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Franchise cashing in on legal self-help
©New York Times
© St. Petersburg Times, LOS ANGELES -- The signs in the store window are eye-catching: "No Lawyers, Save Money." "Divorce: $189-$349." "Bankruptcy: $199." Incorporation: $399." "Living Trust $399." They are an invitation to walk into We the People, one of more than 60 franchises in Florida and 10 other states that have been important in turning do-it-yourself legal assistance into a fast-growing business. Several dozen additional stores could open in Florida alone within the next two to three years. Ira Distenfield, chairman of the umbrella company, We the People Forms & Service Centers USA Inc. -- founded in Tampa, based in Santa Barbara, Calif., and named after the preamble to the Constitution -- said the franchises do not offer legal advice but simply put information provided by clients on the proper legal forms for filing. "We're offering people the ability to represent themselves with the impediments removed," he said. The company's approach is not new; independent paralegals have helped litigants fill out forms for years. But what makes We the People different is its highly visible and burgeoning national presence. The franchises are not anti-lawyer, Distenfield said, but are aimed at people with uncontested legal matters who can bypass the profession to, say, get a simple divorce or arrange a personal bankruptcy. "People with those kinds of matters," he said, "shouldn't be denied legal access because they can't pay the freight of an attorney." But state bar officials and other experts say that the line between "information gathering" and "legal advice" is illusory. They have accused the stores and other document-preparation concerns of engaging in fraud and the unauthorized practice of law, a standard that varies from state to state. The Florida Bar subpoenaed documents and customer information in March from a Sarasota franchise owner, and other state bars are investigating complaints of illicit practices. "Yes, they do have stores in Florida, yes the stores have been investigated, and yes, there is an investigation going on right now," said Lori Holcomb, director of the Florida Bar's unlicensed practice of law department. We the People's attorneys are seeking to block the subpoena. Distenfield disputes the claims against his company, though he acknowledges that the services are controversial. He pointed out with some amusement that Martha Barnett, the president of the American Bar Association, is a partner at Tampa-based Holland & Knight LLC, We the People's primary law firm. "Every state bar in the country wants us out of town," he said, "but we're here to stay." The debate over how far non-lawyers can go to help people represent themselves has intensified as more and more people, disaffected with lawyers and high legal fees, are opting to do so. Although national statistics are limited, studies in some jurisdictions estimate that 60 percent to 90 percent of people suing over domestic relations matters represent themselves. Experts say there also has been a big increase in self-representation in landlord-tenant, bankruptcy and small-claims matters. Distenfield, a former stockbroker and a president of the Port of Los Angeles under Mayor Tom Bradley, is no stranger to controversy or the law. In 1989 he resigned his port post amid allegations that he improperly helped an investment bank that he worked for get a coveted city hall contract. The next year he was sued by some Los Angeles city commissioners, who contended that he misappropriated their investments in a limited partnership. Distenfield denied any impropriety in either instance; the matters ultimately were not pursued. He also had an unhappy experience with high-priced lawyers while going through a divorce in 1986. He said that the opposing lawyers fueled the acrimony, and that after negotiations had dragged on for more than a year, racking up $100,000 in legal fees, he and his former wife met at a restaurant and worked out a settlement "on the back of a napkin." A 1991 Chapter 7 bankruptcy with his second wife, Linda, cost him $40,000 in legal fees, which he said "left a terrible taste in my mouth." Such experiences, he said, underscored the need for economical alternatives that allow people to retain control over their legal matters. Distenfield and his wife, Linda, bought We the People in December 1993 from a Tampa woman named Carol Bradley, who had founded the operation in 1985 and had run it out of her trailer. They took the concept and the license, and opened their Santa Barbara store. Their first customer arrived on Valentine's Day in 1994, seeking, of all things, a divorce. The store, they said, had 500 customers its first year, encouraging them to expand. Adorned in red, white and blue, the stores collectively bring in nearly 5,000 new customers a month, company officials say, and last year they helped prepare and file papers for more than 18,000 bankruptcies, 15,000 divorces, 10,000 living trusts and 6,000 incorporations. They generated more than $6-million in revenue last year, and Distenfield expects a 30 percent increase this year. The Santa Barbara store, which the Distenfields run themselves, had revenue of more than $600,000 last year, and the umbrella company earned about $4-million from the franchise and processing fees. The Distenfields sell the franchises for $89,500. Owners are given training, workbooks and questionnaires for about 100 different types of legal matters, as well as prepackaged television spots. They also get access to centralized processing centers where paralegals enter the information that clients provide onto court forms and then send them back to the stores for signatures and filing. The umbrella company charges a 25 percent processing fee. We the People's plans to penetrate Florida received a boost in February when Chicago investor group WTP Florida LLC bought development rights for the state. The group bought an existing franchise in Cape Coral and plans to develop dozens more statewide over the next few years, some with their own funds and some by finding other qualified franchisees, co-manager Geoff Gempeler said. In addition to the store in Cape Coral, We the People has two stores in Fort Lauderdale and one in Sarasota. A variety of other document-preparation concerns have sprung up in the past few decades. They range from tiny, home-based operations to larger efforts