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Property Address:

4655-4677 Meade Street


Richmond, CA 94804

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SUPERIOR'COURT OF THE STATE OF CALIFORNIA

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COUNTY OF CONTRA COSTA

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v.
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CHEROKEE SThIBON VENTURE I, LLC; a )
Plaintiff,

PIONEER HI-BRED INTERNATIONAL,

)
INC., an Iowa corporation, LUMIPHORE
)
INC., a Delaware corporation, GERONOVA )
RESEARCH, Inc., a Nevada corporation,
)
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NANOASIS TECHNOLOGIES, INC., a
California corporation, CHEMORAGA, INC., )
a California corporation and DOES

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Delaware limited liability company,

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CERF SPVI, LLC, a Delaware limited liability)


company,

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KEVIN SINGER
SUPERIOR COURT RECEIVER/REFEREE
RECEIVERSHIP SPECIALISTS
795 Folsom Street, 1st Floor
San Francisco, California 94107
Telephone: (415) 848-2984
Fax: (415) 848-2301
E-mail: Kevin@ReceivershipSpecialists.com

inclusive,
Defendants.

1-50,

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CASE NO:

C12-00284

NOTICE OF MOTION AND MOTION FOR


ORDER AUTHORIZING RECEIVER TO
RETAIN LEGAL COUNSEL;

MEMORANDUM OF POINTS AND


AUTHORITIES AND DECLARATION OF
KEVIN SINGER IN SUPPORT THEREOF.

=:

Dept.:

ld,,
Wk

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Judge: Hon. Laurel S. Brady


Martinez Superior Court

725 Court Street


Martinez, CA 94553

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Page l

RECEIVER'S MOTION TO RETAIN LEGAL COUNSEL

TO:

RECORD:
PLEASE TAKE NOTICE THAT on

2012 at the hour of

or as soon thereafter as the matter can be heard in Department

Martinez Superior Courthouse at 725 Court Street, Martinez, CA

Receiver, Kevin Singer, will and does hereby move the Court to grant his NOTICE OF

MOTION AND MOTION FOR ORDER AUTHORIZING RECEIVER TO RETAIN LEGAL

COUNSEL; MEMORANDUM OF POINTS AND AUTHORITIES AND DECLARATION

OF KEVIN SINGER IN SUPPORT THEREOF.

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94553, Superior Court

This Motion is based on this Notice of

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Motion, Memorandum of Points and Authorities, Declaration of Kevin Singer, pleadings,

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records and files in this action, and oral and documentary evidence

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hearing on this Motion.

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DATED: September

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10, 2012

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may be presented at the

Kevin Singer
Superior Court &

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as

By:

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31, at the

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THE PLANTIFFS, DEFENDANT AND THEIR RESPECTIVE ATTORNEYS OF

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Page 2

RECEIVER'S .MOTION TO RETAIN LEGAL COUNSEL

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INTRODUCTION

company ("Plaintiff"),

collectively (''the Parties"), the Court granted an Order Appointing Receiver Ex Parte and

Temporary Restraining Order In Aid of Receiver ("Court Order") which was entered on July

12, 2012 and

Singer's ("Receiver") Oath was filed on approximately July

and management of the Property was transitioned to him on August

agreed upon transition date by the Parties.

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("Defendant"),

attached hereto as "Exhibit 1." The appointed Superior Court Receiver, Kevin

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12, 2012, by

Plaintiff's Counsel

15\ 2012.

This was an

2.

The collateral for Plaintiff's Deed of Trust is a commercial and industrial building

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located at

46554677 Meade Street, Richmond, CA 94894 (the "Property"). The Property is

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commonly referred to as Campus Bay. The Property has a long history of chemical

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manufactures using the site. In

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oversight of the San Francisco Bay Regional Water Quality Control Board.

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"Exhibit 2," is information summarizing the environmental issues surrounding the Property.

3.

1997, an environmental cleanup was initiated under the


Attached as

One of Receiver's primary duties is to lease or release the Property or any

portion of it on terms acceptable to Plaintiff. Any lease contract entered into will require

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disclosers regarding the environmental issues.

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4.

On August

8,

2012

and August

9,

2012,

the Receiver had a disagreement with

Defendant's legal counsel over the ability of Defendant to collect past due rents from the

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tenants.

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Receiver, and came to an amicable resolution with the Receiver regarding the collection of past

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Defendant's legal counsel was properly representing her client, respectful to the

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and CHEROKE SIMEON VENTURE I, LLC

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Through a stipulation amongst CERF SPVI, LLC, a Delaware limited liability

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due rent, but there remains a disagreement in between the Receiver and Defendant's legal

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counsel the interpretation of the Court Order.

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5.

Although the Receiver has the ability to write basic pleadings and file papers with

the Court, he is not an attorney. The Receiver is also not an expert in legal environmental

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RECEIVER'S MOTION TO RETAIN LEGAL COUNSEL

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disclosures that will need to be provided to tenants. The Receiver also seeks help from time to

time in interpreting the Court's Order and working with the Parties' legal counsels.

POINTS AND AUTHORITIES IN SUPPORT OF RECEIVER RETAINING COUNSEL


California Rules of Court 3.1180. Employment of attorney

A receiver must not employ an attorney without the approval of the court. The

application for approval to employ an attorney must be in writing and must state:

(1) The necessity for the employment;

(2) The name of the attorney whom the receiver proposes to employ; and

(3) That the attorney is not the attorney for, associated with, nor employed by an

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attorney for any party.

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The Court Order instructs the Receiver as follows (See "Exhibit 1"):

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8a.)

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8e.)

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deems appropriate to effectuate the operation of the Property and to preserve and

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protect the Property;

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Receiver, or any party to this action, may from time to time, make application to

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this Court for further orders instructing Receiver.

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Receiver is authorized to employ and compensate professionals, including

property managers, accountants, and other persons and professionals as Receiver

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Receiver shall have the power to take any and all lawful actions necessary to

preserve, protect, maintain, and operate the Property ..........;

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THE RECEIVER'S REQUEST TO RETAIN LEGAL COUNSEL

The Receiver needs to retain legal counsel for the limited purpose of advising the

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Receivership Estate on the proper way to disclose environmental issues to new tenants to limit

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the liability of the Receivership Estate. The legal counsel retained by Receiver can also advise

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the Receivership Estate on interpretation of the Court Order when the Parties are in

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disagreement as to its interpretation.

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The Receiver would like to retain Mia Blackler ("Ms. Blackler") and Manuel
Fishman

("Mr.

Fishman") of Buchalter Nemer. Ms. Blackler is an expert in receivership law


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RECEIVER'S MOTION TO RETAIN LEGAL COUNSEL

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and Mr. Fishman is an expert in commercial lease contra cts and environmental issues. Their

billing rates are

assistance of associates whose billing rates are

3," are their bios.

to

$350

per hour. Attached as "Exhibit

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$300

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$440 for Ms. Blackler and $495 per hour for Mr. Fishman and they utilize the

WHEREFORE, The Receiver requests that the Court grant the following:

1. The Superior Court Receiver, Kevin Singer, is authorized to retain Mia Blackler and

. e
Manuel Fishman to advise him on any lease negotiations, disclosure issues related to the leas

negotiations and/or contracts, and guidance on interpretation of the Court Order.

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2. For such other relief as the Court may deem just and appropriate.
DATED:

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10, 2012

By:

ks

Kevin Singer

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Superior Co

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September

Respectfully submitted,

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Page 5

RECEIVER'S MOTION TO RETAIN LEGAL COUNSEL

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I, KEVIN SINGER declare and state as follows:

am

a Superior Court Referee and Referee and have acted in that capacity in over 143

cases over the last eleven years.

specializes in Receivership and Referee appointments. If called upon to testify, I could and

would competently do so as to the matters hereinafter set forth based on firsthand knowledge.

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I submit this Declaration in support of the accompanying NOTICE OF MOTION AND

MEMORANDUM OF POINTS AND AUTHORITIES AND DECLARATION OF KEVIN

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MOTION FOR ORDER AUTHORIZING RECEIVER TO RETAIN LEGAL COUNSEL;

SINGER IN SUPPORT THEREOF;

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Through a stipulation amongst CERF SPVI, LLC, a Delaware limited liability company

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("Plaintiff'), and CHEROKE SIMEON VENTURE I, LLC ("Defendant"), collectively (''the

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Parties"), the Court granted an Order Appointing Receiver Ex Parte and Temporary

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Restraining Order

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the Court Order, I was appointed Superior Court Receiver. The parties agreed that the property

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located at

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transitioned to my control on August 1,

In Aid of Receiver ("Court Order") which was entered on July 12, 2012. In

4655-4677 Meade Street, Richmond, CA 94894 (the "Property") was to be


2012.

2. The Property serves as collateral for Plaintiff's Deed of Trust and is a commercial

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and industrial building commonly referred to as Campus Bay. The Property has a long history

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of chemical manufactures using the site.

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the oversight of the San Francisco Bay Regional Water Quality Control Board.

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I am the President of Receivership Specialists, which

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DECLARATION OF KEVIN SINGER

'.,__;

In 1997, an environmental cleanup was initiated under

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3. One of my primary responsibilities is to lease or release the Property or any portion

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of it on terms acceptable to Plaintiff. Any lease contract I have entered into will require

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disclosers regarding the environmental issues.

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4.

On August

8, 2012 and August 9, 2012, I had a disagreement with Defendant's

legal counsel over the ability of Defendant to collect past due rents from the tenants at the
Property. Defendant's legal counsel was properly representing her client, respectful to me, and
Page 6

RECEIVER'S MOTION TO RETAIN LEGAL COUNSEL

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Attomeys for Plaintiff


CERF SPVI, LLC

COUNTY OF CONTRA COSTA

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SPVI, LLC a Delaware limited liability


company

CERF

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1.

2.

CHEROKEE SIMEON VENTURE I, LLC; a


Delaware limited liability company, PIONEER
ID-BRED INTERNATIONAL, INC., an Iowa

corporation, LUMIPHORE INC., a Delaware


corporation, OERONOVA RESEARCH, Inc., a
Nevada corporation, NANOASIS
TECHNOLOGIBS, INC., a California
corporation, CHBMORAGA, INC., a California
corporation and DOES 1-50, inclusive,

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v.

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CASE NO.: CIV C12-00284

Plaintiff,

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Defendants.

[PldJl"tJili!D] ORDER APPOINTING


RECEIVER EX PARTE

(PD] TEMPORARY
TRAINING ORDER IN AID OF
RECEIVER

(Ex Parte Application, Stipulation to Entry of


Order Appointing a Receiver and Preliminary
Injunction, Declaration of Edward Elanjian,
Declaration of Kevin Singer, Declaration of
Dena M. Cruz, and Oath of Receiver filed
concurrently herewith)

Date: July 12, 2012


Time: 1 :30 p.m.
Dept.: 60

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SUPERIOR COURT OF CALIFORNIA

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""

:P: l 2 o_,

71111
.1 .

Dena M. Cruz (CA State Bar No. 121508)


Richard Mooney (CA State Bar No. 176486)
Leena Rege (CA.State Bar No. 236827)
DRY.AN CAvE, LLP
560 Mission Street, 25th Floor
San Francisco, CA. 94105
Telephone: (415)268;,2000.
Facsimile: (415) 2681999

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#80494 vt sar

[PROPOSBPJ ORDER Al':POIN'l'ING RBCBIVBREX PARTE AND TRO


CERF SPVI, LLC va. Cherokee Simeon Venture I, LLC.
Contra Costa SUperior Case No. Cl2-00284

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The motion of Plaintiff CERF SPV I, LLC ("Plaintiff'), for an ex parte order appointlng a

receiver and for the issuance of a Preliminary Injunction came on for hearing in Department 60 of

this Court on July 12, 2012 at 1 :30 p.m.. Plaintiff appeared by and through its counsel, Dena M.

Cruz; defendant Cherokee Simeon Venture I, LLC (''CSV'') appeared by and through its counsel,

Larisa A. Meisenheimer.

Having read and considered the moving papers, pleadings, and evidence in this matter;

having heard argument of counsel; and being apprised of the premises; it appearing to the Court that:

A. On or about September 6, 2007, Continental Environmental Redevelopment Financial,


LLC (''CERF'') entered into a Loan and Security Agreement (the "2007 Loan

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Agreement") and certain related documents, agreements and ins1nments, as lender, with

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CSV,

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certain real property located in Contra Costa County, CA, commonly known as Campus

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Bay ("Campus Bay'').

