Archive for March, 2012


Friday, March 30th, 2012


By David Kramer |


In O’Bannon v. Allen, 337 S.W.3d 662 (Ky. App. 2011) (, the Kentucky Court of Appeals, in an opinion authored by Judge Michelle Keller, upheld a trial court’s order dismissing a professional negligence action for improper venue where the plaintiff sued in the county where the patient experienced harm rather than the county where the allegedly negligent medical treatment occurred. In O’Bannon, the plaintiff had received narcotic prescriptions in Ohio County, then went home to Muhlenberg County where he abused the drugs and ultimately suffered a fatal overdose. The family brought suit in their home county of Muhlenberg and claimed the defendant physician was notified twice that the patient was abusing the drugs and negligently failed to stop him from refilling the prescriptions. The trial court dismissed, finding that Ohio County was the proper venue. The Court of Appeals affirmed, holding that the trial court had correctly applied the Kentucky venue statute for personal injury, KRS 452.460(1), which requires a suit for personal injury to be brought “in the county where the defendant resides, or in which the injury is done.”


The decision did not mention the venue transfer or “savings” statute, KRS 452.105, which was enacted in 2000, and which requires a trial court on motion to transfer the action to a proper venue for the action rather than dismissing it.


David Kramer is a Northern Kentucky attorney practicing at Dressman Benzinger LaVelle psc.


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Oklahoma Considers Bill To Ban Lawsuit Financing

Thursday, March 29th, 2012





OKLAHOMA CITY (Legal Newsline) – A year after the lawsuit financing industry tried to have its legislative agenda passed in nine states, a bill that would ban the practice is pending in the Oklahoma Senate.


Oklahoma Senate Bill 1780 would make it against the law for a company to make a loan to a plaintiff that would be paid back from settlement funds or a jury award. It would apply to any case pending in an Oklahoma state court or any federal court in the state.


The bill makes lawsuit financing a violation of the Consumer Protection Act.


“I think a ban on some of the practices we’re seeing around the country is an appropriate measure to take,” said Thurbert Baker, the former attorney general of Georgia. “It’s very difficult to contain a lot of the problems we’re seeing around the country with lawsuit lending.”


Baker, a Democrat who was a state lawmaker before becoming AG and now works at McKenna Long & Aldridge, says a previous agreement between the industry and former New York Attorney General Eliot Spitzer did little to curtail abuses in the industry.


In lawsuit financing agreements, a plaintiff is given an amount usually between $500 and $5,000 with the promise of paying the company back with funds from a settlement or jury award. If the plaintiff loses, nothing is owed.


Critics say it encourages frivolous lawsuit and jeopardizes the integrity of the judicial system, while proponents say it helps plaintiffs handle everyday expenses in tough times.


“The interest rates are certainly first and foremost,” Baker said. “What we’re seeing in lawsuit lending, the lenders are coming in and charging exorbitant rates to those who take them up on their offer.


“And in many instances, those rates are not regulated and do not fall under the lending laws of that state. They are usurious in nature.”


Eric Schuller, the director of government and community affairs at Oasis Legal Finance, said bills proposed last year would have addressed those concerns. The amount a consumer would have to pay back would be capped after three years in those bills, he said.


Schuller was in Oklahoma on Tuesday to fight the bill. He complained that Oasis didn’t know about the bill until it unanimously passed the Senate Judiciary Committee in late February, though he said it was premature to say if it would be grounds for a challenge to the bill if it passes.


“If the bill does come out of the senate, and then go over to the house, then we will have the proper opportunity to have an honest discussion on the merits of the bill,” Schuller said. “There needs to be proper hearings on the situation.”


Schuller said he agrees that there are some problems within the industry, starting with companies that intervene between the client and its attorney in litigation. He said the agreements are not loans because there is no guarantee of repayment.


The industry’s bill was introduced last year in Alabama, Arkansas, Indiana, Kentucky, Maryland, Nevada, New York and Tennessee.


Baker said even trial lawyers are concerned about the industry, pointing to a case in South Carolina when a plaintiff refused a settlement offer on the advice of the lender and proceeded to trial, only to lose.


“Those are the kinds of problems we see when third-party lenders get in the middle of privileged lawyer-client relationships and somehow or another affect the outcome of a case,” Baker said. “Trial lawyers can see that as a problem.”


The bill was authored by Republican Sen. Brian Crain, who did not return a message seeking comment.


“It’s the first this issue has come up here,” Schuller said. “We’ve had no complaints here, no complaints from the Attorney General’s Office or anywhere. It’s a solution looking for a problem.”


Baker doesn’t see it that way. He says every state legislature should be taking a look at the industry, and that he’ll be talking on a number of panels on the issue in the next year.


“Obviously the industry would like to have a piece of legislation that authorizes their practice in a particular state,” Baker said. “In all of these states – and we’ll probably see more of this – it is very questionable whether or not they can actually engaged in that lending practice.


“The effort seems to be to authorize and legitimize their practices in states they introduce their legislation.”


Baker spoke about the industry at the U.S. Chamber of Commerce Institute for Legal Reform Summit last year and passed out a white paper detailing the ILR’s concerns with the industry at a meeting of the American Bar Association.


The ILR owns Legal Newsline.


From Legal Newsline: Reach John O’Brien by e-mail at



Tuesday, March 27th, 2012


Huffington Post Politics

Jamin Raskin American University Law Prof, MD State Senator, People For the American Way Senior Fellow

Segall, a professor of constitutional law at Georgia State University, has just written a provocative book called Supreme Myths: Why the Supreme Court Is Not a Court and Its Justices Are Not Judges. The thesis is that the Supreme Court, unbound by any court above it, unfastened by the vagueness of constitutional text, and uninhibited by the gift of life tenure, operates like a freewheeling political “veto council” and not like any court that we would recognize as doing judicial work. Professor Segall challenges the legitimacy of the Court’s decisions and essentially mounts an attack on the whole institution of constitutional judicial review except where the text of the Constitution is perfectly plain and clear.

It is easy to share Professor Segall’s exasperation these days, but his argument is not wholly convincing. It understates how often our other courts–federal appeals and district courts and state courts–operate in a political vein and how often they too find themselves in deep ideological conflict. It also understates how clear, coherent, and logical the Warren Court was when it interpreted even vague constitutional language, like “equal protection” or “freedom of speech.” Yet, Segall’s clarion call to roll back judicial review today will be read by conservative judges as an invitation to negate and undo essential lines of doctrinal development that began in the Warren Court, especially the “right to privacy” decisions under Due Process, like Griswold v. Connecticut and Roe v. Wade, which Professor Segall in no uncertain terms asserts were wrongly decided.

The claim that the Supreme Court is “not a court” distracts us from what is truly at issue today. The Supreme Court is a court alright–indeed, it is the most powerful court in America, perhaps the world, and there’s not much getting around that. It takes cases and controversies, writes opinions that refer to precedents and principles, and operates with the full panoply of constitutional powers reserved to the judiciary. The problem is that it is not a court committed to the rights of the people or to strong democracy unencumbered by corporate power. Indeed, it acts with most energy vindicating the rights of the powerful and the unjust. Alas, this hardly makes it an outlier in American history.

With its 2010 decision in Citizens United, the Roberts-led Court essentially cemented the institution’s return to a class-bound right-wing judicial activism. Just as the Supreme Court went to war against social reform and President Franklin Delano Roosevelt’s New Deal in the 1930s, just as it nullified the meaning of Equal Protection in sanctifying “separate but equal” in Plessy v. Ferguson in 1896, just as it expressed the Supreme Court’s pro-slavery and racist jurisprudence in the Dred Scott decision in 1857, the Citizens United decision secured the contemporary Court’s unfolding legacy as the unabashed champion of corporate power and class privilege.

The 2011-2012 Supreme Court Term

Several cases currently on the Court’s docket will tell us whether the Roberts Court will accelerate its assault on public policies that advance the rights and welfare of the vast majority of “natural persons” in the country. Consider:

Legal War on “Obamacare”: Health Care Reform and the Contractible Commerce Clause: Of course, the blockbuster of the Term is the cluster of cases that the Court is hearing on the constitutionality of Obamacare. There are two principal challenges to the Patient Protection and Affordable Care Act. The first, and certainly the one with the most political traction on the GOP campaign trail, is the claim that Congress has exceeded its Commerce Clause powers by compelling taxpayers to buy themselves health insurance or else pay a penalty in the program. However, the political ubiquity of this claim contrasts sharply with its feather-like legal force. Commerce Clause jurisprudence is replete with cases of Congress regulating national economic policy by compelling individuals to take actions that they would prefer not to take, such as serving customers in their restaurant that they don’t want to serve or recognizing a union in their factory and reinstating workers who they fired for organizing it (see my Report for PFAW Foundation, The True Spirit of the Union: How the Commerce Clause Helped Build America and why the Corporate Right Wants to Shrink It Today, for a detailed accounting).

The ACA comes well within Congress’s broad authority to address issues of national importance that affect the lives of millions of people moving and working in the streams of interstate commerce. Despite recent efforts by conservative Justices to constrict Congress’s powers under the Commerce Clause, the vast majority of lawyers still believe that such powers are expansive and will be upheld even by the Roberts Court. An ABA poll of legal academics, journalists, and lawyers that allowed respondents to remain anonymous showed that fully 85% believe that the Court will uphold the ACA in full, and with a 6-3 vote seen as the most likely outcome. While the Supreme Court in the Citizens United era has been ready and willing to ignore precedent and defy logic in order to achieve its political goals, this law is so mainstream that even they are not expected to do so in this case.

The second challenge, a bit of a sleeper that saw little success in lower courts but now fascinates conservative lawyers, is that Congress has exceeded its powers under the Spending Clause and violated federalism by tying too many strings to federal Medicaid funding and thereby “coercing” states into accepting federal policies. The idea is that Medicaid has grown so big and pervasive that any conditions attached to it constitute a kind of Godfather offer that the states simply cannot refuse. From a doctrinal standpoint, the claim is somewhere between unlikely and silly, which is why no federal law or program has ever been found to unconstitutionally coerce the states under the Spending Clause . Experts in the ABA poll mentioned above predict that this outlandish argument will be rejected in an 8-1 split. A decision to strike down the ACA on this basis would be a stunning development indeed. As with the Commerce Clause issue, a decision to strike down the Medicaid expansion as unconstitutionally coercive would be recognized instantly as an exercise of political will rather than legal judgment.

