Michigan Supreme Court
Lansing, Michigan 48909
_____________________________________________________________________________________________
C h i e f J u s ti c e J u s t ic e s
Maura D. Corrigan Michael F. Cavanagh
Opinion
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
____________________________________________________________________________________________________________________________
FILED JUNE 24, 2003
PAUL DRESSEL and THERESA DRESSEL,
Plaintiffs-Appellees,
v No. 119959
AMERIBANK,
Defendant-Appellee.
___________________________________
BEFORE THE ENTIRE BENCH
KELLY, J.
With this case we determine whether a lender that charges
a fee for the completion of standard mortgage documents
engages in the unauthorized practice of law under MCL 450.681.
The Court of Appeals held that the lender is so engaged and
reversed a circuit court order granting summary disposition in
favor of defendant. We conclude that such conduct does not
constitute the practice of law and, accordingly, reverse the
Court of Appeals judgment and reinstate the circuit court
order in favor of defendant.
I. FACTUAL AND PROCEDURAL BACKGROUND
In 1997, plaintiffs obtained from defendant Ameribank a
real estate loan secured by a mortgage on their home. In
connection with the loan, the bank prepared an adjustable rate
note and a mortgage. On its settlement statement, it
designated a $400 fee for "document preparation." It provided
written material to plaintiffs stating that the document
preparation fee was "a separate fee that some lenders charge
to cover their cost of preparation of final legal papers, such
as a mortgage, deed of trust, note or deed."1
Plaintiffs brought suit alleging that the charging of a
fee for completing the mortgage documents constituted the
unauthorized practice of law and violated the Michigan
Consumer Protection Act (MCPA), MCL 445.901 et seq. In March
of 1999, the case was certified as a class action to provide
potential relief for other borrowers who also had been charged
a document preparation fee by lending institutions.
The circuit court granted summary disposition to
defendant under MCR 2.116(C)(10) and denied reconsideration.
On appeal to the Court of Appeals, plaintiffs again argued
1
United States Department of Housing & Urban Development,
Buying Your Home (Washington, DC: United States Government
Printing Office, 1997), p 19.
2
that defendant's assessment of a document preparation fee
constituted the unauthorized practice of law. The Court of
Appeals ruled for the plaintiffs, noting that the statutes
governing the unauthorized "practice of law" do not
specifically define that term and that this Court has never
decided the issue. It held that the charging of a separate
fee for the preparation of legal documents by an interested
party constitutes the unauthorized practice of law. It held,
also, that neither of the exceptions to the statutes
proscribing the unauthorized practice of law2 applied to
defendant's conduct.3
The Court of Appeals concluded that defendant had
violated the MCPA and the Savings Bank Act (SBA), MCL 487.3101
et seq. Because the trial court had erred in dismissing
plaintiffs' claims of unauthorized practice of law, the Court
reasoned, it erred also in dismissing the SBA and MCPA claims.
Basic to these conclusions was the determination that, because
defendant was engaged in the unauthorized practice of law, its
activities were proscribed by the Credit Reform Act's
prohibition on excessive fees. MCL 445.1857(3).
Consequently, given that the fees were excessive under the
2
MCL 450.681 and MCL 600.916.
3
The Court of Appeals specifically held that the pro se
and "as otherwise authorized by law" exceptions to the statute
did not apply. 247 Mich App 133; 635 NW2d 328 (2001).
3
Credit Reform Act, they were not authorized by the SBA. MCL
487.3430(1)(a).
Similarly, the Court of Appeals concluded that, because
defendant was in violation of the SBA, plaintiffs' claims
under the MCPA were also valid. MCL 445.904(2)(d); see also
Smith v Globe Life Ins Co, 460 Mich 446, 467; 597 NW2d 28
(1999). Thus, the Court of Appeals reversed the order of the
circuit court and remanded the case. We granted leave to
appeal.
II. STANDARD OF REVIEW
Issues concerning the proper interpretation of statutes
are questions of law that we review de novo. Hoste v Shanty
Creek Mgt, Inc, 459 Mich 561, 569; 592 NW2d 360 (1999).
Similarly, this Court applies a de novo standard when
reviewing motions for summary disposition made under MCR
2.116(C)(10), which tests the factual support for a claim.
