Can I Borrow Your Law License?

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

“In its S.E.C. filing, Prommis alerted potential investors that it could face challenges from bar associations, prosecutors or homeowners that its relationship with its law firms constituted the “unauthorized practice of law” or involved “impermissible fee sharing” arrangements.”

“The relationship between the Wall Street specialists and a law firm appears to work like this: A private equity firm, in a transaction worth tens of millions of dollars, buys a wide range of services used by the law firm, like its accounting, computer data, document processing and title search departments. Then, a subsidiary of that private equity firm or an entity it controls makes money by providing those services back to that law firm or other businesses for a fee.”

EDITOR’S COMMENT: It was a just a matter of time. Ask any of the anti-foreclosure mills how long and how much money it takes to build up an effective machine to counter the rush to foreclosure, and it doesn’t take a rocket scientist to realize that Stern, Bosco, Baum, Watson et al were getting their money from someplace, and that someplace HAD to be Wall Street. Wall Street effectively owns the foreclosure mills. Bar prosecutors in many states are taking a hard look at the referral of these cases for UPL (Unauthorized Practice of Law) and conspiracy. It’s a felony in most states and there are actual manuals published in many of these states that instruct prosecutors on how to prosecute UPL. It isn’t sexy, but it has a lot of teeth, as I have mentioned before, comparing to how they got Al Capone on income tax evasion.

So the owner of small law firm gets an offer he can’t refuse. We’ll buy out the guts of your firm whether it exists or not. We’ll put in the money to build it up with people, equipment, space, etc. We’ll lease it back to you at a guaranteed amount of money that will make you rich. Just sit back and do nothing. we’ll do the rest. Combined with the admission that the decision as to whether a homeowner would be declared in default was “outsourced” to a computer rather than a person, the pieces are falling together like a jig saw. That decision-making process was also used to “decide” which institution would foreclose — to prevent the obvious inquiries from more than one foreclosure on the same house initiated in the name of two or more supposedly separate and distinct entities. The purpose is to provide “plausible deniability” to the people involved and technical hair-slitting defenses to keep their licenses, keep the money they made, and maintain control of the biggest title fraud in the history of the world.

October 20, 2010

Foreclosures Profit Some Equity Firms


With a surge in lawsuits against law firms specializing in foreclosures, a case in Mississippi is casting light on another aspect of the mortgage mess — the connection between Wall Street private equity firms and those law firms, often known as foreclosure mills.

The lawsuit on behalf of homeowners claims that Great Hill Partners, a private equity firm, has benefited from what the lawsuit calls an illegal fee-splitting arrangement between Prommis Solutions and several of the busiest foreclosure law firms it controls. Great Hills is the biggest stakeholder in Prommis, a company that acts as a middleman between mortgage servicers and law firms.

A lawyer for Prommis rejected that claim, and officials of Great Hill Partners did not respond to inquiries. But a review of public filings, company news releases and other public statements shows that several private equity firms or entities they control have stakes in the business operations of some of the busiest foreclosure law firms in New York, California, Connecticut, Florida, Georgia and Texas.

Some of those law firms — like the offices of David J. Stern of Plantation, Fla., and Steven J. Baum of Amherst, N.Y. — are among those that are either under scrutiny by law enforcement officials or face actions by homeowners contending that they used inaccurate or fraudulent mortgage-related documents. Both lawyers have denied any wrongdoing, and neither has been charged with a crime.

The influence, if any, that private investors are having on the practices of the foreclosure mills is not clear. But the issue is likely to be examined in coming months in lawsuits like the one in Mississippi and as a nationwide task force of state attorneys general start their inquiry into the accuracy of mortgage documents.

To maximize investment returns, private equity firms often squeeze down costs in the operations they acquire. And some legal experts suggest that could be a factor in the quality of legal documents generated by foreclosure mills.

“The concern is that you are pushing production down to least-cost producer,” said Susan Carle, a professor at American University Washington College of Law.

Tom Miller, the Iowa attorney general who is heading up the task force investigating questionable document practices, said he was not aware that private equity firms had acquired some foreclosure-related operations. While there is no law against such purchases, Mr. Miller said the issue could prove significant because it expanded the possibilities of where and how the foreclosure system failed.

“If this is happening, this is something we are concerned about and would want to find out more about it,” Mr. Miller said in a telephone interview.

The investors involved in foreclosure mills include a publicly traded investment fund, Ares Capital, as well as other midsized and small buyout firms like Great Hill Partners.

