Memorandum of Decision Re: Unauthorized Practice of Law
A federal court has inherent authority to regulate the conduct of all who practice in it. State law is properly considered in determining whether the unauthorized practice of law has occurred in a bankruptcy court. In re Evans, 153 B.R. 960, 966 (Bkrtcy.E.D.Pa.1993); In re Harris, 152 B.R. 440, 444 (Bkrtcy.W.D.Pa.1993); In re Bachmann, 113 B.R. 769, 772 (Bkrtcy.S.D.Fla.1990). The conduct of Wilson and Clark constitutes the unauthorized practice of law under both federal and California law. A non-lawyer engages in the unauthorized practice of law when he or she determines for a party the kind of legal document necessary in order to effect the party's purpose. People v. Landlords Professional Services, Inc., 178 Cal.App.3d 68 (1986); People v. Sipper, 61 Cal.App.Supp.844, 846 (1943); In re Glad, 98 B.R. 976, 977 (9th Cir.BAP 1989); In re Anderson, 79 B.R. 482, 484 (Bkrtcy.S.D.Cal.1987). By selecting a form that they thought was appropriate for Powell's purposes, Wilson and Clark were engaged in the unauthorized practice of law.
IV. Conclusions and Sanctions
Pursuant to this court's inherent powers and § 6127 of the California Business and Professions Code, the court finds Wilson and Clark in contempt of court for the preparation and filing of the debtor's motion to avoid liens in and associated papers in this case. The court further finds that Wilson and Clark violated § 110(b) and § 110(c) of the Bankruptcy Code by failing to identify themselves as the persons who prepared those papers. Belated compliance, after issuance of the court's order to show cause, does not undo the violation. Accordingly, the court will assess the following sanctions:
1. Clark and Wilson shall each pay a fine of $1,000.00 to the Clerk of the Court. Provided, however, that payment of this fine shall be reduced to $500.00 each if they provide a competent, licensed attorney to represent Powell in his attempt to avoid the lien at no cost to Powell.
2. Clark and Wilson will be suspended from acting as petition preparers and may not charge any debtor or any other person any sum whatsoever for any service related to a bankruptcy filing in any division of the Northern District of California for a period of 90 days from the date of this memorandum. Thereafter, they may act as petition preparers only after the fine set forth in paragraph 1 has been paid.
3. Clark and Wilson will be permanently enjoined from obtaining, selecting or recommending any form of pleading on behalf of a debtor from any source, or giving any debtor any kind of legal advice whatsoever including, but not limited to, advice concerning reaffirmation of debts and avoidance of liens.
A separate order will be entered.
Dated: May 7, 2001 ___________________________ Alan Jaroslovsky U.S. Bankruptcy