Opinion ID: 2037155
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Heading Rank: 6

Heading: Is the Interest in Enforcement of the Agreement Between Bergantzel and Mlynarik Clearly Outweighed by the Public Policy Behind the Attorney Licensing Requirement?

Text: The Restatement has identified several factors to consider in balancing the competing interests implicated in the enforcement of a contract that violates public policy: (2) In weighing the interest in the enforcement of a term, account is taken of (a) the parties' justified expectations, (b) any forfeiture that would result if enforcement were denied, and (c) any special public interest in the enforcement of the particular term. (3) In weighing a public policy against enforcement of a term, account is taken of (a) the strength of that policy as manifested by legislation or judicial decisions, (b) the likelihood that a refusal to enforce the term will further that policy, (c) the seriousness of any misconduct involved and the extent to which it was deliberate, and (d) the directness of the connection between that misconduct and the term. Restatement § 178(2)-(3), at 6-7. First, under the available record, we cannot determine whether Bergantzel knew her negotiation of the settlements constituted the practice of law. Given the fact that she had performed under the contract, she certainly expected to be paid. For purposes of our analysis, we assume, without deciding, that this expectation was justified. Second, it appears that Bergantzel will suffer a forfeiture in that she has already rendered her performance and will be denied compensation for those services. Cf. Restatement § 181 cmt. c, at 22 (If the party who has failed to comply with the [licensing] requirement has done nothing by way of preparation or performance, the interest in enforcement of the promise is easily outweighed.). As a final matter, there does not appear to be any ascertainable special public interest in the enforcement of this contract. As noted in Mincks, where performance of an activity is illegal, the public interest weighs against enforcement. 611 N.W.2d at 279. Although the factors just discussed reveal some interest in enforcement, that interest is clearly outweighed by the factors militating against enforcement. The factors weighing against enforcement, as previously stated, include (1) the strength of the public policy against the unauthorized practice of law, (2) the likelihood that refusal to enforce the contract will further that policy, (3) the seriousness of any misconduct involved and the extent to which Bergantzel was culpable, and (4) the directness of the connection between the unauthorized conduct and the contract. See Restatement § 178(3), at 6-7. Our first step is to identify the public policy underlying the licensure requirement. We agree with the Minnesota Supreme Court's discussion of the rationale for regulating the practice of law: [The] purpose [for which lawyers are licensed as the exclusive occupants of their field] is to protect the public from the intolerable evils which are brought upon people by those who assume to practice law without having the proper qualifications.... .... ... The law practice franchise or privilege is based upon the threefold requirements of ability, character, and responsible supervision. The public welfare is safeguarded not merely by limiting law practice to individuals who are possessed of the requisite ability and character, but also by the further requirement that such practitioners shall thenceforth be officers of the court and subject to its supervision.... Protection of the public is set at naught if laymen who are not subject to court supervision are permitted to practice law. Gardner v. Conway, 234 Minn. 468, 48 N.W.2d 788, 794-95 (1951); accord Lawler, 342 N.W.2d at 488 (noting that the `underlying purpose of regulating the practice of law ... is to protect the public against the often drastic and far reaching consequences of [the] inexpert advice' [of unqualified legal advisors] (quoting In re Baker, 8 N.J. 321, 85 A.2d 505, 514 (1951))). We think it is not subject to debate that the public policy underlying the regulation of the practice of law is strong. The importance of the licensing requirement is further evidenced by the fact that a person who assumes to be an attorney and acts as such without authority may be held in contempt of court and fined up to one thousand dollars or imprisoned in the county jail for up to six months, or both. See Iowa Code §§ 665.3,.4. As for the second factor against enforcement, we think that a refusal to enforce the contract will further the public policy evidenced by the attorney licensure provisions. As we noted in Mincks, taking the economic benefit out of contracts that violate [public policy] by holding them unenforceable `very definitely would promote the public policy.' 611 N.W.2d at 280 (quoting Springlake Corp. v. Symmarron Ltd. P'ship, 81 Md.App. 694, 569 A.2d 715, 722 (1990)). Turning to the third factor, we find nothing in the record to suggest that Bergantzel knew her actions were unauthorized, yet deliberately proceeded. Nonetheless, it cannot be questioned that the unauthorized practice of law is a very serious matter. Both lawyers and nonlawyers are subject to severe sanctions for such conduct. See Iowa Code of Prof'l Responsibility DR 3-101 & EC 3-1 to 3-9 (providing that a lawyer should assist in preventing the unauthorized practice of law and providing for the imposition of sanctions for acts that aid in such conduct); Iowa Code §§ 665.3, .4 (providing for fines and imprisonment for acting as an attorney without authority). The fourth and final factor concerns the nexus between the lack of license and the contract at issue. In the present case, there is an undeniably direct connection. The performance for which Bergantzel seeks compensation is the unauthorized practice of law, conduct that she was prohibited by law from performing. In other words, the unlicensed conduct is not a collateral matter. Weighing all the factors, we conclude that the interest in refusing to enforce the contract must prevail. The fact that Bergantzel has already performed and, in that sense, Mlynarik will receive a windfall, simply does not outweigh the strong public policy against the unauthorized practice of law. See Meunier, 170 So. at 578 (holding that adjuster, who had fully performed, could not recover his contractual contingent fee due to the strong public policy against the practice of law by laypersons). Accordingly, we conclude that the contract is unenforceable.