The involvement of private equity firms in the legal industry is not new. But their involvement with foreclosure mills appears to have started about five years ago, just as the housing market was starting to collapse and the number of foreclosure procedures was beginning to boom.

The relationship between the Wall Street specialists and a law firm appears to work like this: A private equity firm, in a transaction worth tens of millions of dollars, buys a wide range of services used by the law firm, like its accounting, computer data, document processing and title search departments. Then, a subsidiary of that private equity firm or an entity it controls makes money by providing those services back to that law firm or other businesses for a fee.

For example, about three years ago, Tailwind Capital, a private equity firm in Manhattan, acquired many of the business-related operations of a law firm near Buffalo run by Mr. Baum, which does one of the highest volumes of foreclosures in New York State. Soon afterward, the fund bought similar operations from one of Connecticut’s biggest foreclosure law firms, Hunt Leibert Jacobson of Hartford.

Ares Capital, which financed the move, is also now a co-investor in those assets, which are held in a Tailwind unit called Pillar Processing, a public filing indicates.

Similarly, a private equity firm in San Francisco, FTV Capital spearheaded a $27 million investment in 2007 in an entity that buys law firm business operations and then uses them to provide services back to firms specializing in “foreclosure, bankruptcy and eviction,” according to a news release issued by the firm.

“We have been keenly focused on the mortgage-default services space,” the buyout fund stated in a 2007 news release. “The space is important to our strategic investors which represent six of the top 10 mortgage investors/servicers.”

In an e-mail, a spokeswoman for FTV Capital said that company officials were not available for comment.

Law firms receive a relatively low fee from companies that service home loans, say about $1,200 a case for handling a foreclosure-related proceeding. But those fees can translate into big profits for lawyers and their private equity partners when tens of thousands of foreclosures are involved. The law firms and the private equity firms have structured these deals with an eye toward avoiding legal statutes and ethical rules like those that bar fee-splitting between lawyers and nonlawyers.

But that relationship has been challenged in the Mississippi lawsuit against Prommis and Great Hill Partners.

Another company, Lender Processing Services, is also accused in the lawsuit of illegally splitting fees with foreclosure law firms; it also denies doing so.

The roots of Prommis, based in Atlanta, trace back to 2006 when the company acquired the back-office operations of McCalla Raymer, one of the country’s biggest foreclosure law firms. Great Hill Partners states on its Web site that it was interested in the acquisition because it reflected a way for it to profit from the housing downturn.

In subsequent years, Prommis expanded its operations nationwide by buying the back-office operations of other major foreclosure law firms, according to a recent Securities and Exchange Commission filing made by the company in connection with a planned initial stock offering.

According to that June filing, Prommis now generates revenue by providing services like document processing to the same law firms that handle nearly all of the foreclosures initiated by the loan servicers with whom Prommis works.

In a telephone interview, Prommis’s general counsel, Richard J. Volentine Jr., said that the company did not split fees with its affiliated law firms and that those fees were paid directly to those firms by the loan servicers.

In its S.E.C. filing, Prommis alerted potential investors that it could face challenges from bar associations, prosecutors or homeowners that its relationship with its law firms constituted the “unauthorized practice of law” or involved “impermissible fee sharing” arrangements.

Prommis also stated in that filing that any steps that slowed the pace of foreclosures, like government programs that helped homeowners renegotiate loans, would hurt its revenue.

Julie Creswell contributed reporting.

Fla. Supremes Order Bar to Prosecute UPL Against Banks

Administrative Law is one of those areas that interest only academics like me. It isn’t sexy but it carries BIG teeth. Sometimes it is easier to crack the shell of the titans by an unexpected move where you win hands down and there isn’t much work to do. It’s kind of like taking down AL Capone for income tax evasion. They didn’t get him on the other crimes but he went to jail and died there.

When I was active in the practice of law, I defended many different types of individuals who were licensed by a regulatory board, including lawyers, accountants, doctors, engineers, real estate brokers etc. My eyes were opened at the tremendous amount of power these agencies wield and the devastating effect they have on licensees. It also opened my eyes to the fact that consumers had access to government help that was really there but most consumers didn’t know it.

The latest move in Florida is a simple recognition that practicing law without a license is illegal. In many states beyond fines and an injunction, it is an actual felony punishable by imprisonment. And in most states there is a PRIVATE right of action against those who practice law without a license. It is called Unauthorized Practice of Law (UPL).