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borrower, to fund, amongst other things, a portion of the cost to remediate

borrower (the ''Note").

C. The Note is secured by a deed of 1rust of even date (the ''Deed of Trust'') executed by
CSV in favor of CERF, which Note and Deed of Trust were assigned to Plaintiff on or

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about September 6, 2007. A copy of the Deed of Trust is attached to theDeclaration of

D. TheDeed of Trust is a lien on the title to Campus Bay (the "Property''). A copy of the

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EdwardElanjian (''ElanjianDecl.") as ExhibitB.

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B. Plaintiff is the holder of a promissory note dated September 6, 2007, executed by CSV as

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;;:

Elanjian Deel.

as

Exhibit B.

E. TheDeed of Trust contains a provision whereby all the rents, issues, and profits of the
Property are assigned as additional security on the Note and;

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Deed of Trust, which contains a legal description of the Property is attached to the

F. The 2007 Loan Agreement and the Deed of Trust contain certain provisions in which

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CSV consented to the appointment of a receiver for the Property in the event of default

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under the Borrowing Agreements; and,

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1

[PROPOSED] ORDER. AP:POINTING RECEIVER BX PARTE AND TRO


#80494 vl saf

CERF SPVI, LLC vs. Cherokee Simeon Venture I, LLC.


Contra Costa Superior Case No. Cl2-00284

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G. Plaintiff alleges in the Complaint filed in this action Defendant CSV has defaulted on

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its obligations mderthe 2007 Loan Agreement, Note and Deed of Trust (her einafter

collectively the 'Borrowing Agreements") in that CSV (i) failed to pay the outstanding

principal balance ofth.e loan, all accrued and unpaid interest thereon, and all other sums

owing to Plaintiff pursuant to the terms of the Borrowing Agreements which were due

and payable on or before September 6, 2010; (ii) failed to pay when due and payable

property taxes assessed against the Property; and, (iii) fiiiled to pay premiums for

insurance required mder the terms of the Borrowing Agreements;


H.

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Without admitting to or agreeing with Plaintiff's allegations, CSV stipulated on July 11,
2012, to the appointment of a receive r and a preliminary injunction.

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TIIEREFORE, IT IS HEREBY ORDERED 1HAT:

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ORDER APPOINTING RECEIVER

The Court grants Plaintiff's motion for the appointment of a receiver and appoints Kevin

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1.

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Singer as receiv er (the "Receiver''}, such appointment to be effective on the

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of office. Purswmt to the terms of the Deed of Trust, the Receiver does not need to file an

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undertaldng or bon d.

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2.

Receiver is appointed by this Court to take possession of the Property.

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3.

CSV shall surrender possession of the Property to Receiver as of August 1, 2012 (the

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"Effective Date"), and shall deliver to Receiver all keys, all books and records related to the

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ownership and maintenance of the Property, checkbooks, ledgers, accomits payable and accounts

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receivable records, leases, rent rolls, insurance policies and certificates (except as specified in

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filing of Receiver s oath

Paragraph 18), executory contracts, plans, specifications and drawings, and all other documents

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whatsoever related to the ownership and maintenance of the Property (collectively "Books and

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Records''). Receiver shall take possession and control of all Books and Records, except that

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Receiver may, in his discretion, choose to leave whatever portions of the Books and Records he

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decides appropriate in the possession of the. persons possessing the same, provided that Receiver

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shall have immediate access to these items. Receiver shall retain possession of the Property until the
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[PROPOSED] ORDER APPOlNTJNG RECEIVBREX PARTE AND TRO
#80494 vl saf

CERF SP'YI, LLC vs. Cherokee Simeon Venture I, UC.


Contra Costa Superior Case No. C12-00284

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earlier of further order of the Court or nonjudicial foreclosure of the Property by Plaintiff and/or its

assigns.

4.

personal property, assets, all rents due and hereinafter due, notes, receivables, actions and choses in

action; and,

action, or other evidence of indebtedness and, if need be, bring suit to recover the same in his own

name..

5.

may bein possession there6f, be and they are hereby directed to (i) attom to Receiver, and until the

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As of the Effective Date, Receiver shall (i) receive and take charge of the Property and all

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(ii) collect all outstanding accounts, receivables, leases, rents, actions and choses in

As of the Effective Date, the tenants in possession of the Property or such other persons as

(ii) to pay over to Receiver, or its duly designated agent, all rents of the

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further order of the Court;

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Prop ez:ty now due and unpaid or hereafter to become due. CSV is hereby enjoined and restrained

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from collecting the rents of the Property as of the Effective Date; and that all tenants of the Property

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and other persons liable for the rents be and they hereby are enjoined and restrained from paying any

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rent for the Property to CSV, or its managing agent, its officers, directors, employees, agents, or

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attomeys.

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6.

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possession ofthe Property, CSV is restrained and enjoined until further order of this Court from

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disposing of silch rents, issues, profits, and revenues of the Property in any manner, other than by

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turning over such rents, issues, profits, and revenues to Receiver until further order of this Court;

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7.

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If CSV should receive any rents or revenues from the Property, on or after Receiver takes

Receiver shall be paid fees calculated on an hourly basis, at rates previously provided to

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Plaintiff, for services performed as receiver for the Property pursuant to invoices

Submitted to

Plaintiff describing in detail the services perfonned and the hours worked, to be paid as a priority

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from the rents and revenues of the Property, or otherwise paid by Lender; provided, however, in no

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event shall Receiver's hourly fee exceed$ 250.00 per hour and $150 per hour for Receiver's support

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staff;

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8.

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the following:

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Receiver shall be authorized and empowered to, and when required by this Order must, do

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3

[PROPOSED] ORDER APPOINTING RECEIVER EX PAR'IE AND TRO


#80494Yl Hf

CERF SPVI, LLC vs. Cherokee Simeon Venture I, LLC.


Contra Costa Superior Case No. Cl2-00284

The power to possess,

manage and operate the Property shall include the power to assume or reject executory contracts,

including leases. Except as stated in Paragraph 18 ofthis Order. the power to possess, manage, and

operate shall also include the right to exclude from the Property anyone, including CSV and any

persons claiming under or through CSV, who are not in possession ofthe Property under valid lease

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or rental agreements or acting pursuant to an order or authority granted by the Department of Toxic

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Substances Control ("DTSC'') or other government agency.

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operations or management of any busess operated wi1hin the Property, nor, is Recei ver required to

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assure that

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within the Property conform to Califomia state law.

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Receiver shall not be responsible for the

any required licenses and per.mi.ta applicable to any business currently conducted at or

(b)

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Rents and profits: Receiver shall have the right and power to take possession

and control ofany rents, profits, or income whatsoever generated by the Property ("Rents") after the

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Effective Date, including any pre-paid Rents and profits, Rents and profits due and owing, and any

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Rents and profits which become due and owing thereafter on the Effective Date, whether held by

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CSV, its property managers, tenants, or any other third party. Receiver shall deposit all funds

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received in an FDIC insured deposit account ("Receivership Account,,). Receiver may receive and

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endorse checks constituting income from the Property.

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(c)

Management of the Property's Revenues: Receiver shall man.age the daily

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operations ofthe Property and collect and hold all Rents, profits and other revenues generated by the

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use and occupancy ofthe Property in the Receivership Account for which the authorized signatory

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shall be Receiver and, at Receiver's option, designated agents ofReceiver. Receiver shall pay the

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noimal, ordinary, and necessary operating expenses ofthe Property from the rents and other

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revenues collected from the Property, subject to the limitations set forth in paragraph numb ered 8G)

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below; otherwise, such costs shall be paid by Plaintiff following Receiver's delivery to Plaintiff of

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#804!>4 vl 1sf

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[PROPOSED] ORDBR. APPOINTING RECEIVER EX PAR.TB ANDTRO
CERF SPYJ, LLC vs. Cherokee Simeon Venture 1, LLC.
Contra Costa Superior Case No. Cl2-00284

invoices describing such expenses in detail. All Rents, profits and revenue generated by the use and

occupancy ofthe Property shall be applied first to the payment of Operating Expenses.

Expenses shall include, without limitation, insurance, maintenance and repairs, utilities, payroll,

administration, refunds of security deposits, real property taxes, and assessments. Operating

Expenses shall not include, and Receiver shall not pay without further order of this Court or

Plaintiff's written consent: (i) any alle ged obligations owed to CSV, its agents, assigns, or to any

entity, person, partnership or cotporation owned, in whole or in part, by, related to, or otherwise

affiliated with CSV, or (ii) any obligations or payments owed, or claimed to be owed, to any junior

lien holder. All Rents, profits and revenue generated by the use and occupancy of the Property shall

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tenns of this Order.

Protection of the Prqpert;y and Insurance: Receiver shall have the power to,

(d)

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and is ordered to, protect the Receivership Estate. "Receivership Estate" shall mean the Property,

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Rents and profits, and other income derived from the Property and assets from any destruction, or

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waste.

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there ls sufficient insurance coverage to protect Plaintiff's security interest in the Property. If

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necessary,

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provided that the Receivership Estate's funds and required insurance

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maintain existing insurance policies (except the PLL Insurance Policy referenced in Paragraph 17(b)

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below) and pay any premiums due from available funds of the Receivership Estate. Receiver shall

Receiver shall determine upon taking possession ofthe Receivership Estate whether or not
Receiver shall attempt to procure sufficient insurance coverage as soon as practicable,
available.

Receiver may

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not be persomtlly liable for any insurance claims arising before or after the appointment of a receiver

and procuremcmt of sufficient insurance. If insurance is not currently in place and cannot be

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obtained by Receiver, the Court shall be notified within 30 days from the

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then be applied to other fees, costs or expenses associated with the Property, as permitted by the

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Operating

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date of this Order.

:iiiillia:eampell$ate

(e)

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- ,;4;),

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t/80494 vl saf

[PROPOSED] ORDBRAPPOINTIN"G RBCBIVBREX PARTE AND TRO


CERF SPVI, LLC. vs. Cherokee Simeon Venture!, LLC.
Contra Costa Superior Case No. Cl2-00284

of the Receivership Estate. Receiver shall also file a supplemental inventory thereof; if necessary.

summary

Periodic Accounting: Receiver shall provide periodic statements of account

(g)
that include a

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undertaking and Oa1h are filed, Receiver

of the ootivities of Receiver and any property manager, a schedule of

receipts and disbursements, a summary of Receiver and its professional's interim fees and expenses,

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and other such information as the Court may direct. Receiver sba11 file said accounting with. the

Court and shall serve upon Plaintiff's counsel and CSV' s counsel a copy of said accounting.

Receiver shall file a final report within 3 0 days after the termination of the receivership.

(b.)

Authorized Disbursements and Actions. Receiver shall be authorized, in the

(i)

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Collect past due Rents and profits from tenants or former tenants of the

Property, and collect Rents and profits while this Order is in effect;

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to P1aintiff;

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(ii)

Lease or r&-lease the Property or any portion of it on terms acceptable

(iii)

Evict tenants;

(iv)

As set forth in paragraph 8(c) above, pay Operating Expenses related

(v)

Incm and pay such other expenses as are reasonably necessary for

to the Property.

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18

19

Receiver to perform his duties;

ia

20

(vi)

Retain, in Receiver's discretion, a working capital fund in an amount

sufficient for payment of Receivership expenses;

or
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22

exercise of Receiver's business judgment, to do, without limitation, the following:

11

21

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23

Investigate and evaluate the financial condition and history of the

(vii)

24

Property in order to determine their value and expenses, provided that such investigation does not

25

substantially increase the costs of the receivership over the compensation provided to Receiver

if

al

shall file in this action a detailed inventory of all property

Receiver's Initial Accounting: Within 30 days after the date Receiver's

(f)

or
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26

herein without Plaintiff's consent or further order of this Comt;

(viii)

27
28

Investigate and evaluate the Property for the presence of any readily

apparent dangerous conditions, hazardous waste, substances or chemicals that is not the subject of
6

[PROPOSED] ORDER APPOINTING R,BCBIVBREXPARTE AND TRO

CERFSP"YI, UC vs. Cherokee Simeon Venture[, UC.

