If you rent out a property as a landlord or rent a property as a tenant in California, the issue of late fees often arises. How much can a landlord legally charge in late fees? While there is no cut and dry answer to this question, there is some case law to which we can refer.

Case Law Specifies that Late Fees Can Be Collected if Two Conditions are Met

In Orozco v. Casimiro, 121 Cal.App.4th Supp. 7, the landlord Jose Orozco filed a complaint against his tenant Olivo Casimiro. In this case the rental agreement stated that the rent was due on the tenth day of each month with a three-day grace period, and that a late fee of $50.00 must be paid if the rent was paid late. The tenant paid his rent on the twenty-first of the month. He did not, however, pay the late fee.

The landlord then issued a “3-day notice to perform covenants or quit” to the tenant. This type of notice basically says that the tenant has violated the terms of the lease and has three days to correct the violation or move out of the property. The notice in this case said that the lease was breached because the tenant did not pay the $50.00 late fee along with the rent. The trial court issued judgment in favor of the landlord, and ordered that the property be returned to the landlord.

The judgement, however, was reversed. The court said that late fees can be collected if two conditions are met. First, the lease must state that late fees may be imposed. More importantly, the landlord must establish that its damages from the late payment are “impracticable or extremely difficult to fix.” In this case, the landlord could not meet that second condition. As such, the landlord was only entitled to “administrative costs reasonably related to collecting and accounting for”‘ late payments.

How Much is a Reasonable Amount for a Late Fee?

In California, there is no exact amount that is considered reasonable for a late fee but it should not usually exceed more than 5% of your rent and not be imposed until after a grace period of about three days. In the Orozco case, the $50 late rent fee was well in excess of 5% of the rent amount. In the case of residential leases, the landlord bears the burden of proof to show why the late fee is reasonable.

Tenants and landlords should both review the lease for the following points relating to the rent in order to avoid any misunderstandings with respect to late fees:

• The rent amount;
• The date the rent is due;
• The grace period before the rent is considered late; and
• The amount of any late fee.

There are, of course, other provisions to verify, including whether the lease is month-to-month or for a fixed term, and the amount of the security deposit. You should also check to see if the property is in a rent controlled area, as that may affect your rental agreement.

Addressing Your Late Fee Needs in California

If you have any questions or concerns regarding rental agreement late fees in the State of California, please feel free to contact us.

Everyone concedes that only licensed lawyers can practice law, but that statement begs an important question:  what does it mean to “practice law”?  The question is not an academic one, as the California legal marketplace fills with non-lawyers providing services that only lawyers used to provide.  “Legal document assistants,” for example, now help people fill out court forms.  Lawyers and legal professionals from outside California, and indeed outside the United States, use the Internet to find freelance legal work drafting contracts and other legal documents.  A number of companies use software to create wills, articles of incorporation, and contracts for people, based on data their clients input into their website.

These outside lawyers, non-lawyer professionals, and companies strongly prefer a narrow definition of the term “practice of law,” so they can expand the range of services they can provide.  Consumers are tempted to use these alternatives to California lawyers in order to save on legal fees, and rely on these alternatives to be honest as to the services they can and cannot legally provide.  The result is constant pressure on the line that divides the activities constituting the practice of law from the activities that do not.  Given that the unauthorized practice of law is illegal, however, it serves everyone’s interest to know exactly what constitutes the “practice of law,” and who may legally perform various law-related tasks.

This article begins a series on the unauthorized practice of law in California.    It first confirms that the practice of law in California is generally restricted to lawyers who are active members of the California State Bar.  It then addresses the more difficult question of what constitutes “the practice of law” in California, and identifies the broad range of activities that can only be performed by active State Bar members.  Despite the position of many non-lawyers, California law makes clear that most activities in the legal arena in California must be performed by a California lawyer or under that lawyer’s supervision.  Non-lawyers who perform any of these tasks are thus squarely  violating California law.

Who May “Practice Law” In California.

