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We The People, a nationwide legal document preparation service, promised Wednesday in U.S. Bankruptcy Court for the Southern District of New York not to engage in the “unauthorized practice of law.” The promise was part of a stipulation sought by the U.S. Bankruptcy Trustees’ Office. It could result in dramatic changes in the way the document firm does business. We The People offers help to customers in filling out legal documents in various fields, including bankruptcy, divorce and wills. The company states on its Web site that it “serves customers who cannot afford the high cost of attorney fees” from its 170 offices in 32 states, including 34 offices in New York. Both in New York and nationally, We The People has been accused of providing legal advice without a license. The company, which has franchises offering walk-in services, has denied it provides legal advice. But Greg Zipes, a Department of Justice attorney who advises the bankruptcy trustees’ office, said after Wednesday’s hearing that We The People has been “stepping over the line.” Earlier, before Bankruptcy Judge Robert Drain, Zipes said that members of the trustees’ office “define legal advice very broadly.” Under the terms of the stipulation, We The People cannot advise customers on when to file for bankruptcy, explain secured versus unsecured debt, or categorize the different types of bankruptcy filings available to a debtor, among other things. Additionally, the center cannot distribute how-to books or guides on filing for bankruptcy to customers. “They are allowed to be a typing service,” Zipes said, in characterizing the stipulation’s terms. Richard Lubetzky of Los Angeles, We The People’s lawyer, did not object to the characterization during the hearing, which he attended by phone. Since its arrival in the New York area last year, We The People has opened dozens of offices and handles a large percentage of personal bankruptcy filings in the region, Zipes said. The trustees’ office took an interest when it saw mistakes in the company’s work. The case before Judge Drain involved Debbie Dallas, a customer of We The People. Deirdre Martini, the trustee handling the matter, explained that Dallas may lose her house because of faulty advice she received from We The People. The Dallas case provided an opportunity for the trustees’ office to curb We The People’s practices, Martini explained. Similar moves to place restrictions on We The People are pending in Brooklyn and Connecticut, said Martini. The trustees’ office plans to enter into similar stipulations with the company in those jurisdictions and, during mediation sessions authorized by Judge Drain, reach a regional-wide resolution with the service provider. We The People has come under fire in other jurisdictions, including, Florida and Texas, where local bar associations led the attacks. Martini said that most attorneys in the area charge about $700 for basic bankruptcy advice compared with We The People, which charges about $200. But she added that court clerks will also help potential filers find attorneys willing to do the work on a pro bono basis.

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