Document Preparation Fees Constitute Unlawful Practice of Law

On Tuesday, the Missouri Supreme Court decided Eisel v. Midwest Bank Centre, a case with potentially far-reaching consequences for industries that charge processing fees for legal documents. Midwest Bank Centre, a Missouri bank, processes mortgage loans as part of its regular business. In doing so, the bank charges a document preparation fee for completing pre-printed forms like deeds of trust and promissory notes. Plaintiffs sued, claiming the processing fee constitutes the unauthorized practice of law. The trial court found for Plaintiffs, and the Supreme Court agreed. Section 484.020, RSMo, states no person "shall engage in the practice of law or do law business" unless duly licensed to do and with license in full effect. Section 484.010.2, RSMo, defines the "law business" as the "advising or counseling for a valuable consideration of any person, firm, association, or corporation as to any secular law or the drawing or the procuring of or assisting in the drawing for a valuable consideration of any paper, document or instrument affecting or relating to secular rights or the doing of any act for a valuable consideration in a representative capacity, obtaining or tending to obtain or securing or tending to secure for any person, firm, association or corporation any property or property rights whatsoever." The Court found the operative language the fee charged for the service of completing the documents. The Court previously had prohibited trust associates and escrow companies from charging for document preparation. See, In re Mid-America Living Trust Associates, Inc., 927 S.W.2d 855, 871 (Mo. banc 1996). The bank also raised a "personal interest" defense, which the Court rejected. "Possessing a financial stake in the outcome of a contract or loan does not defeat the fact that a non-lawyer charging a fee for document preparation constitutes the unauthorized business of law." The Court also rejected a "voluntary payment" defense as inequitable, placing the burden of recognizing ex ante the unauthorized practice of law on unwary consumers.

Some questions left unanswered by the decision to ponder: If the bank continues to offer the service of completing the legal documents without a specific processing fee, but nevertheless as part of a package of services that make up the loan, is that also a fee for legal services? The Court has previously held that non-lawyers can prepare documents by filling in the blanks of forms as part of the incidental action of its business, but it cannot charge specifically for that fee, as that would constitute the unauthorized practice of law. How is hiding the fee any different? While it makes sense the Court wants to encourage cost-effective and efficient secured transactions, is the distinction between a specific processing fee and a general fee for an overall service a distinction without a difference? Perhaps the lesson is that the processing fee serves as a flagrant waving of a flag that a certain non-law-business is practicing law and we want to protect the public from that offense. But is not the absence of the specific fee, but the continuation of the practice, equally odious? A drafting error, whether charged for or not, could void a loan or a trust or any number of secured transactions. Should we not protect the consumer by assuring an attorney has a role in the process? Food for thought...