Title: Cleveland Bar Assn. v. Sharp Estate Serv., Inc.

State: ohio

Issuer: Ohio Supreme Court

Document:

[Cite as Cleveland Bar Assn. v. Sharp Estate Serv., Inc., 107 Ohio St.3d 219, 2005-Ohio-6267.] 
 
 
 
CLEVELAND BAR ASSOCIATION v. SHARP ESTATE SERVICES, INC. ET. AL. 
[Cite as Cleveland Bar Assn. v. Sharp Estate Serv., Inc., 
 107 Ohio St.3d 219, 2005-Ohio-6267.] 
Unauthorized practice of law — Sale of living-trust and estate plans by 
nonlawyers — Using review attorney does not cure unauthorized-practice-
of-law violation — Injunction issued and civil penalty imposed. 
(No. 2004-2114 — Submitted May 10, 2005 — Decided December 14, 2005.) 
ON FINAL REPORT by the Board on the Unauthorized Practice 
of Law of the Supreme Court, No. UPL 02-1. 
__________________ 
 
PFEIFER, J. 
{¶ 1} On July 5, 2002, relator, Cleveland Bar Association (“CBA”), filed 
an amended complaint with the Board on the Unauthorized Practice of Law 
pursuant to Rule VII of the Ohio Supreme Court’s Rules for the Government of 
the Bar, asserting that respondents Sharp Estate Services, Inc., Asset Preservation 
Group, Inc., Sharp Estate & Insurance Services, Inc., Jeffrey G. Sharp, Robert 
Clapacs, and Diane C. Sharp (collectively, “Sharp”), Henry W. Abts III, and The 
Estate Plan (“TEP”) engaged in the unauthorized practice of law in Ohio.  The 
complaint alleged that each respondent sold living-trust and estate plans and 
related documents to Ohio residents.  After a hearing, the board recommended 
that this court hold that each respondent has engaged in the unauthorized practice 
of law in Ohio and that we enjoin each respondent from the further unauthorized 
practice of law.  The board also included a statement of costs to be paid by 
respondents. 
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{¶ 2} TEP is a Nevada corporation owned by Abts that engages 
nationwide in the preparation and marketing of living trusts and other estate-
planning products.  TEP associates with companies and individuals, known as 
advisors, who market and sell its products.  Advisors are typically nonattorneys; 
none of the respondents in this case are licensed to practice law in Ohio.  Advisors 
are under contract with TEP, are required to attend TEP training sessions, and 
must adhere to a sales and marketing manual that instructs them how best to 
market TEP products. 
{¶ 3} A typical transaction begins with advisors developing prospects 
through telemarketing or purchased lists, followed by a sales presentation in the 
prospective customer’s home.  When Sharp advisors make sales presentations, 
they use TEP products to assist the prospective customer in determining what type 
of living trust or estate plan is appropriate.  Many customers were targeted despite 
clear indications that they would not benefit from a living trust or estate plan.  
Advisors routinely provide TEP folders containing information on living trusts or 
estates to prospective customers.  The board concluded that Sharp was under 
contract with TEP, that Sharp used TEP products extensively, and that TEP and 
Abts permitted the Sharp advisors to hold themselves out as representatives of 
TEP. 
{¶ 4} When a prospect agreed to purchase a TEP living trust or estate 
plan, the Sharp advisor procured a signed purchase agreement from the customer 
and two checks.  One check was payable to the advisor; the other was payable to 
the review attorney, who had been selected by the advisor from a list provided by 
TEP.  The review attorney, who is typically under contract with TEP, would enter 
the customer’s information into a TEP computer-software program, usually 
without having had contact with the customer.  TEP would then prepare the 
January Term, 2005 
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requested documents and return them directly to the advisor, who would deliver 
the documents to the customer. 
{¶ 5} Sharp’s fees range from $1,995 and $2,195 for living-trust and 
estate-planning documentation for modest estates.  Fees for estates involving 
millions of dollars were more expensive, ranging upward from about $2,495.  
According to the partial list provided by TEP, at least 468 living-trust and estate 
plans were sold in Ohio. 
{¶ 6} The board concluded that Sharp’s nonattorney advisors engaged in 
the unauthorized practice of law when they told customers that they needed a 
living trust or estate plan, when they recommended specific types of trust or estate 
plans, and when they advised customers of the legal consequences of their 