Before your eyes cloud over with yet another theory, this isn’t a theory. It is a fact. And besides giving you a right of action for damages, it calls into question whether any of the documents were legally prepared and if yet another misrepresentation caused you to execute them, believing that an attorney had been involved.

What this does is fill out your argument that the entire transaction was illusory and nothing was what it seemed to be. That is what TILA, RESPA and other consumer protection laws are all about. Yes you signed the documents but that doesn’t mean the documents were properly prepared, nor does it mean that a security interest in your property was ever or could ever be perfected. Yes an obligation was created, but that doesn’t mean you owe the pretender lender. If you shop at Target, the neighborhood supermarket cannot collect the money for your purchase at Target.

But I think most importantly, as the old readers of this blog have seen before, decisions like this and the FTC settlement with BOA for $108 million bring us to a point where government is getting hip to the deficiencies at all levels of the lending process and the documentation. That means that now is the time to file appropriate grievances against anyone who carries a license or charter on loan practices that do not conform with industry standards and in particular, the rules governing the profession for which they were licensed.

Who’s licensed? Just about everyone. Mortgage brokers, real estate brokers, title agents, closing agents, trustees, lenders, originators, etc. An originator like Quicken that specifically and repeatedly told its prospective customers that it was the lender when in fact they were only brokering the money as a mortgage broker or originator has a problem. It just engaged in false and deceptive business and loan practices, but more importantly it created a “table funded” loan, which is a fancy way of not telling you the identity of your creditor and how much money everyone is making on this loan.

The best part is that if you file the grievance early enough, you won’t have to go to court because the enforcement mechanism of the agency will do the investigation, the prosecution, and the discovery for you. And if you do prosecute for damages, in most cases you will prove a claim under TILA you will get attorneys fees paid by the pretender lender or other parties against whom you have filed your grievance.

‘Ghostwriting’ Lawyers Can Remain Cloaked, but Not for Tactical Advantage

‘Ghostwriting’ Lawyers Can Remain Cloaked, but Not for Tactical Advantage

Charles Toutant

A federal magistrate judge’s ruling last year that “ghostwriting” pleadings for a pro se litigant violates a lawyer’s ethical duty of candor to the court has caused an uproar loud enough to get a New Jersey Supreme Court ethics committee’s attention.

In a formal opinion meant to calm nerves, the Advisory Committee on Professional Ethics says it’s ethical, in limited circumstances, for a lawyer to draft pleadings and give other “unbundled” legal assistance to pro se parties without telling the court.

Disclosure is not required if the limited assistance is simply an effort to aid someone who is financially unable to secure an attorney or if it is part of a nonprofit program designed to provide legal assistance to people of limited means, the panel said in Opinion 713.

But full disclosure is required “where such assistance is a tactic by a lawyer or party to gain advantage in litigation by invoking traditional judicial leniency toward pro se litigants while still reaping the benefits of legal assistance.”

Disclosure is also required when it’s clear from the facts that the lawyer, not the pro se litigant, is “effectively in control of the final form and wording of the pleadings and conduct of the litigation,” the panel said.

The ghostwriting issue has been haunting since last spring when U.S. Magistrate Judge Tonianne Bongiovanni ruled, in Delso v. Trustees for the Retirement Plan for Hourly Employees of Merck & Co. Inc., that a lawyer’s anonymous help in preparing pleadings without affirmatively notifying the court was “not emblematic of the candid honesty contemplated by [Rule of Professional Conduct 3.3],” which requires candor to the tribunal.

The lawyer, Princeton, N.J., solo Richard Shapiro, instructed his client, Rosann Delso, to answer honestly if asked about his participation, and the client did so after defense counsel Randi Knepper of McElroy, Deutsch, Mulvaney & Carpenter in Morristown, N.J., told the judge the plaintiff’s papers did not look like those of a pro se litigant. And Knepper received correspondence from Delso in an envelope bearing the return address of Shapiro’s law office. Shapiro subsequently signed on as counsel of record for Delso in the ERISA case.

Bongiovanni said the undisclosed provision of legal assistance could take unfair advantage of the looser leash courts give to unrepresented litigants. “[C]ourts often act as referees charged with ensuring a fair fight,” she noted. “This becomes an obvious problem when the Court is giving extra latitude to a purported pro se litigant who is receiving secret professional help.”

Bongiovanni also found that undisclosed ghostwriting violates the spirit, if not the letter, of Federal Rule of Civil Procedure 11 and Local Civil Rule 11.1, which require attorneys to certify and sign their submissions to the court.