Spiek v Dep't of Transportation, 456 Mich 331, 337; 572 NW2d
201 (1998). We consider the facts in the light most favorable
to the nonmoving party, in this case, the plaintiffs. Smith,
supra at 454.
III. INTERPRETING THE UNAUTHORIZED PRACTICE OF LAW STATUTES
In Michigan, the practice of law is regulated by statute.
MCL 450.681 provides, in part:
It shall be unlawful for any corporation or
voluntary association to practice or appear as an
attorney-at-law for any person other than itself in
4
any court in this state or before any judicial
body, or to make it a business to practice as an
attorney-at-law, for any person other than itself
. . . .
It is the cardinal principle of statutory construction
that courts must give effect to legislative intent.
Omelenchuk v City of Warren, 466 Mich 524, 528; 647 NW2d 493
(2002). When reviewing a statute, courts must first examine
the language of the statute. If the intent of the Legislature
is clearly expressed by the language, no further construction
is warranted. Helder v Sruba, 462 Mich 92, 99; 611 NW2d 309
(2000).
In the past, this Court concluded that it is impossible
to formulate a specific and enduring definition of the
practice of law "'for the reason that under our system of
jurisprudence such practice must necessarily change with the
everchanging business and social order.'" State Bar of
Michigan v Cramer, 399 Mich 116, 133; 249 NW2d 1 (1976),
quoting Grand Rapids Bar Ass'n v Denkema, 290 Mich 56, 64; 287
NW 377 (1939). We disagree with that conclusion.
Although formidable, the task of formulating a definition
of the practice of law is not impossible. The full meaning of
the language in MCL 450.681, and in its sister provisions,4
prohibiting the unauthorized "practice of law" and engagement
4
MCL 600.916 prohibits individuals, as opposed to
corporations, from engaging in the unauthorized practice of
law or the law business.
5
in the "law business" may not be immediately apparent.
However, the language is capable of being construed. In order
to accomplish that, we review the purposes of the unauthorized
practice of law statutes.
These purposes are discernable from the regulations
governing the legal profession that preceded and coincided
with the enactment of the statutes. From them, it is possible
to extrapolate a sufficiently accurate definition of the
"practice of law" to guide parties in their dealings with each
other.
A. THE PURPOSE OF THE UNAUTHORIZED PRACTICE OF LAW STATUTES
Regulation of the legal profession began early in the
English legal tradition. See, generally, 1 Pollock &
Maitland, History of English Law (Boston: Little, Brown, & Co,
2d ed, 1899), pp 211-217; Baker, An Introduction to English
Legal History (London: Butterworths, 3d ed, 1990), pp 21, 179.
In our nation, also, regulation of the practice of law has
been an innate characteristic of the legal tradition. See
Pound, The Lawyer from Antiquity to Modern Times (St Paul:
West, 1953), pp 130, 135-136; see, e.g., 2 Works of John Adams
(Boston: Little & Brown, 1850), pp 45-50.
In the period between the American Revolution and the
Civil War, however, regulation of the profession receded.5 By
5
See, e.g., Ind Const 1851, art VII, § 21 ("Every person
(continued...)
6
the turn of the last century, increasing concern had developed
that the spread of unlicenced practitioners was harmful to the
profession and dangerous to the public. See Comment,
Unauthorized practice of law—The full service bank that was:
Bank cashier enjoined from preparing real estate mortgages to
secure bank loans, 61 Ky L J 300, 303-304 (1972).
Thus, at the time our unauthorized practice of law
statutes were enacted, there was a trend toward restoring the
organized bar as a means of regulating the practice of law.
At the core of this movement and of all other attempts to
regulate the practice was an interest in protecting the public
from the danger of unskilled persons practicing law. See
Comment, supra at 301-302, 304. It became the basic purpose
for our unauthorized practice statutes. As we stated in
Cramer, "'Laymen are excluded from law practice . . . solely
to protect the public.' . . . It is this purpose of public
protection which must dictate the construction we put on the
term 'unauthorized practice of law'." Id., at 134, quoting
Oregon State Bar v Security Escrows, Inc, 233 Or 80, 87; 377
P2d 334 (1962).
Having discerned the purpose of the statutes, we now
explore the extent of their reach. In this regard, we find
5
(...continued)
of good moral character, being a voter, shall be entitled to
admission to practice law in all courts of justice.")
7
persuasive the analysis of the trial judge in this case, Judge
Dennis Kolenda.