choices.  The board found that TEP and Abts engaged in the unauthorized practice 
of law when they marketed and sold their products through a network of 
nonattorney advisors, when they prepared legal documents, and when they advised 
customers as to the legal effect of the documents that they had prepared.  The 
board also found that the use of a review attorney after the execution of a contract 
to create a living trust or estate plan does not cure the unauthorized-practice-of-
law (“UPL”) violation.  This conclusion was bolstered by the fact that the 
purchase agreements between TEP and its customers do not require attorney 
approval. 
{¶ 7} The board recommended that Sharp and TEP be enjoined from 
further engaging in the unauthorized practice of law and that Sharp and TEP pay 
the costs incurred by the board and the CBA.  We agree with the 
recommendations of the board and impose further sanctions as discussed below. 
{¶ 8} The unauthorized practice of law is defined as “the rendering of 
legal services for another person by any person not admitted to practice in Ohio.”  
Gov.Bar R. VII(2)(A).  The record reflects that none of the respondents are 
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admitted to the practice of law in Ohio.  Nevertheless, they marketed and sold 
living trusts and estate plans, explained the legal consequences of specific 
decisions relating to living trusts or estate plans, and prepared legal documents 
related to living trusts or estate plans.  These activities constitute the unauthorized 
practice of law.  See Cincinnati Bar Assn. v. Kathman (2001), 92 Ohio St.3d 92, 
96, 748 N.E.2d 1091. 
{¶ 9} Respondents argue that the use of review attorneys to supervise the 
estate or trust-document preparation immunizes them from a UPL charge.  The 
evidence reveals, however, that review attorneys were only tangentially involved 
in the transactions.  In most cases, they did nothing more than enter a customer’s 
information into a TEP computer program, and they rarely came into contact with 
customers.  Further, approval by the review attorney was not required by the 
purchase agreement. 
{¶ 10} Even if the attorneys had been extensively involved in the 
transaction, they were incapable of acting solely in the interests of their ostensible 
clients because of their contractual relationship with TEP:  review attorneys are 
subject to termination by TEP if they prepare non-TEP living-trust or estate-plan 
documents based on information received from an advisor.  In Kathman, we 
concluded that “the review attorney enters the relationship too late,” and we 
followed the analysis of the Colorado Supreme Court, which concluded that “hub” 
attorneys merely “lend[ ] credibility and a façade of legality to the product the 
nonattorney offers.”   Id. at 97, 748 N.E.2d 1091, citing People v. Cassidy 
(Colo.1994), 884 P.2d 309, 311.  Because the advisor, not the attorney, sells the 
trust or estate plan and makes the decisions necessary to create the trust or estate 
document, the use of hub attorneys does not cure the UPL violation. 
{¶ 11} In Kathman, we also found that an attorney who assists a 
nonattorney in the marketing and selling of living trusts violates DR 3-101(A), 
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which prohibits such assistance.  Id. at 96, 748 N.E.2d 1091.  Consequently the 
hub attorneys involved with respondents knew that they themselves were violating 
DR 3-101(A). 
{¶ 12} Respondents TEP and Abts argue that Sharp and his associates 
were not their agents and that TEP had disclaimed any agency relationship in the 
contracts between TEP and Sharp.  The record, however, reflects that Sharp was 
under contract with TEP, that TEP and Abts permitted the Sharp advisors to hold 
themselves out as agents of TEP, and that the Sharp advisors received extensive 
training from TEP on marketing and selling trust and estate plans to customers.  
We conclude that there was an agency relationship between TEP and Sharp. 
{¶ 13} The board recommended that an injunction be issued enjoining the 
respondents from the unauthorized practice of law in Ohio.  Given the gravity of 
the respondents’ UPL violations, we conclude that a permanent injunction 
preventing the respondents from marketing and selling living trusts in Ohio is 
appropriate.  Otherwise, respondents could make minor changes to their operation 
and continue marketing and selling trusts and estates in Ohio.  This decision is in 