The committee said it hoped its Opinion 713 would strike a balance between “the interests of extending legal assistance to the unrepresented, preserving confidentiality and minimizing the cost of legal representation are on one side [and] candor toward the tribunal and fairness toward opposing parties on the other.”

The committee declined to address the possible applicability of Federal Rule of Civil Procedure 11 suggested by Bongiovanni, saying it has no jurisdiction over questions of federal civil procedure.

The balancing of interests drew a favorable review from John Beckerman, associate dean for academic affairs and professor of professional responsibility at Rutgers Law School-Camden. “My belief is that it is better to have limited representation, as long as it’s clearly understood what it will entail, than nothing at all,” he said.

Beckerman said lawyers limiting their representation should obtain the client’s signature on an extensive disclosure of what services will or will not be provided and the potentially negative outcomes for which the lawyer disclaims responsibility.

Bennett Wasserman, who teaches professional responsibility at Hofstra University School of Law, says Opinion 713 has some flaws that might make it clumsy to apply.

For one, it creates a different standard for compliance in state court than exists in federal court under Delso v. Merck. For another, by making disclosure unnecessary only where a litigant is unable to afford legal fees, the ruling seems to require a lawyer to conduct a financial evaluation of the prospective client’s ability to pay, says Wasserman, of Stryker, Tams & Dill in Newark.

Opinion 713 also holds limited-assistance lawyers to a different standard than transactional lawyers, who must disclose their role in preparing documents such as deeds and powers of attorney.

Finally, the presence of an off-stage lawyer prevents the adversary from conducting a conflicts check.

“Thus, while there may be benefit to one party to the litigation, the prejudicial effort on the adversary would tend to be greater,” Wasserman says.

Other states have taken diverse approaches to police such arrangements. The New York State Bar Association and the Iowa Supreme Court find them unethical per se as a fraud on the court. At the other end of the spectrum, the Los Angeles County Bar and the State Bar of Arizona find no duty to disclose, based on the need to preserve client confidentiality.

Still other states impose a limited duty of disclosure, some using imprecise terms such as “substantial” or “significant” to demarcate the duty, which the committee said were not helpful.

Foreclosure Defense and Offense: The Importance of Hiring Local Counsel

State Bar Associations are wrestling with the issues of “Ghost-Writing” and Unauthorized Practice of Law.

On the one hand it is obvious that substantial additional education is required for local lawyers to properly file their schedules in bankruptcy petitions or properly defend the foreclosures in state courts. On the other hand, despite the paucity of attorneys who actually understand the new context of foreclosure defense, it is in the State’s interest to regulate these activities because of the obvious potential for abuse by an out-of-state lawyer who does not know local laws or procedures.

We therefore feel, as you have seen in prior posts, that is critically important to retain local counsel who is actually involved in the case and not merely a signatory. We also feel that pro se (no lawyer) litigants are getting in over their  heads despite all the resources on this blog.

As for the lawyers reading this blog, consider the following article which while somewhat dated, provides at least some insight into possible consequences of being “behind the scenes.”


Unbundled Legal Services:
Can the Unseen Hand be Sanctioned?
© 1998 Charles F. Luce, Jr.
All Rights Reserved Worldwide

One hot topic in legal ethics circles is the propriety of attorneys “ghost writing” pleadings for ostensibly pro se parties, i.e., in matters in which the attorney has not entered an appearance. The question has produced a handful of ethics opinions, some emotionally charged judicial commentary, and has attracted enough interest that it might some day be the subject of a specific Rule of Professional Conduct.

“Ghost writing” is, by its nature, a loaded term, suggesting the specter of unethical conduct. Certainly it was chastised as such in a fiery opinion by Judge John Kane, Johnson v. Board of County Commissioners, 868 F. Supp. 1226 (D. Colo. 1994), aff’d on other grounds, 85 F.3d 489 (10th Cir. 1996), the case which can be fairly credited for riveting the attention of Colorado litigators to the “ghost writing” issue. Kane’s denouncement of a related issue — partial representation of a client sued in multiple capacities — tersely summarizes the anti-ghost writing viewpoint: “Whatever phantom is calling this tune, . . . , may not have it played in this court.” 868 F. Supp. at 1230.

Depending upon your viewpoint, ghost writing is either an insidious and deceitful way for ostensibly pro se litigants to gain an unfair advantage and attorneys to shirk their duties as officers of the court, or a victory for consumers’ rights, merely one aspect of another hot topic among legal ethicists, the so-called “unbundling of legal services.”

