Sanction Not Sustained For Limited Scope Representation

The Kentucky Supreme Court recently held  that sanctions imposed against attorneys who provided services but did not sign pleadings as part of a limited scope representation could not stand.

Sarah Jackson and David Thomas, of Owensboro, individually retained Appellants Persels & Associates, LLC (“Persels”) to defend them in their debt collection cases that were pending before the Daviess Circuit Court.  Persels is a national law firm organized in Maryland and engaged primarily in unsecured debt collection cases such as credit card debt.  Here, Persels attempted to negotiate with the credit card companies on behalf of its clients.  To assist in negotiations, Persels retained Kentucky attorneys K. David Bradley of Salt Lick, Kentucky, and Robert Gillispie of Leesburg, Virginia, to provide limited representation.  Mr. Bradley was assigned to “assist” Sarah Jackson;  and Mr. Gillispie was assigned to “assist” David Thomas.

The terms of Jackson's and Thomas's limited-representation agreements with Persels were confined to drafting and consultation services.  The agreements specifically provided that neither Kentucky lawyer was required to sign pleadings, enter an appearance, or attend court proceedings.  Therefore, it appears that the defendants were nominally pro se.  They either signed the documents that were prepared for them, or were at least instructed to do so by counsel.  In 2011, however, the Daviess Circuit Court ordered Attorneys Bradley and Gillispie to appear and show cause as to why they should not be held in contempt for their failure to enter their appearances and sign documents filed with the court.  The trial court consolidated the two cases and permitted Persels to intervene as a third party respondent.

Sanctions under Kentucky's Rule 11 were imposed and affirmed by the Court of Appeals.

The rationale behind CR 11 is to regulate the litigation process so that pleadings are valid for everyone – indigent or not. Second, pro se clients, indigent or not, must follow the rules of civil procedure, too. Unfortunately, the solution for providing legal service for indigent clients is much broader and more complex than this case. Undoubtedly, a decision to authorize limited representation through unbundled legal services in Kentucky would likely necessitate a review of the rules of practice, and perhaps, amendments to the civil rules. Such a course of action is not impeded or prevented by the actions of the Daviess Circuit Court in enforcing CR 11.

In conclusion, the trial court was not clearly erroneous in its findings nor did it abuse its discretion in the imposition of its sanction. In sum, we concur with the legal reasoning of the trial court and hold that pleadings prepared with the assistance of an attorney in the Commonwealth must be signed by the attorney.

The court here disagreed and considered the policy implications of limited scope representation agreements.

Kentucky Supreme Court Rule (“SCR”) 3.130 (Rule 1.2) governs the scope of representation and allocation of authority between client and lawyer. It provides in part:  “A lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances and the client gives informed consent.” SCR 3.130(1.2)(c).  Comment 6 further defines the nature and scope of limited representation agreements and provides in part:

A limited representation may be appropriate because the client has limited objectives for the representation.  In addition, the terms upon which representation is undertaken may exclude specific means that might otherwise be used to accomplish the client's objectives.  Such limitations may exclude actions that the client thinks are too costly or that the lawyer regards as repugnant or imprudent...

There is a significant portion of the population comprised of individuals who are not indigent yet do not possess the means to afford full and rigorous representation of counsel.  See Cristina L. Underwood, Comment, Balancing Consumer Interests in a Digital Age:  A New Approach to Regulating the Unauthorized Practice of Law, 79 Wash. L.Rev. 437, 442 (2004) (“Many low- and moderate-income households simply cannot afford the cost of personal legal services.”). Indeed, “[s]ubstantial evidence indicates the existence of a latent marketplace for personal civil legal services to those of low and moderate incomes.”  Accordingly, many of our citizens cannot afford the full breadth of legal representation but are nevertheless in need of representation of some degree.

We encourage lawyers to take on cases that service the less fortunate.

The image of our profession is enhanced by these admirable efforts.  Therefore, it is clear that limited-representation agreements are necessary to some extent.  However, we acknowledge that these types of arrangements may be abused to the detriment of the litigants and the courts.

