by J. Brooks Terry
Staff Writer
A new model definition of “the practice of law” was proposed by the American Bar Association last week. While, in theory, refining what services are required of legal counsels, non-attorneys say that the statute could potentially block real estate brokers from engaging in several routine home sales activities.
The Federal Trade Commission and the U.S. Department of Justice Antitrust Division, in a letter to the ABA, claimed that the proposed model, while not a law, could be interpreted in a way that would prevent non-attorneys from closing real estate loans or even explaining state smoke detector or termite extermination laws in their own states. Additionally, claims were made that the statute would even prohibit the sale of will writing and other law-related programs by software companies.
Bill Ryan, a real estate attorney at Ryan and Marks — a firm that handles more than 1,000 loan closings annually — speculated that the statute may have been issued in reaction to larger companies attempting to control the entire chain of real estate supply.
“What we’ve seen over the past 25 years in Florida,” said Ryan, “is non-lawyers performing functions that had been traditionally reserved for attorneys. Larger builders today may own the mortgage company, the title company and, in some cases, even own the pest control company. These enterprises may be expanding into too many areas.”
Ryan, a Jacksonville native who has been practicing for 31 years, said while an attorney may be more qualified in some areas, including contractual negotiations, he doesn’t support a mandate limiting the public’s right to choose. He claimed that some of his clients have previously dealt with non-lawyers in the past and have walked away with negative feelings.
“Maybe it makes me a dinosaur,” said Ryan, “but I would like to see everyone maintain their own separate and established roles. I don’t think there should be any sort of mandate, however. Competition is good.”
Kim Smith, a realtor for Coldwell Banker, said many people like the idea of being able to accomplish a lot by only going to one office. Coldwell Banker is a subsidiary of the Cendant Corporation, which also owns Century 21 and ERA real estate brokerages.
“Actually,” said Smith, “a lot of buyers and sellers appreciate being able to do one-stop shopping. Today, a closing can be wrapped up in 30 days and people want to move forward quickly from there. Not only that, if a buyer feels comfortable with one particular company, that can be advantageous to everyone.”
R. Hewitt Pate, the acting U.S. assistant attorney general for the Antitrust Division, said that if passed by state governments, the model definition could be held accountable for legal service prices increasing.
“Those who would not pay for a lawyer would be forced to do so, and traditionally lawyers charge more than lay providers for such services,” said Pate. “Without competition from non-lawyers, lawyers’ fees are likely to increase.”
Ryan and Smith both agree that a rise in the cost of legal services could be possible.
Kathie Kearney, a realtor at Coldwell Banker, said more than just a rise in costs could be attributed to the statute.
“If something like that became mandatory, without a doubt you would see much longer turn around times,” she said. “In a business like real estate, working in a timely manner is everything. In fact, our contracts read, ‘time is of the essence,’ right above where you sign. If a buyer doesn’t act fast, they can run the risk of losing out on an excellent opportunity. I don’t think something like this is in the best interest of the buyer at all.”
An ABA task force will hold a hearing Feb. 7 on the proposed definition.