The Case for Exorcising the Spectral Hand

Three principal arguments for prohibiting ghost-written pleadings are most frequently advanced:  (1) Fed. R. Civ. P. 11(b) (or the state equivalent) provides that an attorney’s signature constitutes a certification that the pleading is well-founded in fact and law and not interposed for any improper purpose; (2) Model Rule of Professional Conduct (“RPC”) 8.4, whose several provisions generally prohibit dishonest or misleading conduct by attorneys; and (3) federal law, and the law of some states, requires that preferential treatment, principally in the form of lower standards, be given to pro se litigants by virtue of their unrepresented status. The fault with these general arguments against ghost writing, as well as with the arguments supporting the practice, is that the specific circumstances and consequences of each phantom pleading must be considered. As in most other matters of legal ethics, application of an uncompromising rule, applied in an uncritical manner, will yield unjust results frequently, and ethical results purely by accident.

The Rule 11 “hard liners” contend that it is unlawful and unethical for an attorney not to sign a pleading the attorney has substantially prepared. Rule 11 itself does not support this position; the rule provides that an attorney’s signature is a certification, not that an attorney must sign every pleading he or she has had a hand in preparing. Moreover, there are situations in which an ethical attorney will be unwilling to sign any pleading because of consequences completely unrelated to Rule 11.

For example, in many, if not most, jurisdictions, entry of appearance is accomplished with the stroke of a pen; the signing of any pleading accomplishes the entry of appearance. See, e.g., D.C.COLO. LR 83.5(B); Colo. R. Civ. P. 121, § 1-1(1). Litigators are all too keenly aware that the courthouse door swings more easily inward than outward. Many jurisdictions, including Colorado, take the position that, once having entered an appearance, an attorney is duty-bound to see a matter through to conclusion. People v. Demarest, 801 P.2d 6, 7(Colo. App. 1990) (“We further recognize the general rule that counsel who undertakes to conduct an action impliedly stipulates that he will prosecute it to a conclusion.”) (citing Riley v. District Court, 181 Colo. 90, 507 P.2d 464 (Colo.1973)). Accord People v. Ray, 801 P.2d 8, 9 (Colo. App. 1990); Anderson, Calder & Lembke v. District Court of Larimer County, 629 P.2d 603, 604-05 (Colo. 1981). Accordingly, it is not uncommon for an attorney’s plea to withdraw from a case on the grounds that the client has ceased paying to fall upon deaf or unsympathetic judicial ears. While attorneys should not be allowed to “sign out” as easily as they can “sign into” a case, so long as the key to the courtroom exit is held by a potentially unsympathetic judge, those lawyers who have before found themselves caught in the Venus flytrap of the ease of entry of appearance will be naturally reluctant to sign any pleading if the client’s ability to afford full representation is questionable.

Another common situation in which an attorney may be reluctant to sign on Rule 11’s dotted line is when a potential plaintiff comes calling on the eve of the running of the statute of limitations. If the client has left no time for the attorney to verify facts, how can an ethical lawyer certify that he has conducted a reasonable investigation? Until such an investigation has been made, how can the attorney assess his or her willingness to enlist for the duration of the case? In such a situation, it is obvious that an attorney cognizant of Rule 11 must not sign the complaint. But it is a false Hobson’s choice, and decidedly not in the interest of justice — in any meaningful sense of the word — to conclude that the attorney must either falsely certify the complaint under Rule 11 (a clear ethical violation), or permit the statute of limitations to run, depriving the client of a claim and exposing the attorney to a malpractice action on the theory that representation was undertaken negligently, or, more absurdly, that the lawyer should have undertaken representation.(1)

Another, thornier situation where legal services might be unbundled, are those instances in which insurance defense counsel has been retained by the insurer to provide defense only, even though there are meritorious counterclaims which might and ought to be stated if the insured were in a position to be able to afford full legal representation. If the client is unable to afford insurance counsel, who is already knowledgeable about the case, to provide full representation, the option of the insured to retain separate counsel to prosecute its counterclaims is illusory. Yet, at least in Judge Kane’s courtroom, partial representation of the client may not be allowed. See Johnson, 868 F. Supp. at 1230-31.

In situations such as those described above, the alternatives are either no assistance of counsel or, provided the attorney is willing to unbundle legal services, limited assistance of counsel, which may not extend to the execution of pleadings or appearance in the case. In the author’s opinion, the latter is plainly preferable to the former.

