Is it Practicing Law?

[austin3515]

To draft a QDRO?  I get that a lot of stuff that we do the lines get blurred.  for example, perhaps complicated language in the other field of a volume submitter document, or perhaps requesting language changes to a QDRO for clarification.

I don;t know why I feel like drafting a QDRO goes over that line, but I think it's because a judge ends up signing the document.

Thoughts?

[Belgarath]

Well, if you are very clear that you are drafting it for their ATTORNEY, to review, and modify as their attorney sees fit, then it seems like this should probably be ok. If you are drafting it for the parties involved without this disclaimer and instruction, seems like that does cross the line.

Others might have a stricter interpretation. On a personal level, I wouldn't draft a QDRO for someone, even WITH the disclaimer. I'd tell 'em to see their attorney.

[MoJo]

There are services that employ non-attorney employees to draft and handle DROs, but 1) usually there is an attorney involved (and that would be the same for law firm paralegal drafted documents) BUT for it NOT to be the unauthorized practice of law, a lawyer probably needs to be involved.  I would take it one step further in that it is actually "unethical" for an attorney who DOES NOT REPRESENT THE CLIENT to actually work directly for the client but must work through an attorney who is engaged by the client - so most of the DRO drafting services I'm familiar with are NOT engaged by the client directly, but through an attorney and the DRO is always offered "for review by counsel."  It is possible for such a firm to be engaged as "co-counsel" but then they would have to make an appearance before the court in some cases.  Since most DRO firms I'm aware of who do employ attorneys (most being founded by one) provide their services in jurisdiction in which they are not licensed, it still the "for review by counsel" model.

Bottom line, I agree that DRO drafting is the practice of law as it is an "order" of a court....

[austin3515]

So let's say I wanted to provide this service.  I am not a lawyer.  You're saying I could either

1) have an engagement letter with the attorney representing one of the divorcee's and provide the QDRO for their review OR

2) Prepare the QDRO for the divorcee directly but provide it to then explicitly for review by their divorce attorney.

Is that about right?

Heck it seems to me I could work with an attorney on an awesome QDRO template and just tweak it each time.  Just curious...

[MoJo]

33 minutes ago, austin3515 said:

So let's say I wanted to provide this service.  I am not a lawyer.  You're saying I could either

1) have an engagement letter with the attorney representing one of the divorcee's and provide the QDRO for their review OR

2) Prepare the QDRO for the divorcee directly but provide it to then explicitly for review by their divorce attorney.

Is that about right?

Heck it seems to me I could work with an attorney on an awesome QDRO template and just tweak it each time.  Just curious...

I disagree with 2 - I think you can only provide the service directly to a divorcee IF and ONLY IF you are an attorney licensed in the jurisdiction for which you are providing the service (which would be the state in which the state family court hearing the case is).

[WCC]

 

2 hours ago, MoJo said:

I disagree with 2 - I think you can only provide the service directly to a divorcee IF and ONLY IF you are an attorney licensed in the jurisdiction for which you are providing the service (which would be the state in which the state family court hearing the case is).

What about the self help legal websites that provide DRO services? For example, I received a DRO recently that was prepared by a self help legal form website where the participant paid a few hundred dollars and they generate a DRO? The provider of the forms adds a very clear disclosure stating they are providing "legal information" not "legal advice". I am not an attorney, but I am curious if a self help option is different than what Austin is referring to?

 

[RatherBeGolfing]

22 minutes ago, WCC said:

 

What about the self help legal websites that provide DRO services? For example, I received a DRO recently that was prepared by a self help legal form website where the participant paid a few hundred dollars and they generate a DRO? The provider of the forms adds a very clear disclosure stating they are providing "legal information" not "legal advice". I am not an attorney, but I am curious if a self help option is different than what Austin is referring to?

 

The self help websites and software haven't exactly gone without controversy.  Legalzoom has been challenged in several jurisdictions.  

As I understand it, the difference between Austin and a self help site is Austin would use a degree of judgment and discretion, whereas the self help sites do not. 

Giants like legalzoom have been able to defend themselves against the state bars, and in some cases I believe the reached rather large settlements, which would be hard to do for Austin, even though he is an international man of mystery...

[Peter Gulia]

Without expressing my view about what would or wouldn’t be an unauthorized practice of law, let me indulge a bit of history.

 

In the 1980s, if one wanted Corbel to produce a plan document, one needed a lawyer (or at least someone willing to say she’s a lawyer) to sign the intake questionnaire.

 

In 1990, Florida’s Supreme Court found that the State lacked “power to place limitations on the authority granted to a nonlawyer by a Federal agency.”  The reasoning referred to how 31 C.F.R. Part 10 allows a certified public accountant to practice before the Internal Revenue Service.  The Florida Bar re Advisory Opinion – Nonlawyer Preparation of Pension Plans, 571 So.2d 430 (Fla. Nov. 29, 1990).

