Opinion ID: 1359231
Heading Depth: 2
Heading Rank: 1

Heading: Preparation of Instruments

Text: Buyers Service contends the circuit court erred in holding it may not prepare deeds, notes and other instruments related to mortgage loans and transfers of real property. It argues the forms are standard and require no creative drafting. The State counters that preparation of instruments falls within the definition of the practice of law of In re Duncan , and that Buyers Service acts as more than a mere scrivener in the process. We agree. The practice of law is not confined to litigation, but extends to activities in other fields which entail specialized legal knowledge and ability. Often, the line between such activities and permissible business conduct by non-attorneys is unclear. However, courts of other jurisdictions considering the issue of whether preparation of instruments involves the practice of law have held that it does. In Pioneer Title Ins. & Trust Co. v. State Bar of Nev. , 74 Nev. 186, 326 P. (2d) 408 (1958) escrow agents were enjoined from preparation of instruments necessary to effectuate real estate sales transactions. The court reasoned that preparation of instruments, even with preprinted forms , involves more than a mere scrivener's duties. By necessity, the agents pass upon the legal sufficiency of the instruments to accomplish the contractual agreement of the parties. See also Arkansas Bar Ass'n v. Block , 230 Ark. 430, 323 S.W. (2d) 912, cert. denied , 361 U.S. 836, 80 S.Ct. 87, 4 L.Ed. (2d) 76 (1959). The reason preparation of instruments by lay persons must be held to constitute the unauthorized practice of law is not for the economic protection of the legal profession. Rather, it is for the protection of the public from the potentially severe economic and emotional consequences which may flow from erroneous advice given by persons untrained in the law. This principle was stated by the Supreme Court of Washington in Bennion, Van Camp, Hagen & Ruhl v. Kassler Escrow, Inc. , 96 Wash. (2d) 443, 635 P. (2d) 730 (1981). There, the legislature had enacted a statute authorizing escrow agents to perform services such as selection, preparation and completion of instruments in real estate transactions. The court previously had held these activities to constitute the unauthorized practice of law. See Washington State Bar Ass'n v. Great W. Union Fed. Sav. & Loan Ass'n , 91 Wash. (2d) 48, 586 P. (2d) 870 (1978). The statute was held unconstitutional on the ground it violated the court's exclusive power to regulate the practice of law: The statute fails to consider who is to determine whether such agents and employees of banks, etc., are possessed of the requisite skill, competence and ethics. Only the Supreme court has the power to make that determination through a bar examination, yearly Continuing Legal Education requirements, and the Code of Professional Responsibility. The public is also protected against unethical attorneys by a client's security fund maintained by the Washington State Bar Association. 635 P. (2d) at 734. Similar protections are afforded to the public in South Carolina through this Court's regulation of attorney's competency and conduct. As noted in the statement of facts, Buyers Service has retained attorneys to review the closing documents. This does not save its activities from constituting the unauthorized practice of law. In State Bar of Ariz. v. Arizona Land Title & Trust Co. , 90 Ariz. 76, 366 P. (2d) 1, reheard , 91 Ariz. 293, 371, P. (2d) 1020 (1962), a title company employed staff counsel to prepare legal instruments. The court cited the Arizona prohibition against a corporation's practice of law similar to that in S.C. Code Ann. § 40-5-320 (1986). The court then noted the conflicts of interest inherent in such an arrangement, reasoning that the adverse interests in real estate transactions make it extremely difficult for the attorney to maintain a proper professional posture toward each party. We agree and hold the circuit court properly enjoined Buyers Service from the preparation of deeds, mortgages, notes and other legal instruments related to mortgage loans and transfers of real property.