#80494 vl saf

Contra Costa Superior Case No. Cl2M00284

.. ,

20, 2011 Revised Draft Feasibility Stady and Remedial Action Plan for Lots 1,2, and 3,

the JUly

Campus Bay, Richmond, California ("Draft FSRAP'') or any revision or

(ix)

pay any necessary maintenance

required for health and safety reasons, property management fees, including :reimbursement for costs

on a monthly basis from the assets now held, or which may be received by, t1re Receivership Estate,

subject to.the final review of this Court;

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(x)

Upon request of Pl Receiver shall tum over to Plaintiff, to be


lease proceeds net of (i) Receiver fees and expenses, (ii)

applied toward the indebtedness, any

Operating Expenses, and (iii) Receiver's working capital fund;


(xi)

10

Upon Plaintiff's consent, provide for the payment of all

capital

11

improvements to the Property required to bring the Property to good condition and allow the lease of

12

the Property or any portion of the Property. ReCeiver shall first make any emergency capital

13

improvements or repairs which are necessary, in Receiver's business judgment, to protect persons

14

and the Property from serious bodily harm or damage. Receiver shall promptly notify Plaintiff and

1S

CSV of the need, if any, for any emergency capital improvements;

16
17

and,

Ju

18

(xii)

Contest or protest taxes or assessments with respect to the Property;

{)

Use any federal taxpayer identification numbers relating to the

19

Property for any lawful purpose.

20

(i)

22

if

ia

hereby vested with all of the

general powers of receivers in cases of this kind, subject to the direction of this Court.

23

24

General Receivership Powers. In addition to all of the powers set forth above,

and subject to any limitations contained in this Order, Receiver is

or
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al

Subjeotto the terms of this Order,

amendment to same;

et
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or
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'

"'
.

(j)

Limitations on Receiver's Authority: Except as provided for above, the

Receiver shall not, absent the consent of Plaintiffor further order of this Court:

25

(i)

Obtain loans, secured or unsecured, on behalf of the Receivership

26

Estate o r encumber the Receivership Estate. Notwithstanding this restriction

27

particularly set forth in paragraph 13 below, Receiver may request loans from Plaintiff at Plaintiff's

28

option and/or election to make any of the repairs and perform any maintenance determined by
7

#80494 vl saf

on

loans, and as more

[PROPOSBDJ ORDER APPOINTING RBCBIVBR.BX PARTE AND TRO


CERF SPT'l, LLC vs. Cheroke.e Stmeon Venture I, LLC.
Contra Costa Superior case No. Cl200284

or
k

Receiver in his business judgment to be necessary to keep the Property in good condition, and any

emergency capital improvements or repairs as allowed above. Any and all loans Receiver obtains

from Pl pursuant to this paragraph, shall be: (i) deemed obligatory advances on the

indebtedness; (ii) added to the balance due; and (iii) secured by the operative Deed of Trust.
(ii)

et
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Without the written consent of CSV and Plaintiff, or order of this

Court, execute any documents that (i) result in a subdivision of the Property, or (ii) that result in a lot

line adjus1m.ent of any portion of the Property;

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(iii)

8
9

Without the written consent of CSV and Plaintiff, or order of this

Court, sell any portion of the Property.

Receiver shall have no responsibility for filing future federal and state income tax retums

1O

9.

11

(''Tax Retum'') or for dissolution of CSV. The responsibility for such filings lie exclusively with

12

csv.

13

10.

14

Estate upon ten (10) days notice to the parties. If no written specific objection is provided to

15

Receiver on all fees and expenses submitted; Receiver may pay its invoice and professional fees and

16

expenses owed from available Receivership Estate funds.

17

day period, Receiver must respond within a reasonable time to the parties with an acceptable

18

explanation. If an agreement cannot be reached, a noticed motion on shortened time will be filed

19

with the Court for approval of the fees and expenses in dispute.

20

11.

objection is received within the ten

Ju

If an

ia

Any security or other deposits which tenants have paid to CSV, or its agents, over which

Receiver has no control, shall be obligations of CSV and may not be refunded by Receiver without

or
n

21

Receiver's fees and expenses will be paid monthly from available funds of the Receivership

an

23

have paid or may pay to Receiver, if otherwise refundable under the terms of their leases or

if

order of this Court or approval of Plaintiff. Any other security or other deposits which tenants

22

24

agreements with Receiver1 shall be refundable by Receiver in accordance with the leases or

25

agreements.

26

12.

al

27

.1.:: .:,,,,,,:,-:.,., ,,_.-'..

'.

miime!fi!:p]ftiontotbisealtti

f0f'OM.ets"'llel.Vtfff0'1f:

28
8

[PROPOSED] ORDER APPOINTING RECEIVER EX PARTBANDTRO


#804'4 vl aaf

CERF SPVJ, LLC vs. Cherokee Simeon Venture I, UC.


Contra Costa Superior Case No. C12-00284

or
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Receiver is authorized to borrow from Plaintiff such funds as are necessary to perform bis

13.

duties as set forth in tbis Order. No obligation on the part of Plaintiffto advance or loan funds to the

Receiver shall arise prior to the Receiver's preparation of a budget for management and operation of

4.

the Property, and the approval of said budget by Plaintiff. In any event, Plaintiff shall have no

obligation to advance or loan funds to the Receivership Estate except in its sole and absolute

discretion. In consideration for any such advance or loan, Receiver is authorized to and sh.all issue

to Plaintiff certificates of indebtedness ("Receiver's Certificates"), as evidence of receivership

indebtedness for any such advances made by Plaintiff pursuant to this Order. All Receiver's

Certificates shall be executed and delivered to Plaintiff by Receiver as a condition to funding, and

10

shall be numbered in sequential order for redemption purposes. All indebtedness represented by a

11

Receiver's Certi.fi.cate(s) shall be and constitute a lien and charge upon all assets of the Receivership

12

Estate, and with. respect to such assets and estate.

13

14.

14

Receiver is transferred by reason of a judicial foreclosure sale or nonjudicial trustee's sale conducted

15

pursuant to the tenns of the Deed of Trust sued upon in this action, Receiver shall immediately "turn

16

over possession and control of the applicable property, together with the Books and Records, and all

17

personal property associated therewith to the new owner upon presentation to Receiver of a certified

18

copy of the deed evidencing such transfer, or upon Order of this Court made upon an ex parte

19

application, which may be presented without Receiver's or counsel's personal appearance.

20

15.

21

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In the event that the title to a specific prQPerty and the personal property hereby entrusted to

Plaintiff and Receiver shall cooperate with CSV and Zen.eca, Inc., to effectuate the remedial

rn
i

aotions described in paragraph 18.

22

PRELIMlNARY INJUNCTION

IT IS FURTHER ORDERED that CSV, along with any of its trustees, property managers,

23

16.

24

co-trustees, partners, employees, agents,' representatives, contractors and any other person or entity

25

under their control \'Related Parties") are hereby enjoined and restrained from:

if
o

al

'0

26

(a)

Committing or permitting waste of the Property;

27

(b)

Removing. transferring or otherwise disposing of the Property or any of its

28

:fixtures

and/or incorporated materials;


9

[PROPOSED] ORDER APPOINTING RBCBIVBR BX PAR.TB AND TRO


i#80494vl sat'

CERF SPY.I, LLC w. Cherokee Stmeon Venture I, LLC.


Contta Costa Superior Case No. Cl2-00284

or
k

.''

(c)

Demandmg, collectin& diverting or receiving any Rents of the Property;

(d)

Transferring, moving, selling, leasing or otherwise disposing of any of the

et
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personal property and/or improvements located in or around the Property; and,

In any way interfering with the discharge of the Receiver's duties.

(e)

In addition, CSV and Related Parties shall be obligated to do, and shall be restrained from

17.

doing, the following:

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i:

Turnover of Books. and Records: Prior to the Effective Date, CSV shall tum

(f)

7
8

over complete copies of the Books and Records,

originals of the Books and Records to Receiver if so requested by the Receiver. CSV shall assist

as

defined herein, to Receiver. CSV shall deliver

10

Receiver in obtaining complete copies of the same in the event the Books and Records are held by

11

persons or entities other than CSV. CSV shall promptly, upon request by Receiver, furnish to

12

Receiver copies of such other financial infonnation or backup documentation relating to those Books

13

and Records.

(g)

Turnover of Insurance Information: CSV shall promptly provide Receiver

with the property insurance policies and policy information for the Property. CSV shall make

16

certain that Receiver is named as an additional insured on all applicable policies for the period that

17

Receiver shall be in possession of the Property, except for the Pollution Legal Liability Select Clean-

18

Up Cost Cap Insurance, Policy No. 195 8035 ("PLL Policy") issued by American Intematlonal

19

Specialty Lines Insurance Company, on which the Receiver shall not be named as an additional

20

insured ..

21

Ju

15

14

CSV and Related Parties shall be enjoined and restrained from transfening, appropriating,

rn
i

18.

selling, leasing or otherwise disposing of any of the personal property, fixtures and/or improvements

23

located in and around the properties. In addition, CSV and Related Parties are enjoined and

24

restrained from creating any dangerous conditions on the Property and from interfering with the

25

necessary activities of Receiver.

al

if
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26

Notwithstanding the foregoing, CSV and/or Zeneca, Inc., shall have the right upon

27

reasonable written notice to Receiver and Plaintiff, to enter upon the Property to ex.amine, test and

28

inspect the environmental condition of the Property and to perform any and all acts related to the
10

[PROPOSED] 0'.IIDBR. APPOINTING RECBIVBR.EXPARTEAND TRO


#180494 vi sat

CERF SP"Pl, LLC vs. Cherokee Simeon Venture I, LLC.


Contra Costa Superior Case No. Cl2..00284

or
k

Environmental Indemnity Agreement executed by CSV in favor of CERF, dated September 6, 2007

(''BIA"), related to any agreement or mandate from any governmental entity or official, including but

not limited to, implementing any remedies set forth in a Final Remedial Action Plan for Lots 1,2 and

3, Campus Bay, Richmond, California" ("FSRAP"), or related to other remediation activities

approved by or required by any governmental official or entity. As between CSV and the Plaint:ttI:

all terms and provisions contained in the EIA shall remain in place, including CSV's responsibility

for any damages to the Property as a result any investigatio testing or remedial WQrk it performs on

the Property.

In the

Order, Receiver,, in its sole discretio may, as set forth in paragraph 8(d) above, elect to acquire the

11

insurance and

allow investigation and/or remediation to occur.

12

19.

CSV and Related Parties shall be restrained and enjoined from transferring or

13

assigning, or encumbering atiy interest in the Property without further order of this Court. In

14

addition, CSV and Related Parties shall be restrained and enjoined from committing or pennitting

15

any waste on the Property or any part thereof: or suffedng or committing or permitting any act on

16

the Property or any part thereof in violation of law or removing or transferring or otherwise

17

disposing of any of the equipmeJrt or fixtures presently on the Receivership Estate or any part

18

thereof; until :further Otder of this Court.

19

20.

20

Procedure section 529.

Ju

Plaintiff is not required to file a preUminary injunction bond specified in California Civil

PROVISIONS UPON FORECLOSURE OR TERMINATION OF RECEIVERSHIP

or
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22

IT IS FURTHER ORDERED that:

In the event that any or all of the Property is sold in a non-judicial or judicial foreclosure

23

21.

24

proceeding, and the receivership remains in effect. funds previously paid to and held by Receiver

25

.shall continue to be held by Receiver until Receivers final account and report (the "Final Report") is

26

approved by the Court. After Court approval of the Final Report and payment of all Court approved

27

Receivership Estate expenses, Plaintiff shall receive net proceeds in accordance with the operative

28

loan documents attached to and referenced in the Verified Complaint in this matter.

if

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event CSV is unable to provide Receiver with evidence of insurance required by this

10

21

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11

[PROPOSED] ORDER APPOINTING RECEIVER EX PARTE AND TR.O


#80494 vl saf

CERF SPY!, LLC vs. Cherokee Simeon Venture I, LLC.


Contra Costa Superior Cue No. Cl2-00284

,.

.1

22.

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In the event that the obligations owing to Plamtiff m:e not fully satisfied by the proceeds of

such sale, or in the event that this action is dismissed or the receivership is terminated for any reason

whatsoever. Receiver, upon Court approval ofR.eceiver's Final Report and payment of all Receivership

Estate expenses, shall be authorized to release, within two (2) business days ofReceiver's receipt of a

'Written request by Plaintiff, all net funds under Receiver's control to Plaintiff to be applied toward any

obligations CSV may owe pursuant to the loan documents set forth in tb.e Complaint. In the event that

this receivership is terminated and.no foreclosure sale of the Properties has occurred or the loan has

been fully satisfied by the proceeds of a judicial or non-judicial foreclosure sale of the Property or

otherwise, all funds under Receiver's control shall be disbursed pursuant to the Court's instructions

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10

upon termination of the receivership.