 

After that decision, Corbel revised its intake form to allow not only a lawyer but also a certified public accountant to be the instructing professional.

 

Some might defend an accountant’s, actuary’s, or ERPA’s drafting of plan documents under an assumption that she might file a Form 2848 to appear before the IRS as a representative on the plan sponsor’s application for a determination.  (With fewer opportunities to apply for a determination, this reasoning becomes more tenuous.)

 

For drafting a domestic-relations court’s order, it seems doubtful there is much connection to a proceeding before the Internal Revenue Service.  So a State authority would decide whether the nonlawyer’s practice is unauthorized without applying the U.S. Constitution’s supremacy of Federal law.

 

If one fears enforcement grounded on unauthorized practice of law, one might design a service to avoid judgment or discretion about what provisions to state in the draft order, and to avoid advice about what a particular retirement plan allows or precludes.

 

I remind BenefitsLink readers of my longstanding view that the law ought to permit any person to give legal advice (including drafting documents that involve advice), and to be responsible for that advice.

[MoJo]

14 hours ago, RatherBeGolfing said:

The self help websites and software haven't exactly gone without controversy.  Legalzoom has been challenged in several jurisdictions.  

As I understand it, the difference between Austin and a self help site is Austin would use a degree of judgment and discretion, whereas the self help sites do not. 

Giants like legalzoom have been able to defend themselves against the state bars, and in some cases I believe the reached rather large settlements, which would be hard to do for Austin, even though he is an international man of mystery...

What he said...

In other words the "legal information" vs. "legal advice" is significant.  We provide a "form" DRO but only to plan sponsors and lawyers.  They can deliver it to participants if they want to.

[MoJo]

10 hours ago, Fiduciary Guidance Counsel said:

 

I remind BenefitsLink readers of my longstanding view that the law ought to permit any person to give legal advice (including drafting documents that involve advice), and to be responsible for that advice.

The reason "unauthorized practice of law" is a thing is to protect the public in the same manner that one cannot "practice medicine" without a license.  The consequences are horrific if not done properly, and the remedy of suing for "malpractice" isn't a realistic remedy relative to the consequences.

An extreme example for clarity:  If a non-lawyer represents an accused murderer and loses, causing the defendant to be sentenced to death, getting money damage for malpractice is insignificant if a real defense existed.

While arguably the consequences of messing up a DRO are somewhat more measureable, 1) there is no guarantee the aggrieved will ever collect the damages (ever hear of one being "judgement proof" - easy to do if you want to); and 2) you need to draw the line somewhere (so, if you allow DRO's, would you also allow appeal pleadings and briefs relating to the DRO?  What about other court pleadings, like the settlement agreement/separation agreement?)  If it's legal advice - including court pleadings - it's the practice of law.  Plan documents are a bit of an aberration - but everyone I know who drafts them does so "for review by counsel" - and fall under the "self drafted" rule (now if we could get plan sponsors to actually read them before signing....).

By the way, self representation is always an option, and you can draft pleadings/contracts/business transactions (but you can't represent you own "corporate" entity in court) to your heart's content - but remember, one who represent's him or her self has a fool for a client.

And just for the record, despite being an attorney who deals with 50-70 DROs a month, I hired an attorney to deal with mine....

[Peter Gulia]

MoJo, thank you for describing a different view.

If anyone is wondering, my views distinguish out-of-court advice and in-court acts as a representative of a litigant.

But those distinctions don't change my view that even an unrepresented litigant ought to be permitted to choose any drafter.  The litigant accepts responsibility for the document he or she submits to a court.

I'm aware that my views are a departure from received ideas; so again, thank you for helping me think about different ideas.

[Belgarath]

"The litigant accepts responsibility for the document he or she submits to a court."

I love your viewpoint. Sadly, it seems to me that no one is ever responsible for anything these days - the fault always lies with "someone else." I just wasn't raised that way...

[david rigby]

2 hours ago, MoJo said:

...you need to draw the line somewhere...

Exactly!  As a non-lawyer, I appreciate that the legal profession recognizes that real harm can come from non-lawyers pretending they know the law, and its consequences.  In the same manner, I appreciate when other professionals acknowledge that actuaries have relevant training and experience that helps with other matters.

[MoJo]

57 minutes ago, david rigby said:

In the same manner, I appreciate when other professionals acknowledge that actuaries have relevant training and experience that helps with other matters.

The difference is, nobody in their right mind wants to engage in the unauthorized practice of actuarial science!  It's all voodoo...

Just kidding, of course - and you make a great point.  The "unauthorized practice" principles extend to virtually all professions....

[MoJo]

1 hour ago, Belgarath said:

"The litigant accepts responsibility for the document he or she submits to a court."