The practice of law in California is generally restricted to lawyers who are active members of the California State Bar.  Cal. Bus. Prof. Code § 6125.  This restriction helps assure the competency of the people who provide legal services.  J.W. v. Superior Court (1993) 17 Cal.App.4th 958, 969, 22 Cal.Rptr.2d 527.  While California law recognizes and regulates other types of legal professionals, none of those professionals can practice law without the supervision of a licensed State Bar member.  Neither “legal document assistants” nor “unlawful detainer assistants” may practice law, for example.  Cal. Bus. Prof. Code § 6411(d).  “Paralegals” operate under an identical restriction.  Id. § 6450(b)(5).   Even lawyers who are licensed elsewhere may not practice law in California.  Birbrower, Montalbano, Condon & Frank, P.C. v. Superior Court (1998) 17 Cal.4th 119, 70 Cal.Rptr.2d 304, 949 P.2d 1.  The unauthorized practice of law is also a crime.  Cal. Bus. Prof. Code § 6126.

This restriction does not apply to the practice of federal law, however, since state law does not govern the practice of law before federal courts and agencies.  Sperry v. Florida (1963) 373 U.S. 379, 83 S.Ct 1322, 10 L.Ed.2d 428; see also Benninghoff v. Superior Court (2006) 136 Cal.App.4th 61, 38 Cal.Rptr.3d 759, 768-69 (California Bar may not take over federal practice of lawyer who resigned from bar but continued to practice before federal agencies).  Federal courts and agencies, however, generally restrict the practice of law to licensed attorneys.  For instance, only attorneys licensed in California may generally practice before the federal district courts there.   N.D. Cal. Civ. L.R. Civ. 11-1(b); E.D. Cal.  L.R. 83-180(a); C.D. Cal. L.R. 83-2.2.1; S.D. Cal Civ. L.R. 83.3 c.1.a.    While federal law recognizes the profession of “bankruptcy petition preparers,” those professionals may not provide legal advice, 11 U.S.C. § 110(e)(2), and may not practice law.   In Re Reynoso (9th Cir. 2007) 477 F.3d 1117, 1125.  In addition, only licensed attorneys can practice before the United States Patent and Trademark Office in trademark matters, absent certain exceptions.  37 C.F.R. § 11.14.

The exceptions to these general rules usually pertain to specialized courts or proceedings, where a statute or regulation allows for non-lawyer participation.  See, e.g.  Cal. Labor Code § 5700 (authorizing lay representation before Workers Compensation Appeals Board); Cal. Welf. & Inst. Code § 10950(same for applications for hearings to review certain decisions regarding public social services); 37 C.F.R. § 11.6 (non-attorney “patent agents” can prepare and prosecute patent applications); U.S. Tax Court Rules Prac. & Proc. 200(a)(3) (nonlawyers may practice before Tax Court upon passing examination).  In addition, out-of-state lawyers may practice before a California court or arbitration panel once they are admitted pro hac vice.  Cal. Rules Court 9.40 (courts); id. Rule 9.43 (arbitrations).  The federal courts also have procedures for pro hac vice admissions.  See, e.g., N.D. Cal. Civ. L.R. 11-3.

The Three Types of Activities That Constitute The Practice of Law.

The notion of “practicing law” is not defined by California statute.  The courts, however, have held that the “practice of law” includes three types of activities. First, it includes services provided in a lawsuit or similar proceeding.  Second, it includes the giving of legal advice.  Third, it includes the preparation of documents that secure legal rights.  Birbrower, supra, 17 Cal.4th at 128 (citing People v. Merchants Protective Corp. (1922) 189 Cal. 531, 535, 209 P. 363.  In determining whether particular services constitute the practice of law, courts look at substance over form, and disregard disclaimers saying that no attorney-client relationship exists between the parties. Benninghoff, supra, 136 Cal.App.4th at 73 & n.10.

The courts have broadly interpreted the scope of these three activities.   In terms of lawsuits and similar proceedings for example, non-lawyers cannot appear in court for third parties.  Drake v. Superior Court(1994) 21 Cal.App.4th 1826, 1830-31, 26 Cal.Rptr.2d 829.  They also cannot represent people before administrative agencies, absent explicit authorization by statute or agency regulation.  Benninghoff, supra, 136 Cal.App.4th at 764.  They cannot act as counsel in the planning of pre-litigation strategy.   Birbrower, supra, 17 Cal.4th at 131.  They cannot draft pleadings or court papers for third parties.  Morgan v. State Bar (1990) 51 Cal.3d 598, 603-04, 274 Cal.Rptr 8, 797 P.2d 1186 (preparing documents in dissolution of marriage).  They may not negotiate with opposing counsel.  Id. at 603-04.  Even writing a letter on a client’s behalf can be the practice of law.  Hitchcock v. State Bar (1989) 48 Cal.3d 690, 701, 257 Cal.Rptr. 696, 771 P.2d 394.  Indeed, non-lawyers cannot even choose the forms needed for routine proceedings, or help a third-party decide how the forms should be filled out.  People v. Landlords Professional Services (1989) 215 Cal.App.3d 1599, 1608-09, 264 Cal.Rptr 548.