Of course, should the Court uphold the ACA, as expected by most lawyers, that should not distract anyone from the damage it is doing in other ways, from the constitutional glorification of corporate political power to the continuing erosion of public health, environmental and workplace standards.

Immigration Law: the Arizona Case: Arizona v. United States addresses Arizona’s efforts to develop and enforce an immigration law all its own. The statute in question provides law enforcement officers with the power to arrest someone without a warrant based on probable cause to believe that the person committed a deportable act. It also makes it a criminal offense for an undocumented immigrant to apply for a job without valid immigration papers. This presents a clear case of a law that is preempted by federal laws governing and defining U.S. immigration policy, which is committed by the Naturalization Clause of the Constitution to Congress. This case should offer no dilemma for conservatives on the Court, who almost always side with the Executive branch in preemption controversies relating to national security, police enforcement and immigration law. However, underlying all of the debate is legislation hostile to one of America’s most scapegoated populations, the undocumented, and that political reality may change the legal calculus.

Attack on Labor Unions: From the repressive “labor injunctions” of the late-19th and early 20th-centuries to the Supreme Court’s decisions undermining the right to organize during the New Deal, periods of judicial reaction have always included judicial assaults on the rights of labor to organize unions and fight for their interests. This period is no different, and the Supreme Court has given itself an opportunity, probably irresistible to the five conservative Justices, to take another whack at labor this Term. The case is Knox v. SEIU. It poses the question whether public sector unions must notify members of the union’s political expenditures every time they happen so that employees who pay union agency fees to the union for purposes of collective bargaining only may demand a proportional rebate in advance for political expenditures. Or, alternatively, does it suffice to give an annual budgetary statement with notice of political expenditures and invite the “objectors” to seek a rebate at that point? The case, fairly frivolous on its face, but deadly serious in its political mission and reception on the Roberts Court, is obviously designed to further hobble unions and render them ineffectual political actors. The irony is that, through decisions like Abood v. Detroit Board of Education (1977) and Communication Workers of America v. Beck (1988), the Court has granted muscular rights and powers to dissenting union members that are totally undreamed-of when it comes to dissenting corporate shareholders. Company shareholders who object to corporate political expenditures have no right to a proportional rebate of their corporate shares, much less that they must be told of such corporate treasury political expenditures in advance. While defenders of the Court’s decision in the Citizens United case love to observe that the decision opened the floodgates not just on corporate treasury money but on union treasury money too (as if the two were comparable!), they never follow through and make the obvious point that corporate shareholders should, therefore, enjoy the same rebate rights against “compelled speech” as union members presently enjoy. In any event, the war on unions continues and accelerates, with the Supreme Court poised again to undercut the political effectiveness of public sector labor unions, the last meaningful bulwark of labor solidarity in America.


The Surprising Early Return of College Affirmative Action to the Court: In Fisher v. University of Texas at Austin, the Supreme Court has, surprisingly, decided to review its holding in Grutter v. Bollinger and explore dismantling what remains of affirmative action in the next Term. The 2003 Grutter decision preserved a soft form of affirmative action at the college and university level for young people who belong to racial and ethnic minority groups, but only for a period that Justice Sandra Day O’Connor suggested would be 25 years. Now, just nine years later, the ruling bloc is ominously poised to wipe out affirmative action entirely, a prospect we must judge a rather likely prospect given the Court’s express loathing of progressive race-conscious measures and its brazen disregard for the original meaning of the Fourteenth Amendment, whose framers clearly contemplated such measures. Justices Scalia, Thomas, Alito, and Roberts insist that the Equal Protection Clause compels government to be “color-blind” even if seeks to remedy the effects of historical and continuing racism. This rhetorical gloss is a fundamental distortion of the meaning of the Fourteenth Amendment, whose framers clearly championed race-conscious measures, like the Freedmen’s Bureau, to assist the historical victims of racism. The current project of using the Equal Protection Clause against racial and ethnic minorities seeks to deny any relationship between historical and present-day discrimination and continuing inequalities of opportunity.


The Supreme Court is, of course, still a court, no matter how much certain Justices behave like partisans. Yet, the Court’s ideological politics are in full swing these days as the 5-4 conservative majority fleshes out one-sided doctrines in areas from corporate political rights to corporate commercial speech rights to affirmative action to Congressional power to union rights. This is a Court that almost always chooses corporate power over democratic politics and popular freedoms. In a Court of logic and precedent, a Court without aversion to the channels of popular democracy, the challenge to Obamacare would be a total non-starter. But here we are again, waiting to see whether the Court will follow the path of justice or the path of power.




Tuesday, March 27th, 2012

Thursday, April 5, in Memorial Hall the UK College of Law is sponsoring  a conversation with Justice Clarence
Thomas, UK Law Professor Stephen Clowney, and ABA President Wm. T. (Bill) Robinson III.


Tuesday, March 27th, 2012

Recently the Montana Supreme court dissolved the Montana Supreme Court Commission on the Unauthorized Practice of Law. In the opinion the court reasoned that under the Montana Constitution the court never had any authority to regulate the unauthorized practice of law. The Ruling said that regulation of non-lawyers is an Executive Branch function.


Rules governing jurisdiction, personnel, procedure, bar membership.

The Supreme Court shall have the power to prescribe rules governing its appellate jurisdiction, rules for the appointment of commissioners and other court personnel, and rules of practice and procedure for the Court of Justice. The Supreme Court shall, by rule, govern admission to the bar and the discipline of MEMBERS OF THE BAR.

Text as Ratified on: November 4, 1975, effective January 1, 1976.

History: Repeal and reenactment proposed by 1974 Ky. Acts ch. 84, sec. 1; original version ratified August 3, 1891, and revised September 28, 1891.

This language in the Kentucky constitution suggests that the Kentucky Supreme Court cannot regulate non-members of the bar association. Therefore the authority of the Ky. Supreme Court to regulate the conduct of non-lawyers is a relevant question yet undecided in Kentucky.


Section 2. Supreme court jurisdiction. (1) The supreme court has appellate jurisdiction and may issue, hear, and determine writs appropriate thereto. It has original jurisdiction to issue, hear, and determine writs of habeas corpus and such other writs as may be provided by law.

(2) It has general supervisory control over all other courts.

(3) It may make rules governing appellate procedure, practice and procedure for all other courts, admission to the bar and the conduct of its members. Rules of procedure shall be subject to disapproval by the legislature in either of the two sessions following promulgation.

(4) Supreme court process shall extend to all parts of the state.

The Kentucky Judicial Article appears to be limited to the conduct of “Members of the Bar” and does not apply to non-lawyers who sell legal forms etc. The reasoning of the Montana Supreme Court seems to provide a strong basis for non-members of the KBA to challenge regulation of their activities by the Supreme Court.

Two Kentucky Supreme Court Rules discuss the unauthorized practice of law grants to itself the right to regulate the unauthorized practice of law. That self-created right appears to conflict with Section 116 of the Kentucky Constitution. Other states such as Montana now take the position that regulation of non-lawyers is an Executive Branch function under laws passed by the Legislature. The Kentucky Constitution does not state that the Courts may amend the Ky. Constitution.

KY SCR 3.020 Practice of law defined

The practice of law is any service rendered involving legal knowledge or legal advice, whether of representation, counsel or advocacy in or out of court, rendered in respect to the rights, duties, obligations, liabilities, or business relations of one requiring the services. But nothing herein shall prevent any natural person not holding himself out as a practicing attorney from drawing any instrument to which he is a party without consideration unto himself therefor. An appearance in the small claims division of the district court by a person who is an officer of or who is regularly employed in a managerial capacity by a corporation or partnership which is a party to the litigation in which the appearance is made shall not be considered as unauthorized practice of law.

HISTORY: Amended eff. 11-1-78; prior amendment eff. 7-2-71


Also see:

KY SCR 3.460 Unauthorized practices proceeding

(1) When it comes to the attention of the Director that any person or entity not having the right to practice law is directly or indirectly practicing law, the Director shall have the authority to cause such investigation to be made concerning the matter as he deems appropriate. Bar Counsel may participate in such investigation. The Director shall have the authority to subpoena any person or entity to produce any evidence relevant to the investigation including testimony by deposition pursuant to the Rules of Civil Procedure. Any motion to quash a subpoena shall be filed in and ruled on by the Supreme Court. If the Director determines that any person or entity has been engaged in the unauthorized practice of law, the Director shall send a letter or warning by certified mail, return receipt requested, to the person’s or entity’s last known address, requesting that the unauthorized practice of law be discontinued. If future violations occur and in the opinion of the Board action should be taken, it shall direct that a motion in the name of the Association for a show cause rule be filed with the Clerk. The Clerk shall docket the motion and issue a rule against the alleged offender to show cause why he/she should not be held in contempt for unauthorized practice of law. The rule shall be returnable on the 15th day following service. When procedure is by warning order, service shall be deemed to have been made thirty (30) days after the date of making the warning order.

(2) If the Respondent fails to file due response on the rule’s return day or files a response admitting the offense, the rule shall forthwith be made absolute, and the Court shall enter such orders as it deems appropriate to deter and punish, which may include injunctive relief.

(3) If the Respondent timely files response denying the offense, the Court shall within twenty (20) days refer the case to a Trial Commissioner appointed under Rule 3.230 sitting as a Special Commissioner, who shall thereupon hold a hearing within sixty (60) days at such time and place as he/she may fix, at which hearing the Association shall be represented by counsel designated by the Board for that purpose. The parties may obtain compulsory attendance of witnesses and the production of documents as provided in the Civil Rules. The Special Commissioner, at the conclusion of the hearing, may permit the filing of briefs by the parties, with each brief being filed within thirty (30) days, and shall make and submit to the Court written findings of fact and recommendations within thirty (30) days thereafter.

(4) Upon filing of the Special Commissioner’s report, the Court may permit the filing of briefs by the parties or may summarily dispose of the matter and shall enter such order as may be appropriate. The Clerk shall furnish counsel and the Director copies of every order entered under this rule and every such order shall be reported and published as are other opinions of the Court.

(5) If the Respondent is adjudged guilty, he/she shall be liable for all Court costs, and the provisions of Civil Rule 73.07 shall apply.

HISTORY: Amended by Order 98-1, eff. 10-1-98; prior amendments eff. 1-1-86 (Order 85-2), 1-1-78, 10-14-74, 7-2-71


The only Kentucky Statute which may be applicable to this discussion is:

KRS 447.154 Laws not to limit right of Court of Justice to promulgate rules.