I love your viewpoint. Sadly, it seems to me that no one is ever responsible for anything these days - the fault always lies with "someone else." I just wasn't raised that way...

Generally I would agree, but when it comes to "professional services" it just isn't the "litigant" or patient or client or whatever - it is also a burden on others when such things are done wrong.  Unrepresented litigants consume an inordinate amount of taxpayer funded court time.  I can't imagine the societal costs of having quacks practice medicine, or bookeepers practicing tax accounting, or as David points out above, the societal costs of an entire plan's worth of participants not having money for retirement because someone stayed at a Holiday Inn last night and engaged in actuarial science.

It isn't just a matter of the "litigant, et.al." but of the problems and chaos that results from incompetence in professional services (or for that matter, untrained people in any service or trade).

[austin3515]

I have always thought a possible way to do it would be a check the box QDRO, like a prototype docyument.  That way my task is ministerial.  The prototype QDRO would of course be prepared by an attorney. So not dissimilar from what I do on my plan documents.

What do people think about that?

[ESOP Guy]

A few observations as we are getting way off topic.

I do appreciate MoJo's view and classic views about who should practice law.

There is however the theory and practice.  With both the law and medicine the licensing requirements are in a large part a protection of the public and in part (only part) a legalized barrier to competition that has created two of the highest paid professions in this country.  On top of that because we have a near irrational public policy of subsidizing higher education many of us lower paid taxpayers get to have a good chuck of our tax dollars subsiding those who choose to enter those professions ability to do so.  This is via public universities using tax dollars and the various student financial aid. 

it is true this is has some truth to my profession as a CPA but the only thing we really can do a non-CPA can do that is big dollars is auditing.  I have to compete again non-CPA tax prep, bookkeepers, consultants....  So I might be open to a charge of double standard. 

But law and medicine pretty much you have to join the "priesthood" to practice.  And while their compensation has to do with skill, risk and compensation for spending years in school instead of earnings money during their 20's... some of it is simply a legal barrier to competition premium.  This even becomes worse when for example I have had to hire a lawyer for a house closing (back in the '80s at least in the Chicago area everyone has a lawyer for a simple home purchase for some reason.  I was 23 so I did what all the other adults were doing.)  And that lawyer just sent a paralegal to the closing who barely looked at the forms.  All the forms were standardize forms and it seemed like the Title Company who ran the closing did most of the work and I had to pay them a closing fee for that service.  It screamed out for the creation of something like a license for a residential paralegal that allowed the paralegal to compete with her boss.  My guess is back then she was making <$20/hour and I was being billed close to $350 for that hour of work.  In that case I think the barrier to competition premium was very high. 

There are just times when I use a lawyer I feel like I am paying for that service twice. Once to help them get the education to become a lawyer and then again when they use that knowledge on my behalf.

[MoJo]

37 minutes ago, ESOP Guy said:

A few observations as we are getting way off topic.

There are just times when I use a lawyer I feel like I am paying for that service twice. Once to help them get the education to become a lawyer and then again when they use that knowledge on my behalf.

The same is true for many, many "professions" and there is room for improvement.  It is happening in some areas (nurse practitioners are now alternative for certain medical concerns - and they can prescribe, etc.).  Lawyers are like other "professionals" in that they charge based on not only the hours they spend, but the risks they undertake in doing so.  The paralegal at your closing may have not made that much, but the lawyer they worked for undertook risk in performing that service - and the fee is market driven.  By the way, in many states a lawyer is not required for a real estate closing - and licensed" real estate agents can perform some of the "contract writing" etc. - with the title company doing the deed/title work.

You do pay for our education - as I pay for doctor's education (which is why I get ticked off thinking about not having access to medical care when I was unemployed having spend decades supporting medical schools, doctors and other medical practitioners, universities, hospitals and drug companies - but I digress).

The real reason is protection of society.  Has it gotten "monopolistic"?  Perhaps.  But are you going to trust legalzoom to draft appropriate documents for *your* divorce/estate pan/multi-million dollar corporate merger/acquisition or other significant transaction?

Probably not anymore than I would trust a bookeeper over CPA to hand a complex tax transaction....

[RatherBeGolfing]

32 minutes ago, MoJo said:

Probably not anymore than I would trust a bookeeper over CPA to hand a complex tax transaction....

or Turbotax et al...

[Carol V. Calhoun]

2 hours ago, austin3515 said:

I have always thought a possible way to do it would be a check the box QDRO, like a prototype docyument.  That way my task is ministerial.  The prototype QDRO would of course be prepared by an attorney. So not dissimilar from what I do on my plan documents.

What do people think about that?

We definitely have instances in which we as attorneys draft a form QDRO, which a nonattorney employee of the employer or plan then provides to plan participants or their attorneys.  I don't see the purely ministerial function of providing the sample QDRO as being the practice of law.  But I would not want a nonattorney drafting the QDRO in the first instance, or providing the participant with legal advice concerning it.

