Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Texas’ Unauthorized Practice of Law Committee is at it again, this time cracking down on independent companies that — for a fee — identify class members and help them file claims as part of a nationwide settlement. The investigation has already sparked reciprocal litigation that seeks to call off the proverbial dogs. Since the spring, the UPLC — an arm of the Texas Supreme Court — has been investigating 22 companies that allegedly solicit business in Texas by offering to help potential class members file claims as part of a 1998 settlement in Naef, et al. v. Masonite Corp. , et al., according to a committee official. Naef is an Alabama case filed against two companies, Masonite and International Paper, alleging they produced defective hardboard siding that was installed on homes and other structures between 1980 and 1998. Settlement claims in Naef are paid by a compensation formula based on the amount and condition of the siding on the class members’ property. All of the class members have not been identified, primarily because the siding was usually installed by contractors who often did not keep records of the installation, according to lawyers familiar with the settlement. Independent companies that have solicited potential Naef class members in Texas hoping to profit from assisting in filing claims have received tersely worded letters over the past few months from the UPLC informing them they “may have engaged in activities which may constitute the unauthorized practice of law.” So far, the committee has obtained temporary restraining orders in Houston state court against two Louisiana-based companies seeking to stop them from doing business in Texas, says Jeffrey Lehmann, chairman of the Houston Subcommittee of the Unauthorized Practice of Law Committee of the Supreme Court of Texas, who is leading the investigation. Five of the 22 companies the committee targeted have agreed to stop doing business in Texas and have also agreed to pay back any money they collected from homeowners, Lehmann says. The crackdown resembles the UPLC’s last highly publicized action. In 1998 the committee alleged that publishers of legal self-help books and software violated the UPL statute — � 81.101 of the Texas Government Code — because their products instructed people on how to fill out wills and other basic legal documents without the help of a lawyer. After a federal judge enjoined the sale of such products in Texas, the state Legislature ended the controversy in 1999 by changing the statute to note that such publications do not violate the law. But one lawyer representing some of the recently targeted claims companies wants to know what exactly his clients have done wrong. “The mystery to me is why the UPLC would want to put this very useful service out of business in Texas when they are operating throughout the country,” says Peter D. Kennedy, a partner in Austin’s George & Donaldson. “This ain’t the unauthorized practice of law.” Kennedy represents four companies: the Claims Group Inc., Homeowners for Justice Inc., Home Claim Services and Home Claim Services of America. They all solicit business in connection with the Naef settlement — three of them received letters from the UPLC. On Dec. 17, Kennedy filed Claims Group, et al. v. Unauthorized Practice of Law Committee seeking a declaratory judgment against the UPLC in Travis County’s 98th District Court. Kennedy wants the court to declare that his clients have not violated the UPL statute. He also alleges the UPLC has failed to inform his clients what part of the statute they’ve allegedly violated. But Lehmann says the businesses are clearly violating � 38.123 of the Texas Code of Criminal Procedure — a law Kennedy, who has previously battled the UPLC, should be well aware of. That law prevents nonlawyers from entering “into any contract with a third person to represent that person in personal injury or property damage matters on a contingent fee basis with an attempted assignment of a portion of the person’s cause of action.” The companies targeted by the UPLC have been asking class members to sign 30 percent contingent-fee agreements for any recovery class members may receive, Lehmann alleges. In exchange, the companies help class members file claims, he says. That’s against the law, Lehmann says, punishable by up to one year in jail for the first offense and up to 10 years in jail for a second offense. “Their services happen to be legal services. It’s claims-running instead of ambulance-chasing except there’s no ambulance,” Lehmann alleges. “That’s all we’re missing here.” HOMEOWNER CONCERNS When the UPLC came under fire for going after self-help legal publishers three years ago, their opponents accused them of pursuing the action so lawyers could monopolize providing basic legal services even though no one complained about the publications. But there’s no question that people have complained about the solicitation from claims companies, Lehmann says. “I didn’t just come up with this,” says Lehmann, of Houston’s Lehmann & Associates. “I started getting calls from people who had been getting calls from the Better Business Bureau.” Homeowners in the Houston area have been solicited in a number of ways — either through flyers left on their doorstep or by door-to-door solicitors — about the potential to receive money as part of the Naef settlement, Lehmann says. Some of the homeowners were concerned about the questions they were asked by the door-to-door solicitors, Lehmann says. “Here comes a stranger hanging stuff around the neighborhood saying, ‘Hey, I can get you some money,’ ” Lehmann says. “ I started getting a couple of calls a day. And people actually got to the point in the questioning in their homes where their Social Security number was requested. And then they’d call the Better Business Bureau. And they started shooting the information to me.” But Kennedy can’t understand how helping someone fill out forms that any layperson can complete can be construed as the unauthorized practice of law. “I think [Lehmann is] misinterpreting the law by a considerable degree,” says Kennedy, who represented legal self-help publisher Nolo Press in its 1998 battle with the UPLC. To practice law, a person must take an advocacy role. His clients aren’t doing that, Kennedy says. “There are no lawyers providing this service because it’s not conceived to be a legal service,” Kennedy says. The claims service is most helpful to people who don’t know whether their property has Masonite siding and those who own large buildings such as apartment complexes who want help in measuring the amount of hardboard siding on their buildings and the extent of damage to their property, Kennedy says. “They go out and measure hardboard siding and get sweaty. I’ve been a lawyer for 13 years and I don’t measure siding,” Kennedy says. “I can fill out my own tax return, but I pay someone else to do it because I can better use my time doing something else,” he adds. Even the lead lawyer for class members in the Naef litigation initially questioned the need for the claims filing services, but he now says they are helpful in processing settlement money. “We were initially opposed to claims companies because we thought homeowners could file themselves,” says Richard Dorman, a partner in Mobile, Ala.’s Cunningham, Bounds, Yance, Crowder & Brown. He represents Naef class members. “But what they’ve done is a lot of work for apartments and large commercial businesses. But as time wears on [claimants] become less and less aware of the settlement process.” Lehmann says the UPLC has not been served with Kennedy’s suit. And if a district court eventually declares that the claims companies aren’t violating the law, that’s fine with him. “If the district court says my view of the statute is wrong, so be it. We’ve got plenty of other things to do,” Lehmann says. “In the meantime I’m here. And they’re going to have to deal with me. That’s a fact.”

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.