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Hawaii's Proposed Practice Rules Make Waves

It's lawyers versus realtors, accountants, architects, title insurers and a slew of other professions as the Hawaii Supreme Court considers a proposal to tighten the state's definition of law practice. As a matter of fact, even many lawyers now say the proposal goes too far, including the state's attorney general.

The Hawaii State Bar Association submitted a revised version of the proposed rule on unauthorized practice of law in December after its original proposal came under attack last year. Yet one of the most controversial provisions of the original proposal remains in the revised version. The controversial clause would define the practice of law to include "selecting, drafting or completing documents that affect the legal rights of another person or entity."

"This basically shuts me down," opponent Betty Marais told the Star Bulletin last year. She runs a business, Legal-Ez, that helps customers fill out legal documents at rates far below what lawyers charge. She had allies then in John Schapperle and Cheryl Yuen. Schapperle, president of the Hawaii Insurers Council, said that the proposed rule would prohibit many of the activities now done by property and casualty insurers, including such routine tasks as preparing auto insurance policies. Yuen, president of the Hawaii Paralegals Association, said the proposal would crimp the livelihoods of realtors, accountants, architects, title insurers, sports agents and others.

In the year since submitting its original proposal, state bar officials met with representatives of several professional groups who banded together as the UPL Coalition to fight the proposal. In a letter to the Supreme Court, the bar's immediate past-president, Jeffrey H.H. Sia, says the latest proposal represents an attempt to achieve a balance between protecting against unauthorized law practice while avoiding any adverse effect on certain types of nonlawyer work already permitted under Hawaii law.

But this latest proposal is being dealt a significant blow by the opposition of Hawaii Attorney General Mark J. Bennett, according to reports this week in both the Star Bulletin and the Pacific Business News. "Bennett wrote to the bar association saying he could not support the revised rules because they were laden with exceptions and exclusions that were overly broad, ambiguous or do 'not make sense,'" the report said. And at least one legal blogger in Hawaii, Charles A. Foster, agrees. He wrote last year on his blog, Planet Kauai, the the proposal as originally drafted was overbroad:

On their face, the rules would seem to prohibit an accountant from informing clients about the legal (including tax(!)) ramifications of choosing one form of business entity over another (partnership, say, over a corporate form), or a Realtor from helping a buyer or seller fill out listing or offer forms, or anyone who is not a lawyer from negotiating on another's behalf pretty much any kind of legally binding agreement whatsoever. This strikes me as a significant expansion of the legal trade's cartel.

Of this latest proposal, he pointed to the AG's comments and said only, "I would add that ambiguity invites litigation." The Supreme Court has given the public until April 27 to file comments.

Posted by Robert J. Ambrogi on January 28, 2009 at 11:01 AM | Permalink | Comments (0)

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