No act creating, repealing, or modifying any statute shall be construed directly, or by implication, to limit the right of the Court of Justice to promulgate rules from time to time or to supersede, modify, or amend any rule so promulgated. Nor shall any statute be construed to limit in any manner the power of the Court of Justice to make rules governing practice and procedure in the courts.

Effective: June 19, 1976

KRS 447.154 forbids the legislature to limit the Court of Justice from making rules governing practice and procedure IN THE COURTS.”

We would observe that the legislature by adoption cannot repeal Section 116 of the Kentucky constitution limiting the powers of the Supreme Court to only regulate “MEMBERS OF THE BAR”.


The Montana Court citing constitutional provisions similar to the Kentucky Judicial Article stated:

Ҧ5 First, we conclude that this Court is not authorized either directly or through a

Commission to regulate the “unauthorized practice of law.” Article VII, Section 2(3) of

Montana’s Constitution empowers this Court to “make rules governing appellate

procedure, practice and procedure for all other courts, admission to the bar and the

conduct of its members [subject to the legislature’s power to disprove rules which we

adopt]” (italics added). Pursuant to this Constitutional scheme, the legislature has

historically defined what constitutes the practice of law (§ 37-61-201, MCA)1 and has

charged the executive branch with the duties of investigating and prosecuting the

“unauthorized” practice of law (§ 37-61-214, MCA).”


Ҧ6 Second, we conclude that the array of persons and institutions that provide legal or

legally-related services to members of the public are, literally, too numerous to list. To

name but a very few, by way of example, these include bankers, realtors, vehicle sales

and finance persons, mortgage companies, stock brokers, financial planners, insurance

agents, health care providers, and accountants. Within the broad definition of § 37-61-

201, MCA, it may be that some of these professions and businesses “practice law” in one

fashion or another in, for example, filling out legal forms, giving advice …”


The Kentucky Court to our knowledge tolerates banks and insurance companies to prepare legal forms (deeds, mortgages etc.) to fill them out, and to charge for them. But private persons are limited by the Supreme Court Rules from doing the same thing. Critics of the regulation of non-lawyers suggest that the current structure hurts consumers by keeping legal costs high, and creating a monopoly in favor of the legal profession. We have found no good answer why the Courts have in fact exempted banks and insurance companies from sanctions for the unauthorized practice of law and allows them to draft legal documents. The same court prohibits private individuals from doing the same thing.

There is an interesting book on this subject which asks FIRST THING WE DO, LET’S DERUGLATE ALL THE LAWYERS.


This issue is seen by some as a consumer protection and anti-trust issue. The Justice Department is currently pursuing an anti-trust suit against the ABA for their conduct in accrediting law schools.



Saturday, March 24th, 2012


A Laramie, Wyoming municipal court judge has been publicly censured by the Wyoming Supreme Court.

The judge attended a meeting of the city council. He suggested that the council take up the issue of towing charges.


The judge said, “…quite frankly the towing people are gouging ‘em. If you can make some amendments to the ordinance dealing with that as to the maximum amount, anything else is usurious or ridiculous or unconscionable.”


Mike Frisch — March 23, 2012 :Judicial Ethics and the Courts |


Hon. Lee Davis: U.S Supreme Court Decides Two Important Cases Affecting Attorneys Obligations To Clients

Saturday, March 24th, 2012

Hon. Lee Davis: U.S Supreme Court Decides Two Important Cases Affecting Attorneys Obligations To Clients

Saturday, March 24, 2012 – by Lee Davis

Lee Davis

The Supreme Court published opinions in two important cases this week, LAFLER v. COOPER and MARTINEZ v. RYAN. The cases recognize two obligations that attorneys owe their clients: (1) the right to effective counsel during plea bargaining and (2) a procedural remedy, if not a recognized right, during post-conviction challenges. Both cases set forth the minimum standards of constitutional protections to be afforded individuals during either the plea process or in some situations upon collateral post-conviction.


In”>Lafler an attorney’s bad advice led a client to reject a prosecutor’s plea offer, resulting in a harsher sentence after trial. Noteworthy about this case is the Court’s expansion of the right to competent counsel to the plea bargaining process. Previously, there was no specifically recognized right to plea bargaining or to a competent lawyer at that point:


“as a general rule, defense counsel has the duty to communicate formal offers from the prosecution to accept a plea on terms and conditions that may be favorable to the accused.” “Because ours ‘is for the most part a system of pleas, not a system of trials,’” Justice Kennedy reasoned, “the negotiation of a plea bargain, rather than the unfolding of a trial, is almost always the critical point for a defendant.”


In Martinez, the Court recognized the process–without going so far as recognizing the right–of people convicted in state court to effective assistance of counsel in collateral state post-conviction proceedings. Historically there is a well recognized right to effective counsel in direct appeals. However, there is no established right to competent counsel for collateral review of a conviction.


Justice Kennedy, without saying that a person has a right to effective counsel for these proceedings, nonetheless found that there is a procedure by which an individual can seek federal review of a constitutional claim if the person was denied that opportunity in state court because of attorney ineffectiveness:


“when a State requires a prisoner to raise an ineffective-assistance-of-trial-counsel claim in a collateral proceeding, a prisoner may establish cause for a default of an ineffective-assistance claim in two circumstances. The first is where the state courts did not appoint counsel in the initial-review collateral proceeding for a claim of ineffective assistance at trial. The second is where appointed counsel in the initial-review collateral proceeding, where the claim should have been raised, was ineffective under the standards of Strickland v. Washington.”


Both opinions produced critical dissents from Justice Scalia, and through those he writes that these opinions will open floodgates of litigation for both the newly recognized procedure in post-conviction proceedings and the right to effective counsel during plea negotiations.


Practically speaking where over 90% of criminal cases are resolved by pleas rather than trials, these decisions will have a significant impact in the day-to-day practice of law. While previously it was ethically required only for attorneys to relate plea offers to defendants, it is now a basic minimum requirement. For most lawyers this is a small but important safeguard in our system of justice.

(Lee Davis is a Chattanooga attorney who can be reached at or at 266-0605.)



A Bizarre Outcome on Generic Drugs – Supreme Court limits patient rights

Saturday, March 24th, 2012

March 24, 2012

Dozens of suits against drug companies have been dismissed in federal and state courts because of a decision by the Supreme Court last year that makes it virtually impossible to sue generic manufacturers for failing to provide adequate warning of a prescription drugÂ’s dangers. This outrageous denial of a patientÂ’s right to recover fair damages makes it imperative that Congress or the Food and Drug Administration fashion a remedy.

This situation is particularly bizarre because patients using the brand-name drug can sue when those using the generic form of the drug cannot, as explained by Katie Thomas in The Times on Wednesday. In 2008, the Supreme Court ruled that a Vermont woman who had her hand and forearm amputated because of gangrene after being injected with a brand name antinausea drug could sue the manufacturer for inadequate warning of the risks; she won $6.8 million from Wyeth.

In 2011, the court ruled that similar failure-to-warn suits could not be brought against makers of generic drugs. As a result, an Indiana woman who was also forced to have her hand amputated because of gangrene after being injected with a generic version of the same antinausea drug had her case dismissed.

Same drug. Same devastating health consequences. Opposite results. This injustice will affect more people as generics, which already dominate the market, expand even more under the pressure to control health care costs.

The Supreme CourtÂ’s disparate rulings hinge on the ability of the drug makers to change a warning label if they detect new evidence of dangers. In 2008, the court found that brand-name manufacturers had the unilateral power to change warnings through various mechanisms even before asking the Food and Drug Administration for a formal change.

Then, in 2011, the court found that, under the F.D.A.Â’s interpretation of a 1984 law, known as the Hatch-Waxman amendments to the Food, Drug and Cosmetic Act, the generic versions must carry warning labels identical to those of the brand-name drug. The goal was to minimize confusion and dispel any doubt that a generic was therapeutically equivalent to the brand-name drug. Generic makers canÂ’t change the warnings but can propose a change to the F.D.A., which can then bring about a revision of the brand-name label to trigger a corresponding change in the generic label. The court ruled that because the generic makers do not control the labeling, they cannot be sued under state law for inadequate warnings.

Justice Clarence Thomas, writing for the majority in 2011, acknowledged that the distinction “makes little sense” in the eyes of consumers, and Justice Sonia Sotomayor, writing the dissent, predicted “absurd consequences” depending on the “happenstance” of whether a prescription was filled with a brand-name or generic drug.

Congress should fix the disparity by amending the law to make it clear — as Representative Henry Waxman, a co-author of the statute contends — that the act did not intend to pre-empt all failure-to-warn claims. Alternatively, the F.D.A. should fix the liability problem by amending its regulations to allow generic manufacturers to change the warning labels.

Generic drugs have rapidly expanded their reach, and, by one estimate, from one-third to one-half of all generic drugs no longer have a brand-name competitor. The regulatory system needs to hold generic companies, many of them large multinationals, accountable for labels on the products they sell.

Generic Drugs Proving Resistant to Damage Suits


Debbie Schork, a deli worker at a supermarket in Indiana, had to have her hand amputated after an emergency room nurse injected her with an anti-nausea drug, causing gangrene. She sued the manufacturer named in the hospitalÂ’s records for failing to warn about the risks of injecting it. Her case was quietly thrown out of court last fall.


That result stands in sharp contrast to the highly publicized case of Diana Levine, a professional musician from Vermont. Her hand and forearm were amputated because of gangrene after a physician assistant at a health clinic injected her with the same drug. She sued the drug maker, Wyeth, and won $6.8 million.


The financial outcomes were radically different for one reason: Ms. Schork had received the generic version of the drug, known as promethazine, while Ms. Levine had been given the brand name, Phenergan.


“Explain the difference between the generic and the real one — it’s just a different company making the same thing,” Ms. Schork said.


Across the country, dozens of lawsuits against generic pharmaceutical companies are being dismissed because of a Supreme Court decision last year that said the companies did not have control over what their labels said and therefore could not be sued for failing to alert patients about the risks of taking their drugs.


Now, what once seemed like a trivial detail — whether to take a generic or brand-name drug — has become the deciding factor in whether a patient can seek legal recourse from a drug company. The cases range from that of Ms. Schork, who wasn’t told which type of drug she had been given when she visited the hospital, to people like Camille Baruch, who developed a gastrointestinal disease after taking a generic form of the drug Accutane, as required by her health care plan.