The Rule 11 hard liners who would not admit the existence of this possibility ignore not only the language of Rule 11 itself, but of the first rule of civil procedure, that all the rules “shall be construed and administered to secure the just, speedy and inexpensive determination of every action.” Fed. R. Civ. P. 1 (emphasis added). While Rule 11 provides that an attorney’s signature is a certification that the pleading is well-grounded in fact and law, the converse, that the absence of an attorney’s signature is the hallmark of a spurious and frivolous pleading, is hogwash. Having debunked the hard line Rule 11 position, the RPC 8.4 argument must also fall; it is no more misleading or deceitful for an attorney to ghost write a meritorious pleading than it is proper for an attorney to sign a frivolous and groundless pleading. The real issue is not the presence or absence of a lawyer’s signature, but the intended or reasonably foreseeable effect of the unseen assistance of counsel.

The third argument made in support of an anti-ghost writing rule — that in federal courts and some jurisdictions pro se pleadings are treated more leniently — is considerably stronger than the Rule 11 argument. This rule, rooted in the edict of the Supreme Court’s decision in Haines v. Kerner, 404 U.S. 519, 520 (1972), was the foundation of Judge Kane’s concern in Johnson, supra. Moreover, as litigators know, even in those jurisdictions whose black-letter law provides that pro se litigants are to be given no preferential treatment, the reality is that they frequently are. Even the most ardent disciple of stare decisis will, if not bend over backwards, at least incline some degree in that direction when dealing with a pro se litigant, if only in the interest of “bulletproofing” appellate review. Accordingly, if the spectral solicitor knows that a pleading regarding which he has provided substantial assistance will be used in a jurisdiction which either, as a matter of law or practice, favors pro se litigants, the attorney’s hand, even if not identified, must be acknowledged to avoid a foreseeable unfair effect. This duty need not take the form of the attorney signing the pleading, but can be as effectively discharged by the attorney conspicuously indicating in the pleading, perhaps in the signature block, “prepared with the assistance of counsel,” or words to similar effect. Numerous ethics bodies considering this issue have reached the same conclusion. See infra.

The Case for A Beetle Juice Barrister

In assailing the Rule 11 hard line position, the author does not suggest that the best representation is for an attorney to operate the levers of justice from behind a curtain like the Wizard of Oz, nor to appear only in cameo. Even simple litigation requires a myriad of daily decisions by someone trained and experienced in law. An attorney who is only partially engaged, figuratively and/or literally, is a danger to himself and to the client, and should so advise the client. Further, there is a substantial risk that the client and attorney may bargain for unbundled, limited assistance, only to have a court hold the attorney to a more encompassing duty should the lawyer-coached client’s case go south. Although the Model Rules permit an attorney to limit the scope of representation, RPC 1.2(c), there is foreseeable and understandable judicial reluctance to “downsize” the standard of care. See generally, Cohen, Afraid of Ghosts, 83 A.B.A. J. 80 (Dec. 1997) (warning against the malpractice potential inherent in “sort of” representing a client). Agreeing to author, but not sign, pleadings undoubtedly creates an attorney-client relationship, and requires that the attorney fulfill all the duties normally owed to a client, even though the scope of representation is limited. The attorney must exercise caution that unseen assistance will not result in a fraud on the court or other litigants — such as creating an illusion of pro se representation if the forum’s rules require leniency be granted only to truly pro se parties — for this would violate Rule 8.4’s prohibition against directly or indirectly engaging in dishonest conduct. The attorney must also be mindful that the principal of unbundled legal services does not support the unauthorized practice of law; if it would be unlawful for an attorney to appear in a particular matter directly, it is no less unlawful for the attorney to “disappear.” See Iowa Opinion 94-35 (May 23, 1995) (attorney-serviceman stationed, but not licensed, in Georgia, may not prepare pleadings for nonlawyers in Georgia).

However, some legal assistance is preferable to none at all, and if the client is unable to afford the complete panoply of the attorney’s skills, it should not consequently be deprived of all of them. The authors of the Model Rules of Professional Conduct recognized this in adopting RPC 1.2(c): “A lawyer may limit the objectives of the representation if the client consents after consultation.” This is not simply an issue of indigent representation; many attorneys could not themselves afford uninsured legal representation. If justice is to be practically available for all, if the litigation is not to become literally “the sport of kings,” unbundling legal services must apply litigation services, too. See generally Colo. Bar Ass’n Opinion 101, Unbundled Legal Services (Jan. 17, 1998) (recognizing, but declining to address the issue of ghost writing).

The Law

Although the ethical rules implicated in the ghost writing debate are clear, no consensus has emerged regarding the ethical or legal propriety or procedure by which counselors may proffer a phantom pen.

