The Wall Street Journal - April 21, 1998
by Richard B. Schmitt
For years, the public has used consumer-protection laws to fight
unscrupulous business practices by used-car salesmen and mail-order
vendors.
But soon consumers could have a new target: lawyers.
In Illinois, the daughter of a woman with Alzheimer's disease
has gone to court against a lawyer who allegedly overbilled her mother
by $40,000. The suit contends that by sending out inflated bills, the
lawyer not only committed malpractice but also violated the state's
tough consumer-protection law.
The case of 85-year-old Roberta Schmitz, which is headed to
Illinois's highest court, raises a novel question: Should lawyers and
other professionals be subject to the same laws as car dealers and
home-improvement contractors?
In several places, including Washington state, clients can
already sue lawyers under state business laws more easily than before.
If the Schmitz suit succeeds in Illinois, the case, along with several
others percolating nationally, could redefine how lawyers are
regulated.
"The idea that lawyers should be above a law that applies to
every other business person is patently absurd," contends James
Turner, executive director of HALT, a Washington-based group that
focuses on consumer-oriented legal issues and has filed court papers
in support of the Schmitz suit.
Consumer-protection cases are unusually plaintiff-friendly.
Unlike standard malpractice cases, they offer the possibility of large
punitive damages. In contrast with fraud cases, they don't require
clients to prove that their lawyers intended to deceive them - only
that they were given misleading information or otherwise unin-
tentionally misled. As a further incentive, the laws generally require
defendants to pay consumers' legal fees if the consumers win in court.
In Illinois, the 35,000-member State Bar Association opposes the
Schmitz suit, arguing that using the consumer-protection law, against
lawyers would interfere with the state's lawyer disciplinary system,
which regulates the practice of law in
Illinois.
"This is a question of reasonable public policy-making," says
Dennis Rendleman, the association's general counsel, adding that the
bar group isn't taking a position on the merits of the Schmitz claim.
"Who calls the balls and strikes?"
But proponents of broadening consumer-protection laws say the
current system is stacked in favor of lawyers. In 1997, only 117 of
the more than 4,000 attorneys investigated by Illinois disciplinary
authorities were sanctioned or disbarred.
Traditionally, lawyers, doctors and clergymen haven't had to
worry about suits alleging unfair or deceptive business practices
because courts deemed them members of "learned professions," subject
to different ground rules. The landscape started changing in the late
1970s, after the U.S. Supreme Court ruled that lawyer's could be sued
for violating antitrust laws in a case challenging a minimum fee
schedule set up by the Virginia bar.
In recent years, states have stripped away other protections.
Two years ago, the Supreme Court of Connecticut held that doctors
could be sued under that state's consumer-protection law for
"entrepreneurial" activities, including competing for patients.
Mrs. Schmitz's ordeal began in 1992, when her husband died,
leaving her two trusts valued at nearly $600,000. She hired Thomas
Leiter, a lawyer in Peoria, III., who over about two years billed
$65,000 in fees. The suit contends that about $40,000 of that sum was
excessive or fraudulent.
David Sinn, an attorney for Mr. Leiter, denies that his client
overbilled anyone and says Mr. Leiter got caught in the middle of an
acrimonious family feud over control of the trust money.
"Tom had to do a tremendous amount if hand-holding," and
research "all kinds if esoteric legal questions," he says, adding that
Mr. Leiter also fought off an early attempt by certain family members
to have Mrs. Schmitz declared incompetent.
Eventually, a court in Michigan, where Mrs. Schmitz now resides,
determined that she was incapable of handling her affairs; a doctor
had found her easily manipulated. A daughter of Mrs. Schmitz was
appointed guardian, and she sued Mr. Leiter soon afterward.
Bradley McMillan, the daughter's lawyer, had never sued a fellow
attorney before and knew about the consumer-protection law primarily
from a defense angle, having previously represented insurance
companies. "It just seemed very logical" that the law's ban on
deceptive practices would apply to lawyers, he says.
In court papers, Mr. Leiter is accused of inadequately
documenting his bills and including false information about the number
of hours he worked. A separate suit against a bank that administered
the trusts-and paid Mr. Leiter-was recently settled.
In 1996, a trial court dismissed the consumer-protection claim
against the attorney. But last July, the ruling was overturned by an
appeals court, which found no reason to exempt the "business aspects"
of law from regulation under the consumer law. "The only skills
required in billing," the court concluded, "are the ability to tell
time." The state supreme court is expected to hear Mr. Leiter's appeal
of that decision this spring.
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