11

23.

12

documents and any obligations incurre d by or to Receiver, Plaintiff and Receiver shall cooperate to

13

promptly prepare and obtain Court approval of a Final Report and an order discharging Receiver and

14

exonerating its bond.

15

24.

16

foreclosure sale, whether judicial or non-judicial, relating to the Note or Deed of Trust and all debt

17

under the Note is fully paid; (ii) Plaintiff consents to the termination of the Receivership; and (ill)

18

the Court issues an order approving the Receiver's Final Report, discharging the Receiver and

19

exonerating its bond, thereby, terminating the Receivership.

20

Receiver shall remain an agent of this Court until: (i) the Property and all security is sold at a

IT IS SO ORDERED.

23

DATED:

or
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21

Promptly upon the satisfaction of the entire indebtedness to Plaintiff pursuant to the loan

Ju

;;

JUDITH A. SANDERS
JUL 1 2 201Z
Judge of the Superior Court

24

al

if

'fro T@

25

26
27
28
12

[PROPOSED] ORDER APPOINTING RBCEIVBRBXPARTE AND TR.O


1#80494 vl aaf

CERF SPT'I, LLC vs. Cherokee Simeon Venture I, LLC.


Contra Costa Superior Case No. C12-00284

UNAUTHORIZED PRACTICE
OF LAW
MANUAL FOR PROSECUTORS

LOS ANGELES COUNTY


OFFICE OF THE DISTRICT ATTORNEY
Steve Cooley
District Attorney
County of Los Angeles
Thomas A. Papageorge
Head Deputy District Attorney
Consumer Protection Division

Kathleen J. Tuttle
Deputy District Attorney
Karen Nobumoto
Deputy District Attorney
February 2004 Edited for Public Release

PREFACE TO
THE PUBLIC EDITION

Access to an attorney to protect your rights is important in the American legal system.
Unfortunately, some con artists undermine this vital key to justice by falsely claiming they are
entitled to practice law. They often take large payments under false pretenses and harm the legal
rights of their victims.
Such unauthorized practice of law (UPL) is a serious problem in Southern California.
The crime hits immigrant communities especially hard as new arrivals to the United States seek
to clarify their immigration status. Anyone, however, can be a victim. UPL occurs in all legal
fields, including family law, personal injury, bankruptcy, and criminal law.
As District Attorney, I am committed to combating this form of fraud. Working with the
State Bar of California and various bar associations, the District Attorneys Office has launched
a broad-scale effort to identify and prosecute these crimes. The District Attorneys Office has
initiated numerous investigations and prosecutions against these unscrupulous con artists and is
leading statewide efforts to enhance laws dealing with UPL.
I gratefully acknowledge the work of the many other agencies and community bar
associations which are active partners in addressing the problem of unauthorized practice of law.
This version of the UPL manual has been prepared to assist those other offices and community
groups which are active in this effort. Working together, we can protect the public from these
fraudulent practices and promote the American ideal of justice for all.
Steve Cooley
District Attorney

TABLE OF CONTENTS

This version of the Manual is for public use. It is a redacted version of the full-length Manual
and includes only Chapters II and IV.

II.

The Problem of Unauthorized Practice of Law in California

p. 4

IV.

Statutes Applicable to Unauthorized Practice of Law

p. 14

Chapter II
THE PROBLEM OF
UNAUTHORIZED PRACTICE OF
LAW IN CALIFORNIA

Introduction
The unauthorized practice of law is not a new phenomenon. Californias modern efforts
to regulate law practice and discourage unqualified practitioners trace back to 1927 and before.
But the UPL problem of today has taken on troubling new dimensions, as both Los Angeles and
California as a whole struggle with the challenges and opportunities of unprecedented cultural
diversity and social change. Disturbing new forms of UPL-related fraud are now commonplace,
and the volume and intensity of complaints increase steadily. From unscrupulous consultants
who prey on newcomers to America with promises of special influence at INS, to insurance
salespersons masquerading as experienced estate planners, to disbarred attorneys, and those
without any legal training at all, earning six figure incomes for unqualified workthe integrity
of our system of access to justice is increasingly at risk.
It is of vital concern to consumers, honest law practitioners, and the justice system as a
whole that we identify these problems and implement new and better strategies to protect the
public and our institutions.

A.

Historical Background of the UPL Issue


1. Regulating the Practice of Law in California

Although California has governed law practice since its statehood, the modern era of
attorney licensure and regulation began in 1927, with the passage of the State Bar Act,

5
Californias first comprehensive effort to regulate the legal profession. The State Bar Act
created the modern State Bar of California, with the California Supreme Court as the principal
regulatory authority, and promulgated statutory standards for the practice of law, including the
requirement of membership in the State Bar as the prerequisite for law practice in California.
Business and Professions Code section 6125 codifies that requirement: No person shall practice
law in California unless the person is an active member of the State Bar. (6125.)
Regulation of attorneys and control over the practice of law are matters of great statewide
importance. The profession and practice of the law . . . is . . . a matter of public interest and
concern, not only from the viewpoint of its relation to the administration of civil and criminal
law, but also from that of the contacts of its membership with the constituent membership of
society at large, whose interest is to be safeguarded . . . the membership, character and conduct
of those entering in and engaging in the legal profession have long been regarded as the proper
subject of legislative regulation and control. State Bar of California v. Superior Court (1929)
207 Cal.323,331 (emphasis added); see also In re McKenna (1940) 16 Cal.2d 610.
The State Bar Act represented a commitment to elevating and preserving the status of law
practice as a learned profession imbued with special public responsibilities. The California
Supreme Court has described this public policy: The right to practice law not only presupposes
in its possessor integrity, legal standing and attainment, but also the exercise of a special
privilege, highly personal and partaking of the nature of a public trust. It is manifest that the
powers and privileges derived from it may not with propriety be delegated to or exercised by a
nonlicensed person. McGregor v. State Bar (1944) 24 Cal.2d 283, 288 (emphasis added), citing
Townsend v. State Bar (1930) 210 Cal.362, 364. UPL enforcement thus serves the policies of
protecting potential clients and the integrity of the justice system.
2. Defining the Practice of Law: The Continuing Issue
What constitutes the practice of law in California is an issue which is necessarily
central to any discussion of enforcement of UPL laws. Neither the Business and Professions
Code, nor any other California statute, comprehensively defines the practice of law for all
purposes. Over the years this has raised questions about the precise parameters of the legal
profession in California. But Californias Supreme Court and courts of appeals have knowingly
crafted a broad definition of law practice suited to grow with the profession.
The Supreme Court has described the evolution of this definition:
As early as 1922, before the passage of the modern State Bar Act, the
Supreme Court adopted the definition of practice of law used in an Indiana

6
case: [A]s the term is generally understood, the practice of the law is the doing
and performing services in a court of justice in any matter depending therein
through its various stages and in conformity with the adopted rules of procedure.
But in a larger sense it includes legal advice and counsel and the preparation of
legal instruments and contracts by which legal rights are secured although such
matter may or may not be depending in a court of law. (People v. Merchants
Protective Corp. (1922) 189 Cal. 531,535, quoting Eley v. Miller (1893) 7 Ind.
App. 529 [citations omitted].) The legislature adopted the State Bar Act in 1927
and used the term practice law without defining it. The conclusion is obvious
and inescapable that in doing so it accepted both the definition already judicially
supplied for the term and the declaration of the Supreme Court [in Merchants]
that it had a sufficiently definite meaning to need no further definition. The
definition quoted above from People v. Merchants Protective Corp. has been
approved and accepted in subsequent California decisions [citations], and must
be regarded as definitely establishing, for the jurisprudence of this state, the
meaning of the term practice law.
Baron v. City of Los Angeles (1970) 2 Cal.3d 535, 542-543 (emphasis added), quoting People v.
Ring (1937) 26 Cal.App.2d Supp. 768, 772; see Birbower, Montalban, Condo & Frank, P.C. v.
Superior Court (1998) 17 Cal.4th 119, 127-128.
Thus California today defines law practice as providing legal advice and legal
instrument and contract preparation, whether or not these subjects were rendered in the course
of litigation. Birbower, Montalban, Condo & Frank, P.C . v Superior Court., supra, at 128.
Providing legal advice or service is a violation of the State Bar Act if done by an unlicensed
person, even if the advice or service does not relate to any matter pending before a court.
(Mickel v. Murphy (1957) 147 Cal.App.2d 718, 721.)
This definition of law practice is broad and non-specific, but that policy choice is one
which the California courts have made consciously. The California court of appeals has
summarized the rationale for this broad approach as follows:
[A]ny definition of legal practice is, given the complexity and variability of the
subject, incapable of universal application and can provide only a general guide to
whether a particular act or activity is the practice of law. To restrict or limit its
applicability to situations in the interest of specificity would also limit its
applicability to situations in which the public requires protection.

7
People v. Landlords Professional Services (1989) 215 Cal.App.3d 1599, 1609.
In sum, California uses a broad standard for defining law practice to maximize its ability
to protect its citizens from wrongs arising from the practice or counterfeited practice of law.
3. The UPL Statute Today: Significant Changes
The California statutes governing the unauthorized practice of law have changed
significantly in the past two decades. Prior to 1988, the unauthorized practice of law whether
by a layperson or an attorney having lost the privilege of practice was prosecutable exclusively
as a misdemeanor. That year, the Legislature passed SB 1498 (Presley) in response to a growing
problem of disbarred and suspended attorneys who continued to use their positions of trust and
confidence to prey upon the public long after they had forfeited their right to practice.
(Cal.Stats.1988, ch.1159.) SB 1498 added to section 6126 a new provision providing for
alternate felony/misdemeanor prosecution of former attorneys engaged in UPL. All other UPL
criminal violations continue as misdemeanors.
Even after the 1988 amendments, section 6126 was troubled by several problems. As the
statute was then worded, felony prosecution of a disbarred or suspended lawyer was not possible
if the former attorney did not affirmatively advertise or hold himself out as entitled to practice
law, even if the disbarred attorney continued to practice law actively. Non-lawyers who engaged
in the practice of law were subject only to the statutes misdemeanor provision, which provided
only the default six-month jail term of Penal Code section 19, and the numerous repeat offenders
often faced little or no jail time as a practical matter. In addition, the statute was unclear as to the
relevant time frame of licensure status for UPL purposes, raising the possibility that UPL
activities could be unprosecutable if the defendant was licensed before or after the acts of
unlicensed practice.
In response to these concerns, Senate Bill 1459 (Romero), supported by a coalition
including the State Bar, the Los Angeles District Attorneys Office, the California District
Attorneys Association, the state Attorney General, and numerous community and bar
organizations, was enacted by the state Legislature, effective January 1, 2003. (Cal.Stats.2002,
ch 394.)
Senate Bill 1459 made important improvements to Business and Professions Code 6126.
The bill:

8
Doubled the maximum jail sentence for a misdemeanor UPL conviction of a nonattorney from six months to one year (6126(a));
Provided for a required county jail term of 90 days to one year for a second or
subsequent UPL conviction, unless the interests of justice demand otherwise; and required that a
court which deviates from this sentence must state its reasons on the record (6126(b));
Clarified that a person who is not a member of the California Bar, but is otherwise
authorized to practice law in this state pursuant to court rule or statute (e.g., an out-of-state
attorney appearing pro hac vice) is not engaged in the unauthorized practice of law (6126(a));
Clarified that whether an action constitutes UPL depends upon the suspects status
when the disputed legal activity occurred, not his or her status before or after that time
(6126(a)); and
Eliminated a statutory loophole, thus permitting felony prosecution of disbarred or
suspended attorneys engaging in UPL who continue to practice but arguably do not advertise or
hold themselves out as entitled to practice law (either by disclosing to clients their changed
licensure status or by remaining silent on the matter with continuing clients) (6126(b)).
Section 6126, as amended effective Jan. 1, 2003, now provides as follows:
6126. Unlawful practice or advertising as crime
(a) Any person advertising or holding himself or herself out as practicing or
entitled to practice law or otherwise practicing law who is not an active member
of the State Bar, or otherwise authorized pursuant to statute or court rule to
practice law in this State at the time of doing so, is guilty of a misdemeanor
punishable by to one year in a county jail or by a fine of up to one thousand
dollars ($1,000), or by both that fine and imprisonment. Upon a second or
subsequent conviction, the person shall be confined in a county jail for not less
than 90 days, except in an unusual case where the interests of justice would be
served by imposition of a lesser sentence of less than 90 days for a second or
subsequent conviction under this subdivision, the court shall state the reasons for
its sentencing choice on the record.
(b) Any person who has been involuntarily enrolled as an inactive member of the

9
State Bar, or has been suspended from membership from the State Bar, or has
been disbarred, or has resigned from the State Bar with charges pending, and
thereafter practices or attempts to practice law, advertises or holds himself or
herself out as practicing or otherwise entitled to practice law, is guilty of a crime
punishable by imprisonment in the state prison or county jail. However, any
person who has been involuntarily enrolled as an inactive member of the State
Bar pursuant to paragraph (1) of subdivision (e) of Section 6007 and who
knowingly thereafter practices or attempts to practice law, or advertises or holds
himself or herself out as practicing or otherwise entitled to practice law, is guilty
of a crime punishable by imprisonment in the state prison or county jail.
(c) The willful failure of a member of the State Bar, or one who has resigned or
been disbarred, to comply with an order of the Supreme Court to comply with
Rule 955, constitutes a crime punishable by imprisonment in the state prison or
county jail.
(d) The penalties provided in this section are cumulative to each other and to any
other remedies or penalties provided by law.

