Court News Ohio
Court News Ohio
Court News Ohio

Paralegal Who Lied about Working Under Attorney’s Supervision Fined $5,000

The Ohio Supreme Court today sanctioned  the operator of a Cuyahoga County loan modification business for the unauthorized practice of law and fined her $5,000.

A majority of the Supreme Court ruled that Melissa M. Smidt, doing business as A Perfect Solution, deceived a customer by stating she was a paralegal acting under the supervision of a licensed attorney. The attorney told disciplinary authorities he fired Smidt and she was using his attorney letterhead without his consent.

Chief Justice Maureen O’Connor and Justices Judith L. French, Patrick F. Fischer, Michael P. Donnelly, and Melody J. Stewart joined the Court’s per curiam opinion.

Justice R. Patrick DeWine concurred in judgment only with a written opinion, stating that Smidt’s actual attempt to negotiate a loan modification was not the unauthorized practice of law. Justice Sharon L. Kennedy joined Justice DeWine’s opinion.

Homeowner Seeks to Stop Foreclosure
A Perfect Solution advertised that it was a “knowledgeable, fully committed professional company preparing loan modifications and bankruptcy petitions under the direct supervision of consumer bankruptcy attorneys.”  Smidt was not licensed to practice law in Ohio, but had been employed by attorney J. Norman Stark as a contract paralegal. Smidt use the designations ACP (advanced certified paralegal) and RP (registered paralegal) in the signature line of her correspondence to indicate her paralegal training.

In March 2015, Deborah Krantz paid Smidt a $1,000 flat fee to prepare and negotiate a modification for a loan that was the subject of foreclosure proceedings in Franklin County Common Pleas Court.  Krantz already had an attorney representing her in the foreclosure. A final judgment on the foreclosure had been issued, and a sheriff’s sale of the property had been scheduled.

During the course of representation, Smidt sent two letters to Krantz’ mortgage lender on Stark’s letterhead. In the first letter, she identified herself as a paralegal and the “legal representative appointed to act or speak on behalf of” Krantz for the purpose of negotiating a loan modification. In the second letter, she related the reasons Krantz had been prevented from paying her loan obligations and suggested she was an “excellent candidate” for a modification.

Smidt later told Krantz she spoke with one of the attorneys representing the lender and asked him to delay the foreclosure proceedings so that she had time to submit a loan-modification packet for Krantz. She later emailed Krantz’ attorney and told him that she spoke with the lender’s underwriter, who told her the lender needed more time to make a loan-modification order.

Smidt suggested to Krantz’ attorney that he prepare — with her help — several motions, including asking the Court to stay the execution of the foreclosure judgment. The efforts to delay the judgment were unsuccessful, and the trial court confirmed the sheriff’s sale of the Krantz property in June 2019. Krantz fired Smidt. She requested a return of her documents and a full refund of her fee. Smidt did not do either.

Client Files Complaint, Paralegal Fails to Cooperate
In 2016, Krantz filed a complaint against Smidt with the Office of Disciplinary Counsel, which sent a letter to Smidt seeking information. Smidt requested additional time to reply to the disciplinary counsel, but only provided a partial answer. She sent several documents, including the two letters she sent to the lenders on Stark’s legal letterhead. When the office requested more information, Smidt did not reply.

In August 2018, the disciplinary counsel asked the Board on the Unauthorized Practice of Law to find Smidt in default and declare she was practicing law without a license.

The board also received an affidavit from Stark that denied he represented Krantz, and also that he terminated Smidt’s employment as a “paralegal assistant” because of her unauthorized practice of law and use of his law-office letterhead without permission. He stated that after he fired Smidt, he repeatedly asked her to cease and desist from using his letterhead, but she did not respond.

The board found no evidence that Smidt worked under the supervision of any licensed attorney. The board  recommended that the Court order Smidt to stop engaging in the unauthorized practice of law and pay a $5,000 fine.

Court Finds Practice Illegal
The Court’s opinion noted the unauthorized practice of law includes both the “rendering of legal services for another” and “representing oneself as authorized to practice law in Ohio” when the person is not. The opinion stated an unlicensed person may assist in providing certain legal services when acting under the close supervision of a licensed attorney.

The Court noted that attempting to represent the legal interests of others and advising them of their legal rights during settlement negotiations constitutes the unauthorized practice of law, as does advising debtors of their legal rights while helping them negotiate settlements to avoid foreclosure.

While Smidt did not directly give legal advice to “her client,” she gave litigation advice to Krantz’ attorney in hopes of delaying the foreclosure and buying her time to negotiate a loan modification, the opinion stated. The Court ruled her actions to be the unauthorized practice of law.

The opinion described Smidt’s attempt to convince others she operated under the supervision of licensed attorneys as “flagrant.” The Court noted the disciplinary counsel presented evidence that Smidt engaged with others in a similar pattern of the unauthorized practice of law.

Smidt’s indication that she had paralegal training led the Court to conclude she received instruction regarding the actions paralegal could not do and that she chose to ignore those instructions.

“Her intentional and deceitful misuse of Stark’s letterhead demonstrates her knowledge that in the absence of direct supervision by a licensed attorney, the actions she took on behalf of Krantz constituted the unauthorized practice of law,” the opinion concluded.

Concurrence Questions Right to Negotiate
In his concurring opinion, Justice DeWine wrote that he agreed Smidt engaged in the unauthorized practice of law by using the attorney’s letterhead to falsely convey she was working with an attorney.

Citing his opinion in the Court’s Ohio State Bar Assn. v. Watkins Global Network LLC decision, he wrote that merely offering an opinion with legal implications is not, on its own, sufficient to count as the unauthorized practice of law. He cautioned that concluding someone is engaged in the unauthorized practice of law by voicing a legal opinion runs the risks of burdening many professional activities by accountants, human-resource representatives, and real-estate agents, “whose jobs require them to opine on legally relevant matters.”

He also wrote he does not agree that debt negotiation is necessarily the practice of law. To find Smidt engaged in the practice of law requires a determination that she provided legal services, which would be behaviors that are exclusively the work of lawyers. He wrote the majority suggests an “overly broad understanding of what might count as the unauthorized practice of law.”

2019-0827. Disciplinary Counsel v. Smidt, Slip Opinion No. 2020-Ohio-3258.

Please note: Opinion summaries are prepared by the Office of Public Information for the general public and news media. Opinion summaries are not prepared for every opinion, but only for noteworthy cases. Opinion summaries are not to be considered as official headnotes or syllabi of court opinions. The full text of this and other court opinions are available online.

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