  The California courts have also held that giving legal advice is the practice of law.  Bluestein v. State Bar of California (1974) 13 Cal.3d 162, 173-74, 118 Cal.Rptr. 175, 529 P.2d 799.  This is true even if the advice does not concern California law.  Id.  In general, people “practice law” whenever they research difficult questions that “reasonably demand the application of a trained legal mind,” and then give advice based on that research.  Agran v. Shapiro (1954) 127 Cal.App.2d.Supp.807, 818.  However, one also practices law when giving advice in connection with a relatively simple proceeding.  Landlords Professional, supra, 215 Cal.App.3d at 1608-09 (advice in connection with unlawful detainer actions).

The judicial interpretation of “practicing law” when preparing legal documents is similarly broad.  For instance, non-lawyers cannot draft wills for third parties.  Biakanja v. Irving (1958) 49 Cal.2d 647, 651, 320 P.2d 16.  They also cannot prepare living trusts.  People v. Fremont Life Ins Co. (2002) 104 Cal.App.4th 508, 128 Cal.Rptr.2d 463.  They cannot choose the form of deed for a transaction to which they have no connection.  People v. Sipper (1943) 61 Cal.App.2d.Supp 844, disapproved on other grounds, Murgia v. Municipal Court (1975) 15 Cal.3d 286, 301 n.11, 124 Cal.Rptr. 204, 540 P.2d 44.  Negotiating and preparing contracts for third parties also constitutes the practice of law.  Simons v. Steverson (2001) 88 Cal.App.4th 693, 106 Cal.Rptr.2d 193, 208-09; In Re Garcia (9th Cir. Bankr.  App. Panel 2005) 335 B.R. 717, 727-728.  As such, the role of non-lawyers in these sorts of activities is extremely limited.

Conclusion.

The practice of law in California is generally restricted to active members of the California State Bar.  In addition, the California courts have expansively defined the “practice of law” to include much more than court appearances.  As such, the “practice of law” includes the drafting of court papers, the preparation of legal papers, providing legal advice, and most activities that require the application of law to fact in a specific situation.  People who are not licensed California lawyers but provide these kinds of services thus risk engaging in the illegal and unauthorized practice of law.

An earlier post established that only active members of the California State Bar have a general right to “practice law” in that state, and that the “practice of law” included many activities far removed from the courtroom.  Among other things, the “practice of law” includes the drafting of wills and contracts, the conducting of legal research the giving of legal advice, and the selection of legal forms for even routine matters.

This post addresses the converse question.  It examines what law-related activities that non-lawyer professionals can legally perform without engaging in the illegal and unauthorized practice of law.  It first discusses the seminal decision in People v. Landlords Professional Services (1989) 215 Cal.App.3d 1599, 264 Cal.Rptr 548, and the restrictions that decision imposes on non-lawyers.  It then discusses the California regulatory scheme for non-attorney professionals, which essentially codifies the holdings in Landlords Professional.  Read together, these authorities reinforce the idea that the non-lawyer’s role in the legal field is narrowly drawn, and that the non-lawyer can act as little more than a scrivener without an attorney’s supervision.  Non-lawyers certainly cannot independently draft pleadings, agreements, or other legal documents whenever that work would require them to make substantive decisions regarding the contents of those documents or the language to be used.

Landlords Professional Services (“LPS”) had advertised an eviction service for landlords.  It told its clients that its agents were not attorneys, and that its customers would need to represent themselves in any unlawful detainer litigation.  LPS also gave its customers a booklet that described an unlawful detainer action.  That booklet, however, also gave advice on subjects like changing locks after an eviction and accepting rent payments after serving a notice to quit.  LPS also occasionally provided oral advice to its clients.  For example, LPS told one client about errors in a three-day notice, and offered at least once to type up a client’s testimony for the client to read in court.