B. The Unauthorized Law Practice Problem in California Today


1. The Challenge of Measuring the UPL Problem
Prosecutors offices, consumer affairs agencies, and community bar associations report a
growing volume of complaints of consumer fraud and abuse resulting from the unauthorized
practice of law in such disparate fields as immigration law, bankruptcy, estate planning,
landlord/tenant disputes, and criminal law. But assessing the rising tide of UPL complaints is a
difficult task, made even more problematical by the fragmentary nature of available statistics.
This difficulty of assessment is common to all forms of fraud. In measuring the full
scope of the UPL problem, and based on the universal experience of federal and state consumer
protection officials, our only certainty is that the problem is large and growingand appears to
be under-reported even more chronically than other forms of fraud complaints.
There are a number of reasons for the under-reporting of UPL-related matters. As with
other forms of fraud, UPL fraud victims are often unaware they have been victimized, at least in
the near term. It is usually not until long after they have parted with their money that victims

10
realize that the immigration assistance or bankruptcy stays or unlawful detainer papers they
have bought dearly will not yield the results that were promised. Often, these victims are not
sophisticated about the legal process and do not realize that the fault was that of the UPL suspect,
and not their own. Also, UPL victims, like other fraud victims, are often ashamed or embarrassed
about falling for illegal schemes (whether this embarrassment is justified or not), and as a
result they are frequently reluctant to come forward to authorities.
However, unlike many other fraud victims, UPL victims are often recently arrived or
undocumented immigrants who are highly unwilling to identify themselves to law enforcement
agencies. Even those who are here lawfully often face substantial language barriers in
attempting to explain their victimization to authorities. Based on experiences with other
governments, these victims are often distrustful of the government and the legal systema
problem exacerbated by
the very experiences they should complain of.
Many users of marginal or unauthorized legal services are poor or modestly educated.
These victims tend to be unaware of proper channels for crime complaints, and often cannot
devote the time and resources needed to pursue these matters.
Experienced consumer fraud prosecutors estimate that the ratio of actual violations to
formal complaints filed with authorities in fraud cases ranges from 10-1 to 50-1, depending on
the industry, the dollar value of harm, and the nature of the victim class. Poor and uneducated
victims with uncertain immigration status, for example, would certainly be at the far end of this
spectrum. Each written complaint from this source probably represents fifty or more violations.
2. Assessing the Scope of the Problem
State Bar of California complaint data provide at least a partial picture of the extent of
this problem and the types of UPL activities taking place. The bulk of State Bar complaints
concern the conduct of active members of the Bar. The State Bar also receives complaints
against non-lawyers for unauthorized practice of law, but this is not a basic function of the State
Bar disciplinary systemthese complaints are not solicited and often cannot be investigated by
the State Bar staff. Thus State Bar UPL complaints are necessarily only a fragment of the UPL
universe.
Even given this fragmentary nature, the pattern of UPL complaints received by the State
Bar is revealing. Table 1 indicates the State Bar received 210 complaints involving non-attorney

11
UPL in 2001, and 25% more such complaints (262) just two years later.
The most recent data from 2002-2003 indicate that a minimum of 250+ non-attorney
UPL complaints per year are received by the State Bar intake center, notwithstanding that
investigation of these complaints is not part of the core mission of the State Bar disciplinary
system. Using a highly conservative 10-1 violations-to-complaints ratio, these data suggest
thousands of non-attorney UPL violations occur each year.
Table 1. Non-Attorney UPL Complaints Received by State Bar (2001-2003).
Subject Area
Immigration
General Civil
Family Law
Criminal Law
Personal Injury
Identity Theft
Bankruptcy
Collections
Probate
Other/Unidentified
TOTALS

20011

2002
83
36
9
13
8
12
3
7
21
52

210

244

2003
109
37
8
4
13
11
5
17
19
39
262

State Bar complaints against disbarred/resigned and suspended attorneys indicate a


similar pattern. Table 2 shows the State Bar received 215 complaints of UPL against former
attorneys in 2001, but an average of 339 complaints in 2002 and 2003 (a 57% increase over
2001). Clients using apparently licensed attorneys are a class of consumers more likely to
complain formally to the State Bar. However, these recent averages suggest thousands of actual
violations in recent years, using minimum consumer fraud projection ratios.

State Bar data by complaint category is only available for 2002 and 2003.

12
Table 2. Former Attorney UPL Complaints to State Bar (2001-2003).
Complaint Subject
Disbarred/Resigned Attorneys
Suspended Attorneys
TOTALS

2001
14
201
215

2002
36
355
391

2003
41
246
287

The pattern from existing consumer complaint data is fully supported by the continuing
experiences reported in recent years by the community bar associations of Southern California,
including the Mexican American Bar Association, the Southern California Chinese Lawyers
Association, the Korean American Bar Association, the Asian Pacific American Legal Center,
Public Counsel, and the Bet Tzedek Law Center. These organizations have reported to this
Office that consumer complaints of UPL abuse and fraud have increased alarmingly in the
communities these groups represent.
In sum, complaint statistics and reports from a wide spectrum of community groups
together indicate a clear pattern: the unauthorized practice of law is a serious and growing
problem in California.
2. Continuing and New Patterns of UPL Activities
Table 1 (above) illustrates the range of unauthorized law practice activities now occurring
in California. The pattern of UPL problems consists of both traditional forms of UPL and new
variations reaching into additional areas of legal service.
The traditional forms of UPL continue to generate a significant portion of consumer
complaints. The second highest total of specific State Bar complaints (more than of 20% of all
complaints) consists of UPL allegations in the general civil area of practice, and many
complaints fall into the unspecified/general practice category. Consumer organizations and
prosecutors continue to field complaints of paralegals posing as attorneys and performing general
functions in civil law practice (see, e.g., UPL complaint in People v. Hylland in chapter VII), as
well as complaints of resigned attorneys simply continuing their previous general law practices
(see, e.g., UPL complaint in People v. Schultz in chapter VII).
However, the complaint information also indicates that UPL fraud and abuse is occurring
with greater frequency in specialty areas of law practice reflecting the legal issues facing our
community in the 21st century. Chapter V (Special Types of UPL Matters) provides details on

13
these new and emerging aspects of the UPL problem, including:
UPL and immigration fraud. As Los Angeles has become the nations immigration
hub, the demand for legal services to assist new arrivals has made immigration UPL fraud the
top source of non-attorney UPL complaints to the State Bar (at 31% of the 2002-2003 total). The
wave of immigration fraud matters led this Office to coordinate the Los Angeles Immigration
Fraud Task Force, a working group of more than 20 law enforcement agencies and community
organizations, and that Task Force has successfully prosecuted more than 50 felony and
misdemeanor matters in this field since 1998.
Other new forms of UPL now occur with frequency in such fields of practice as:
Estate planning and living trust counseling (see, e.g., People v. Fremont Life Ins. Co.,
(2002) 104 Cal. App. 4th 508);
Bankruptcy counseling and petition preparation (see, e.g., In re Anderson (1987) 79
B.R. 482; In re Kaitangian (1998) 218 B.R. 102; In re Boettcher (2001) 262 B.R. 94);
Landlord-tenant and housing issues (see, e.g., People v. Landlords Professional
Services (1989) 215 Cal.App.3d 1599); and
Identify theft and personal privacy (see People v. Morrison discussion in chapter V).
(See generally chapter V.)

Conclusion
All relevant indicators confirm there has been a troubling increase in both the number and
the types of unscrupulous UPL-related practices victimizing Californians just when they are most
vulnerablewhen they need skilled professional assistance to protect their rights in an
increasingly complex legal system.
It is the conclusion of this Office that the appropriate response is a comprehensive and
consistent effort to detect, punish, and prevent the unauthorized practice of law and related fraud
and abuse, as these practices significantly harm consumers, honest competitors, and our system
of justice.

14

Chapter IV
STATUTES APPLICABLE
TO UNAUTHORIZED PRACTICE
OF LAW

Chapter Outline
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A. Business and Professions Code section 6125 et seq.: Definition
of UPL and Elements of the Crime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1. UPL Statutory Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Definition of the Practice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B. Other Statutory Alternatives for Prosecuting UPL. . . . . . . . . . . . . . . . .
1. Grand Theft by False Pretenses (Pen. Code 484/487) . . . . . . . . .
2. Illegal Practice of Business (Bus. & Prof. Code 16240) . . . . . . . .
3. Immigration Consultants Act (Bus. & Prof. Code 22400 et seq.) .
4. False or Misleading Statements in an Immigration Matter
(Penal Code 653.55) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. False Advertising (Bus. & Prof. Code 17500) . . . . . . . . . . . . . . .
6. Unfair Competition (Bus. & Prof. Code 17200 et seq.) . . . . . . . .
7. State Bar Ethical Standards and Related Rules and Statutes . . . . . .

Introduction
Acts constituting the unauthorized practice of law may violate many different California
statutes and ethics regulations. In assessing potential charges, the prosecutor should consider all
alternatives, including criminal sanctions in the Business and Professions and Penal Codes, civil
remedies in the Business and Professions Code and elsewhere, and potential referral for
violations of State Bar ethical standards. UPL cases need not be complex, and often the basic

15
UPL misdemeanor charge is all that is appropriate. However, sound charging decisions call for
consideration of all relevant alternatives.
In considering these alternative charges, the prosecutor should consult as needed with the
special units in the District Attorneys Office which have relevant expertise:
Justice System Integrity Division (213-974-3888) Felony charges against disbarred
or resigned attorneys who continue to practice, or for attorney misconduct more generally;
Consumer Protection Division (213-580-3273) Cases involving unfair and deceptive
business practices, false advertising, and for information or assistance with civil enforcement
tools;
Major Fraud Division (213-580-3200) Cases involving complex and large-scale
fraud offenses.
These divisions stand ready to assist in case evaluation and application of the statutes
referenced in this chapter.
A note of caution is appropriate with regard to the broad concept of practice of law
upon which the crime of UPL is dependent. Although this chapter summarizes the extensive case
law guidance on this term, there is no state statute which comprehensively defines the practice
of law. Most cases will involve clear facts of law practice, but prosecutors should be alert for
issues arising in this regard.

A.

Business and Professions Code section 6125 et seq.: Definition of UPL


and Elements of the Crime
1. UPL Statutory Scheme

The unauthorized practice of law is governed by Business and Professions Code sections
6125-6133. (All following references in this section are to the Business and Professions Code,
unless otherwise specified.) The California Legislature enacted these provisions originally in
1927 as part of the State Bar Act which comprehensively regulated the practice of law in
California. These provisions require licensure to practice law; punish unauthorized practice of
law and related practices; and provide a wide range of potential civil remedies ancillary to an
enforcement case.

