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‘Non-Lawyer Legal Help’ Are No Longer Banned Words in New York

May 26, 2022, 9:30 AM

Welcome back to the Big Law Business column on the changing legal marketplace written by me, Roy Strom. Today, we look at a case that pits free speech against the provision of legal advice by people who are not lawyers. Sign up to receive this column in your inbox on Thursday mornings. Programming Note: Big Law Business will be off next week for Memorial Day.

The late comedian George Carlin famously said there are seven words you can’t say on TV.

For non-lawyers, there have been far more than seven words they can’t say—if they drift anywhere close to practicing law. Those banned words include, “Check that box.”

But now that’s changing.

A federal judge in Manhattan this week ruled a non-profit can train regular people to provide free help for New Yorkers filling out responses to debt collection lawsuits.

The order lets Upsolve Inc.’s “justice advocates” tell debt collection defendants what boxes to check on a one-page response to the lawsuits.

The ruling could create a roadmap for other programs to provide less-expensive legal advice in other types of cases. The increasingly high cost of hiring a lawyer is driving similar efforts in other states.

Everyone involved in the New York case agreed that Upsolve, through its box-checking exercise, would open themselves to a potential State Attorney General lawsuit. That’s because case precedent points to such activity as the “unauthorized practice of law.”

But Judge Paul Crotty granted a preliminary injunction to prevent the AG from pursuing cases against Upsolve or its advocates on those grounds.

Licensing requirements targeting professionals do not automatically evade scrutiny under First Amendment arguments, he said in a 33-page opinion and order, citing a series of Supreme Court rulings.

“There are special categories of pure speech that government can regulate without scrutiny,” Crotty wrote. “But legal advice does not appear to be one of them.”

Legal advice is different from defamation, incitement or fraud, he said, in part because it lacks a history of regulation dating back to the country’s founding.

The ruling is a “landmark decision,” Rohan Pavuluri, Upsolve’s CEO, said in an interview. “We’re optimistic about what it means for the future of our country.”

He added, “The lawsuit is about a very specific issue, but embedded in it is a central question about the future of the US. It’s about whether we want to live in a country where equal rights under the law is a reality, and today’s ruling is a big step towards reaching that fundamental American promise.”

Remember, this fight was about whether someone without a law degree can tell someone else what box to check.

Upsolve and its lawyers developed a training manual for advocates to provide advice on the debt collection lawsuits. Not answering the suits can lead to garnished wages, eviction, lower credit scores and other financial problems, Upsolve has said.

One plaintiff in the Upsolve case is a pastor from the Bronx, John Udo-Okon. He wanted to be an advocate after people in his congregation told him they’d been sued over consumer debts and didn’t know what to do next.

Before Udo-Okon or any other advocates started giving advice under the program, Upsolve filed a lawsuit in Manhattan in January seeking protection from prosecution.

Weil Gotshal & Manges represented Upsolve. Associate Robert Niles-Weed led a team that included appellate practice co-heads Greg Silbert and Zack Tripp, and associates Elena De Santis, Liz Grefrath, and Sara Weiss.

The team argued there is a pressing unmet legal need in the cases. Their complaint cited estimates that as many as 90% of defendants in debt collection cases don’t respond, resulting in default judgments against them.

To make matters worse, a Legal Aid Society of New York study found more than a third of sample debt collection cases were baseless. They were the result of mistaken identity, involved debt that had already been paid, or ignored that the statute of limitations to collect the debt had expired.

After large groups of defendants failed to respond to cases, New York had gone to some lengths to fix this problem by itself. That included creating the simple one-page form that asked defendants to check off any of 24 defenses, such as having paid the alleged debt already or having had no business dealings with the plaintiff.

Upsolve decided to limit their free advice to filling out the form.

Crotty’s ruling was not “revolutionary” but could still lead to similar programs being developed to help low-income defendants respond to other types of lawsuits, said Michael Frisch, ethics counsel at Georgetown University Law Center.

The ruling matches efforts elsewhere, such as Arizona’s “regulatory sandbox” that are aimed at providing lower-cost legal services, he said.

“The general trend has been toward recognizing that many people just can’t afford lawyers and there is a need that has to be satisfied that can’t be done at $600 or even $300 an hour,” Frisch said. “This decision recognizes that and is telling the bar that if you’re going to regulate this, it has to be in the public interest and not the interest of lawyers.”

Carlin’s bit about the seven words you can’t say on TV famously led to his arrest in Milwaukee in 1972. A judge dismissed the charges against him, noting the words led to laughter, not incitement.

Carlin had argued that words alone aren’t good or bad—context matters.

Crotty’s order shares that sentiment. Upsolve’s program isn’t likely to harm consumers; quite the opposite, he ruled.

In doing so, Crotty sent a signal that context matters when providing legal advice. Telling someone something as simple as “check that box” shouldn’t always be punished.

Worth Your Time

On Law Firm Diversity: An American Bar Association report shows White attorneys were almost twice as likely to reach partnership ranks than members of other racial groups, Sam Skolnik reports. Male lawyers were twice as likely to be become partners as women.

On Big Law Billing Rates: Hogan Lovells partner Neal Katyal is facing blowback from the Department of Justice’s bankruptcy watchdog after a Johnson & Johnson unit hired him to work on its Chapter 11 case for nearly $2,500 an hour, James Nani reports. The US trustee objected to Katyal’s fee, noting it was more than $1,000 an hour higher than lawyers at Jones Day or Skadden.

On SPACs: The poor trading performance of a recently listed SPAC transaction is putting a dent in the fortune of Miami lawyer John Ruiz, Tom Maloney reports for Bloomberg. Ruiz’s MSP Recovery, which seeks reimbursements for erroneous government healthcare payments, plunged more than 60% after a SPAC combination led to its first day of public trading on Tuesday. Ruiz’s fortune plunged from $21.4 billion to $8.3 billion.

That’s it for this week (and next)! Thanks for reading and please send me your thoughts, critiques, and tips.

To contact the reporter on this story: Roy Strom in Chicago at rstrom@bloomberglaw.com

To contact the editors responsible for this story: Chris Opfer at copfer@bloomberglaw.com; John Hughes at jhughes@bloombergindustry.com