Jacobi v. Industrial Com. 342 id. 210.) So also, in his practice, respondent must determine whether the injured employee has a common law action to recover damages for his injuries. (Wintersteen v. National Cooperage Co. 361 Ill. 95. ) A situation may arise where it may be necessary for him to determine whether the statute creates two causes of action, one in favor of the employee for injuries not causing his death, and the other in favor of the dependents, where death subsequently ensues as the result of the same injuries. (American SteelFoundries v. Industrial Com. 361 Ill. 582.) Although the Industrial Commission is an administrative agency, yet its findings on certain matters are conclusive and may not be re-litigated. (Lewin Metals Corp. v. Industrial Com. 360 Ill. 371. ) Numerous other cases might well be cited bearing upon the complicated questions and perplexing problems which are the product of the Workmen's Compensation act of this State. An examination of the above cases involving questions springing from the administration of the Workmen's Compensation act will readily convince the reader that the field covered by that statute is comprehensive, and that one who practices in that sphere must understand its legal ramifications. He should, from a lawyer's standpoint, be able understandingly to weigh evidence and co-ordinate the testimony and its application to the statute. He must have a trained legal mind so that he may grasp intelligently the substantive provisions of (1) the Workmen's Compensation act, (2) the Federal Employer's Liability act and (3) the common law, as related to liability for damages for traumatic injuries. Obviously, the decision of these issues, and action thereon, require more than a layman's knowledge of the law. It is a service that exacts a high degree of legal skill by one who would serve his clients efficiently. That at least one of the respondent's clients has come without the realm of the practice before the Industrial Commission, is apparent from some of his advertising matter. In the list there given of numerous clients for whom recovery has been had, and the amounts thereof, is one where the amount paid was $17,500. The Workmen's Compensation act of this State does not permit an award of such large size.

In those instances where the respondent has employed an attorney to represent him in a cause which has found its way from the Industrial Commission to a court of record, the relation of attorney and client does not exist between the attorney and his ostensible client. The faithful observance of the fiduciary and confidential relationship between attorney and client is one of the greatest traditions of the legal profession. In Goodman's business that relationship is absent as to the litigant whom the attorney employed by Goodman purportedly represents. The respondent is the attorney's real client and paymaster, and the one to whom the attorney owes allegiance. In principle there is no distinction as to the phase of respondent's undertaking where he hires and pays the attorney, and that held to constitute the practice of law in People v. Real Estate Tax-Payers, supra, and People v. Motorists Ass'n, supra. It is immaterial whether the acts which constitute the practice of law are done in an office, before a court or before an administrative body. The character of the act done, and not the place where it is committed, is the factor which is decisive of whether it constitutes the practice of law. In so far as the opinion in theBeall case, supra, may appear to conflict with our views as here expressed, we decline to follow that case. We hold that the court has jurisdiction of the respondent and that the institution of proceedings before the Industrial Commission, and his trial of those causes before the arbitrator and the commission, constituted the practice of law.

There remains the issue made on the plea of estoppel. An information was filed in the municipal court of Chicago charging that on January 21, 1927, in the county of Cook, the respondent here, not being regularly licensed to practice law, held himself out as an attorney at law and then and there represented himself verbally, and in writing, directly and indirectly, as being authorized to practice law in all courts of the State, contrary to the statute. Upon trial by the court he was found guilty and sentenced to pay a fine of $500 and costs, and committed to the county jail for three months. The prosecution was brought under "An act to prevent and punish frauds in the practice of law." (State Bar Stat. 1935, chap. 38, par. 281, p. 1187.) That statute consists of two sections. Section 1 makes it unlawful for any person residing in this State, not regularly licensed to practice law, to hold himself out as an attorney at law or to represent himself as authorized to practice law. Section 2 defines certain acts as being "a holding out" within the meaning of section 1. The Appellate Court reversed the judgment and remanded the cause for a new trial. (People v. Goodman, 259 Ill. App. 667.) Incidentally the Appellate Court stated in its opinion, in substance, that the defendant had the right to handle the claim of the prosecuting witness, there, before the arbitrator and Industrial Commission, although he was not licensed to practice law. Such alleged fact was not the issue in the cause and the statement in the opinion may be considered as dictum. The gist of the charge was the holding himself out as an attorney and representing himself as authorized to practice law. A judgment or decree will not operate as an estoppel unless the identical issue was raised and decided in the former proceeding. (Svalina v.Saravana, 341 Ill. 236, 247; Gouwens v. Gouwens, 222 id. 223;Sawyer v. Nelson, 160 id. 629.) The issues decided in the criminal case are materially different from those here for determination. The judgment in People v. Goodman, supra, does not work an estoppel.

The motion to dismiss is denied and the plea of estoppel is held insufficient. The respondent is found guilty of the unauthorized practice of law for which he is adjudged to be in contempt of this court. Inasmuch as the respondent, relying upon what was said in People v. Goodman, supra, was doubtless sincere in his belief that he had the legal right to conduct the practice he did before the Industrial Commission, although the record conclusively shows the practice of law by him aside from his activities before that body, we are not disposed to inflict a heavy fine upon him.

It is the judgment of this court that the respondent pay to the clerk of this court a fine in the sum of $500, and the costs of this proceeding.

Respondent found guilty of contempt.