Opinion ID: 1189218
Heading Depth: 2
Heading Rank: 1

Heading: The Slate & Leoni Letter Program

Text: Petitioners Houston Slate [3] and Andrew Leoni [4] are attorneys licensed to practice law in California. They practice under the name of Slate & Leoni, a professional corporation organized under California law. At all times relevant to this proceeding the practice of Slate & Leoni was exclusively before the federal bankruptcy courts. In 1978, after studying the United States Supreme Court's decision in Bates v. State Bar of Arizona (1977) 433 U.S. 350 [53 L.Ed.2d 810, 97 S.Ct. 2691], (First Amendment protects attorney advertising of prices at which routine legal services will be performed), Slate & Leoni began sending letters to certain defendants regarding legal aspects of debt problems. The letters informed the recipients of the procedural aspects of the case pending against them, as well as the legal rights and remedies of debtors. Slate & Leoni recommended that the recipient consult an attorney  his or her own or Slate & Leoni. The recipients were defendants in small claims or municipal court actions or were owners of real properties which were in foreclosure. The names and addresses of the recipients were obtained by employees of Slate & Leoni at first and later by a private consulting firm using public records of judicial proceedings in the Los Angeles County courts and listings in public newspapers. Between November 1978 and July of 1980, 83 different versions of the letters and informational enclosures were sent to approximately 250,000 recipients. The type of letter and enclosure received depended on the type of defendant (business or nonbusiness) and the procedural stage of the case against the defendant. Mailings were sent to defendants against whom: (1) civil complaints for money had been filed; (2) unlawful detainer actions had been filed; [5] (3) civil complaints for personal injury and property damage had been filed; (4) requests to enter default had been filed in collection actions; (5) writs of execution had been issued; and (6) writs of execution had been served. The letters did not identify the name or court number of the pending case. Instead, Slate & Leoni marked the letters with in-house filing numbers. In addition to the letters, Slate & Leoni enclosed various informational pamphlets which were prepared by petitioner Slate. One letter, Money Problems? was included in virtually all of the correspondences. A second pamphlet, How to Pay Debts Under Court Protection was included in correspondences with individuals against whom civil complaints for money had been filed, requests to enter default in collection actions had been filed, and writs of execution had been issued or served. This pamphlet describes a chapter 13 bankruptcy, although the word bankruptcy is not mentioned in the pamphlet. In cases where a writ of execution had been issued against a defendant, a third enclosure, What is a Writ of Execution? was also included. A fourth enclosure, If You Are in Business and You Are Facing A Writ of Execution, and a fifth enclosure, Is Your Business Having Money Flow Problems? were sent to business defendants against whom a writ of execution had issued. Additional enclosures included Order for Debt Relief, The Consolidation Plan, and How to Get a Release of a Garnishment on Your Pay-Check [ sic ]. Slate & Leoni transmitted roughly 2,000 letters per month initially in 1978 and transmitted roughly 10,000 letters per month by 1980. The firm obtains at least one client for every 100 letters sent out and approximately 25 percent of the firm's chapter 13 (of the Bankruptcy Act) filings are attributable to the letter program. Chapter 13 cases reflect a portion, the extent of which is not clear from the record, of petitioners' law firm business. As the letters indicate, the lawyers will answer questions regarding the cases or mailings free of charge. Mr. Slate estimated that the office receives 5 or 6 callers per 100 letters whose questions are answered free of charge. Additionally, the enclosure Money Problems, Lawsuits? Here are Some Suggestions lists a telephone number where the recipient can call and listen to a recorded explanation of how a bankruptcy works. The parties stipulated that the letter program is designed, in part, to generate paying clients. Because the exclusive practice of the firm was in federal bankruptcy court, the firm would not charge a client unless there was an actual filing in the bankruptcy court. Additional services were performed without charge such as calls to negotiate with creditors and assistance with preparation of in pro. per. filings for state court proceedings. There are numerous letters and enclosures in the record because Slate & Leoni revised their materials. For instance, the initial version of the enclosure What is a Writ of Execution? stated that if you have $1,000 in a certain type of account in a savings and loan association, it cannot be seized by the officer. Because a husband and wife could not each have $1,000 in such an account, Slate & Leoni voluntarily changed the enclosure because they wanted it to be exactly true and have nothing that might mislead somebody. In January 1979, Mr. Slate wrote to the president of the State Bar of California outlining the letter program and enclosing samples of some of the letters which were actually sent. He requested that the State Bar undertake the letter program to provide information to persons who appear to be in need of legal assistance with their debt problems. The president thanked Mr. Slate for his letter and good intentions and forwarded the proposal to the Legal Services Division of the State Bar. Two years later, on February 3, 1981, disciplinary proceedings were commenced by the State Bar on the complaint of members of the bar and the public concerning letters received.