Document Preparers or Paralegals Ripping Off Consumers

ANOTHER DOCUMENT PREPARATION SERVICE IN TROUBLE FOR NOT FOLLOWING THE LAW – SAUNDRA EHRHARDT and AIRHARDT ENFORCEMENT SERVICE

In re Munoz, 2:19-bk-05828 (7/3/2019)Judge Collins, Arizona bankruptcy judge, found Ms. Ehrhardt violated bankruptcy law and forced her to return the money paid by her “clients, plus fines for these illegal actions.  She is also barred from preparing bankruptcy documents in Arizona.

November 2018: The Arizona Supreme Court established a committee to review the current process authorizing documents preparers to do certain work normally done by attorneys.  Administrative Order 2018-111

The following is part of a discussion by fellow attorneys who describe some very expensive mistakes created by document preparers or paralegals (the Arizona Supreme Court does not allow them to call themselves paralegals).

Document Preparers are not permitted to give legal advice which leads to people losing their tax refunds and more.

Document preparers are regularly involved in filing Bankruptcies for better or worse.   There are some very able document preparers and there are some that create plenty of trouble for pro se debtors; the Self-Help Center see this all of the time.   The problem in bankruptcy is that is impossible to be a document preparer without giving legal advice as to vehicle reaffirmations and declaration of exempts (otherwise the “document preparer” is just a typist).

Document preparers do not warn people about the problems with filing bankruptcy.

With that caveat, I have seen a lot of bad work. I have seen where PCs were charged $3,000-$4,000 for bad documents that were not in the client’s best interest. Many of these said documents, I would have done for $2,000 or less. 

Document Preparers preying on Hispanic and other minority communities

In my experience, this particularly pervasive in Hispanic communities where lawyers have a huge stigma, but it is the document preparers that they should be fearful of. 

Divorce work

I have routinely seen doc preparers swindle one party; they draft Consent Decrees or Rule 69 Agreements that are overly favorable for one party and that they sign without understanding. 

Recently, I have seen:

1. a Consent Decree where the parties agreed to Father paying 300% more than the child support guidelines suggested; 
2. Someone paid $3,000 to Respond to an uncontested divorce and was considering an additional $4,000 for the doc preparer to draft a Consent Decree – No children, no assets, no debt;
3. And a couple was quoted $5,000 to draft mediation agreements when their combined income was well under $60,000.

Business Structures

So to throw another monkey wrench into this, what about LegalZoom?  Is this a document preparer?  I can’t tell you how many cases I’ve had to unwind or attempt to unwind after folks got their operating agreements from Legal Zoom and agreed that Delaware LLC law applied to this small AZ company.

Estate Planning:

Flyers Left on Doorsteps Lead to Cease and Desist Order of Non-Lawyer

PHOENIX – Nov. 16, 2018 – A Judgment of Default and Cease and Desist Order was issued by Pinal County Superior Court Judge against Barry L. Cox for engaging in the unauthorized practice of law in Arizona.

The order stems from a complaint filed by the State Bar of Arizona after Cox advertised estate planning services.

A flyer reading “Estate Planning Documents” was left on several San Tan Valley residents’ doorsteps listing a menu of services and identified Cox as “Barry L. Cox, Esq., Legal Document Writer.” In its complaint, the Bar asserted that offering estate planning services, identifying himself as a legal document writer, and using the “Esq.” designation for lawyers led the public to believe he was authorized to practice law in Arizona.

The State Bar found that Cox had never been authorized by the Arizona Supreme Court to engage in the practice of law in Arizona nor certified as a legal document preparer.

On Nov. 9, 2018, Barry L. Cox, and any corporate or business entity owned, controlled or operated by him, was ordered to immediately and permanently cease and desist from engaging in the unauthorized practice of law in Arizona and enjoined from using the designations “lawyer,” “attorney at law,” “counselor at law,” “law,” “law office,” “J.D.,”  “Esq.,” or equivalent words. He must also pay for costs and expenses associated with the State Bar of Arizona’s investigation. 

MUSINGS BY DIANE:

Bankruptcy is a very complicated Rubik’s cube in even simple cases and everyone has a right to know how bankruptcy can cause serious damage (lose tax refunds, have family sued or other really bad results.

I am not trying to scare people, but instead to inform them.  Whether they hire our office or another good bankruptcy attorney (I give referrals out all the time), my goal is to educate everyone – even document preparers and fellow lawyers.