“Your pharmacists aren’t telling you, hey, when we fill this with your generic, you are giving up all of your legal remedies,” said Michael Johnson, a lawyer who represented Gladys Mensing, one of the patients who sued generic drug companies in last year’s Supreme Court case, Pliva v. Mensing. “You have a disparate impact between one class of people and another.”


The Supreme Court ruling affects potentially millions of people: nearly 80 percent of prescriptions in the United States are filled by a generic, and most states permit pharmacists to dispense a generic in place of a brand name. More than 40 judges have dismissed cases against generic manufacturers since the Supreme Court ruled last June, including some who dismissed dozens of cases consolidated under one judge.


Public Citizen, a consumer advocacy group, has petitioned the Food and Drug Administration to give generic companies greater control over their labels, a rule change that could allow users of generic drugs to sue, but the agency said earlier this month that it needed more time to decide. “Congress can make this problem go away, and the F.D.A. could, too,” said Allison Zieve, the director of Public Citizen Litigation Group. “But we haven’t seen signs that either of them is paying much attention.” A spokeswoman for the F.D.A. declined to comment.


The Supreme CourtÂ’s ruling, which was split 5 to 4 on ideological lines, has its roots in the Hatch-Waxman Act, the 1984 law that opened the floodgates to generic drugs. That law allowed companies to skip the lengthy process required to approve new drugs if they could prove that the generic drug was equivalent to its brand-name counterpart.


With few exceptions, it also required generic manufacturers to use the same labels — the lengthy list of a drug’s uses, dosages and risks — used by the brand names.


If a problem develops, the brand-name companies are responsible for changing the label, and the generic companies must follow their lead. As a result, the courtÂ’s majority ruled, generic companies cannot be held responsible for failing to alert patients to problems with their drug. The dissent, which was written by Justice Sonia Sotomayor, argued that generic companies nevertheless have a responsibility to report problems to the F.D.A. and should be held liable for failing to warn patients.


The ruling came just two years after the Supreme Court established — in Ms. Levine’s case — that, by contrast, brand-name companies can be sued for failing to adequately warn patients.


Ms. Levine was given an injection of Phenergan in 2000 during a visit to a clinic to treat a migraine headache. Her hand and forearm turned black and eventually had to be amputated. Reports had shown that the drug can cause gangrene if it enters an artery, especially if it is placed directly into the vein rather than injected into the muscle or through a diluted intravenous drip. Although the label warned that gangrene could occur if the drug came into contact with arterial blood, Levine argued that the warning did not go far enough.


She sued Wyeth and a Vermont jury awarded her $6.8 million. Wyeth appealed and the Supreme Court sided with Ms. Levine, agreeing that the company could be held liable for failing to adequately warn about the risks of a drug.


Ms. Schork, 52, was given the generic version of Phenergan when she visited the hospital in 2007 with a stomachache and nausea related to her diagnosis of CrohnÂ’s disease.


When a nurse injected the drug into her arm, it entered her artery, and Ms. SchorkÂ’s right hand developed gangrene. In asking that the case be dismissed, lawyers for Baxter Healthcare Corporation, which then was one of several companies that made the drug but has since sold its injectable generics to another company, argued that Ms. Schork could not conclusively prove that Baxter had made the drug she took.


The judge agreed that the question could be debated at trial but said it was irrelevant because of the Supreme CourtÂ’s ruling.


Ms. Schork filed a malpractice claim against the hospital with the Indiana Department of Insurance, and received what her lawyer described as a limited award; the amount was confidential. She said she could not continue to work at her supermarket job and is now unemployed.


Soon after Ms. Levine won her case, Ms. Schork wrote to congratulate her and to share her own story. At the bottom of the letter, Ms. Levine recalled, Ms. Schork apologized for her handwriting because she was writing with her left hand. “The fact that it had happened to her and she had this same struggle — and then to hear now that it’s getting dismissed — is just beyond me,” said Ms. Levine.


Ms. Schork said she and Ms. Levine later spoke on the telephone. “I’m glad for her,” she said, “but it didn’t help me any.”


Lawyers for generic drug companies say their clients are able to provide low-cost drugs because their primary task is replicating drugs. If the companies were expected to take responsibility for updating their labels, “we would effectively start to turn generic companies into brand companies, and of course the tremendous cost savings that American consumers have benefitted from would start to wane,” said Jay Lefkowitz, who served as the lead attorney representing generic companies before the Supreme Court.


The Supreme Court recognized that its decision must make “little sense” to plaintiffs who sue generic drug companies. However, Justice Clarence Thomas wrote for the court, “Congress and the F.D.A. retain the authority to change the law and regulations if they so desire.”


Some attorneys who follow the issue have speculated that Congress and the F.D.A. are reluctant to deal a blow to generic companies, which are responsible for providing cheap drugs to millions of American consumers, especially in an election year when health care is a hot issue.


In a statement last week, Representative Henry A. Waxman, Democrat of California, who co-wrote the Hatch-Waxman Act, said he was exploring ways to address the issue, either through legislation or a rule change.


Mr. Waxman argued in a brief opposing the generic companies in the Supreme Court case last year that Congress had never intended for generic companies to be freed of all responsibility. “Congress did not intend for consumers’ rights to be categorically eliminated simply because they purchased a generic rather than a brand-name drug,” he wrote.


Camille Baruch, 18, and her family say that is precisely what happened to her. When she was 12, Camille, of Rockville, Md., began taking the generic version of the antiacne drug Accutane and developed severe gastrointestinal pain several months later. Her diagnosis was ulcerative colitis, a type of inflammatory bowel disease, and she had to have her large intestine removed.


Six years and eight operations later, doctors have not been able to stabilize her condition. Her parents said the disease transformed their daughter from a talented basketball and softball athlete to someone who will struggle with debilitating physical challenges for the rest of her life.


Thousands of patients have sued Roche, the maker of Accutane, claiming that it caused their inflammatory bowel disease, and several have won multimillion-dollar verdicts against the company. In 2009, citing litigation costs and competition from generics, Roche removed Accutane from the market. In 2010, Camille sued the makers of the three generic versions of Accutane she took. Her lawyer, Tayjes Shah, said lawyers for the companies have told him they intend to ask for a dismissal. “I have very little optimism,” Mr. Shah said.


Camille, who was in the hospital this month recovering from another operation, said she had heard the arguments that the generic companies had made. “It makes me almost want to cry every time that I think that I took something that is nearly identical” to Accutane, yet she cannot sue, she said. “I lost everything. That is not a reason enough that these people aren’t to blame.”




Saturday, March 24th, 2012



, Not many Americans think of the legal profession as a monopoly, but it is. Abraham Lincoln, who practiced law for nearly twenty-five years, would likely not have been allowed to practice today. Without a law degree from an American Bar Association–sanctioned institution, a would-be lawyer is allowed to practice law in only a few states. ABA regulations also prevent even licensed lawyers who work for firms that are not owned and managed by lawyers from providing legal services. At the same time, a slate of government policies has increased the demand for lawyers’ services. Basic economics suggests that those entry barriers and restrictions combined with government-induced demand for lawyers will continue to drive the price of legal services even higher.


In First Thing We Do, Let’s Deregulate All the Lawyers, Clifford Winston, Robert Crandall, and Vikram Maheshri argue that these increased costs cannot be economically justified. They create significant social costs, hamper innovation, misallocate the nation’s labor resources, and create socially perverse incentives. In the end, attorneys support inefficient policies that preserve and enhance their own wealth, to the detriment of the general population.


To fix this situation, the authors propose a novel solution: deregulation of the legal profession. Lowering the barriers to entry will force lawyers to compete more intensely with each other and to face competition from nonlawyers and firms that are not owned and managed by lawyers. The book provides a much-needed analysis of why legal costs are so high and how they can be reduced without sacrificing the quality of legal services.


Read a review of First Thing We Do, Let’s Deregulate All the Lawyers in Regulation magazine »



Saturday, March 24th, 2012



Comment: “I would have found such power useful when I was a judge.” Stan Billingsley


The following excerpts are from R. v. Covey (2001), in which the court held

Covey was a “vexatious litigant,” meaning he can’t file further cases without

court approval because he has filed so many bogus cases in the past. Note that this appears to be a transcript of a hearing at which the court read out its judgment in the case, not a formal written opinion. This is why certain remarks by Mr. Covey (“The Applicant”) appear in the excerpts themselves. They are presumably not part of the court’s actual judgment.


B e f o r e:








1. THE LORD CHIEF JUSTICE: There are before the court two linked

applications, the first by Mr Andrew Covey…. [The] issues are: first, whether

Mr Covey [has] respectively, habitually and persistently, and without any

reasonable grounds, instituted vexatious civil proceedings; [and] secondly,

whether the Divisional Court [erred in ruling that he had]….


2. In his application this morning, Mr Covey took the course of stripping

off his clothes and throwing water at one member of the court. He has

subsequently made oral submissions to the court after giving an undertaking to

behave. He has not repeated his misconduct. He has made submissions which have

no relevance whatsoever…. However, someone has prepared on his behalf (or he

has prepared himself) a detailed [outline] which the court has read.


In case you missed it there, Tip #1 is to remain clothed at all times when

before the court. Tip #2 is to refrain from approaching the bench either in

person or indirectly by means of some projectile.


Covey claimed he had not been adequately heard by the lower court. The Lord

Chief Justice noted that Covey was given all afternoon to argue his case there,

but the court was “unsuccessful in [its] attempts to limit Mr Covey’s

submissions to the afternoon” and let him come back the next day. When the court

reconvened at 10 am, Covey presented it with another 60-page brief. The court

then “retired to read the document and returned at 10.30 to hear further



Tip #3: keep it short. Tip #4: if your brief can’t keep a reader’s attention for

more than two minutes per page, you’re doing something wrong.


In the lower court, Lord Justice Buxton had also remarked that most of Covey’s

argument consisted of irrelevant attempts to reopen the underlying disputes in

the prior cases. Tip #5 is therefore to focus on the real issue before the

court. (Interestingly, there was a difference of opinion as to how many cases he

had filed. The opinion mentions 15, but says Covey insisted that “the number of

proposed actions had been underestimated by the court” and that there had

actually been 54. Tip #6: know when to keep your mouth shut.) Continuing with

the judgment, the Lord Chief Justice noted that:


13. Mr Covey’s submissions to this court this morning make it only too

understandable why Lord Justice Buxton felt it necessary to make those remarks.


14. THE APPLICANT: Get me a jury and see what they say.


Tip #7: do not interrupt the court.