B. CONDUCT PROSCRIBED BY THE STATUTES
Judge Kolenda noted:
Some activities are plainly the practice of
law. "'It is too obvious for discussion'" that
"'the conduct of cases in courts'" is the practice
of law, as is "'the preparation of pleadings and
other papers incident to actions . . . and the
management of such actions and proceedings on
behalf of clients before judges and courts . . .
[.]" Detroit Bar Assn v Union Guardian Trust Co,
282 Mich 216, 222[ 276 NW 365] (1937), quoting In
re Duncan, 83 SC 186; 65 SE 210 (1909); and
Denkema, [supra] at 63. Doing those things, at
least doing them well, demands the unique training
and skills of an attorney. It is likewise obvious
that, for the same reason, the practice of law
includes "the giving of legal advice in any action
taken for others in any matter connected with the
law," [id.] at 63, even though unrelated to any
action in court. Much of what lawyers do is
"'performed outside of any court and [has] no
immediate relation to proceedings in court,'" [id.]
at 64, quoting Opinion of the Justices, 289 Mass
607, 613; 194 NE 313 (1934), and giving competent
legal advice requires a lawyer's training and
skill.
More problematic is the drafting of documents.
In Denkema, supra [at 63], our Supreme Court said
that the practice of law includes "the preparation
of all legal instruments of all kinds whereby a
legal right is secured," and in Detroit Bar Assn,
[supra] at 221, that Court quoted holdings from
other courts which included within the practice of
law "'the drafting of legal documents of all kinds.
[ . . .]'" Very significantly, however, the Court
prefaced those quotations with the reservation,
"[w]ithout giving full sanction thereto," Id., and
a careful reading of those and subsequent cases
discloses that such a broad definition has never
actually been applied in this State. Only some
documents, e.g., wills, have actually been held to
constitute the practice of law, [Denkema, supra] at
8
65. When composing a document requires "the
determination of the legal effect of special facts
and conditions," that activity is the practice of
law, [Ingham Co Bar Ass'n v Walter Neller Co, 342
Mich 214, 228; 69 NW2d 713 (1955)(citations
omitted).] "[P]rofound legal knowledge [is]
necessary" to properly draft such documents.
Detroit Bar Assn, [supra] at 223 (citations
omitted).
The practice of law does not, on the other
hand, encompass drafting "the ordinary run of
agreements [used] in the every day activities of
the commercial and industrial world," Detroit Bar
Assn, [supra] at 229. Legal training and knowledge
are not necessary to properly compose them.
Drafting simple documents, which drafting does not
entail giving advice or counsel as to their legal
effect and validity, is not the practice of law.
Denkema, [supra] at 66. Specifically, the
preparation of ordinary leases, mortgages and deeds
do not involve the practice of law, [Walter Neller
Co, 342 Mich 226-227.] They have become "'so
standardized that to complete them for usual
transactions requires only ordinary intelligence
rather than legal training.'" Id. at 224, quoting
Hulse v Criger, 363 Mo 26, 44; 247 [SW2d] 855
(1952). To insist that only a lawyer can draft
such documents would impede numerous commercial
transactions without protecting the public, [id.]
at 229, i.e., would not further the purpose of
restricting the practice of law to trained and
licensed attorneys. Cramer, [supra] at 133.
Hence, our courts have consistently rejected the
assertion that the Legislature thought that a person practiced
law when simply drafting a document that affected legal rights
and responsibilities. Walter Neller, 342 Mich 228-229;
Cramer, 399 Mich 133. Instead, our courts have found a
violation of the unauthorized practice of law statutes when a
person counseled another in matters that required the use of
legal knowledge and discretion. We agree and reiterate that
9
a person6 engages in the practice of law when he counsels or
assists another in matters that require the use of legal
discretion and profound legal knowledge.
This definition is in accord with the purpose of the
statutes, the protection of the public. It maintains the
integrity of the legal profession without overburdening our
normal economic activities with unnecessary restrictions.
Also, it provides parties with a common-sense approach to
conforming their conduct so as to avoid committing the
unauthorized practice of law.7
IV. APPLICATION OF THE STATUTES
Plaintiffs contend that defendant's activities
constituted the unauthorized practice of law because they
affected plaintiffs' legal rights and responsibilities.
Plaintiffs also contend that defendant's decision to charge a
6
As used in this opinion, "person" refers to any legal
entity.
