Law office staff and the Unauthorized Practice of Law – Part 2

 In Georgia State Bar Grievances, Legal Malpractice

We have represented clients in legal malpractice matters, and defended lawyers in State Bar disciplinary grievance cases, where the alleged negligent advice giving rise to the claim or grievance was given by a paralegal or other non-lawyer staff member. On top of the potential unlicensed practice of law by the non-lawyer, it could also be malpractice or a Bar Rule violation for the firm or supervising attorney. In general, the more contact that the client has with the non-lawyer, the more likely it is for the client to ask the non-lawyer for legal advice. And the more work experience the non-lawyer has, the more likely they are to offer legal advice to the client. Training non-lawyers on what is and is not legal advice, and enacting sound office policy and procedures prohibiting such conduct, is an integral part of any risk management program in your firm. Former high-profile personal injury attorney David C. Joel of the Atlanta, Georgia law firm Joel & Associates learned these lessons the hard way in the case of David Joel Attorney at Law v. Chastain.

Chastain was injured in an automobile accident in March 1996 and retained Joel’s law firm to represent her in her personal injury claim. Joel testified that he developed his firm into a “volume practice” using television and other advertising. Joel was not in the office on a regular basis, took no part in handling the cases, and was notified by weekly faxes of case dispositions after they had settled. Joel testified that “generally the case management decisions for the Georgia clients would have been left primarily to those persons who staffed the Atlanta office.” Evidence showed that, during some periods when important settlement decisions were being made on Chastain’s case, the firm employed one attorney other than Joel at the Atlanta office and eleven non-lawyer support staffers to handle up to 500 pending cases. To manage that high volume, Joel employed non-lawyer “case negotiators,” who were authorized under Joel’s guidelines to relay settlement offers from insurance companies to clients, respond for the client to the offers, and, under “supervision and instructions” from the on-site attorney, advise the client on whether to accept or reject the offers.

Chastain signed a fee contract with Joel’s firm in May 1996. Joel’s firm assisted Chastain through non-lawyer employees in seeing physicians for treatment of her injuries through November 1996. In July 1997, a non-lawyer case negotiator working for Joel, contacted Chastain, subsequently conveyed several offers to Chastain from the insurance company (all of which Chastain rejected), advised Chastain not to pay pending medical bills, and recommended that she take the insurance company’s final offer of $10,000. Despite her directions to reject the $10,000 offer, a few days later Chastain received correspondence from Joel’s firm containing settlement and release documents indicating her case had been settled with the insurance company for $10,000. When Chastain contacted Joel’s firm about the documents, she was told they were sent by mistake and to throw them away. The evidence suggested, however, that Joel’s firm had in fact accepted the insurance company’s $10,000 offer on behalf of Chastain without her consent.

Upon review of the law firm’s file in Chastain’s case, Joel was unable to find any reference to an attorney’s involvement in the case prior to January 1998. He claimed that there may be evidence of attorney involvement in the firm’s case management software, but he failed to produce any evidence of it. Joel admitted that there was no procedure in place for client files to be reviewed by an attorney on a periodic basis, and acknowledged that this “system” was fraught with potential problems.

Chastain asserted claims for breach of fiduciary duty, violation of the Fair Business Practices Act, and for fraud against Joel’s firm. The jury returned a verdict in favor of Chastain on the breach of fiduciary duty claim and awarded $4,000 in compensatory damages and $20,000 for attorney fees. Joel appealed the jury’s verdict against his firm, but the Court of Appeals affirmed, and held that Joel organized his firm to handle a high volume of cases using non-lawyer “case negotiators,” at times under the supervision of just a single attorney. The Court wrote that “[a]lthough attorneys generally employ non-lawyers such as secretaries, investigators, and other paraprofessionals to assist them in providing legal services to clients, they act for the attorney and must be adequately trained and supervised to ensure that the attorney’s legal and ethical duties to clients are not compromised. See Georgia Rules of Professional Conduct, Rule 5.3.” The appellate court also found that sufficient evidence existed such that the jury could find that “Joel deliberately organized his P.C. in a manner which allowed [non-lawyer staff], without adequate supervision by an attorney, to mishandle Chastain’s case and that this breached the P.C.’s fiduciary duty to apply its best skill, zeal, and diligence in representing Chastain.” 

Chastain also filed a bar grievance against Joel. Joel had testified that he later phased out the case negotiator system because of “the confusion it may or may not have created.” The firm suffered from all of the negative attention it received, and eventually went out of business; Joel is listed as an “inactive member in good standing” of the Georgia Bar with no public discipline.

A lot can be learned from Joel’s case, but the overriding lesson is to train your non-lawyer staff on what is and what is not the unlicensed practice of law. Law firms should have clear and firm office policies and procedures in place to protect against illegal conduct. For assistance in evaluating what may be going on in your law firm, contact Chandler & Moore Law, LLC.

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