By Thomas P. McGarry and Thomas P. Sukowicz
Hinshaw & Culbertson
Lawyers are often called upon by family members and friends to help them out without being formally retained. Sometimes the assistance does not create an attorney-client relationship, such as when all that is requested is general information about legal issues and the lawyer is not asked to address a specific legal situation and apply the law.
One common way in which lawyers are asked to help out is by drafting an agreement that simply recites the terms to which the parties have agreed on their own, without any assistance by the lawyer. Sometimes the lawyer calls this merely acting "as a scrivener" without providing any advice to either party.
That was the situation in the disciplinary case, In re Grimm, 08 SH 57, M.R.24576 (2011). In that case, an attorney represented an elderly client, Rita Wandro, in her sale of 28.48 acres of her property in O'Fallon, Ill., to Stone Bridge Villas LLC, which was owned by the Rev. Jerry Casey and Bryan Harris, who were a client and a former client of the attorney representing Wandro. They intended to develop Wandro's land with senior living townhouses and condominiums. O'Fallon city officials, however, would not approve the project unless the adjoining property, which was owned by Wandro's brother, was developed as well.
Casey, Harris and the attorney formed CHG Enterprises Inc. to purchase and develop the property owned by Wandro's brother.
Wandro sold her 28.48 acres to Stone Bridge Villas, but she still possessed an additional 5 acres. Harris, who was a member of the Midwest Community Church, suggested that she donate the property for tax purposes. The attorney was the church's pastor. Wandro deeded the 5 acres to the church. The church immediately deeded the property to Stone Bridge Villas in exchange for $179,000.
From the proceeds of the sale, Wandro agreed to lend Harris $500,000. Harris stated that the money would be placed in his account to "beef up" his financial position when CHG Enterprises applied for loans to develop the property to be purchased from Wandro's brother. Here is where the attorney became involved as the scrivener. The attorney suggested that the loan be reduced to writing. Harris told him the terms of the loan and the lawyer prepared a draft of a promissory note.
The respondent discussed the promissory note with Wandro and felt that she understood it and that the terms it contained were the terms to which she and Harris had agreed. The note provided that the $500,000 would be repaid within five years with $2,000 monthly payments at the end of which the remaining $380,000 would become due. Harris was not charged any interest unless he defaulted. There was no collateral for the loan.
CHG Enterprises obtained $2.1 million from Centrue Bank for the purchase of Wandro's brother's property. CHG Enterprises purchased the property for slightly less than $1 million. Wandro's brother donated part of the property to the church. The church donated the property to CHG Enterprises.
In the disciplinary proceedings, the attorney stated that he was not acting in his professional capacity or practicing law when he prepared the promissory note because he reduced to writing or memorialized what the parties orally agreed to outside his presence. The Attorney Registration & Disciplinary Commission Hearing and Review Boards rejected the suggestion that his drafting of the promissory note was merely a ministerial act. The boards found that the attorney engaged in the practice of law and was not acting in a ministerial capacity when he gave advice regarding the benefit of putting the terms of the loan into writing, when he drafted the promissory note and when he discussed the terms of the loan with both Harris and Wandro. The boards concluded that the attorney engaged in a conflict of interest, overreaching and undue influence. Although the administrator urged that the attorney be disbarred, the court suspended him for two years and until he paid restitution to Wandro's estate.
A similar claim was rejected by the Supreme Court in In re Rosin, 118 Ill. 2d 365, 515 N.E.2d 85 (1987). In Rosin, the attorney was charged with, among other misconduct, having a conflict of interest in a financial transaction when he prepared an investment agreement. The attorney claimed that the "drafting of the document was merely a ministerial act performed at the request of (a person), which did not require an exercise of his independent professional judgment." The court disagreed that the drafting of the document was merely a ministerial act that did not involve the exercise of professional judgment. The court held that practicing law includes the giving of any advice or rendering any service requiring the use of legal knowledge or the skill to apply legal principles. The court provided examples of work that constitutes the practice of law, including the preparing or explaining of "legal instruments of all kind," including "form documents," the giving of "advice to others on questions of law" and taking action for clients "in matters connected with the law."
Because the court's definition is broad and the provision of such services may create an attorney-client relationship, lawyers would be prudent to be cautious when approached by a friend or family member to help.