Ohio State Bar Assn. v. Lienguard, Inc. , 126 Ohio St. 3d 400 ( 2010 )

[Cite as Ohio State Bar Assn. v. Lienguard, Inc., 126 Ohio St. 3d 400, 2010-Ohio-3827.]
OHIO STATE BAR ASSOCIATION v. LIENGUARD, INC. ET AL.
[Cite as Ohio State Bar Assn. v. Lienguard, Inc.,
126 Ohio St. 3d 400, 2010-Ohio-3827.]
Unauthorized practice of law — Preparing mechanic’s liens on behalf of others
without the supervision of a licensed attorney — Consent decree —
Injunction imposed.
(No. 2010-0796 ⎯ Submitted May 26, 2010⎯ Decided August 25, 2010.)
ON FINAL REPORT by the Board on the Unauthorized Practice of Law of the
Supreme Court, No. UPL 09-03.
__________________
Per Curiam.
{¶ 1} Pursuant to Gov.Bar R. VII(5b), the Board on the Unauthorized
Practice of Law has recommended our approval of a consent decree proposed by
relator, Ohio State Bar Association, and respondents, Lienguard, Inc., and Allan
R. Popper. We accept the board’s recommendation and approve the proposed
consent decree submitted by the parties, as follows:
{¶ 2} “1. The unauthorized practice of law is the rendering of legal
services for another by any person not admitted to practice law in Ohio. Gov.Bar
R. VII(2)(A).
{¶ 3} “2. With limited exception, a corporation may not give legal
advice to another, directly or indirectly, through its employees or attorney
employees. Judd v. City Trust & Savings Bank (1937), 133 Ohio St. 81, 88 [10
Ohio Op. 95, 12 N.E.2d 288].
{¶ 4} “3. The practice of law encompasses the preparation of legal
documents and instruments upon which legal rights are secured and advanced.
SUPREME COURT OF OHIO
Lorain County Bar Association v. Kocak, 121 Ohio St. 3d 396 [2009-Ohio-1430,
904 N.E.2d 885, ¶ 17].
{¶ 5} “4. The practice of law is not limited to the conduct of cases in
court, but embraces the preparation of pleadings and other papers incident to
actions, the management of such actions, and in general all advice to clients and
all action taken for them in matters connected with the law. Cincinnati Bar
Association v. Foreclosure Solutions, LLC, 123 Ohio St. 3d 107 [2009-Ohio-4174,
914 N.E.2d 386, ¶ 21].
{¶ 6} “5. Nonlawyers engage in the unauthorized practice of law when
attempting to represent others’ legal interests and advise others of their legal
rights during settlement negotiations. Id. at [¶ 25].
{¶ 7} “6. The unauthorized practice of law also occurs when a non-
attorney acts as an intermediary to advise, counsel, or negotiate on behalf of an
individual or business in an attempt to resolve a collection claim between debtors
and creditors. Id. [at ¶ 26].
{¶ 8} “7. Lay persons cannot insulate themselves from responsibility for
engaging in the unauthorized practice of law by using powers of attorney
executed by customers or by simply informing customers that the layperson is not
an attorney and is, therefore, incapable of giving legal advice. Id. [at ¶ 27].
{¶ 9} “8. Thus, a general power of attorney does not grant authority to
prepare and file papers in court on another’s behalf. Lorain County Bar
Association v. Kocak, 121 Ohio St. 3d 396 [2009-Ohio-1430, 904 N.E.2d 885, ¶
18].
{¶ 10} “9. Ohio Revised Code § 4705.01 provides: ‘No person shall be
permitted to practice as an attorney and counselor at law, or to commence,
conduct or defend any action or proceeding in which the person is not a party
concerned * * * unless the person has been admitted to the bar by order of the
supreme court in compliance with its prescribed and published rules.’
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January Term, 2010
{¶ 11} “10. When a person not admitted to the Ohio bar attempts to
represent another on the basis of a power of attorney, he is in violation of Ohio
Revised Code § 4705.01. Disciplinary Counsel v. Brown, 121 Ohio St. 3d 423
[2009-Ohio-1152, 905 N.E.2d 163, ¶ 11].
{¶ 12} “11. Preparing an affidavit for mechanic’s lien or in satisfaction of
mechanic’s lien is the unauthorized practice of law. Id. at [¶ 16].
{¶ 13} “12. Thus, advising others of their legal rights and responsibilities
is the practice of law, as is the preparation of legal pleadings and other legal
papers without the supervision of an attorney licensed in Ohio. Id. at [¶ 41].
{¶ 14} “13. Respondents admit the allegations of the Complaint filed in
this matter.
{¶ 15} “14. Respondents further admit that they are not, and have never
been, authorized to practice law in the State of Ohio.
{¶ 16} “15. In addition to the events described in the Complaint,
Respondents also prepared and filed an Affidavit for Mechanic’s Lien on behalf
of Plibrico Sales & Service Inc. against Ohio Valley Aluminum Company, LLC.
***
{¶ 17} “16. By preparing, signing, filing and pursuing affidavits of
mechanic’s liens for third-parties in the State of Ohio, Respondent’s engaged in
the unauthorized practice of law.
{¶ 18} “17. Respondents Lienguard, Inc. and Allan R. Popper, as well as
their successors, affiliates, assigns, officers, members, agents, representatives and
employees have ceased preparing, signing, filing and pursuing affidavits of
mechanic’s liens for third-parties in the State of Ohio, and are hereby permanently
enjoined from preparing, signing, filing and pursuing affidavits of mechanic’s
liens in the State of Ohio and from otherwise engaging in the unauthorized
practice of law in the State of Ohio.
