Thursday, April 15, 2010

How to Avoid Probate And Engage in Unauthorized Practice

The Indiana Supreme Court has found that the practices of an insurance marketing agency amounted to the unauthorized practice of law. The courtenjoined certain identified practices described in the opinion and remanded the matter for consideration of issues concerning disgorgement of fees.

The company targeted and mailed primarily to retirees information on avoiding probate. A sales representative contacted and met with responders, who would provide the representative  with financial information (information also used to sell insurance products). The sales rep made false claims about the company's "team." The sales reps were paid on commission to sell the most expensive products.

 An attorney was not involved until after the sale was made and the products purchased. The court rejected the company's suggestion that "the panel attorneys had the freedom to exercise their own independent judgment in ensuring that the client had an estate plan suitable for his or her needs." The court identified one client who clearly suffered for following the advice to pirchase a trust product.

The company sold 1,306 estate plans in Indiana for gross payments that exceeded $2.7 million over a period from October 2006 to May 2009.  It is headquartered in Indianalpois and does business in thirteen states. The company claimed reliance on the opinion of an expert that their practices complied with unauthorized practice limitations. The state bar called an expert who testified to the contrary.

The court remanded the matter to its appointed commissioner to determine the appropriate amount to award to the state bar as attorney fees. The court also concluded that payment for the state bar's expert was a properly charged cost or expense.  finally, the court set out the considerations for the commissioner to apply for an order of disgorgement as "we believe disgorgement or a similar form of restitutionary remedy serves as a more reliable and effective deterrent against the unauthorized practice of law and better protects the public from such practices."

(Mike Frisch)

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