These policy concerns lead to this conclusion

In keeping with the letter and spirit of SCR 3.130 (Rule 1.2) and its accompanying commentary, we authorize agreements that limit the scope of legal assistance or that limit representation to discrete legal tasks, so long as they are reasonable under the circumstances and the client gives informed consent.  See Rochelle Klempner, Unbundled Legal Services in New York State Litigated Matters:  A Proposal to Test the Efficacy Through Law School Clinics, 30 N.Y.U. Rev. L. & Soc. Change 653, 654 (2006). This includes limitations on services provided in furtherance of traditional litigation as well as alternative dispute resolution methods.

Agreements that limit representation to distinct stages of litigation may also be reasonable under the circumstances.  The monumental increase in pro se and nominal pro se domestic filings provides a particularly apt example of the need for this unique type of limited-representation. For instance, family law practitioners may provide comprehensive representation during property division proceedings but not provide representation in any form during child custody proceedings, or vice versa.  However, these types of agreements must be carefully tailored to avoid abuse and confusion from the perspective of the client and the court.

To clarify, in addition to being reasonable under the circumstances, all agreements which limit representation must be in writing, require the informed consent of the client(s), and must comport with our rules, including the rules of professional conduct.

However, we do not adopt a strict rule requiring drafting attorneys to sign the documents they prepare pursuant to limited-representation agreements.  An attorney involved in the preparation of initial pleadings (complaint, answer, cross-claims and counter-claims), must indicate that the document has been prepared by or with the assistance of counsel by providing “Prepared By or With Assistance of Counsel” on the document concerned. See Bhojani, 65 SMU L.Rev. at 680 (“since the court is not being misled as to the fact of the drafting assistance, the attorney is not violating the duty of candor and not deceiving the court.”).  Of course, in cases where there is one or more attorneys of record, at least one attorney of record must sign documents presented to the court and provide their address in accordance with CR 11.  Pro se litigants must also satisfy the signature and address requirements of CR 11.

Furthermore, active assistance by counsel must be disclosed to the presiding tribunal and adversaries.  Active assistance includes drafting documents in furtherance of litigation that extend beyond initial pleadings. Notice of active assistance shall include the name, address, and telephone number of the attorney(s) working on the case, and the nature of the limited representation agreement at issue.  However, such disclosures do not constitute an appearance by counsel, nor do they require the drafting attorney to appear in court on behalf of the litigant receiving limited representation unless the court or the surrounding circumstances dictate otherwise.  For example, cases involving expedited or emergency relief may justify comprehensive representation, or at least a limited appearance of counsel, for the purpose of resolving the expedited matter.

In all cases, attorneys providing limited-representation are required to adequately investigate the facts to ensure that the pleadings or other documents drafted in furtherance of litigation are tendered in good faith.  See Rule 3.1.  Moreover, attorneys providing limited-representation of any kind may not deceptively engage in a more complete role.  See Rule 8.4.

Lastly, limited representation does not require proof of indigence.  Although the financial means of litigants pursuing limited-representation may be considered by courts as relevant to the overall reasonableness of the agreement, a litigant's financial status is not a dispositive factor.  On this issue, deference should be afforded in favor of the litigant seeking limited representation.

Here

...whether the agreement is reasonable also goes to the question whether it is ethical And because it is an agreement entered into by an attorney, if it is unreasonable, for example as to the fees charged, then the attorney may have committed an ethical violation by negotiating an unreasonable contract with his client.  Certainly, if a trial court becomes aware of such unreasonable aspects of a limited-representation agreement, then the court has a duty to file a bar complaint against the offending attorney, as does opposing counsel who may become aware of the situation.  Indeed, the party to the agreement may do likewise.  But collateral contract disputes or ethical violations are not proper issues for a trial court to address with CR 11 sanctions merely because a pleading is not signed by the attorney who drafted the document.

To clarify, we do not limit the authority of courts to impose other appropriate remedies that are necessary to maintain order and the integrity of the legal profession.  For example, if the court determines that a limited representation agreement is unreasonable, the court may order counsel to cease providing legal assistance of any kind to the client.  If an attorney continues to provide legal assistance for a client in violation of the court's order, the court may exercise its contempt authority in order to enforce its order.

The court remanded for a hearing on the reasonableness of the limited scope representation of the clients.

This is a decision of potential significance.  (Mike Frisch)