15. THE LORD CHIEF JUSTICE [continuing to read]: His submissions so far as

fact was concerned rest upon an assertion of no relevant evidence having been



16. THE APPLICANT: A load of bollocks.


Tip #8: Refrain from using terms such as “bollocks” (unless bollocks are the

real issue before the court).


Pressing on, the Lord Chief Justice then noted that most of Covey’s cases had

been little more than harassment of one particular family, and that at least one

restraining order had been issued against him:


23. Mr Covey had been made the subject of a restraining order under section

5 of the Protection from Harassment Act [of] 1997. The order was made on the

basis that he had harassed members of the family … between June and July 1997.


24. THE APPLICANT: Point of order, your Honour. The law was passed on 1



25. THE LORD CHIEF JUSTICE: The order was made –


26. THE APPLICANT: I was out of the country at the time.


27. THE LORD CHIEF JUSTICE: Would you please keep quiet?


28. THE APPLICANT: How can I harass them? I wasn’t even in the country.


29. THE LORD CHIEF JUSTICE: Would you please keep quiet or you will have to

leave court?


30. THE APPLICANT: I was just picking up on a point of law, that’s all. The

law was passed on 1 July.


31. THE LORD CHIEF JUSTICE: Mr Covey, would you please keep quiet and not

interrupt me?


32. THE APPLICANT: Am I right?


33. THE LORD CHIEF JUSTICE: If you do interrupt me, then you will have to

leave court.


34. THE APPLICANT: Please tell this court when the Harassment Act was



35. THE LORD CHIEF JUSTICE: The court is going to adjourn.


36. THE APPLICANT: Fine. The Harassment Act was passed on 1 July. I was out

of the country. How can I harass somebody when I’m out of the country? This is a

kangaroo court and you are a bent judge.


(The court adjourned for a short time. The applicant left court.)


See Tips #5-8, supra. Tip #9: If accused of harassment, don’t harass the judge

about the Harassment Act.


You won’t be surprised to learn that Mr. Covey lost, but his brave and stupid

crusade has at least provided these important lessons. And for that we thank



March 21, 2012 in Appellate Practice



Saturday, March 24th, 2012


By Todd McMurtry | 3-24-2012


Federal Circuits are split on whether the tort of negligent misrepresentation must be pled with particularity. The Second and Eighth Circuits have held Fed. R. Civ. P. 9(b) applies to negligent misrepresentation claims. See Trooien v. Mansour, 608 F.3d 1020, 1028 (8th Cir. 2010), Aetna Cas. & Sur. Co. v. Aniero Concrete Co., 404 F.3d 566, 583 (2d Cir. 2005). The Seventh and Fourth have held it does not. See Tricontinental Indus., Ltd. v. PricewaterhouseCoopers, LLP, 475 F.3d 824, 833 (7th Cir. 2007) and Baltimore Cnty. v. Cigna Healthcare, 238 Fed. App’x 914, 921–22 (4th Cir. 2007).

Fed. R. Civ. P. 8(a)(2) generally requires only “a short and plain statement of the claim showing that the pleader is entitled to relief.” Rule 9(b) by comparison requires that “a party must state with particularity the circumstances constituting fraud or mistake.” In Denver Health and Hosp. Auth. vs. Beverage Distribs. Co., LLC, 2012 WL 400320 (D. Colo., Feb. 8, 2012), the U.S. District Court for Colorado found that where the allegations sound primarily in negligence, then claims for negligent misrepresentation need only be pled in accord with Rule 8(a)(2).


In this case, a motorcyclist (Hood) was severely injured in an accident. Hood had health benefits through a domestic partner. Another defendant, Principal Life Insurance Company, repeatedly authorized the Denver Health and Hospital Authority (DHHA) to provide care to Hood. Concurrently, Beverage Distributors Company (Beverage), which administered the health plan, advised Hood’s domestic partner that there was no medical coverage for Hood. DHHA billed Hood over $750,000 for medical care. The motorcyclist assigned his claims to DHHA, which brought the action alleging, in part, negligent misrepresentation.


DHHA alleged that Beverage’s negligence prevented Hood and DHHA from seeking other sources of third-party coverage. The Court examined the facts and concluded that the “crux of the claim is that Beverage failed to use reasonable care or competence in obtaining and communicating information concerning Hood’s eligibility. This rings not of fraud but negligence.” Id. at *4. “Moreover, the general tenor of the complaint weighs against applying Rule 9(b). This is because none of the causes of action or allegations implicate fraud.” Id.


The Court reasoned that where the tenor of the complaint is one of fraud, then Rule 9(b) applies. Citing Benchmark Electronics Capital Corp. v. J.M. Huber Corp., 343 F.3d 719, 723 (5th Cir. 2003) (stating that “[a]lthough Rule 9(b) by its terms does not apply to negligent misrepresentation claims,” it will apply the rule when the negligent misrepresentation claim is based on the same set of facts as a fraud claim). But, where the complaint alleges negligence, as in this matter, then negligent misrepresentation need not be pled with particularity. Id. The take-away from this analysis is that if a complaint alleges negligent misrepresentation founded upon fraudulent conduct, it should be pled with particularity. Otherwise, it need only be made by a short and plain statement of the claim.

Todd McMurtry is a Cincinnati attorney practicing at Dressman Benzinger LaVelle psc.

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Friday, March 23rd, 2012


By David Dirr | March 23, 2012


The U.S. Department of Health and Human Services (HHS) hopes that its recent settlement of $1.5 million with Blue Cross and Blue Shield of Tennessee serves as a warning to healthcare providers and insurers. The settlement with Blue Cross and Blue Shield stemmed from an incident in which 57 of the insurer’s hard drives that contained protected health information were stolen from a leased facility. An investigation by the Office of Civil Rights of HHS revealed that Blue Cross and Blue Shield did not conduct a proper security evaluation of its data storage and failed to ensure that the leased facility was appropriately secured.

In a recent interview with Modern Healthcare, the deputy director of the Office of Civil Rights of HHS, which enforces HIPAA, said that providers need to make sure that their protected health data is secured even when it is in the hands of a third party. The deputy director warned that providers need to ensure that appropriate safeguards are in place wherever health data is stored, including third-party cloud storage systems.


See the entire article at the Modern Healthcare website:

David Dirr is a Northern Kentucky attorney practicing at Dressman Benzinger LaVelle psc.



The Fair Debt Collections Practices Act (FCDPA) Applies only to third party debt Collectors

Friday, March 23rd, 2012

The Fair Debt Collections Practices Act (FCDPA) Applies only to third party debt Collectors

By Megan Maxfield | March 22, 2012


The Fair Debt Collections Practices Act (“FDCPA”), 15 U.S.C. §§ 1692-1692p, is a federal law that was instituted to regulate the collection practices of debt collectors and to protect consumers from abusive debt collection practices. However, it is important to for businesses to note that this law generally does not apply to a business collecting its own outstanding accounts receivable.

A debt collector under the FDCPA is defined as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” However, the FDCPA specifically exempts “any officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor” from the definition of a debt collector. These persons are treated as a “creditor” under the FDCPA, and thus they do not have to comply with the FDCPA. In addition, the FDCPA only applies to consumer debts which are defined as debts “primarily for personal, family or household purposes.”

Therefore, the FDCPA generally does not apply to a business collecting its own outstanding accounts receivable. It is when the account is referred to a third party for collection, such as a collection agency or attorney’s office, that the FDCPA would apply to the third party’s collection actions.

Megan Maxfield is a Northern Kentucky attorney practicing at Dresman Benzinger LaVelle psc.

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Should Unauthorized Practice of Law Statutes be Repealed?

Thursday, March 22nd, 2012

Lawyer Fees Too High?

The Case for Repealing Unauthorized Practice of Law Statutes


by George C. Leef

Lawyers are not a popular group among the general public, and the high price of legal services in part accounts for their poor reputation. A principal reason for those high prices is the lawyer’s monopoly on providing legal services. Every state except Arizona has an “unauthorized practice of law” (UPL) statute that makes it illegal for anyone who does not meet the requirements set by state bars to render legal assistance. Lawyers invariably argue that UPL statutes serve the public interest. Wrote F. M. Apicella, J. A. Hallbauer, and R. H. Gillespy II in the American Bar Association Journal (1995), repealing UPL statutes “would result in the most unwary, guileless members of the public being incompetently represented and advised, if not victimized and defrauded.”

But the notion that the best or only way to protect consumers of legal services is to prevent them from hiring people without bar membership is based on fundamental fallacies. First, it assumes that only governments can protect consumers. Second, it assumes that a government-sustained monopoly has no adverse effects that might offset purported benefits. And third, it ignores the mechanism that best protects the interests of all consumers—the free market.

All UPL statutes prohibit individuals from legally practicing law without bar membership. Bar membership, in turn, has four prerequisites for aspiring legal practitioners: (1) they must earn a college degree; (2) they must graduate from an approved law school; (3) they must pass the state’s bar exam; and (4) they must convince the bar that they are “of good moral character.” Such criteria, however, did not always hold. According to Dietrich Rueschemeyer in Lawyers and Their Society, as late as 1951, 20 percent of American lawyers had not graduated from law school and 50 percent had not graduated from college.

Consumer Welfare

Lawyers argue that licensure protects consumers from unqualified or unscrupulous practitioners, but it is more likely that licensure protects lawyers from competition. Many economists and even some lawyers have assailed licensing laws as special interest legislation that is supported by those who want to restrict competition, not protect the public interest. As Professor Walter Gellhorn of Columbia Law School wrote in the University of Chicago Law Review (1976):

Licensing has only infrequently been imposed upon an occupation against its wishes. . . . Licensing has been eagerly sought—always on the purported ground that licensure protects the uninformed public against incompetence or dishonesty, but invariably with the consequence that members of the licensed group become protected against competition from newcomers.

Gellhorn’s comments apply to members of the legal profession who sought licensing laws. While they argued that licensing was for the public’s benefit, no test of competence was imposed on those who were practicing law when the UPL statutes were passed.

Judge Richard Posner likens the legal profession to a medieval guild with an elaborate structure of internal and external controls designed to suppress the kind of marketplace competition that it claims is “unbefitting.” In the Indiana Law Journal (1993) Posner wrote:

[The legal profession] was an intricately and ingeniously reticulated, though imperfect, cartel. Governmental regulations designed to secure the cartel against competition and new entry from without, and centrifugal, disintegrative competitive pressures from within, held the cartel together against the dangers that beset and ordinarily would destroy a cartel of so many members.

