Automat of Legal Services on the Defensive

Times Staff Writer

As a prospective client walks into the office of We the People, eager for help with divorce paperwork, nothing looks like a legal office.

There is no receptionist, no expensive office decor, no parking structure filled with luxury cars at the office of this nationwide franchise of legal documents services. There are also no diplomas on the walls from Ivy League schools -- and no lawyers.

Instead, surrounded by patriotic wallpaper and cheerful wooden tables laden with flowers and teddy bears, there are paralegals in a modest office, standing ready to help would-be litigants, and a children's play area. The only framed documents on the walls are state notary public certificates.

"We are here to help the people," said Don Karel, who owns the Chicago franchise of We the People, a leading nationwide legal documents service. "We are here to help those who can't afford to spend thousands of dollars in a divorce or a bankruptcy."

In the pricey world of the law, a growing number of companies are jumping into the market of "do-it-yourself" legal services -- and, in turn, sparking a national debate between lawyers protecting their turf and businesses wooing consumers who are eager to trim their legal bills.

Many of the companies offer services ranging from tax preparation to real estate deals; some operate out of offices and some do all their business over the Internet. Los Angeles-based LegalZoom.com, for example, has handled more than 30,000 divorces since it opened up its virtual doors in 2001.

The legal community is increasingly charging that the do-it-yourself companies are overstepping their bounds, put the rights of consumers in jeopardy, and do not have the expertise to navigate the complicated judicial world. Santa Barbara-based We the People has garnered some of the most vitriolic reactions from the legal community, in part because of its size -- it has 130 stores nationwide.

And some lawyers and bar associations are taking We the People to court to make their case.

Attorneys in Nebraska and North Carolina have filed suit against We the People franchisees, accusing them of illegally practicing law. The Florida and Illinois state bar associations, and a committee with the Texas State Supreme Court, each brought similar lawsuits against the company in September.

"I have heard more complaints about We the People than I have about any other individual or group in the past 12 years," said attorney Leland de la Garza of the Texas Supreme Court's committee on the unauthorized practice of law.

"We have no problem with a company that wants to just fill out paperwork," De la Garza said. "But clients need someone who's trained in the law."

Of these actions the biggest fight over this issue is being waged in Illinois. The state bar association and We the People have taken their cases into the political arena as well as the courts.

We the People is lobbying for a state Senate bill that would regulate the legal document industry; the legal community is backing a bill that would amend the state's attorney laws to allow civil penalties to be levied against those who practice law without a license.

"Not every transaction requires a lawyer. But at the same time, we need to be vigilant in distinguishing between those providing documents and people offering legal advice," said state Rep. John A. Fritchey (D-Chicago), who cosponsored the amendment bill.

The public "will start to put the same faith and trust as they would into a legal professional," Fritchey said. "This bill is as much about consumer protection as it is about the unauthorized practice of law."

Countered Jason Searns, general counsel for We the People: "H&R; Block trains people who are not accountants or tax lawyers to understand federal IRS laws. We don't offer legal advice. Why is what we do with the law treated any differently than what H&R; Block does with taxes?"

The franchise company offers fill-in-the-blanks legal forms that customers complete on their own. The service then types them up and gives them back to the customer for review and filing with the appropriate court.

Founded 11 years ago, the company pulled in a total of $28 million in revenue last year, said co-founder Linda Distenfield. The business relies on high volume and low prices. The Santa Barbara office handles 40% of the county's uncontested divorce cases and about 50% of its bankruptcy filings, Distenfield said.

In Illinois, where the company opened three locations in the Chicago area in 2001, We the People managed about 5% of all the divorce filings in Cook County last year.

"On average, we charge about 10% of what an attorney charges," Distenfield said. "So, if you do the math, we've taking about $280 million worth of business from the legal community last year."

Distenfield insists that customers have to know what forms they need to use because We the People cannot give them legal advice.

"We're not lawyers; we're document experts," Karel said. "We don't have clients; we have customers."

A similar debate happened in California in the 1990s, said legal watchers, when a boom of paralegal firms cropped up to offer discount legal help. Posters on the sides of buses touted ways to get a cheap divorce, while placards on the trains promised frugal bankruptcy filings and television ads promoted inexpensive wills.

But the issue was clarified when then-Gov. Pete Wilson signed legislation that required independent paralegals to register with the government and post bonds before they help people fill out legal documents.

And last year, Arizona's state bar has passed certification guidelines for document preparation companies and requires them to be certified by the state government. As similar legislation is pending in Illinois, We the People continues to court a market of income legal customers.

When Boguslaw and Alice Nowak decided to get a divorce last year, the working class immigrants from Poland with limited English tried to save some money and handle their own paperwork.

Looking for help, they turned to a local office of We the People. One of the attractions was cost: The Nowaks could get all their uncontested divorce paperwork completed for less than $400.

But when the Nowaks went to court in Kendall County to file the papers, Judge Leonard Wojtecki refused to accept the paperwork from the couple. In his order, he wrote that the documents were void because someone who was not a lawyer prepared them.

In order to have the divorce completed, Wojtecki told the couple, they would have to hire an attorney. Within weeks, the couple pulled together the money to hire a lawyer. They returned to court and were granted their divorce.

The Nowaks could not be reached for comment, and Wojtecki declined to discuss the matter.

But Wojtecki isn't the only judge in Illinois to refuse to accept paperwork pulled together by We the People, say legal experts. Court records show that judges in family court in McHenry County have written letters to the Illinois Supreme Court expressing concern over inadequate and incomplete filings prepared by the company.

We the People insists that it has done nothing wrong -- and will defend itself against its critics in court.

"We know what we are doing," said Distenfield. "And we have never lost any of these cases."

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