such as Nolo of Berkeley, Calif., which began producing self-help legal books 30 years ago and now offers 150 products, and LegalZoom.com, an online company introduced this spring whose founders include Robert Shapiro, one of O.J. Simpson's lawyers during his murder trial. Deborah Rhode, a Stanford Law School professor, said there was a huge demand for such services because "lawyers have priced themselves out of the market and low-income people are left without an alternative." Cost was the primary reason that Michelle Brohaw of Los Angeles decided to use We the People. After being intimidated by the forms and the process when she tried to file for a divorce by herself, Brohaw went to a lawyer who charged her $100 for a consultation and wanted a $2,500 retainer. With We the People, her divorce will cost $349 plus the $194 filing fee. "They'll get the same results," she said. Such assertions are precisely what disturb lawyers who say that some document preparers are misleading consumers by claiming to be able to handle matters far beyond their competence. In their suit against the We the People center in Crystal Lake, Ill., and its owner, Steven Tracy, the Illinois State Bar Association and a plastic surgeon, Dean Manus, contend that Tracy unlawfully gave Manus legal advice and engaged in consumer fraud when the doctor sought help for his uncontested divorce last year and Tracy hired a lawyer to appear in court on Manus' behalf without Manus' knowledge. Michael Stiegel, a Chicago lawyer who represents the umbrella company, said Tracy had "no intention of engaging in the practice of law." The franchise, he said, had tried unsuccessfully to reach Manus about his scheduled divorce hearing and then sent a supervising lawyer to seek a continuance. Separately, the Pennsylvania Bar Association's Unauthorized Practice of Law Committee contends that a We the People franchisee is offering legal advice without a license and has referred the matter to state prosecutors. William Hoffmeyer, co-chairman of the committee, said the bar association had "gotten a number of claims from individuals who had gotten involved with the organization and had to be extricated from the situation they were put in." Hoffmeyer said his committee fields 20 to 30 complaints a month about a variety of non-lawyer document preparers. He disputed We the People's contention that many divorces are simple. Some spouses, he said, do not contest, out of duress, and should be referred to counseling, while others think their matter is straightforward only to learn, upon investigation, that their spouses are hiding significant assets. Similarly, he said, document preparers "act as if anyone can prepare a will," when in fact clients need legal expertise on such matters as disbursement of assets, child custody and even the manner in which they wish to be buried. "What would happen if the same number of unlicensed people advertised that they could do brain surgery or dentistry?" he asked. Distenfield said it was not his company's role to engage in protracted discussions with clients or advise them on whether their legal matters were well-founded. "We do what we're asked to do, and we're not going to counsel them as to whether it is or is not appropriate," he said. He said certain legal matters may require a lawyer, concedingthat he and his wife, Linda, hired one instead of using We the People for their own complex Chapter 13 bankruptcy filing in 1995. The company retains supervising attorneys in each state where the franchises operate -- Arizona, California, Colorado, Connecticut, Florida, Hawaii, Illinois, New Jersey, Nevada, North Carolina and Pennsylvania -- to answer clients' legal questions at no additional cost, according to the general counsel, Jason Searns. Distenfield argues that the legal profession's real objection to the company's services is economic. He pulled out a calculator and estimated that the approximately 3,300 customers that his Santa Barbara store served last year saved $2.9-million that would have gone to lawyers' fees. Rhode agrees that lawyers are trying to protect their monopoly, and says they fear that such services are a "concession that a lot of what lawyers do isn't much different from what legal secretaries do." Many lawyers say they are just trying to protect the public. Roderic Duncan, a retired judge for the Superior Court of California, Alameda County, says that those most at risk of being victimized are low-income, unsophisticated consumers. One provider who had prepared documents for people appearing before the judge was so incompetent, he said, that he reported the man to state authorities. The man was ultimately convicted of the unauthorized practice of law. The California legislature passed a law in 1988 requiring document preparers to have minimal qualifications and to obtain a state license. But most states leave providers unregulated. To address the need for affordable, competent assistance, many bar groups and other non-profits have jumped in with services like telephone help lines or referrals to arbitrators or low-cost lawyers. More recently, some courts have started programs of their own. In California, said Bonnie Hough, a senior attorney in the courts administrator's office, every county has facilitators for people representing themselves in domestic relations matters, and there are three pilot family-law information centers. Ventura and Fresno have roving self-help centers, Winnebagos that roll into low-income communities to provide free legal assistance. Arizona also has been a leader in offering help, including 150 kiosks throughout the state with information about court proceedings, legal forms and instructions, said Gordon Griller, court administrator for the Superior Court of Arizona in Maricopa County. Whatever the concerns about the private document-preparation services, the customers keep on coming. On one recent Saturday, a steady stream of people filed into the Los Angeles We the People franchise. Imelda Rojas was there for a divorce. Larry Coleman wanted to file a complaint over a $190,000 house he had recently bought. The store would help him while lawyers he had approached were not interested, he said. Besides, he said, "This is the cheapest I can afford." - Times staff writer Scott Barancik contributed to this story.
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From the Times Business report
From the AP
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