16
a. Licensure Required
Section 6125 establishes the basic requirement of licensure to practice law: No person
shall practice law in California unless the person is an active member of the State Bar. (6125.)
The California requirement of licensure to practice law is a valid exercise of the states
police power and serves the legitimate state interest of assuring the competency of those
performing this service. (J.W. v. Superior Court (1993) 17 Cal.App.4th 958.). The licensure
requirement does not violate First Amendment free speech rights (Howard v. Superior Court
(1975) 52 Cal.App.3d 722), and has survived Equal Protection challenge (People v. Sipper
(1943) 61 Cal.App.2d Supp. 844).
b. Unauthorized Practice or Attempted Practice Prohibited
Section 6126 is the basic charging statute for most UPL crimes. Section 6126(a)
provides, in relevant part:
Any person advertising or holding himself or herself out as
practicing or entitled to practice law or otherwise practicing law
who is not an active member of the State Bar, or otherwise
authorized . . . to practice law in this state at the time of doing so,
is guilty of a misdemeanor . . . (6126(a).)
Misdemeanor violation of section 6126 is punishable by up to one year in county jail or a
fine of up to $1000, or both. However, in a new provision sponsored by the State Bar and this
Office, upon a second or subsequent conviction, the defendant shall be confined in a county jail
for not less than 90 days, except in an usual case where the interests of justice would be served
by a lesser sentence. If the court imposes the lesser sentence, it must state its reasons on the
record. (6126(a).)
A felony charge is available for any person who has been suspended from membership
from the State Bar, or has been disbarred, or has resigned from the State Bar with charges
pending, and thereafter practices or attempts to practice law , or advertises or holds himself or
herself out as entitled to practice law. (See alternate felony/misdemeanor provision of
6126(b).)
c. Other Sanctions for UPL-Related Offenses

17
A felony may also be charged in a case of a willful failure of a State Bar member to
comply with a Supreme Court order under Rule 955 regarding return of documents and legal
fees, notice to clients and opposing counsel, and other matters. (6126(c).) And contempt of
court sanctions are available where a person assumes to be an attorney without authority, or
advertises or holds himself or herself out as entitled to practice law. (6127.) All penalties
under section 6126 are cumulative to each other and any other remedies provided by law.
(6126(d).)
d. Other Remedies for UPL Violations
In an important new development in UPL enforcement, legislation in 2001 (Stats.2001,
c.304 (SB 1194)) added a new section 6126.5, which provides prosecutors a wide range of
additional remedies and penalties available in any enforcement action brought in the name of
the people of the State of California by the Attorney General, a district attorney, or a city
attorney, acting as a public prosecutor. In UPL cases where victims purchased services or
goods, or were otherwise harmed, the court is empowered to award as additional relief in the
enforcement action:
(1) Actual damages.
(2) Restitution of all amounts paid.
(3) The amount of penalties and tax liabilities incurred in
connection with the sale or transfer of assets to pay for any goods,
services, or property.
(4) Reasonable attorney's fees and costs expended to rectify errors
made in the unlawful practice of law.
(5) Prejudgment interest at the legal rate from the date of loss to
the date of judgment.
(6) Appropriate equitable relief, including the rescission of sales
made in connection with a violation of law. (6126.5(a).)
The court is to award this relief directly to victims, or if direct restitution is impracticable,
the court may distribute this relief as it chooses pursuant to its equitable powers. (6126.5(b).)
Significantly, prosecutors may also recover reasonable attorney's fees and costs and, in
the court's discretion, exemplary damages as provided in Section 3294 of the Civil Code (the
provision governing such damages in California litigation). (6126.5(c).)

18
Prosecutors should now actively consider these alternative remedies in UPL cases, in
addition to traditional criminal fines and imprisonment. And these new remedies are expressly
cumulative of each other and all other remedies and penalties provided by law. (6126.5(d).)
2. Definition of the Practice of Law
a. Case Law Definition of Practice Law
Successful UPL prosecution under section 6126 requires that the prosecutor prove the
defendant sought to practice law," or advertised or held himself or herself out as entitled to
practice law. (6126(a).) Neither the Business and Professions Code, nor any other California
statute, comprehensively defines the practice of law.
However, the California Supreme Court and courts of appeal have developed a definition
of law practice within the meaning of the State Bar Act, and the Supreme Court has concluded
that this case law definition serves the purpose of . . . definitively establishing, for the
jurisprudence of this state, the meaning of the term practice law. (Birbower, Montalban,
Condo & Frank, P.C. v. Superior Court (1998) 17 Cal.4th 119, 127-128.)
The Supreme Court has determined that the term practice law as used in sections 6125
and 6126 means:
. . . the doing and performing services in a court of justice in any
matter depending therein throughout the various stages and in
conformity with the adopted rules of procedure. It includes legal
advice and counsel and the preparation of legal instruments and
contracts by which the legal rights are secured although such
matter may or may not be depending in a court.
People v. Merchants Protective Corp. (1922) 189 Cal. 543, 535 (emphasis added), cited with
approval in Birbower, Montalban, Condo & Frank, P.C. v. Superior Court (1998) 17 Cal.4th
119, 127-128. Law practice encompasses legal advice and legal instrument and contract
preparation, whether or not these subjects were rendered in the course of litigation (Birbower,
Montalban, Condo & Frank, P.C., supra, at 128), and the giving of legal advice on a matter not
pending before a court is nonetheless a violation of section 6125 and 6126. (Mickel v. Murphy
(1957) 147 Cal.App.2d 718, 721.)

19
Thus the California Supreme Courts functional definition of law practice, as
developed in Birbower and Merchants Protective Corp., supra, can be summarized as the giving
of legal advice and counsel and the preparation of legal instruments affecting the clients
legal rights. This definition, does not encompass all lawyers professional activities which
could reasonably be included . . . however, the definition does delineate those services which
only licensed attorneys can perform. Baron v. City of Los Angeles (1970) 2 Cal.3d 535, 542543. See also State Bar of California v. Superior Court (1929) 207 Cal. 323, 331; People v. Ring
(1937) 26 Cal.App.2d Supp. 768, 772-773. (See further discussion of definition of law
practice and policies behind it in Ch. II (The UPL Problem in California).)
Although the Business and Professions Code does not provide a comprehensive statutory
definition of law practice for all purposes, other statutes in the Code provide additional guidance
and may be useful to supplement the broad definition of Merchants and Birbower. Most directly
applicable are the provisions of the Business and Professions Code governing the work of legal
document preparers (sections 6400 et seq.). For the purposes of this regulatory scheme, section
6411(d) provides: The practice of law includes, but is not limited to, giving any kind of advice,
explanation, opinion, or recommendation to a person about that person's possible legal rights,
remedies, defenses, options, selection of forms or strategies.
b. Examples of the Practice of Law
California courts have found the practice of law in circumstances including the following:
Providing legal advice and counsel for clients even when no matters were pending
before a court (People v. Merchants Protective Corp. (1922) 189 Cal.531, 535; Simons v.
Stevenson (2001) 88 Cal.App.4th 693);
Preparing a trust deed (People v. Sipper (1943) 61 Cal.App.2d Supp. 844);
Operating an eviction service by providing information to clients concerning eviction
procedures (People v. Landlords Professional Services (1989) 215 Cal.App.3d 1599);
Providing bankruptcy legal services (In re Anderson (1987) 79 B.R. 482, 485
(paralegal assisting with bankruptcies answered legal questions and assisted in legal decisions,
all of which acts "require the exercise of legal judgement beyond the knowledge and capacity of
the lay person"); In re Kaitangian (1998) 218 B.R. 102, 113 ("bankruptcy petition preparers are
strictly limited to typing bankruptcy forms"); In re Boettcher (2001) 262 B.R. 94 (bankruptcy

20
petition preparer selected appropriate form, later prepared by attorney, but actions still
constituted UPL);
Selection and preparation of marital dissolution documents, and providing
counseling/ drafting services for the public concerning corporate formation, bankruptcy and real
estate (State Bar Ethics Opinions 1983-7, 1983-12);
Selling estate planning services (involving preparation of trusts and wills), and falsely
representing that attorneys would oversee such services and prepare the documents (People v.
Fremont Life Ins. Co., (2002) 104 Cal. App. 4th 508);
Operating a phony legal aid business providing legal advice, violating both the
State Bar Act and the unfair competition law (Brockey v. Moore (2002) 107 Cal. App.4th 86);
Merely holding oneself out as a licensed attorney by a layman or suspended
attorney, even if no actual legal services are rendered (Farnham v. State Bar (1976) 17 Cal.3d
605);
A single act of law practice, even without allegation or proof of a pattern of conduct or
a business practice (People v. Ring (1937) 26 Cal.App.2d Supp. 768);
Providing legal advice or assistance from out-of-state to a California resident, using
the telephone, fax, computer, or other new technologies (Simons v. Stevenson (2001) 88
Cal.App.4th 693).
c. Examples of Activities Which Are Not the Practice of Law
California courts have found no practice of law, within the meaning of sections 6125 and
6126, in the following circumstances:
Self-representation, as law practice in this context means practice or assistance on
behalf of others and does not affect a persons right to appear and conduct his or her own case
(Gray v. Justice Court of Williams Judicial Township (1937) 18 Cal.App.2d 420);
Giving a client a manual on the preparation of unlawful detainer cases, where
defendant did not personally advise the client with regard to a specific case (People v. Landlords
Professional Services (1989) 215 Cal.App.3d 1399, review denied);

21
Tasks merely preparatory in nature performed by nonattorneys in a law firm
supervised by an attorney (In re Carlos (Bkrtcy.C.D.Cal.1998) 227 B.R. 535);
Negotiating a tax settlement with the federal government on behalf of a client, where
the issue (whether reserves constituted taxable income) was within the normal purview of an
accountant (Zelkin v. Caruso Discount Corp. (1960) 186 Cal.App.2d 802);
The acts of a scrivener filling in the blanks on a form at the direction of a client
(People v. Landlords Professional Services (1989) 215 Cal.App.3d 1599, 1608 (defendants who
"made forms available for the client's use and filed and served those forms as directed by the
client did not practice law); Mickel v. Murphy (1957) 147 Cal.App.2d 718; People v. Sipper
(1943) 61 Cal.App.2d Supp. 844).
3. Elements of the Offense
The elements of the offenses of unauthorized practice of law, as prohibited in section
6126, are as follows:
a. Practicing law, or advertising or holding oneself out as practicing law,
without authorization
(Bus. & Prof. Code 6126(a), a misdemeanor)
(1)
A person practiced law, OR advertised or held himself or herself out as
entitled to practice; AND
(2)

That person is not an active member of State Bar or otherwise entitled to


practice law pursuant to statute or court rule.

b. Practicing law while involuntarily enrolled as inactive member


(Bus. & Prof. Code 6126(b), an alternate felony/misdemeanor)
(1)

A person practiced law or attempted to practice law, OR advertised or held


himself out as practicing or otherwise entitled to practice law; AND

(2)
Bar.

That person was involuntarily enrolled as an inactive member of the State

22
c. Practicing law, or advertising and holding oneself out as entitled to
practice law, while disbarred/suspended/resigned with charges pending
(Bus. & Prof. Code 6126(b), an alternate felony/misdemeanor)
(1)

A person practiced law or attempted to practice law, OR advertised or held


himself out as practicing or otherwise entitled to practice law; AND

(2)

That person was suspended from membership from the State Bar, OR was
disbarred, OR had resigned from the State Bar with charges pending.

d. Failing to comply with an order of the Supreme Court under Rule 955
(Bus. & Prof. Code 6126(c), an alternate felony/misdemeanor)

B.

(1)

A person was a member of the State Bar, OR a former member who


has resigned from the State Bar, OR has been disbarred;

(2)

That person failed to comply with an order of the Supreme Court


pursuant to Rule 955; AND;

(3)

The failure to comply with Rule 955 was willful.

Other Statutory Alternatives for Prosecuting UPL

Cases involving unauthorized practice of law, as prohibited by Business and Professions


Code section 6126, may also be appropriate for charges under a number of other statutes. The
following are those statutes most likely to apply to such facts, but other statutes may also apply
in particular circumstances, and thus this list is not exhaustive.
1. Grand Theft by False Pretenses (Pen. Code 484/487)
a. Provisions and Applicability to UPL
Many factual situations involving unauthorized practice of law can also be charged as
grand theft under Californias unified theft statute, Penal Code sections 484(a) and 487. Often
the use of Penal Code sections 484/487 is the most appropriate means of charging a felony in
these cases, as UPL by a non-attorney is a misdemeanor. But note that it is generally also
appropriate to charge a parallel misdemeanor under Business and Professions Code section 6126,

23
in light of the newly added provision of Bus. & Prof. Code section 6126(a) which, effective
January 1, 2003, requires a minimum county jail sentences of 90 days for repeat offenders.
The essential elements of grand theft by false pretenses (the theft theory most likely to be
applicable) include a misrepresentation of a past or existing fact, made with the intent to defraud
and to permanently deprive the victim, which statement is relied upon by the victim, who parts
with money or property in excess of $400.
Many UPL cases involve misrepresentations of fact by the UPL suspect which statements
can readily meet the required elements of the grand theft offense. Examples of these
misrepresentations include:
the knowing misrepresentation that the UPL suspect is in fact a lawyer when the suspect
is not (or is not now) qualified or entitled to practice law;
the knowing misrepresentation that the UPL suspect is able lawfully to handle all
aspects of the victims case including court appearances;
false claims of special influence with the INS in an immigration context, or similar
claims that a potential immigration strategy (such as political asylum) is available or has worked
previously.
b. Elements of the Offense
Grand theft by false pretenses
(Penal Code sections 484(a) and 487a, a felony)
(1)

A person made or caused to made a promise without intent to


perform it, OR a false pretense or representation of a past or
existing fact known to be false or made recklessly;

(2)

The person made the pretense, representation or promise with


the specific intent to defraud;

(3)

The pretense, representation or promise was believed and relied


upon by the victim and was material in inducing the victim to
part with money or property; AND

24
(4)

The theft was accomplished in that the victim parted with his or
her money or property intending to transfer ownership thereof.