[austin3515]

But just filling in the blanks would work, right?  What is the amount?  Select $ amount or percentage.  Adjusted for gains, yes or no. IT seems to me that there are not so many variables.

 

Heck if one of you wants to draft the check the box QDRO perhaps you could make some money off of it!

[Peter Gulia]

austin3515, some retirement plans and TPAs furnish a model form of domestic-relations order, typically as an illustration of what would get an administrator’s Yes.

 

Many divorce lawyers put requesting the plan’s model form as a first step in their work toward a domestic-relations order.

 

Some plans furnish a model form only to a requestor who presents herself as an attorney-at-law.  Some plans furnish the form also to a non-attorney requestor who is the plan’s participant or who refers to a participant and presents himself as that person’s spouse or former spouse.

 

Some service providers offer a service, often for an incremental fee, of deciding whether an order is a QDRO.  They reason a service is non-discretionary under 29 C.F.R. § 2509.75-8/D-2 if the service provider does no more than check whether an order follows the model form the plan’s administrator specified.

 

I’ve designed and written these regimes from both sides – sometimes as counsel to a plan’s sponsor/administrator specifying its procedure and forms, and other times as counsel to a third-party administrator that designed what its customer would instruct the TPA to follow.

 

These services are increasingly a norm for large plans that prefer to outsource the work.  But the service might be even more useful for small plans.  A small employer might have so few submissions that it’s too hard to teach an employee how to do QDRO reviews.  But a TPA with a sufficient aggregation of clients might see enough volume (and might have enough related knowledge and experience) that the TPA can do QDRO reviews efficiently.

 

[Larry Starr]

Back to the original question....

Yes, drafting a QDRO is practicing domestic law; no question about it.  I can actually practice "pension law" (the Internal Revenue Code stuff) because I am an Enrolled Agent (CPA has same authority) but a QDRO is outside of that area.

I draft lots of QDRO's.  I do not ever work for the participant.  The participant is told to have their lawyer contact me. I have a simple one page form that is filled out and signed by the lawyer that makes it clear that the lawyer is hiring me and I provide my finished "draft" product to the lawyer for them to take to the court.  It even has the lawyer's name on it as "prepared by", not mine.

I don't care who sends the check (I get paid before doing the QDRO). Often I get two checks; 1/2 from each of the soon to be ex spouses, but it is still the attorney that is hiring me and my document is the work product of the lawyer.  Therefore, I am NOT practicing law.

 

[MoJo]

25 minutes ago, Larry Starr said:

I don't care who sends the check (I get paid before doing the QDRO). Often I get two checks; 1/2 from each of the soon to be ex spouses, but it is still the attorney that is hiring me and my document is the work product of the lawyer.  Therefore, I am NOT practicing law.

 

Larry, are you "not practicing law" entirely correctly, IMHO....

[Old Benefits Dog]

Whether drafting a QDRO for a participant is the practice of law is a state law issue.  

Generally, if you do so for an attorney that represents the participant you are ok since the attorney is the one practicing law and he/she is responsible for the terms of the DRO and whether it is in the best interest of his/her client, as well as the DRO's filing with the state court and obtaining the court's approval making it a QDRO.

If you draft the QDRO and provide it directly to the participant, then expect to be held as practicing law in the state where the participant is located and is to file the QDRO.  Also, expect to be held to the same quality and ethical standards as an attorney in the applicable state.

It will be a state court that makes the determination of whether you were practicing law and whether you met the quality and ethical requirements of an attorney in that state. This is a state law issue of legal representation, not a Federal tax or ERISA law issue.

Can you do it.  Of course you can.  However, if you do, your main concern should not be whether you were allowed to under state law (unauthorized practice of law) but whether your service met the state law quality and ethical requirements that apply to attorneys.  Your "client", the participant, can sue you in state court for malpractice of law or for ethics violations and seek damages.

Also, states generally do not allow persons practicing law, whether authorized or not, to hide behind fin print language saying your are not practicing or to have an attorney review the QDRO you drafted.  

Do you really want to practice law?  This is a family law setting where the QDRO is to be filed with a state court.  Ethics issues abound in family law settings and the participant and his/her spouse are not very happy with each other.  Do you really want to step into the middle of this.

I am an attorney who has practiced almost 100% of my time working on retirement plans.  I will not draft a QDRO directly for a participant, but will only do so for a family law attorney that represents the participant.

When you draft a QDRO you are drafting a court order on behalf of a participant whose interests are likely in opposition to his/her spouse, that is the practice of law.  Do so at your own risk.  

Again it is the participant or his/her spouse that you need to worry about, not whether the state will take action to stop you from unauthorized practice of law.