Cartels hold together better when there are fewer members and the cost of meeting membership requirements is high. Professor Roger Cramton of Cornell Law School wrote in the Case Western Law Review (1994), “When the opportunity costs of foregone income are taken into account, the investment in human capital presently required to become a lawyer amounts to at least $100,000.” That cost prices many potential practitioners out of the field and requires those who can afford a legal education to charge high fees.

Licensure is not the sole cartel-protecting device used by the bar. In the past, the bar restricted competition by prohibiting advertising and requiring adherence to bar-established fee schedules. Those restraints, however, have been swept away. In Goldfarb v. Virginia State Bar (1975) the Supreme Court struck down bar-imposed fee schedules, and in Bates v. State Bar of Arizona (1977) the Court ruled against advertising restrictions; both cases were argued on antitrust grounds. UPL statutes, however, are still a major barrier to competition in legal services.

The English Example

The practical case for permitting a free market in legal services is supported by several case studies. In England, for example, conveyancing services—that is, the legal work associated with transferring real estate titles—had been a legal monopoly for over a century. But in the 1970s, the public complained about the high cost of those services. Like bar associations in the United States, the English Law Society had restrained competition with recommended fee scales and a prohibition against advertising. As Avrom Sherr and Simon Domberger wrote in the International Review of Law and Economics (1989), “The conveyancing monopoly came to be viewed with increasing hostility by aspiring homeowners and by a government committed to greater competition.”

Consequently, in 1984 Prime Minister Margaret Thatcher’s government announced that, beginning in 1987, the market would be opened to “licensed conveyancers” who were not members of the legal profession. That edict began what Sherr and Domberger call “a unique, controlled experiment in the liberalization of the supply of legal services.” The result was that the market for conveyancing services was transformed even before licensed conveyancers entered the market. The authors wrote:

Fees started to fall in 1984 . . . a full three years before licensed conveyancers entered the market. By 1986 the discriminatory element in the combined fees charged for sales and purchases of property had fallen by one-third. . . . The threat of competition has yielded significant welfare benefits. Price discrimination has been reduced, conveyancing costs have fallen in real terms, and there has been a measurable improvement in consumer satisfaction.

The market for legal services clearly responds to economic laws. More competition, brought about by eliminating artificial barriers to market entry, lowers prices and increases the quality of available services.

The Arizona Example

Arizona has also opened up its market for legal services. In1986, Arizona’s UPL statute expired and the legislature declined to reenact it. Since that time, many businesses offering legal assistance by nonlawyers have opened. The benefit to consumers of having the option of contracting with unlicensed practitioners is illustrated in Arizona Attorney (1994):

Bob Haves knew he needed help in filing for a divorce when a nine-year search finally turned up his wife in Georgia. But when the air-conditioning and heating mechanic was told by an attorney that he needed to pay an $800 retainer up front, Haves balked. Instead he turned to one of a growing number of legal document services in Arizona that helped him prepare and file his divorce and even sort through child support, child custody, and spousal maintenance problems. Haves believes that the $175 he paid for the service was a bargain.

Haves saved $625 because he was able to shop around for the help he needed.

In California there has been a de facto move away from the lawyer monopoly. The California bar has stopped taking action under the state’s UPL statutes against unlicensed practitioners, for example, those offering divorce and other services in low-income neighborhoods. So far there has been no outbreak of customer complaints about unlicensed practitioners providing low-quality service.

Repealing UPL statutes would be particularly beneficial for low-income Americans. A study commissioned by the American Bar Association found that in 1987, 40 percent of Americans near or below the poverty line experienced civil legal problems for which they had no legal assistance. With a free market in legal services, those individuals could patronize an affordable, unlicensed legal practitioner. The success of such businesses in Arizona indicates that many people regard that option as a good alternative to lawyers.

The Bar’s Defense

Bar supporters argue that without UPL statutes, incompetent or dishonest practitioners would harm consumers. But that is a case of looking only at the supposed hazards of a free market while ignoring the palpable benefits. For example, the president of the Michigan bar, Thomas G. Kienbaum, wrote in Michigan Lawyers Weekly (1995),

[George Leef] would no doubt not allow a member of his family to be operated on by a nurse any more than he would have a will or estate plan prepared by an insurance agent. Yet, he appears to advocate a legal system that would leave the fates of children and families—particularly the poor—to the whims of an unregulated, incompetent or even unscrupulous marketplace.

But most individuals, including those who are poor, are careful decisionmakers. Few individuals would ask a nurse to perform a heart operation, a bookkeeper to perform a difficult accounting analysis, or a patent lawyer to defend against a murder charge even if doing so appeared cheaper than the alternatives.

Moreover, the consumer’s self-interest is not the only protection against incompetent practitioners; the provider’s self-interest is also important. It is very much in the provider’s interest to perform the tasks for which he has contracted and not to leave dissatisfied clients in his wake. A bad reputation will lose customers and money. Professionals who fail through incompetence lose the investments they made in their enterprises and their prospects for future success.

Nonlawyers routinely refer cases that are outside their competence to lawyers, even though they are not bound by law to do so. In Arizona and California referrals from paralegals to lawyers are common. That indicates that nonlawyers tend not to take cases that they feel are beyond their level of competence. In a leading Michigan unauthorized practice case, State Bar v. Cramer (1976), the record disclosed that the defendant had referred over six hundred cases to lawyers. Referrals, another filter against foolish contracting, work to protect consumers from incompetent practitioners.

Experience shows that the vast majority of UPL cases are brought by bar organizations, not injured consumers. Actual cases of harm to clients due to incompetent or dishonest nonattorney assistance are rare. Professor Deborah Rhode wrote in the Stanford Law Review (1981) that of all UPL inquiries, investigations, and complaints in 1979, only 2 percent arose from consumer complaints and involved injury.

The Canadian experience is similar. In particular, the province of Ontario reserves most legal services for bar-approved attorneys. The Report of the Task Force on Paralegals, prepared for Ontario’s Ministry of the Attorney General in 1990, analyzed the 155 cases of unauthorized practice brought from 1986 to 1989. The task force found that 87 percent of the cases had been brought by lawyers, governmental agencies, or the Law Society. Moreover, the report stated, “Those few complaints of incompetence or fraud related to one independent paralegal business [that is] no longer in operation.” The report concluded:

The great majority of clients of independent paralegals feel that they have received satisfactory legal services. In fact, the information assembled by the task force suggests that any intimation of large scale incompetence or fraudulent activity by independent paralegals is incorrect and misleading.

Consumers and Information

Supporters argue that UPL statutes help the public assess the competence of service providers. Supposedly, in a free market consumers of legal services generally would be unable to judge the quality of prospective unlicensed practitioners.

There is an element of truth in that argument. It is difficult for consumers to obtain information on the quality and reliability of one-time purchases of certain goods and services. How does one know who is a good architect, accountant, or lawyer?

But the market for legal services is no different from markets for other services when it comes to the problem of uncertainty, and consumers would approach the problem in the same way. Consumers would ask friends, relatives, and associates to recommend a service provider. They might also be aided by various indicators of success, such as business location. Consumers might also contact agencies, governmental and nongovernmental, that maintain records of complaints against businesses. Finally, consumers might choose to use certification as a screening device if they have reason to believe that possession of a certain certificate shows a level of competence relevant to their needs. In a free market for legal services, consumers would use the same information-gathering techniques to assess the competence of unlicensed practitioners that they now use to assess the competence of licensed ones. The only difference is that they would have a wider field of choice than they do now.

Competence and Credentials

Supporters of UPL statutes contend that only practitioners who have the right credentials can properly assist people with legal problems. “Members of the bar are required to pass a state bar examination which insures a minimum level of legal competency,” contends Ryan Talamante in the Arizona Law Review (1992). And the Michigan Supreme Court decision in State Bar v. Cramer wrote:

Those persons offering advice on legal matters regarding child custody, contract and property rights, inheritance, separate property, and support, to name the more significant, must possess a measure of competency and judgment to insure proper representation.

The implicit assumption behind those statements is that the only way a person can demonstrate the degree of knowledge and judgment needed to render legal assistance is by taking all of the steps required for bar membership. That assumption does not withstand critical examination.

Law school provides a broad but shallow education. Would-be lawyers learn a smattering of many subjects but none in depth. In-depth training usually does not begin until graduates land a job and enter an area of specialization. In the Georgetown Journal of Legal Ethics (1990) Rhode notes:

An increasing specialization in legal work, coupled with a growing reliance on paralegals and routinized case-processing systems, undercuts some of the traditional competence-related justifications for banning lay competitors. Law school and bar exam requirements provide no guarantee of expertise in areas where the need for low-cost services is greatest: divorce, landlord/tenant disputes, bankruptcy, immigration, welfare claims, tax preparation, and real estate transactions. In many of these contexts, secretaries or paralegals working for a lawyer already perform a large share of routine services, and this experience has equipped a growing number of employees to branch out on their own.

A law school education, while valuable, does not guarantee competence. For example, a fresh-out-of-law-school attorney is incapable of handling many complex legal matters. A newly admitted bar member is almost never equipped to handle, for example, worker’s compensation litigation, but there is no law against “unauthorized worker’s compensation practice.” Such a law is unnecessary. The legal profession and the public rely on market incentives and disincentives to see that attorneys who claim to have worker’s compensation or any other type of expertise have acquired it.

The Federal Example

Another indication that individuals without bar approval can adequately render legal services is that most federal administrative agencies permit unlicensed practitioners to represent parties in cases before them, both adversarial and nonadversarial. According to the Results of the 1984 Survey of Non-Lawyer Practice Before Federal Administrative Agencies, published jointly in 1985 by the ABA Standing Committee on Lawyers’ Responsibility for Client Protection and the Center for Professional Responsibility, there have been few reports of problems with lay advocates.

The U.S. Patent Office administers a competency test that both attorneys and nonattorneys must pass before they can bring cases before the office. There is no evidence to suggest that the nonattorneys are any less capable than the attorneys in dealing with the complexities of patent law and procedure. And in the case of Sperry v. Florida Bar (1963), the Supreme Court rebuffed an attempt by the Florida bar to prevent a non-bar member from representing Florida clients in patent applications.

Accountants, who are usually not bar members, frequently advise their clients on tax matters, and “enrolled agents” are permitted to appear before the U.S. Tax Court on behalf of their clients in disputes with the Internal Revenue Service. Accountants usually understand tax law as well as or better than many lawyers. As Barlow Christensen argues in the American Bar Foundation Research Journal (1980):

The accountant who lives every day in the field of tax law almost surely has an understanding of that field comparable to a lawyer’s understanding. Indeed, a proficient accountant probably knows and understands the tax laws far better than does the general practice lawyer.