line with similar UPL cases.  See Trumbull Cty. Bar Assn. v. Hanna (1997), 80 
Ohio St.3d 58, 61, 684 N.E.2d 329. 
{¶ 14} We further order respondents to comply with the board’s order to 
disclose the names of their Ohio customers.  Within seven days following the 
issuance of the court's order, the respondents will disclose to the board, with a 
copy to the Cleveland Bar Association, the names and addresses of all of their 
Ohio clients.  Beginning on the eighth day after the order, a fine of $25,000 per 
day will be imposed until all Ohio clients have been disclosed.  The Cleveland 
Bar Association will send a letter to each of the Ohio clients informing them of 
the UPL conduct of the respondents and suggesting that the clients may want to 
consult with a lawyer of their choice, at their expense, to confirm that the 
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respondents' documents are suitable and appropriate for them.  Respondents shall 
be responsible for attorney fees and costs incurred by the relator as recommended 
by the board. 
{¶ 15} Finally, we determine that it is appropriate to impose monetary 
penalties on the respondents under Gov.Bar R. VII(8)(B).  The rule allows the 
board to recommend and the court to impose civil penalties in an amount up to 
$10,000 per offense. Id.  The factors to be considered include the degree of 
cooperation provided by the respondents in the investigation, the number of UPL 
violations, the flagrancy of the violations, harm to third parties arising from the 
violations, and any other relevant factors.  Id.  We conclude that each of these 
factors weighs heavily against the respondents.  First, as the record shows, the 
respondents have failed to fully cooperate in the investigation, and they have 
ignored the board’s order to disclose lists of their Ohio customers.  Second, the 
respondents committed hundreds of UPL violations.  Third, the respondents’ 
violations were flagrant because they aggressively targeted customers even after 
Kathman, 92 Ohio St.3d 92, 748 N.E.2d 1091, which warned that trust-mill 
operations are UPL violations.  Finally, the respondents’ offenses harmed third 
parties, their ostensible clients.  As we stated in Kathman, “The principal reason 
courts have restricted the rendering of legal services to licensed attorneys is for 
the protection of the public.”  Id. at 97, 748 N.E.2d 1091.  In short, the 
respondents have willfully defrauded their customers by selling trusts and estate 
documents without authorization. 
{¶ 16} Contrary to the respondents’ argument, the imposition of monetary 
penalties is constitutional even though the case was filed before the amendment of 
former Gov.Bar R. VII(8), 99 Ohio St.3d XCIII, XCIV, which specifically 
allowed for monetary penalties.  Nothing in the Ohio Constitution prohibited this 
court from imposing monetary penalties prior to adoption of former Gov.Bar R. 
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VII(8)(D).1 See Section 2(B)(1)(g), Article IV, Ohio Constitution.  We have 
previously imposed monetary penalties in a UPL case in which some of the 
violations predated former Gov.Bar R. VII(8)(D).  Toledo Bar Assn. v. Chelsea 
Title Agency of Dayton, Inc., 100 Ohio St.3d 356, 2003-Ohio-6453, 800 N.E.2d 
29.  Furthermore, Gov.Bar R. VII “shall be liberally construed for the protection 
of the public, the courts, and the legal profession and shall apply to all pending 
investigations and complaints so far as may be practicable, and to all future 
investigations and complaints whether the conduct involved occurred prior or 
subsequent to the enactment or amendment of this rule.”  Gov.Bar R. VII(17).  
The imposition of monetary sanctions is not prohibited. 
{¶ 17} For the foregoing reasons, we affirm the decision of the Board on 
the Unauthorized Practice of Law.  We impose a civil penalty in the amount of 
$1,027,260, determined by multiplying 468, the number of living-trust and estate 
plans sold by Sharp in Ohio, by $2,195, against all respondents on a joint and 
several basis.  Costs are taxed to respondents. 
Judgment accordingly. 
 
MOYER, C.J., RESNICK, LUNDBERG STRATTON, O’CONNOR, O’DONNELL 
and LANZINGER, JJ., concur. 
__________________ 
 
Buckley King L.P.A. and John A. Hallbauer; Jones Day, David A. Kutik, 
and John D. Fabian, for relator. 
Tucker Ellis & West L.L.P., Matthew P. Moriarty, and Jeffrey M. 
Whitesell, for respondents The Estate Plan and Henry W. Abts III. 
______________________