(See CALJIC 14.10.)


2. Illegal Practice of Business (Bus. & Prof. Code 16240)
a. Provisions and Applicability to UPL
Because the practice of law requires a license in California, individuals who wrongly
hold themselves out as lawyers are also subject to prosecution under Business and Profession
Code section 16240. This misdemeanor statute does not depend on the definition of what
constitutes the practice of law. Instead, mere holding oneself out while not actually having a
valid certificate is a completed misdemeanor violation.
Section 16240 provides that every person who practices, offers to practice, or advertises
any business, trade, profession, occupation, or calling, or who uses any title, sign, initials, card,
or device to indicate that he or she is qualified to practice any business, trade, profession,
occupation, or calling for which a license, registration, or certificate is required by any law of
this state, without holding a current and valid license, registration, or certificate as prescribed by
law is guilty of a misdemeanor, punishable by a fine of not more than $1,000, or six months in
county jail, or both (see Penal Code 19).
b. Elements of the Offense
Illegally practicing or offering to practice a business without a
required business license
(Bus. & Prof. Code 16240, a misdemeanor)
(1)

A person practiced, OR offered to practice, OR advertised any business,


trade, profession, occupation, or calling, or who used any title, sign,
initials, card, or device to indicate that he was qualified to practice any
business, trade, profession, occupation, or calling;

(2)
That business, trade, profession, occupation or calling is one which a
license, registration, or certificate is required by law; AND

25
(3)
That person did not hold the requisite current and valid license,
registration, or certificate.

3. Immigration Consultants Act (Bus. & Prof. Code 22400 et seq.)


a. Provisions and Applicability to UPL
The single most common form of unauthorized practice of law in California today
involves the activities of immigration consultants or others seeking to assist recent immigrants to
this country with their legal status. Thus activities constituting UPL often raise issues of
potential violations of the Immigration Consultants Act (ICA), found in Bus. and Prof. Code
22440-22448), which governs the activities of immigration consultants in California.
Originally enacted in 1986, the Immigration Consultants Act recognized a new class of
service providers called immigration consultants who were to provide assistance to the
millions of persons who sought to take advantage of the Federal governments sweeping
amnesty program then briefly in existence.
Under the ICA an immigration consultant is defined as a person who gives nonlegal
assistance or advice on any immigration matters. (22441.) The ICA specifically limits the
scope of work for immigration consultants solely to non-legal matters. Assistance is confined to
helping persons complete INS forms, translating their answers to questions on the forms,
submitting completed forms to the INS, and making referrals to those who are qualified to
perform legal tasks. (Id.) The ICA specifically prohibits immigration consultants from practicing
law, and even from advising persons concerning their answers on the INS forms. (22440(a).)
The ICA imposes a number of specified obligations on immigration consultants. An
immigration consultant is required to conspicuously display a notice in English and in the native
language of his clients, which notice includes the consultants name, address, proof of bond with
its number, and a statement that the consultant is not an attorney. (22442.2.)
The consultant must have a written contract in English and in the clients native language
specifying the services the consultant will perform, describing fees to be charged, and providing
notification that the client can rescind the contract within 72 hours of signing. (22442.) The
consultants contract must state clearly and conspicuously that the immigration consultant is not

26
an attorney. (22442.2.)
Immigration consultants are required to obtain and maintain a $50,000 bond which may
be access by clients in cases of wrongdoing (22443.1). The consultants must keep copies of
client documentation and forms for at least 3 years (22443(b)), but are prohibited from retaining
original documents belonging to the client. (22443(c).)
An immigration consultant cannot translate documents or advertisements in
a way that misleads the client or implies to the client that he is are an attorney. (22442.)
The ICA has been strengthened through legislative amendment numerous times in recent
years, often at the initiation of this Office. Misdemeanor criminal sanctions are now imposed for
the following violations:
Failure to provide a client with a written contract (22442(a));
Failure to conspicuously display in the office adequate notice, in the language of the
consultants clients, providing phone and address, that the consultant has a bond, the bond
number, and that the consultant is not an attorney (22442.2);
Intentionally translating from English into another language word(s) that imply the
consultant is an attorney in any document describing the consultant (22442.3);
Failure to notify the California Secretary of State within 30 days of a change of name,
address, phone number, etc. (22442.4);
Failure to obtain and maintain a $50,000 bond accessible for victims of misconduct
(22443.1); and
Failure to provide a disclosure statement in all advertising that the immigration
consultant is not an attorney (22442.2).
Criminal sanctions and civil remedies under the ICA. First violations of most of the
ICAs misdemeanor provisions are punishable by a fine of between $2,000 and $10,000 as to
each client-victim, or county jail of up to one year, or both (although victim restitution takes
precedence over these fines). (22445(b).) The posting and notification provisions of the ICA
are punishable as misdemeanors only for the second and subsequent offenses. (22445(c).)

27
Second and subsequent offenses other the posting and notification offenses are punishable as
felonies. (22445(c) (Certain practices prohibited by the ICA are characterized only as
unlawful, and do not appear to have criminal sanctions (see, e.g., misrepresentations regarding
special influence with the INS, 22444). These practices would, however, trigger civil remedies
under the Unfair Competition Law, infra.)
The ICA also provides substantial civil remedies. Civil lawsuits may be brought by any
person injured by violations under the Act, and a civil penalty of up to $100,000 may be imposed
for each violation. (22445). Victims may also seek injunctive relief or damages, or both. A
court may award actual damages, treble damages, and reasonable attorneys fees and costs.
(22446.5) Prosecutors should be alert for circumstances where these remedial alternatives are
applicable, as these alternatives may be of special value for victims in cases where criminal
prosecution is not viable or appropriate.
b. Elements of the Offense
The elements of the numerous distinct misdemeanor offenses of the Immigration
Consultants Act are provided in the sample jury instructions in chapter VII (Models and
Forms).
4. False or Misleading Statements in an Immigration Matter (Penal Code 653.55)
a. Provisions and Applicability to UPL
Unscrupulous immigration consultants often file unnecessary INS paperwork and charge
their clients knowing these papers are improper and cannot yield the promised results. Obtaining
money based on misleading promises of this kind such as filing asylum papers for a victim
from a country not eligible for asylum status can also be addressed by charging a violation of
recently enacted Penal Code section 653.55. This misdemeanor statute should prove to be a
useful additional tool to punish misleading material statements made in connection with
immigration assistance.
Section 653.55 generally prohibits the making of false or misleading material statements
detrimentally relied upon by those seeking assistance with immigration matters. Specifically the
new law provides:
It is a misdemeanor for any person for compensation to knowingly make a
false or misleading material statement or assertion of fact in the

28
preparation of an immigration matter which statement or assertion is
detrimentally relied upon by another.
Violation of section 653.55 is a misdemeanor punishable by imprisonment in the county jail not
exceeding six months, or by a fine not exceeding $2,500, or both.
b. Elements of the Offense
False or misleading statements in an immigration matter
(Penal Code 653.55, a misdemeanor)
(1)

A person made a false or misleading statement or assertion in the


preparation of an immigration matter;

(2)

That person received compensation for the services performed in


the preparation of the immigration matter;

(2).

That person knew the statement or assertion was false or


misleading; AND

(3)
The false or misleading statement was detrimentally relied upon by
another.
5. False Advertising (Bus. and Prof. Code 17500 et seq.)
a. Provisions and Applicability to UPL
Any non-attorney, or attorney no longer entitled to practice law, who advertises or holds
himself or herself out as a lawyer or as practicing law violates Californias false advertising
statute, Business and Professions Code section 17500. This section provides, in pertinent part:
It is unlawful for any person, firm, corporation or association, or any employee
thereof, with intent directly or indirectly to dispose of real or personal property or
to perform services...to make or disseminate...any statement which is untrue or
misleading, and which is known, or which by the exercise of reasonable care
should be known, to be untrue or misleading.

29
Any non-attorney or former representing in any manner that he/she is a lawyer, on
business cards, stationary, signs, billboards, or in advertisements, including those in telephone
books, is violating the false advertising law. Section 17500 is governed by the capacity to
deceive legal standard, meaning that there is a violation of law if the advertisement or statement
has a tendency or capacity to deceive or confuse the public. (Committee on Childrens Television
v. General Foods (1983) 35 Cal.3d 197, Fletcher v. Security Pacific National Bank (1979) 23
Cal.3d 442, Chern v. Bank of America (1976) 15 Cal.3d 866, 876.) It is necessary only to show
that members of the public are likely to be deceived. Committee on Childrens Television,
supra, at 211. It is not necessary to prove intent to defraud, reliance, or actual injury in such
cases (id.), greatly reducing the prosecutors proof burden in contrast to most other fraud
offenses. And industry customs or practices are not a defense to a false advertising allegation,
rendering ineffective the common defense that no one is deceived because everyone says this
in the particular industry. (People v. Cappuccio (1988) 204 Cal. App. 3d 750.)
The untrue or misleading statements under section 17500 can take the form of affirmative
misrepresentations or indirect deception by statements or inferences which omit material facts
necessary to avoid misleading the consumer. For instance, appropriating the symbol for scales
of justice, or use of the statement Law Offices, on business cards, without any further
clarification about whether anyone employed in the business is in fact a licensed attorney, may
convey the impression that a licensed attorney works in that office. The California Supreme
Court has declared: [w]here, in the absence of an affirmative disclosure, consumers are likely to
assume something which is not in fact true, the failure to disclose the true state of affairs can be
misleading and thereby a violation of law. (Ford Motor Dealers Association v. DMV (1982) 32
Cal.3d 347, 363-364). If the overall impression of the words, pictures or format of an
advertisement has the capacity to deceive, the advertisement violates section 17500, as well as its
companion statute, the Unfair Competition Law, Business and Professions Code section 17200,
detailed below (see Committee on Childrens Television, supra).
Knowledge element for criminal violations. Section 17500 requires that the
misrepresentation be one "which is known, or which by the exercise of reasonable care should be
known to be untrue or misleading." This provision requires some proof of mens rea, and thus
"[t]his section proscribing...misleading statements does not impose strict criminal liability."
People v. Regan (1979) 95 Cal.App.3d Supp. 1. However, the legal standard of know or
should have known is substantially less burdensome for prosecutors than a minimum
requirement of actual knowledge.
Even in the misdemeanor context, the acts of employees can visit liability on corporation,

30
although for individual defendants to incur liability, some evidence of individual participation or
knowledge of the subordinates' acts is required. (People v. Toomey (1984) 157 Cal.App.3d 1,
15.) (In this context, the prosecutor should also consider also the possible allegation of
conspiracy to misrepresent, see, e.g, People v. Bestline (1976) 61 Cal.App.3d 879, 918.)
However, the defense claim that a violation involved only "low level" employees was held
meritless in Dollar Rent-A-Car, supra. And the owner/president of car dealership was held
criminally liable for misrepresentations by salesmen in People v. Conway (1974) 42 Cal.App.3d
875. Thus businesses or corporations engaged in UPL activities -- and their operators or
principals -- may be subject to false advertising liability, including potential criminal sanctions,
if their employees or staff misrepresent the nature of their work or their entitlement to practice
law.
b. Criminal Sanctions and Civil Remedies for False Advertising
False advertising is a misdemeanor, punishable by a fine up to $2500 and by up to six
months in county jail.
The civil remedies under section 17500 (and the Unfair Competition Law) are potent, and
may be even more effective than criminal sanctions in certain contexts. Section 17536 provides
for:
Civil penalties of up to $2500 "per violation" are available, but only to public
agencies. A "per victim" test is applied, permitting substantial aggregation of penalties. Under
Sec. 17534.5, penalties are cumulative of all penalties and remedies of other laws. (Toomey,
supra, at 22). Six factors are used in assessing penalties. (17536.)
Injunctive relief, including permanent injunctions entailing both prohibitory and
mandatory injunctive terms (17535),
Restitution for any money or property taken by means of false advertising (see
Children's Television, supra, 35 Cal.3d at 215), but damages other than restitution may not be
recovered, Bank of the West v. Superior Court (1992) 2 Cal.4th 1254.
Costs for specified public agencies may be recovered under section 17536.
c. Elements of the Offense

31
False advertising
(Business and Professions Code section 17500, a misdemeanor)
(1)

A person made an untrue or misleading statement;

(2)

The statement was made in connection with the sale or lease


of goods or services;

(3)

The statement was made in circumstances where the suspect


knew or should have known that the statement was untrue
or misleading.