In Michigan, nonlawyers are permitted to represent parties in proceedings before the Michigan Employment Security Commission (MESC). That requires considerable knowledge of the relevant law, but there is no evidence that claimants or employers have been ill-served by nonlawyers. The Michigan bar in 1985 fought to have a slight ambiguity in the wording of the Michigan Employment Security Act interpreted in a way that would place MESC cases under Michigan’s UPL statute, but failed.

In many states, nonlawyer real estate agents have been successfully preparing legal conveyancing documents for years. In Arizona, for example, a state supreme court decision in 1961 ruled that such work constituted the “practice of law” and was therefore illegal (State Bar of Arizona v. Arizona Land Title & Trust Co.). The realtors mounted a campaign, vigorously opposed by the state bar, to overturn that decision by amending Arizona’s constitution. The public voted in favor of the amendment by almost four to one. Since the adoption of that amendment, no evidence of consumer harm from incompetent document preparation has come to light.

The Discipline Argument

Defenders of UPL statutes make much of the fact that licensed attorneys are subject to disciplinary actions, such as disbarment or sanctions. One objection to this argument is that the bar’s disciplinary system is an inadequate consumer protection mechanism. In the Loyola Consumer Law Reporter (1991) attorney Deborah Chalfie wrote:

Nationwide, more than 90 percent of all discipline complaints are dismissed. The bulk of these complaints are dismissed at the screening stage because they are considered outside the agency’s jurisdiction, which is confined to enforcing the ethical rules that govern lawyers. Thus, even if all the complaints about over-charging, neglect, and incompetence are true, they state no violation of the ethical rules and are therefore dismissed.

The bar’s discipline system does little to deter poor service because sanctions are almost never levied for anything less than criminal behavior, gross and repeated negligence, or unconscionable overcharging.

Supporters of UPL statutes also argue that bar membership is a seal of approval that guarantees quality for consumers. That argument is belied by the fact that when the bar administers sanctions, it often does so secretly; thus, the public gains no valuable information on the reliability of the attorney who has been the subject of disciplinary action. Moreover, bar sanctions seldom redress the financial loss to the client. The alleged efficacy of the bar’s disciplinary system to protect consumers is a very slender reed upon which to base the prohibition of legal practice by non-bar members.

Moreover, the absence of a formal system for disciplining unlicensed legal practitioners does not mean they are not subject to disciplinary forces. The competitive marketplace has powerful, built-in incentives for providers to supply high-quality goods and services, which minimizes the need for a formal disciplinary apparatus. As Professor Richard Epstein of the University of Chicago Law School wrote in Simple Rules for a Complex World (1995):

There’s a regrettable tendency among lawyers to say that if there is no legal remedy, there is no constraint on human behavior at all. Social sanctions cannot be ignored in determining the institutional value of any legal arrangement. No one is socially a free agent where others depend on him, and customers should not be treated as strangers whose preferences are to be disregarded simply because they are unable to win a lawsuit. . . . Virtually everybody involved in business recognizes the enormous importance in business affairs of preserving a reputation for fair and honest dealing. . . . Where the reputational bond is strong, the legal bonds may be weak, because the incentives for good conduct can be secured without having to incur the extensive administrative costs of any system of liability.

Finally, even if the bar’s system of attorney discipline were effective, it would not follow that people should be deprived of the option of contracting for legal services with unlicensed practitioners. The bar’s discipline system is arguably one reason why consumers may prefer to deal with licensed attorneys. But just because one product has a superior feature does not mean that consumers should be prohibited from choosing other products.

Local bars presumably will attempt to convince consumers that they will be served better by highly educated, licensed attorneys who are subject to professional disciplinary action for malfeasance. In that way, bar membership could serve as a seal of approval similar to the Underwriters Laboratories label for electrical appliances. If consumers regard the “protection” afforded by the bar’s disciplinary system as worth the added cost, they will act accordingly. They should not, however, be deprived of freedom of choice merely because the bar has an established disciplinary system.

An Alternative to UPL Statutes

Certification is a sound alternative to licensing that does not restrict consumer choice. It is a means of informing consumers that a service provider possesses one or more specific qualifications, and it need not involve the government. For example, the Certified Public Accountant designation is earned by those who can pass a rigorous accounting examination, but the exam is voluntary. There is no “unauthorized practice of accountancy” statute. Consumers of accounting services are free to hire accountants who come with the private seal of approval and a higher price tag, or they may use a non-CPA who they believe will meet their needs at a lower cost. Certification provides information without restricting consumer options. In Capitalism and Freedom (1962) Milton Friedman wrote:

The usual arguments for licensure, and in particular the paternalistic arguments, are satisfied almost entirely by certification alone. If the argument is that we are too ignorant to judge good practitioners, all that is needed is to make the relevant information available. If, in full knowledge, we still want to go to someone who is not certified, that is our business; we cannot complain that we did not have the information. . . . I personally find it difficult to see any case for which licensure rather than certification can be justified.

Bar membership too is a form of certification. Without UPL statutes, bars might make this informational device more useful to consumers by certifying attorneys in various subfields of law.

The great advantage of certification is that it is subject to the test of the market. Consumers decide whether the higher fees that typically accompany contracts with certified practitioners are worth the service. Without UPL statutes, the bar’s steps to certification would be put to the test of the market as well. Are three years of law school really necessary? Are two years sufficient? If one can pass the bar exam, is graduation from law school necessary? The need to serve consumers should force bars to review and probably refine their requirements and rating systems.

Restoring Freedom

Whatever the purposes of UPL statutes, their principal effect is to limit the freedom of individuals to engage in voluntary transactions. UPL statutes restrict free exchange against the will of those who would sell legal services without bar certification and the customers who would purchase those services.

The nineteenth century French political and economic thinker Frederic Bastiat proposed this test for bad laws: “See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.” UPL statutes certainly fall into this category.

Consumers are better-off if they can shop for the goods and services they want in a free market. By imposing a very high and costly barrier to entry, the state makes consumers worse off. The case for repealing UPL statutes was summarized well by W. Clark Durant, former chairman of the Legal Services Corporation, in a speech before the ABA in 1987:

We should encourage at every turn the ability of entrepreneurs, para-professionals and lay people to be a part of the delivery of legal services to the poor and for all people. I’ve met many eligible clients around the country who can quite capably be advocates in resolving disputes if barriers to practice did not exist. How can doors be opened to others to participate in this profession? In serving others, a private sector deregulated legal profession can deliver a good quality product in much the same way that a good commercial enterprise does. . . . We let the free competitive energies of creative and energetic people in the private sector provide and deliver for us. . . . Such people exist for the delivery of legal services but are blocked by UPL statutes and aggressive bar efforts to halt them.

UPL statutes are inconsistent with the optimal price of legal services, and they are inconsistent with the freedom of individuals to peacefully interact. For those compelling reasons, all UPL statutes should be repealed.

George C. Leef is president of Patrick Henry Associates and an adjunct scholar with the Mackinac Center for Public Policy. He earned a J.D. from Duke University in 1977.


Regulation is published four times a year by the Cato Institute. Editorial and business offices are located at 1000 Massachusetts Avenue, N.W., Washington, D.C., 20001. For subscription information, please write to Circulation Department, Cato Institute, same address, or call (202) 842-0200. Send email inquiries to, or subscribe online via the World Wide Web at:

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U.S. Supreme Court Ruling Expands Rights of Accused in Plea Bargains

Wednesday, March 21st, 2012



Published: March 21, 2012


WASHINGTON — Criminal defendants have a constitutional right to effective lawyers during plea negotiations, the Supreme Court ruled on Wednesday in a pair of 5-to-4 decisions.


Because about 95 percent of criminal convictions arise from guilty pleas, the decisions represent a vast expansion of judicial supervision of the criminal justice system.

“Criminal justice today is for the most part a system of pleas, not a system of trials,” Justice Anthony M. Kennedy wrote for the majority. “The right to adequate assistance of counsel cannot be defined or enforced without taking account of the central role plea bargaining takes in securing convictions and determining sentences.”

Justice Antonin Scalia took the unusual step of summarizing his dissents from the bench. “Today’s opinions open a whole new field of constitutionalized criminal procedure: federal plea-bargaining law,” he said.

Scholars who welcomed that development agreed about its significance.

“The Supreme Court’s decision in these two cases constitute the single greatest revolution in the criminal justice process since Gideon v. Wainwright provided indigents the right to counsel,” said Wesley M. Oliver, a law professor at Widener University.

It has long been established that defendants are entitled to new trials if they can show that incompetent work by their lawyers probably affected the verdicts in their cases. The Supreme Court has also required lawyers to offer competent advice in urging defendants to give up their right to a trial by accepting a guilty plea.

The cases decided Wednesday answered a harder question: What is to be done in cases in which a lawyer’s incompetence caused the client to reject a favorable plea bargain?

Justice Kennedy, who wrote both majority opinions and was joined both times by the court’s four more liberal members, acknowledged that allowing the possibility of reopening cases involving rejected pleas that were followed by convictions presented all sorts of knotty problems. But he said the realities of American criminal justice required the court to take action.

One of the cases, Missouri v. Frye, No 10-444, involved Galin E. Frye, who was charged with driving without a license in 2007. A prosecutor offered to let him plead guilty in exchange for a 90-day sentence.

But Mr. Frye’s lawyer at the time, Michael Coles, failed to tell his client about the offer. After it expired, Mr. Frye pleaded guilty without a deal in place, and a judge sentenced him to three years.

The second case, Lafler v. Cooper, No. 10-209, concerned Anthony Cooper, who shot a woman in Detroit in 2003 and then received bad legal advice. Because all four of his bullets struck the victim below her waist, his lawyer said, Mr. Cooper could not be convicted of assault with intent to murder.

Based on that advice, Mr. Cooper rejected a plea bargain that called for a sentence of four to seven years. He was convicted, and is serving 15 to 30 years.



U.S. Justice Dept. Sues American Bar Assoc. for Anti-Trust Violation re: Law Schools

Tuesday, March 20th, 2012

United States v. American Bar Association


We filed the second and most significant of our recent trade association cases last June, also here in the District, against the American Bar Association. We charged that its law school accreditation program was controlled by law school faculty, who were using the ABA’s power over accreditation to force law schools to inflate faculty salaries and benefits.


