The SC Supreme Court, on February 22, 2017, found that a group managing HOAs (Community Management Group, “CMG”) committed unauthorized practice of law by representing associations in magistrates court, filing judgments in circuit court, preparing and recording liens, and (4) advertising it could provide the above.
In holding that CMG could not engage in the above activities as an “agent” for the several associations, the Court relied on two precedents. In the first, an administrative order titled In re Unauthorized Practice of Law Rules Proposed by South Carolina Bar, 422 S.E.2d 123 (S.C. 1992), the Court held that it was permissible for “a business to be represented by a non-lawyer officer, agent or employee.” 422 S.E.2d at 124 (modifying State ex rel. Daniel v. Wells, 5 S.E.2d 181 (S.C. 1939)). In the second, promulgation of South Carolina Magistrate Court Rule 21, the Court provided that “[a] business . . . may be represented in a civil magistrates court proceeding by a non-lawyer officer, agent, or employee . . . .”
The Court found that the term “agent” in the above-cited authorities could not be interpreted to include “a third party agent like Community Management Group … [i.e.] non-lawyer third party entities or individuals.” The Court explained that
“Agent” … includes individuals who are not officers or employees of a business, but who have some nexus or connection to the business arising out of its corporate structure. For example, a member of a corporation’s board of directors who is not an officer or employee would qualify as an “agent” under these provisions.
In particular, the Court found the following activities to be the unauthorized practice of law:
- Bringing actions in magistrate court
CMG brought actions in magistrate’s court on behalf of associations to collect unpaid assessments owed to the latter. The Court refused to extend, to these filings the reasoning of Medlock v. Univ. Health Serv., Inc., 743 S.E.2d 830, 831 (S.C. 2013), which found that the making of a claim against an estate or the petitioning for the allowance of the claim in probate court were not the unauthorized practice of law. None of these activities require the professional judgment of an attorney or entail specialized legal knowledge and ability. The services of representing a business in magistrate’s court are not “comparable” to those.
- Filing of magistrate court judgments with circuit court
The Court also found that after obtaining judgments in magistrate’s court, CMG filed the judgments in circuit court without consulting an attorney. Upon filing the judgment of the magistrate’s court become a circuit court judgment. S.C. Code § 22-3-300.The Court found that the filing of the judgment with the circuit court was unauthorized practice exactly as it would have been unauthorized practice if CMG had represented associations in circuit court to obtain a judgment against a homeowner. See Renaissance Enter. Inc. v. Summit Teleservices, Inc., 515 S.E.2d 257, 258-59 (S.C. 1999) (finding it was the unauthorized practice of law for non-lawyers to represent a corporation in circuit court).
- Filing liens
The Court found that CMG committed unauthorized practice also by preparing and recording lien documents. CMG performed these activities for associations when homeowners did not pay overdue assessments. Admittedly, CMG filed the liens in order to “cloud” the title on homeowners’ property. This purpose, in the Court’s opinion, demonstrated that the lien documents were “instruments.” The Court referred to several precedents for the effect that “preparing and recording legal instruments constitutes the unauthorized practice of law.” See Wells; see also State v. Robinson, 468 S.E.2d 290, 292 (S.C. 1996); Buyers Serv., 357 S.E.2d at 19.
- Advertising that MCG could perform the above listed actions
The Court found that CMG advertised that it could “could file liens, represent associations in magistrate’s court, and file judgments without the use of an attorney” and held “it is the unauthorized practice of law for a non-lawyer to advertise he can provide legal services.”
The Court reminded that “what is and what is not the unauthorized practice of law in the context of an actual case or controversy.” Unauthorized Practice of Law, 422 S.E.2d at 124.
Full decision here
For advice regarding what is unauthorized practice of law in South Carolina, you can contact Nathan M. Crystal (article coauthored with Francesca Giannoni-Crystal).