Debt Counseling Business Found to Engage in Unauthorized Practice of Law

The Supreme Court of Ohio issued a permanent injunction banning a Pennsylvania corporation, Century Negotiations, Inc., from engaging in what the court deemed “the unauthorized practice of law.”  Ohio State Bar Assn. v. Century Negotiations, Inc., Slip Opinion No. 2017-Ohio-9110.

Century Negotiations provided legal advice concerning debt settlements to over 3,000 Ohio customers. In so doing, it directly brokered settlements with third-party creditors, drafted terms agreements, and counseled customers on their legal obligations to creditors.  Century Negotiations, Inc. was not licensed to practice law in Ohio or in any other state. Ohio law prohibits corporations from engaging in both the direct and indirect practice of law. As a result, corporations like Century Negotiations, Inc., cannot practice law in Ohio even if they employ licensed lawyers.  Ohio State Bar Assn. v. Century Negotiations, Inc., Slip Opinion No. 2017-Ohio-9110 (citing Judd v. City Trust & Savs. Bank¸ 133 Ohio St. 81, 12 N.E.2d 288 (1937)).

The court found that “making representations to creditors of third parties, advising persons of their rights, and the terms and conditions of their settlement” constituted the practice of law. As a result, the court enjoined Century Negotiations, Inc., from further engaging in these activities.

Louisiana has a comparable statute.  Only “professional law corporations” created under Title 12 of the Louisiana Revised Statutes can practice law in Louisiana. See LSA-R.S. 37:213(A)(1). The practice of law in Louisiana includes the rendering of legal services or advice. Id.