7
A report by the American Bar Association's Task Force on
the Model Definition of the Practice of Law supports our
conclusion that this definition comports with the general
purpose for regulating the practice of law. The Task Force
reviewed the regulation of the practice of law among the
several states and ultimately recommended "that every
jurisdiction adopt a definition of the practice of law . . .
[that] include[s] the basic premise that the practice of law
is the application of legal principles and judgment to the
circumstances or objectives of another person or entity." See
Report of the American Bar Association Task Force on the Model
Definition of the Practice of Law to the House of Delegates,
http://www.abanet.org/cpr/model-def/taskforce_rpt_429.pdf.
June 11,2003.
10
fee for its services compels a holding that it engaged in the
practice of law and the "law business."
As we noted previously, the preparation of ordinary
mortgages is not the practice of law. Plaintiffs do not
assert that the bank's preparation of their mortgage document
was in conjunction with anything other than an ordinary
transaction in the normal course of the bank's business.
The bank's employees did not draft the mortgage document.
They merely completed a standard form document that the
federal government compiled and that is readily available to
the public.
In performing the act of completing the standard form
mortgage, defendant was acting as an amanuensis, a kind of
secretary for plaintiffs. No legal knowledge or discretion
was involved in the document's completion. The bank did not
counsel plaintiffs with regard to the legal validity of the
document or the prudence of entering into the transaction. In
general, the completion of standard legal forms that are
available to the public does not constitute the practice of
law. State Bar of Michigan v Kupris, 366 Mich 688, 694; 116
NW2d 341 (1962); see also Denkema, 290 Mich 68; Walter Neller,
324 Mich 222. Accordingly, defendant was not practicing law
when it completed the mortgage form at issue in this case.
Moreover, because defendant was not practicing law when
it completed the mortgage, it was not engaged in the "law
11
business." It is immaterial that it charged a fee for its
services. Charging a fee for nonlegal services does not
transmogrify those services into the practice of law.8
CONCLUSION
We hold that a person engages in the practice of law when
he counsels or assists another in matters that require the use
of legal discretion and profound legal knowledge. Defendant
completed standard mortgage forms for plaintiffs and charged
a fee for the service. But it did not counsel or assist
plaintiffs in matters requiring legal discretion or profound
legal knowledge. Therefore, it did not engage in the practice
8
Plaintiffs' reliance on Walter Neller and Kupris for the
proposition that charging a fee for a law-related service
constitutes the practice of law is misplaced.
In Walter Neller, we remarked that a realtor who charged
a separate fee for a real estate closing might be engaged in
the practice of law. However, the holding in the case was
that the defendant was not practicing law by completing and
executing form documents that were incidental to his business.
In Kupris, the defendant real estate broker was enjoined
from advising another broker and that broker's clients in the
preparation of a chattel mortgage. The fact that the
defendant had charged a fee for the service does not bind that
case to this. Rather, what distinguishes Kupris from both
Walter Neller and this case is that there the defendant took
upon himself the role of advising others about the legal
effect of a document. Kupris, 366 Mich 692-693.
Because the discussions about charging a fee were not
necessary to the resolution of either case, they are obiter
dicta. Thus, neither discussion constitutes a holding to
which the binding principle of stare decisis is applied.
People v Bouchard-Ruhland, 460 Mich 278, 286 n 4; 597 NW2d 1
(1999), citing Roberts v Auto-Owners Ins Co, 422 Mich 594,
596; 374 NW2d 905 (1985).
12
of law and did not violate MCL 450.681. Accordingly, we
reverse the Court of Appeals decision and reinstate the
circuit court order granting summary disposition in favor of
defendant.
Marilyn Kelly
Maura D. Corrigan
Michael F. Cavanagh
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
13
S T A T E O F M I C H I G A N
SUPREME COURT
PAUL DRESSEL and THERESA DRESSEL,
Plaintiffs-Appellees,
v No. 119959
AMERIBANK,
Defendant-Appellee.
___________________________________
WEAVER, J. (concurring).
I concur with the majority that the filling out of
standardized mortgage documents does not constitute the
practice of law.
I disagree, however, with the reasoning employed by the
majority in reaching this conclusion. Specifically, I
seriously question the majority's attempt to formulate a
comprehensive definition of the "practice of law." Such a
definition runs contrary to prior precedent and appears to
contribute little clarity or guidance to the unauthorized
practice-of-law analysis.