Consultation with the Consumer Protection Division (213-580-3273) may be appropriate


when considering a criminal false advertising charge, and is required before proceeding with a
civil false advertising case.
6. Unfair Competition (Bus. & Prof. Code 17200 et seq.)
a. Provisions and Applicability to UPL
A non-attorney or a former attorney who practices law or advertises or holds himself or
herself out as entitled to do so violates Californias broad-scale Unfair Competition Law (UCL),
Business and Professions Code section 17200. Although not a criminal statute, the UCL
provides powerful civil remedies (including permanent injunctions, restitution, and large civil
penalties) and is thus a useful adjunct or alternative form of enforcement in particular business
circumstances.
Section 17200 prohibits unfair competition, defined as an unlawful, unfair or
fraudulent business act or practice, and any unfair, deceptive, untrue or misleading advertising.
(17200.) (See generally Barquis v. Merchant Collection Association (1972) 7 Cal.3d 94, 113;
People v. McKale (1979) 25 Cal.3d 626; Saunders v. Superior Court (1994) 27 Cal.App.4th 832,
839.) By its specific terms, the UCL is also triggered by any act violating Californias false
advertising law, Business and Professions Code section 17500, described above.
Of particular relevance here is the UCLs prohibition against unlawful business
practices. The California Supreme Court has held that this provision applies to anything that
can properly be called a business practice and that at the same time is forbidden by law. (People
v. McKale (1979) 25 Cal.3d 626, 632; Barquis v. Merchants Collection Assn. (1972) 7 Cal.3d 94,

32
111-112.) Thus, a criminal violation of Business and Professions Code sections 6125 and 6126
will generally also trigger civil liability under section 17200 as it is both a business activity and it
is proscribed by law. The only defense to an allegation of an unlawful business act or practice
based upon a violation of another law is that the underlying law was not violated (Hobby
Industry Assn. Of America. Inc. v. Younger (1980) 101 Cal.App.3d 358, 372). With specific
reference to UPL, the California court of appeals has recently held that misrepresentations
regarding entitlement to practice law and the improper legal activities of non-lawyers violate
section 17200. (People v. Fremont Life Ins. Co. (2002) 104 Cal. App. 4th 508 (permanent
injunction and $2.5 million in civil penalties and restitution upheld in living trusts case).)
By its own language, section 17200 includes any act which violates the false advertising
laws defined in section 17500 and discussed above. Thus, both violations of the unfair
competition statute and the false advertising statute trigger exposure to legal remedies that
include substantial civil penalties, costs, and injunctive relief.
b. Civil Remedies for Unfair Competition
The Unfair Competition Law provides only civil remedies for unlawful, unfair, or
fraudulent business acts or practices, but these remedies are potent. Like the false advertising
statute, Business and Professions Code section 17200 provides for:
Civil penalties of up to $2500 "per violation" are available for public agency
enforcement actions. (17206.) A "per victim" test is applied, permitting substantial aggregation
of penalties. Under Sec. 17205, penalties are cumulative of all penalties and remedies of other
laws. (Toomey, supra, at 22). Six factors are used in assessing penalties. (17206.) Civil
penalties under these statutes are mandatory, in an amount determined by the court, once a
violation of the statute has been established in a public enforcement action. (People v. National
Association of Realtors (1984) 155 Cal.App.3d 578.). The civil penalties of sections 17500 and
17200 are cumulative.
Injunctive relief (17203) including permanent injunctions entailing both prohibitory
and mandatory injunctive terms,
Restitution for any money or property taken by means of false advertising (see
Children's Television, supra, 35 Cal.3d at 215), but damages other than restitution may not be
recovered, Bank of the West v. Superior Court (1992) 2 Cal.4th 1254.

33
Costs for specified public agencies may be recovered under section (17206.)
Consultation with the Consumer Protection Division (213-580-3273) is required before
proceeding with a civil unfair competition action, and most such cases will be referred to CPD
for investigation and litigation.
7. State Bar Ethical Standards and Related Rules and Statutes
State Bar ethical rules and related California Rules of Court and statutes also establish
ethical and legal prohibitions applicable to the unauthorized practice of law. Although local
prosecutors do not enforce most of these prohibitions directly, facts revealed in UPL
investigations may often call for appropriate referral of findings to the State Bar disciplinary
system. In addition, certain provisions of the Business and Professions Code carry criminal
sanctions for attorney and non-attorney conduct violating California norms of professional
practice.
The full range of these standards is beyond the scope of this manual, but a selected few of
these applicable standards include:
Improper fee sharing between attorneys and non-lawyers (see, e.g.,
Professional Conduct 1-320: Financial Arrangements with Non-Lawyers);

Rules of

Standards governing the conduct of legal service programs utilizing non-attorney


personnel (Rules of Professional Conduct 1-600: Legal Service Programs);
Business and Professions Code sections 6151-6152 prohibiting acting as a runner or
capper soliciting or procuring business for an attorney, including paralegals acting in that illegal
capacity as prohibited by Business and Professions Code section 6450(b).
Cal Rules of Court, Rule 955, which imposes duties on disbarred, resigned, or
suspended attorneys, including: notification of clients; return of client papers and property; and
notices to opposing counsel. (Sanctions include contempt of court and criminal sanctions, see
Bus. & Prof. Code 6126(c), supra.)

that a lay person, while allowed to represent himself or herself, may not
represent the interests or rights of anyone else. The court held that the statue
does not permit artificial entities, such as corporations, partnerships,
associations, LLCs, trusts or estates to prosecute or defend in federal court
except through an attorney, admitted to practice in that particular court. The
BAP cited a number of authorities in support of its ruling including Rowland v.
Cal. Mens Colony, 506 U.S. 194, 201-202 (1993), where the Supreme Court
stated: It has been the law for the better part of two centuries that a
corporation may appear in the federal courts only through licensed counsel. As
the courts have recognized, the rationale for that rule applies equally to all
artificial entities the lower courts have uniformly held that 28 U.S.C. 1654,
providing that parties may plead and conduct their own cases personally or by
counsel, does not allow corporations, partnerships or associations to appear in
federal court otherwise than through a licensed attorney.
As to the receivers contention that he was appearing as an individual, the court
dismissed that argument because, as an individual, the receiver had no
personal claim against the debtors. The receiver was not advocating his
personal rights, but was acting in a representative capacity on behalf of the
receivership estate of the LLC. Because the LLC could not appear in federal
court, except through counsel, neither could the receiver. The receiver argued,
in addition, that his position as receiver was analogous to that of a trustee of
an estate. The BAP held, however, that if a trustee is not a licensed attorney he
too lacks the legal capacity to appear and represent an estate in federal court,
citing a number of authorities including 9th Circuit and California district court
opinions to that affect. These cases state a party may only represent
themselves where they are representing themselves alone, asserting their own
personal rights or interests exclusively. If an individual purporting to appear
pro se is not the actual beneficial owner of the claims being asserted, they are
not viewed as a party conducting their own case personally within the
meaning of the statute, Alpha Land Company v. Little, 238 F.R.D. 497 (E.D.
Cal. 2006).
Import of the Decision
While this decision comes from the Tenth Circuit its reasoning appears sound. It
has long been the rule in the district and bankruptcy court that only individuals
can represent themselves without an attorney. The decision merely applies this
long standing rule to a receivership estate, and arguably a bankruptcy estate,
both artificial entities. Whether the district courts and bankruptcy courts in
California will follow the decision, and possibly apply it to bankruptcy trustees,
remains to be seen.
The BAP seemed to feel that if the receiver had been an attorney himself, he
would have been permitted to appear and file pleadings on behalf of the
receivership estate. While the BAP may have allowed this, the fact that a
receiver or a bankruptcy trustee is also an attorney should not empower them
to appear on behalf of an estate in federal court unless they have been
employed, by either the receivership or the bankruptcy court, to act as an
attorney in the case. Generally, receivers and bankruptcy trustees, while they
may be attorneys, are not acting in that capacity, and they are not
compensated as attorneys.
Both state court rules and bankruptcy rules allow receivers or trustees to be
employed as counsel for the estate, although bankruptcy courts are often
reluctant to allow a trustee to act as counsel in the case. It appears, therefore,
the best course of action for receivers and bankruptcy trustees, when filing
pleadings or appearing in district or bankruptcy court (which is merely a
division of the district court) is to employ counsel for such purposes. Failure to
do so may not only result in the pleading or complaint being stricken, but could
subject the receiver to criminal liability for the unauthorized practice of law.

particular matter; such representation is not the person's primary duty to the legal entity, but
secondary or incidental to other duties relating to the management or operation of the legal entity;
and the person is not receiving separate or additional compensation (other than reimbursement for
costs) for such representation.
14. If the amount in any single dispute before the State Board of Tax Appeals is less than
twenty-five thousand dollars, a taxpayer may be represented in that dispute before the board by a
certified public accountant or by a federally authorized tax practitioner, as that term is defined in
A.R.S. 42-2069(D)(1).
15.Nothing in this rule shall affect the ability of nonlawyer assistants to act under the
supervision of a lawyer in compliance with Rule 5.3 of the rules of professional conduct.
16.Nothing in these rules shall prohibit the supreme court, court of appeals, or superior
courts in this state from creating and distributing form documents for use in Arizona courts.
17.Nothing in these rules shall prohibit the preparation of documents incidental to a
regular course of business when the documents are for the use of the business and not made
available to third parties.
18.Nothing in these rules shall prohibit the preparation of tax returns.
19. Nothing in these rules shall affect the rights granted in the Arizona or United States
Constitutions.
20. Nothing in these rules shall prohibit an officer or employee of a governmental entity
from performing the duties of his or her office or carrying out the regular course of business of
the governmental entity.
21. Nothing in these rules shall prohibit a certified document preparer from performing
services in compliance with Arizona Code of Judicial Administration, Part 7, Chapter 2, Section
7-208.
Arkansas
Arkansas Bar Association v. Block, 323 S.W.2d 912 (1959).
Research of authorities by able counsel and by this court has failed to turn up any clear,
comprehensible definition of what really constitutes the practice of law. Courts are not in
agreement. We believe it is impossible to frame any comprehensive definition of what constitutes
the practice of law. Each case must be decided upon its own particular facts.--The practice of law
is difficult to define. Perhaps it does not admit of exact definition.
California
People v. Merchants Protective Corp., 209 P.363, 365 (1922)
'As the term is generally understood, the practice of the law is the doing or performing services in
a court of justice, in any matter depending therein, throughout its various stages, and in
conformity to the adopted rules of procedure. But in a larger sense it includes legal advice and
counsel, and the preparation of legal instruments and contracts by which legal rights are secured
although such matter may or may not be depending in a court.' Quoting In the case of Eley v.
Miller, 7 Ind. App. 529, 34 N. E. 836.
Baron v. Los Angeles, 2 C.3d 535, 86 C.R. 673, 469 P.2d 353 (1970).
(T)he Legislature adopted the state bar act in 1927 and used the term 'practice law' without
defining it. [FN7] The conclusion is obvious and inescapable that in so doing it accepted both the
definition already judicially supplied for the term and the declaration of the Supreme Court (in
Merchants') that it had a sufficiently definite meaning to need no further definition. The definition
above quoted from People v. Merchants' Protective Corp. has been approved and accepted in the
subsequent California decisions (citations), and must be regarded as definitely establishing, for
the jurisprudence of this state, the meaning of the term 'practice law." (People v. Ring (1937)
supra. 26 Cal.App.2d Supp. 768, 772, 70 P.2d 281, 283.)

-5-

Exhibit D

Exhibit D

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