Thursday, July 17, 2014
S.C. Suspends Valley Attorney Over Loan Modifications
By KENNETH OFGANG, Staff Writer
The California Supreme Court yesterday ordered that a Woodland Hills attorney be suspended for at least two years for violating ethics rules and a state statute in connection with loan modification services.
The high court adopted the State Bar Court Review Department’s recommendation in the case of Marilyn S. Scheer. Scheer has been on involuntary inactive status since May of last year, for failure to pay a fee arbitration award obtained by one of her clients.
The Review Department concluded in March that Scheer violated unauthorized practice rules by handling loan modifications for 26 clients in 11 states where she is not licensed. It further found that she violated California law by accepting fees prior to completing her work on behalf of four loan modification cases.
Hearing Judge Donald Miles found that she was culpable in all of those matters, as well as two involving clients in Colorado. The Review Department disagreed as to those clients, saying that Colorado rules allow an out-of-state attorney to practice there under some circumstances.
Former Iowa Lawyer
Scheer is a 1979 graduate of Drake University Law School in Iowa, and was admitted to practice in that state that year. She was admitted in California in 1987.
She practiced bankruptcy law at one time, later shifting to real estate and lending law at a large firm where she was laid off in 2009, Presiding Judge Joann Remke, writing for the Review Department, explained, Scheer started her own practice, Marilyn Scheer Law Group PC, in August 2009.
She argued that she violated no rules because the services she performed did not constitute the practice of law and could have been performed by a layperson, and that even if she engaged in the practice of law in other states, it was not unlawful because loan modification services are governed by federal law.
But Remke, who noted that Scheer was paid more than $120,000 in fees, said that even if federal law governed the out-of-state activities, Scheer still collected the money illegally because she is not admitted to practice in federal courts outside Iowa and California.
Nor can she claim she was not practicing law, when the fee agreements, and the letterhead on which she communicated with clients, clearly said she was a lawyer, identified her practice as “a California law corporation,” and said she was providing “legal services,” Remke noted. The attorney also never explicitly told her out-of-state clients that she was not licensed in their jurisdictions, the presiding judge said.
With respect to the California clients, the jurist went on to say, the attorney violated the Civil Code provision that says an attorney may not “claim, demand, charge, collect or receive” payment for assisting a loan modification client until “each and every service” for which the attorney is retained has been completed.
Scheer, Remke explained, deposited client moneys into her trust account, then withdrew them as the work progressed. That is a clear violation of the statute, the presiding judge said.
Remke also rejected Scheer’s argument that the statute places unconstitutional restraints on the homeowner’s ability to retain counsel of choice. She cited the state Supreme Court’s ruling upholding the constitutionality of contingency fee limits in medical malpractice cases against a similar argument.
The penalties, which include suspension for at least two years and until Scheer demonstrates fitness to practice and refunds the fees, as well as three years on probation, are reasonable, Remke said, in part because the attorney appeared not to appreciate the seriousness of her actions.
“Her persistent claim that her conduct is excused because she believes the law is unconstitutional is less a creative legal theory than a refusal to accept responsibility for deliberately violating the law,” the presiding judge wrote.
Remke also distinguished a prior case in which an attorney who committed similar misconduct was only suspended for six months. That case involved less money and fewer clients, she explained.
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