The few published opinions express severe reservations regarding unbundled litigation services. Johnson, supra, concluded that the undisclosed assistance of counsel in drafting pleadings, “necessarily causes the court to apply the wrong tests in its decisional process and can very well produce unjust results,” 868 F. Supp. at 1231, violates Rule 11, id., and is “ipso facto lacking in candor,” id. at 1232 (citing RPC 1.2(d)). Laremont-Lopez, supra, held that ghost writing:

(1) unfairly exploits the Fourth Circuit’s mandate that the pleadings of pro se parties be held to a less stringent standard than pleadings drafted by lawyers . . . , (2) effectively nullifies the certification requirement of Rule 11 . . . and (3) circumvents the withdrawal of appearance requirements of Rule 83.1(G) of the Local Rules for the United States District Court for the Eastern District of Virginia [permitting withdrawal only by order of the court and after reasonable client notice].

986 F. Supp. at 1078 (citations omitted). Another court properly granted a motion to compel disclosure of whether “behind the scenes” legal assistance was being provided an ostensibly pro se party:

Plaintiff argues that she has a legal fight [sic] to proceed pro se, whether or not she is an attorney. She also argues against any “unlawful intrusion into privileged information.” . . . The court has no quarrel or disagreement with these propositions. But they miss the point. The court does not propose to deny plaintiff the right to proceed pro se. Nor does it propose the invasion of privileged information. In this instance, however, plaintiff has sought to invoke the leniency of the court when she may not have a right to assert her pro se status for that purpose. Both the court and the parties, moreover, have a legitimate concern that an attorney who substantially participates in a case at least be identified and recognize the possibility that he or she may be required to enter appearance as counsel of record and thereby accept accountability for his or her participation, pursuant to Rule 11 and the rules of professional conduct applicable to attorneys. The grounds urged by plaintiff to deny the requested information do not trump the valid reasons for providing it on the record.

Wesley v. Don Stein Buick, Inc., 987 F. Supp. 884, 887 (D. Kan. 1997) (citations omitted).

Ethics opinions have generally been more supportive of ghost writing as an unbundled legal service, though they have differed as to what kind of notice of legal assistance should be provided. See, e.g., Kentucky Bar Ass’n Opinion E-353 (Jan. 1991) (lawyer’s name, but not signature, must appear on pleadings); N.Y. City Bar Ass’n Opinion 1987-2 (document must state “Prepared by Counsel,” but attorney need not be identified); Iowa State Bar Ass’n Opinion 96-31 (1997) (proper for lawyer to prepare pro se pleadings provided court is informed of lawyer’s identity); New York State Ethics Opinion 613 (1990) (reaching a similar conclusion). Other ethics bodies see no reason for any identification of legal assistance to appear. See, e.g., Maine Ethics Commission No. 89 (Aug. 31, 1988); Los Angeles County Bar Ass’n No. 483 (March 20, 1995); Alaska Bar Ass’n Ethics Committee No. 93-1 (March 19, 1993) (noting “that judges are usually able to discern when a pro se litigant has received the assistance of counsel in preparing or drafting pleadings”). See also Virginia Bar Ass’n Opinion 1127 (1988) (Virginia attorneys may assist pro se litigants in preparing pleadings, briefs and discovery requests without entering an appearance).


The value of unbundling litigation services for clients is self-apparent. The risk to attorneys who may find themselves held accountable for a larger duty than they thought was bargained for is only slightly less obvious. A bright-line rule regarding ghost writing is neither possible, nor desirable; careful consideration must be given to the circumstances of each case and the rules of each forum. Instead, the author suggests the following standard be used in assessing the ethics of adopting the nom de plume of one’s client:  if the intent or reasonably foreseeable effect of ghost writing is that the court or another party will be misled or that a pro se litigant will obtain an unfair advantage, the act of ghost writing, if not the identity of the spectral scrivener, must be made known. The court may always compel the pro se litigant to identify the assisting counsel, if it believes there is a need. If, on the other hand, no deceit or unfair advantage is either intended or reasonably likely to occur, the assisting lawyer’s hand may remain unseen and unknown.

Whether such a standard will be adopted in Colorado remains to be seen. For now, those practicing in federal court would be wise to carefully consider Johnson, supra, and should at least insist that the pro se pleading indicate the assistance of counsel. However, the test proposed stands on solid footing, both as a matter of current ethics and social policy and, at least amongst bar ethicists, appears to be the “better rule.”