The accreditation program run by the ABA’s Section of Legal Education — 90 percent of whose members were law school faculty — involved extensive requirements, enforced by on-site inspections, probationary periods, and periodic renewals. The individuals who served on the Section’s Accreditation Committee had been there for many years, and their activities had for a long time largely escaped supervision by the ABA’s Board of Governors and House of Delegates.


Among other things, the ABA committee required that the law school’s faculty salaries — the price of teaching talent — be “comparable” with those of other ABA-accredited schools, and required each accredited school to submit detailed salary information in order to verify compliance with this requirement.


In practice, we charged, the ABA committee further manipulated this price-fixing requirement by permitting the faculty of the law school under review to select their own “peer group” of other law schools to compare salaries with. Not surprisingly, the faculty often chose higher-ranked schools or schools located in higher-cost areas for the peer group, which inflated the salary levels. We found a number of instances in which law schools were placed on probation for having an “inadequate” salary structure.


ABA accreditation is virtually essential to the success of a law school. The bar admission rules in over 40 States require graduation from an ABA-accredited law school as a condition for taking the bar exam.


The ABA committee further flexed its muscle by prohibiting an accredited law school from accepting transfer credits from unaccredited law schools, or from accepting graduates of unaccredited law schools into its graduate programs — even if the other school was accredited by the State.


That case has also been resolved by a consent decree, which is still being reviewed by the court. Under the decree, the ABA committee cannot impose any comparative requirement, or collect any comparative data, regarding law school faculty compensation. Nor can the ABA committee prohibit schools from accepting credits or graduates from State-accredited law schools.


The decree also requires a number of reforms to the structure of the Accreditation Committee and the Legal Education Section to ensure that law school faculty no longer dominate, and that accreditation-related activities are subject to effective outside supervision.


Finally, the decree requires that a Special Commission, which had already been established by the ABA, advise the court on the appropriate use of several other accreditation requirements that we looked at. These are requirements that can serve legitimate educational purposes, but that we found had also been used at times to feather the nests of law school faculty. These requirements relate, for example, to faculty teaching-hour limitations, student-faculty ratios, faculty sabbaticals and other leaves of absence, and quality of law school facilities.


Tomorrow is the deadline for the ABA Board of Governors to file the Commission’s final report with the court, along with the Board’s comments. After a public notice and comment period, we will file our own comments


N. Carolina Attorney’s disbarment Order Overturned for Due Process Violation

Tuesday, March 20th, 2012


March 20, 2012

In an appeal from a Disciplinary Hearing Commission order of disbarment, the North Cartolina Court of Appeals reversed based on its determination that the due process rights of the accused attorney had been violated.

The State Bar filed a complaint alleging that the attorney had “knowingly misrepresented the seller’s $7,400 loan to the buyer as a down payment on the HUD-1 statement.” The State Bar moved to compel discovery responses. The attorney sent the DHC this e-mail in response:

I reviewed your bogus order to compel. I will not be producing anything. in fact, I will never be in communication with any of you people ever again.

I will not be at the February hearing.

I am moving on with my life. You have no power over me. You are mistaken to think that you do. You are fully aware that Mrs. [Leanor] Hodge [the attorney handling the matter for the State Bar] is lying. Apparently, this is status quo.

At the hearing, the State Bar presented evidence of fraud that differed in material respects from the allegations.

The court here held that the lack of notice amounted to a due process violation. The court further held that disbarment could not be imposed based on the violation of the order to compel discovery.

You don’t often see such holdings in bar discipline cases. (Mike Frisch)

March 20, 2012 in Bar Discipline & Process




Shari’a Law Is Creeping into American Courts

Sunday, March 18th, 2012

LawReader published a story about a pending resolution by the Ky. Legislature would allow religious laws to override some state laws.  We suggested that this law, if passed, would jeopardize the separation of church and state.

The bill was adopted by the Senate and is now in the House.  The resolution calls for a constitutional amendment to Kentucky’s constituton.  A reader sent in the following links.

Shari`a law is creeping into American courts, and needs to be stopped:


And for the latest example thereof:


Saturday, March 17th, 2012


By David Kramer |


On Feb. 23 I posted about Goodin v. White, 342 S.W.3d 282 (Ky. App. 2011), the first Kentucky appellate decision dealing with Mary Carter settlement agreements ( After running the post I received additional information, including the fact that the agreement in Goodin did have the characteristic of a Mary Carter agreement that it rewarded the settling defendant on a dollar-for-dollar basis with a set-off (via indemnity) for damages imposed against the nonsettling defendant.


Also, I learned that the plaintiff in Goodin filed an amended complaint against the third-party defendant, making that party a defendant as well. I believe the opinion properly upheld the admissibility of the occurrence of a Mary Carter settlement agreement and correctly found that such a settlement may be admissible to show bias or for impeachment.


However, an indemnity agreement between the plaintiff and a defendant taking part in a jury trial would arguably give the settling defendant a hidden interest (and greater than usual bias) against the nonsettling defendant that distorts the normal adversarial process. This is one of the reasons why some jurisdictions have banned secret Mary Carter agreements, and why others hold them admissible. On the other hand, one could argue that attempting to educate the jury about the terms of such an indemnity agreement might cause confusion, and that admission of the fact of the settlement agreement itself is sufficient to let the nonsettling defendant argue to the jury that the settling parties are in league. Also, under the particular circumstances of the Goodin case, there was already antagonism evident between the nonsettling defendant and the settling third-party defendant — the filing of the third-party complaint itself.


The bottom line on Goodin v. White? The court and all parties should be advised of the existence of a Mary Carter agreement; and such an agreement should be admissible to show bias or to impeach prior testimony. I would have preferred if the opinion had added that individual terms of the agreement that would distort the normal adversarial process or that cause a de facto misalignment of the parties should be admissible to the jury as well, subject to the trial court’s discretion.


David Kramer is a Northern Kentucky attorney practicing at Dressman Benzinger Lavelle psc.

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Thursday, March 15th, 2012


By David Kramer |


Until recently, Kentucky courts interpreted the Kentucky long-arm statute as permitting jurisdiction to the full extent of federal due process, which meant that if federal due process permitted personal jurisdiction over a nonresident defendant, the long-arm statute did as well.[1] The Supreme Court of Kentucky reversed course in 2011 and held that Kentucky courts may exercise personal jurisdiction over a nonresident only in the nine specific instances set out in the long-arm statute.[2] Now, a Kentucky court must engage in a two-step process to determine if it may exercise personal jurisdiction over a nonresident defendant. First, the court must determine whether personal jurisdiction over the defendant will satisfy the requirements of any one of the nine specific categories set out in the long-arm statute, and second, the court must determine whether federal due process will permit the court to exercise personal jurisdiction.[3]


Federal due process requires that a nonresident defendant have minimum contacts with the forum state “such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’”[4] Thus, where there are no activities, ties, or contacts with Kentucky, courts within the state will not have personal jurisdiction over the nonresident.[5]


Where a defendant comes into the state, his or her physical presence alone satisfies due process because it is one of the continuing traditions of the legal system that defines the due process standard of “traditional notions of fair play and substantial justice.”[6] When the plaintiff cannot serve the nonresident defendant in the state, personal jurisdiction over the nonresident defendant falls into two categories: general personal jurisdiction and specific personal jurisdiction.[7]


Courts exercise specific personal jurisdiction over a nonresident defendant in cases in which the claim arises from one or more acts of the defendant in the forum state.[8] Courts may not exercise specific personal jurisdiction over a nonresident defendant unless the defendant has purposefully availed itself “of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.”[9] A “random, fortuitous, or attenuated contact” will not permit a Kentucky court to exercise specific personal jurisdiction under federal due process.[10] Thus, for instance, a single eBay sale by a nonresident to a Kentucky resident will not allow a Kentucky court to exercise personal jurisdiction over the nonresident seller.[11] Likewise, the Supreme Court of the United States has held that a foreign manufacturer is not subject to personal jurisdiction in a state simply because one of its machines makes its way into the state through the stream of commerce.[12]


Under general personal jurisdiction, the defendant’s contacts with the forum state are so “continuous and systematic” that the state’s courts have jurisdiction over all claims whether the claims are related to the defendant’s contacts with the forum state or not.[13] The threshold for establishing general jurisdiction is substantial, and thus the fact that a nonresident defendant maintains a website that continuously reaches Kentucky residents or advertises in national magazines to which Kentucky residents subscribe will not be enough to subject the defendant to general personal jurisdiction.[14]

Note: The foregoing post includes commentary reprinted from the forthcoming 2012 supplement to Rules of Civil Procedure Annotated, 6th ed. (Vols. 6 & 7, Kentucky Practice Series), by David V. Kramer and Todd V. McMurtry, with permission of the authors and publisher.


Copyright (c) 2012Thomson Reuters. For more information about this publication please visit


David Kramer is a Northern Kentucky attorney practicing at Dressman Benzinger LaVelle psc.

Subscribe to the DBL Civil Litigation blog.


[1] Cummings v. Pitman, 239 S.W.3d 77, 84-85 (Ky. 2007); Wilson v. Case, 85 S.W.3d 598, 592 (Ky. 2002).

[2] Hinners v. Robey, 336 S.W.3d 891, 895 (Ky. 2011); Caesars Riverboat Casino, LLC v. Beach, 336 S.W.3d 51, 56 (Ky. 2011).

[3] Id.

[4] Goodyear Dunlop Tires Operations v. Brown, __ U.S. __, 131 S. Ct. 2846, 2853 (2011) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

[5] See, e.g., Halderman v. Sanderson Forklifts Co., 818 S.W.2d 270, 274 (Ky. App. 1991).

[6] Burnham v. Superior Court of California, County of Marin, 495 U.S. 604 (1990); Perry v. Central Bank & Trust Co., 812 S.W.2d 166 (Ky. App. 1991).

[7] Goodyear Dunlop Tires Operations v. Brown, 131 S. Ct. 2846, 2854 (2011).

[8] Id.

[9] Id. (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)).

[10] Hinners v. Robey, 336 S.W.3d 891, 901 (Ky. 2011).

[11] Id. at 902

[12] McIntyre Machinery v. Nicastro, __ U.S. __, 131 S. Ct. 2780 (2011).

[13] Goodyear Dunlop Tires Operations, 131 S. Ct. at 2854.

[14] Crouch v. Honeywell International, Inc., 682 F. Supp. 2d 788, 796 (W.D. Ky. 2010)