This Court has long held that the "practice of law"
defies precise definition. "‘Even if possible, it is not
practical or advisable to attempt specific definition of
“practice of law.”’" Detroit Bar Ass'n v Union Guardian Trust
Co, 282 Mich 216, 220; 276 NW 365 (1937) (citation omitted).
This reluctance to adopt an inclusive definition of the
"practice of law" derives from the fact that "under our system
of jurisprudence such practice must necessarily change with
the everchanging business and social order." Grand Rapids Bar
Ass'n v Denkema, 290 Mich 56, 64; 287 NW 377 (1939); see also
Ingham Co Bar Ass'n v Walter Neller Co, 342 Mich 214; 69 NW2d
713 (1955); State Bar of Michigan v Kupris, 366 Mich 688; 116
NW2d 341 (1962); State Bar of Michigan v Cramer, 399 Mich 116;
249 NW2d 1 (1976). Constant new developments in society,
technology, business, and the law preclude any chance of
arriving at a lasting definition.1
Today, the majority deviates from this longstanding
restraint and defines the "practice of law" as "counsel[ing]
or assist[ing] another in matters that require the use of
legal discretion or profound legal knowledge." Ante at 12-13.
1
The view that the "practice of law" does not admit of
exact definition is shared by many other jurisdictions.
Arkansas Bar Ass’n v Block, 230 Ark 430; 323 SW2d 912 (1959);
State of Florida v Sperry, 140 So 2d 587 (Fla, 1962); Fought
& Co, Inc v Steel Engineering and Erection, Inc, 87 Hawaii 37;
951 P2d 487 (1998); Iowa Supreme Court Comm on Unauthorized
Practice of Law v Sturgeon, 635 NW2d 679 (Iowa, 2001); Bd of
Overseers of the Bar v Mangan, 2001 ME 7; 763 A2d 1189 (2001);
Cardinal v Merrill Lynch Realty/Burnet, Inc, 433 NW2d 864
(Minn, 1988); State of Nebraska v Childe, 147 Neb 527; 23 NW2d
720 (1946); Appeal of Campaign for Ratepayer’s Rights, 137 NH
720; 634 A2d 1345 (1993); State of North Dakota v Niska, 380
NW2d 646 (ND, 1986).
2
To reach this new standard, the majority analyzes the purpose
of the statute—the protection of the public from untrained
legal practitioners—and extrapolates a definition meant to
effectuate that purpose. Ante at 6-7.2
However, I do not believe that the majority's definition
(or, for that matter, any definition) will better protect the
public than the statute currently does. Whether certain
conduct requires the use of "legal discretion or profound
legal knowledge" is as open-ended an inquiry as whether that
same conduct constitutes the "practice of law." "Legal
discretion" and "profound legal knowledge" are amorphous
concepts that, like the "practice of law," do not lend
themselves to a single interpretation. Thus, even with the
majority's definition, a lack of consensus will persist among
the courts. Moreover, any attempt to conclusively define the
term necessarily runs the risk of sweeping too broadly—thereby
impeding public access to certain quasi-legal services at more
competitive prices—or cutting too narrowly—thereby permitting
nonlawyers to engage in legal activities to the detriment of
the public. See United States Department of Justice and
Federal Trade Commission December 20, 2002, joint letter
recommending that the "practice of law" not be defined.
2
The majority does not explain what has changed that
allows it to define today what it was incapable of defining in
the past.
3
http://www.ftc.gov/opa/2002/12/lettertoaba.htm.
The prudent and restrained course therefore seems to be
to remain committed to our prior holdings and continue
deciding these issues on a case-by-case basis. Since no
definition of the "practice of law" can fully account for the
infinite variety of fact situations that will inevitably
arise, it is best to decide these cases in light of their
specific circumstances. This approach allows the lower courts
to explore the concept's dimensions without confining their
analyses to the parameters of an artificial formula.
Judge Kolenda's exemplary opinion demonstrates the wisdom
of this approach. In his opinion, Judge Kolenda traced the
relevant case law, examined it in light of the facts of the
case, and properly concluded that filling out standardized
mortgage documents does not constitute the practice of law.
I support and adopt both his case-specific method of analysis
and his conclusion.
Elizabeth A. Weaver
4