1. The suggestion of one court, that the “better practice” in this scenario “would be for counsel to acknowledge draftsmanship of the complaint . . . by signing and filing it and simultaneously filing a motion to withdraw as counsel accompanied by an appropriate explanation and brief,” Laremont-Lopez v. Southeastern Tidewater Opportunity Center, 968 F. Supp. 1075, 1077 n.2 (E.D.Va 1977), assumes a benevolent and understanding judiciary, and trust that the motion to withdraw will be granted. Bad experiences have taught many litigators to not be so trusting. Moreover, the suggested motion to withdraw would be tantamount to an admission that the attorney had violated Rule 11.



Our objective is to get to as many people as possible who were or are effected by the mortgage meltdown practices between 2001-2008. We are allowing and promoting as much free information as possible and providing active assistance mostly to other lawyers who already have clients. It is our goal to get to as many people as possible whether or not they have money to pay fees to outside consultants or attorneys.

There are some cases that we are referring to local attorneys and we are assisting them in learning the strategies for foreclosure defense. Most people who contact us or our readers are not an attorney but that many have some knowledge regarding certain rights of the borrower and that they feel qualified to perform mortgage audits or they are outsourcing your mortgage audit function to a third party or parties.


It is extremely important that to realize that there are now 26 states wherein the attorney general or the equivalent is investigating not only outright scams and fraud by those who purport to be helpful in settling foreclosures, but also those who are charging fees in excess of a few hundred dollars, including contingency fees, on the promise that they will stop the foreclosure, prevent the foreclosure, or collect money refunds, rebates or damages.

Most people are unaware of the fact that State Law in most states makes UPL (Unauthorized Practice of Law) not only illegal and subject to injunction, but actually a crime. In some states it is raised to the level of a felony and people have been and are being prosecuted criminally on a very aggressive basis in several states. Jail and fines are not unusual punishments.

Our goal is to legally help people without aiding or abetting a lay person in the unauthorized practice of law. Some of the red flags that prosecutors look for is whether promises have been made regarding the outcome of entering into a retainer agreement, whether a contingency fee payable to a non-lawyer is involved, whether the upfront fee exceeds a few hundred dollars, and whether the services being rendered go beyond the audit and report and into the area of opinions and advocating for the client about the lender and borrower legal liability, rights, obligations, procedures and consequences.

It is possible there might be lee-way for some entities that have qualified themselves as collection agencies to receive a percentage of actual dollars recovered, but this ignores many If not most of the rights of the owner(s) of a home threatened with foreclosure, sale, or eviction.

Thus if your goal is to perform audits and issue reports, that is fine. If you wish to perform further services, it must be for a licensed attorney in the jurisdiction where the property is located. We have a growing list of attorneys who are forming an informal mentoring network with whom you could work. However, it is not possible that you can, on a some geographically remote basis, perform the services or do the work that is ordinarily performed in a law office — unless you qualify as a paralegal and you are associated with licensed local counsel. We can support local counsel and educate him or her in this area of increasingly complex litigation. Your financial arrangements would best be through the office of a local attorney rather than directly with a client. If you are providing services to an attorney (with a license in the proper jurisdiction) then you are not offering legal services to the public.

We do find that most ‘audit servicers’ are either re marketing the services of companies that actually do the work or are trying to perform the services themselves without specific training or experience in doing so. While channeling sales through a conduit is a perfectly proper way of doing business, it is a red flag at the moment for prosecutors and bar associations. Obviously not having the credentials to actually perform the work would tend to work against you if you are requested to perform the audit. We consider a person qualified to perform these audits ONLY if they have prior auditing experience with a financial institution or regulator. And they must have the qualifications to appear as an expert at trial if that becomes necessary. If the ‘Auditor’ is receiving a fee contingent upon the outcome of the case, the credibility of the expert is severely impaired.

It is our opinion and the opinion of most regulators that most of the work of foreclosure defense and offensive including strategies involving violations of disclosure requirements under TILA or Resolution requirements under RESPA, etc., constitutes the practice of law. Many companies are springing up to try to offer these services and we believe that they are low-hanging fruit for criminal prosecution, regardless of how surprised or offended they are by the interpretation of the law and the legal requirements. For that reason we issue this information prior to commencing any relationship with an entity or person that wishes to offer auditing services.

Assuming you are seeking to offer services within the narrow constraints outlined above, then please send a return email with your acknowledgment and a member of our staff will contact you in order to qualify you and commence contractual work.

Neil F. Garfield, Esq.

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