Unfair Trade Practices and the Practice of Law
By Jeffrey P. Lewis
Many plaintiffs assert a claim under
the Unfair Trade Practices and Consumer Protection Law (UTPCPL), 73 Pa.C.S. §§ 201-1
et seq. in professional liability
actions against lawyers. The appeal of such a claim lies in the fact that (unlike
in a claim for legal malpractice or breach of fiduciary duty) it allows, at the
court’s discretion, an award of treble damages, costs and reasonable attorney
fees. UTPCPL protects “[a]ny person who purchases or leases goods or services
primarily for personal, family or household purposes and thereby suffers any
ascertainable loss of money or property … as a result of the use or employment
by any person of a method, act or practice declared unlawful by … this act … .”
So, the argument goes, “services” in this context would include legal services
and the “method, act or practice declared unlawful” by UTPCPL would include
conduct that also constitutes legal malpractice or breach of fiduciary duty.
The
majority of courts in other jurisdictions — all of which have similar consumer
protection laws and have considered this issue — conclude that these laws do
not apply to conduct that constitutes the practice of law. Some jurisdictions
recognize an exception to this exclusion for conduct involving the
entrepreneurial aspects of law practice. This would include, for example, debt
collection and advertising. Although several lower
In Beyers v. Richmond, --- A.2d ---, 2007 WL 4557840 (Pa.), decided
December 28, 2007, the court holds that a lawyer’s conduct in distributing
settlement proceeds constitutes the practice of law such that UTPCPL cannot
apply. The case involves a lawyer who converted settlement funds and prepared a
settlement distribution sheet that includes deductions for unsubstantiated
costs. Five of the seven justices voted to reverse the Superior Court, which
had affirmed the trial court’s finding that UTPCPL does apply to this conduct.
Then-Chief
Justice Ralph J. Cappy, in one of the last opinions of his career as a jurist,
and Justice Max Baer, however, find that only statutory construction of the law
is necessary to conclude that it does not apply to this conduct. Justices Ronald
D. Castille, Cynthia A .Baldwin and James Fitzgerald III, who wrote the
plurality opinion, find that UTPCPL implicates the state constitution because
it presents an unconstitutional intrusion by the legislature upon the court’s
power to regulate the practice of law. Based upon the separation of powers
doctrine, Article V Section 10(a) and Section 10(c), as the court interprets
it, grant the court the exclusive power to monitor and regulate the practice of
law. Instead, in the plurality’s view,
Justice
J. Michael Eakin wrote a dissenting opinion, joined in by Justice Thomas G. Saylor.
Although they recognize the court’s responsibility under the state’s
constitution to supervise the practice of law, they also chide the plurality
“for unrealistic micromanagement over provisions of general
applicability.” In their view, UTPCPL
should withstand state constitutional muster because it is a law of general
applicability where some of the persons it applies to “happen to be attorneys.”
From
its review of other case law, the plurality would apply or not apply UTPCPL
based upon whether the conduct complained of constitutes the practice of law. The
two concurring justices would agree. Therefore, there appears to be little
danger that UTPCPL claims will now ordinarily accompany lawyer malpractice claims,
even, as here, where liability is premised upon intentional conduct. The
majority, contrary to the Superior Court below, views the misdistribution of
settlement proceeds as the practice of law.
But
the plurality’s separation of powers approach raises another intriguing
question: If the UTPCPL constitutes an impermissible intrusion by the Legislature
upon the Supreme Court’s exclusive power to govern the practice of law,
although it has general application, then does not the same fate befall other such
statutes? For example, the Dragonetti
statute applies to both lawyers and other persons who wrongfully bring a civil
action. Indeed, the Supreme Court has promulgated Pa.R.C.P. 1023.1 et seq. to also address such conduct. No
one would argue that a lawyer was not practicing law when he or she engaged in
such conduct. Yet the Legislature provides a statutory remedy for such conduct.
Maybe a distinction can be drawn because the legislation was replacing a common
law tort to address such conduct. But this is not the case, for example, with
respect to the passage of 42 Pa.C.S.A. Section 2503(7), which allows for the
award of attorneys’ fees against parties and their lawyers for obdurate,
vexatious and/or bad faith conduct. These statutes are the product of the Legislature
and they seek to govern the conduct of lawyers engaged in the practice of law. How,
the argument would go, would they also not violate the separation of powers
doctrine if UTPCPL does? These are questions that have not yet been raised, and
their resolution must wait for another day.
Jeffrey P. Lewis is a partner in the