The Indiana Bar Association sued United Financial Systems Corporation and people associated with the company for the unauthorized practice of law in Indiana. The case is State ex rel. Indiana State Bar Ass’n v. United Financial Systems Corp., 926 N.E.2d 8 (Ind. 2010).
UFSC sold wills, trusts and estate plans to residents of Indiana and other states through a system involving door to door sales people who received commissions based on the cost of the estate plans. It’s most expensive estate plans sold in 2009 cost $2,695 of which only $225 was paid to an attorney to draft the documents. The sales people who sold this estate plan were paid commissions of $750 – $900.
The Court concluded that UFSC was engaged in the unauthorized practice of law. It said that “UFSC’s business model has marginalized the attorney’s role to such a degree as to cross the line of permissible practices.” The court found that “UFSC’s profitability stems from the sale of insurance products related to the trusts created by the estate plans.”
The following is from the Indiana Supreme Court’s opinion:
UFSC is an insurance marketing agency. . . . In 1995, UFSC began to market and sell estate planning services, including wills and trusts. The company is headquartered in Indianapolis and does business in Indiana and twelve other states. In Indiana, from October 2006 through May 2009, UFSC sold 1,306 estate plans from which the company grossed over $ 2.7 million. . . . During roughly this same period of time, 0.09% of UFSC’s total nationwide income and 18.8% of UFSC’s nationwide fee income was derived from the sale of estate planning services in Indiana. . . .
The business practices at issue in this case occurred as follows. UFSC targeted and then mailed prospective clients (generally retirees) information . . . on how to avoid probate. For those who responded, as well as some existing UFSC clients, a UFSC sales representative (either an Estate Planning Assistant or a Health Planning Assistant) met with the client and gained access to his or her financial information, which the company separately used later in an effort by its Financial Planning Assistants to sell insurance products. The presentation made by the Estate Planning Assistant or the Health Planning Assistant to the prospective client touted UFSC’s team of tax strategists, financial consultants, independent attorneys, and Medicaid and estate planning assistants. In reality, UFSC has no tax strategists. . . .
The Estate Planning Assistant or Health Planning Assistant received a commission on sales of wills and trusts, and the Assistant’s presentations pushed the most expensive plan. The cost of this plan, which included a will, trust, powers of attorney, deeds, and the promise of future amendments as needed, was $ 2,695 in 2009. The commission from each sale of this plan ranged from $ 750 to $ 900. . . . The Estate Planning Assistants and Health Planning Assistants were not licensed attorneys . . . and were not directly supervised by an attorney. The Financial Planning Assistants likewise were not attorneys. . . .
Once a sale was made, the Estate Planning Assistant or Health Planning Assistant secured full or partial payment from the client on the spot. n3 The forms containing the client’s personal and financial information were routed to UFSC’s in-house counsel, David McInerney, who then provided the information to one of the panel attorneys with whom UFSC has contracted. The estate plans sold by UFSC throughout the country were all processed in Indianapolis and routed to panel attorneys in Indiana and other states to draft documents for the plans.
. . .
a panel attorney was paid a flat fee of only $ 225 for drafting the estate planning documents . . . .
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we have held that preparing and drafting a will, and giving advice regarding the contents and effect of a will, constitute the practice of law. See State ex rel. Pearson v. Gould, 437 N.E.2d 41, 42 (Ind. 1982). Likewise, “