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Last week, the Illinois Attorney Registration and Disciplinary Commission suspended two lawyers for two years for a variety of issues in their dealings with low-income clients who were settling debts. They're all somewhat run-of-the-mill violations, except committed on a much larger scale.
What could attorneys Thomas Macey and Jeffrey Aleman have possibly done to get suspended for two years? Read on, and maybe you can learn what not to do with your new debt settlement firm.
Lesson 1: You Should Have Attorneys at Your Law Firm.
According to the discipline report, Macey and Aleman's firm, Legal Helpers Debt Resolution (LHDR), employed non-attorneys who conducted intake. The intake consisted of the non-attorneys reviewing documents with the clients, then sending the file off to a "non-attorney company" for management of a settlement plan.
Many of the debtors in this case who called LHDR said they believed their cases would be reviewed by attorneys. In fact, most of them weren't; the cases were sent off to the non-attorney companies -- a critical fact that wasn't really explained to the clients. In fact, "[m]any clients testified they would not have enrolled in the LHDR program had they understood it." But that's the point, right? To confuse someone into signing something?
Lesson 2: Make Sure Those Fees Are Reasonable.
For the privilege of having LHDR attorneys do basically nothing other than refer their cases out to debt settlement companies, clients paid a $500 flat fee ($900 after October 2010). The disciplinary report says that it "[could not] say clients received no legal services whatsoever in exchange for the retainer fees," but this was an issue of proof. The state didn't prove what the customary fees are for similar litigation in the area, so it didn't meet its burden of proving unreasonable fees.
With that said, charging $900 for "no entries of identifiable work or communications by a Legal Helpers attorney" seems like a problem, and had the state put on evidence of the cost of essentially referring cases out, the hearing board would have probably found a violation.
Lesson 3: Supervise Non-Lawyers.
Even though LHDR really just sent the case off to someone else, the fact that they held themselves out as lawyers, and that clients thought they were talking to lawyers, meant that LHDR had an ongoing duty to supervise the conduct of everyone in the chain.
Macey and Aleman, however, were too busy operating their business to pay much attention to their "thousands of ... clients nationwide." A "supervising paralegal" from each settlement company was supposed to keep in touch with LHDR. And generally, LHDR established standards and policies for its settlement companies -- but that was about it. The board found that this wasn't enough to comply with the rule requiring policies in place to make sure non-attorneys were complying with LHDR's ethical obligations.
Basically, the LHDR attorneys -- who were managing the business, but not really the legal side -- delegated all client communication and case handling to non-attorneys. And this, too, constituted unauthorized practice of law on the non-attorneys' parts.
So that, folks, is how you get suspended for two years: By seizing a business opportunity, crafting a nominal law firm around it, and then outsourcing most of your obligations to someone else.