{¶ 19} “18. The factors in Gov.Bar R. VII(8)(B) apply as follows:
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{¶ 20} “(a) Respondents have cooperated in the investigation of this
matter;
{¶ 21} “(b) Respondents engaged in the conduct under review on a
number of occasions, but under the mistaken belief that such conduct did not
constitute the unauthorized practice of law in Ohio;
{¶ 22} “(c) Respondents’ conduct was flagrant, but again based upon the
mistaken belief that such conduct did not constitute the unauthorized practice of
law in Ohio; and
{¶ 23} “(d) Third parties may or may not have suffered harm from such
conduct, to the extent that third parties have hired counsel to negotiate or defend
against such mechanic’s liens.
{¶ 24} “19. Other relevant factors are set forth in UPL Reg. 400 and
Gov.Bar R. VII(8)(B), which allow for consideration of aggravation and
mitigating factors.”
{¶ 25} The parties submit that the aggravating factors should be analyzed
as follows:
{¶ 26} “Whether respondent has previously engaged in the unauthorized
practice of law. Although multiple instances of the unauthorized practice of law
occurred over a period of time, such instances were based upon Respondents’
mistaken belief that such conduct was not the practice of law, and not based upon
any dishonesty, ill intent or malicious purpose.” See UPL Reg. 400(F)(3)(a).
{¶ 27} “Whether respondent has previously been ordered to cease
engaging in the unauthorized practice of law. Respondents submit that they have
not previously been ordered to cease engaging in the unauthorized practice of
law.” See UPL Reg. 400(F)(3)(b).
{¶ 28} “Whether respondent had been informed prior to engaging in the
unauthorized practice of law that the conduct at issue may constitute an act of the
unauthorized practice of law. Respondents had not been so informed. To the
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contrary, Respondent’s had been under the honest but mistaken belief that such
conduct did not constitute the practice of law.” See UPL Reg. 400(F)(3)(c).
{¶ 29} “Whether respondent has benefited from the unauthorized practice
of law and, if so, the extent of such benefit. Respondents have benefited from the
conduct under review, in that Respondents’ customers paid for such services.
However, the amount of such benefit is indeterminable.” See UPL Reg.
400(F)(3)(d).
{¶ 30} “Whether respondent’s unauthorized practice of law included an
appearance before a court or other tribunal. Respondents did not appear before a
court or other tribunal.” See UPL Reg. 400(F)(3)(e).
{¶ 31} “Whether respondent’s unauthorized practice of law included
preparation of a legal instrument for filing with a court or other governmental
entity. Respondents’ conduct involved the preparation, signing, filing and
pursuing of mechanic’s liens in the State of Ohio, which documents were filed
with the various county recorder’s offices in the State of Ohio.” See UPL Reg.
400(F)(3)(f).
{¶ 32} “Whether respondent has held himself or herself out as being
admitted to practice law in the State of Ohio, or whether respondent has allowed
others to mistakenly believe that he or she was admitted to practice law in the
State of Ohio. Respondents did not hold themselves out as being admitted to
practice law in the State of Ohio, and there is no indication of any third party
mistakenly believing that Respondents were admitted to practice law in the State
of Ohio.” See UPL Reg. 400(F)(3)(g).
{¶ 33} The parties also submit the following analysis of the relevant
mitigating factors:
{¶ 34} “Whether respondent has ceased engaging in the conduct under
review. Respondents have ceased engaging in the conduct under review.” See
UPL Reg. 400(F)(4)(a).
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{¶ 35} “Whether respondent has admitted or stipulated to the conduct
under review. As reflected by the * * * Revised Proposed Consent Decree,
Respondents have admitted and stipulated to the conduct under review.” See
UPL Reg. 400(F)(4)(b).
{¶ 36} “Whether respondent has admitted or stipulated that the conduct
under review constitutes the unauthorized practice of law. Respondents have * *
* also stipulated and admitted that the conduct under review constitutes the
unauthorized practice of law in the State of Ohio.” See UPL Reg. 400(F)(4)(c).
{¶ 37} “Whether respondent has agreed or stipulated to the imposition of
an injunction against future unauthorized practice of law. Respondents have
further agreed to imposition of an injunction against the preparation, signing,
filing and pursuing of mechanic’s liens, as well as against future unauthorized
practice of law.” See UPL Reg. 400(F)(3)(d).
{¶ 38} “Whether respondent’s conduct resulted from a motive other than
dishonest or personal benefit. Although the conduct under review resulted from a
motive of personal benefit, i.e. a for profit business enterprise, Respondents
honestly but mistakenly believed that the conduct did not constitute the
unauthorized practice of law. Further, Respondents did not engage in
dishonesty.” See UPL Reg. 400(F)(3)(e).
{¶ 39} “Whether respondent has engaged in a timely good faith effort to
make restitution or rectify the consequences of the unauthorized practice of law.
None of Respondents’ customers have reported any adverse consequences.
Further, by agreeing to cease such conduct and to the imposition of an injunction
from any such conduct in the future, Respondents have engaged in a good faith
effort to rectify the root of the issue.” See UPL Reg. 400(F)(3)(f).
{¶ 40} “Whether respondent has had other penalties imposed for the
conduct at issue. Respondents have not had other penalties imposed for the
conduct at issue.” See UPL Reg. 400(F)(3)(g).
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January Term, 2010
{¶ 41} Based upon this balancing of the aggravating and mitigating
factors, the parties agreed that a civil penalty should not be imposed. The parties
also agreed that because no costs were incurred by either party, costs would not
be assessed on either party.
So ordered.
BROWN, C.J., and PFEIFER, LUNDBERG STRATTON, O’CONNOR,
O’DONNELL, LANZINGER, and CUPP, JJ., concur.
__________________
Al A. Mokhtari and Eugene P. Whetzel, for relator.
Allan R. Popper, pro se.
______________________
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