The District Attorney filed a civil complaint against LPS for the unauthorized practice of law, and the trial court subsequently issued an injunction barring LPS from engaging in numerous activities.  Among other things, the court enjoined LPS from preparing papers for eviction proceedings, “other than at the specific and detailed direction of a person in propria persona” or under an attorney’s direct supervision.  Landlords Professional, supra, at 1603.  The injunction also barred LPS from explaining the effect of any rule of law or court, and prohibited LPS from explaining the requirements for commencing or maintaining a court proceeding.  Id. at 1603-04.  LPS also was enjoined from advising or explaining which forms were required for an unlawful detainer proceeding, unless an attorney directly supervised this explanation.  Id. Essentially, then, the injunction limited LPS’ role in preparing legal documents to that of a secretarial service.

The Court of Appeal affirmed the injunction.  It summarized California law holding that the “practice of law” involved not only services in a court of justice, but also the providing of legal advice and counsel, and the creation of contracts and other legal documents.  Id. at 1604-05.  It also noted that people practice law when they resolve difficult or doubtful legal questions which, to safeguard the public, reasonably demand the application of a trained legal mind.  Id. at 1605 (citing Agran v. Shapiro (1954) 127 Cal.App.2d.Supp. 807, 818.  Certain activities, however, did not constitute the practice of law.  While non-lawyers may not select forms for their clients, they can nevertheless provide clerical services or act as scriveners to help fill out any forms their clients choose.  Landlords Professional, supra, 215 Cal.App.3d at 1605 (citing People v. Sipper (1943) 61 Cal.App.2d.Supp. 844, 846-47, 142 P.2d 960). The Court also noted that in other states, the sale of detailed manuals containing instructions on filling out legal forms is lawful, provided that the seller not “particularize the advice given to individual situation cases.”  Landlords Professional, supra, 215 Cal.App.3d at 1606.  The Court held that the law was the same in California, and stated that the seller of legal texts and manuals cannot  “personally advise the client with regard to his specific case.” Id. at 1608.

The Court also discussed in detail and agreed with several cases from other states on the subject of the unauthorized practice of law. A key theme in those cases was the nature of the contact between the non-lawyers and their clients.  If there was no direct, personal contact between the client and non-lawyer, such as through the sale of do-it-yourself books, then there was no practice of law.  Any personal contact, however, had to be severely limited.   In no case was a non-lawyer allowed to provide anything other than secretarial services, and in no case was the defendant allowed even so much as to choose the forms the client used.  See, e.g., Oregon State Bar v. Gilchrist (1975) 272 Ore. 552, 538 P.2d 913, 919 (publisher of legal materials prohibited from helping clients select forms, among other things) (cited in Landlords Professional, supra, 215 Cal.App.3d at 1607).

The Court of Appeal then held that LPS had improperly practiced law.   It noted that LPS’ advertisement implied its services “were not limited to clerical functions,” and that LPS had “cast about itself an aura of expertise concerning evictions.” Id. at 1608-09.  LPS also provided “specific information to its clients.”  Id. at 1609.  Given this “aura of expertise,” the Court held, LPS’ advice would “undoubtedly be relied upon by its clients, perhaps to their serious detriment.”  Id.  The Court also did not consider the case at hand to be “close” as to whether or not LPS was practicing law.  Id.

California Statutes Governing Non-Lawyer Legal Professionals.

California has enacted a regulatory system for professionals who are not lawyers but who provide services in the legal field.  Among other things, this system recognizes the professions of “legal document assistant,” “unlawful detainer assistant,” and “paralegal.”  Cal. Bus. Prof. Code §§ 6400-6415(legal document assistants and unlawful detainer assistants); id. §§ 6450-6456 (paralegals).  This system expressly prohibits all three categories of professionals from “practicing law.”   Id. § 6411(d) (legal document and unlawful detainer assistants); id. § 6450(b)(5) (paralegals).  In particular, legal document and unlawful detainer assistants may not give “any kind of advice, explanation, opinion, or recommendation to a consumer about possible legal rights, remedies, defenses, options, selection of forms, or strategies.”  Id. § 6411(e).  Similarly, paralegals may not “[s]elect, explain, draft, or recommend the use of any legal document” to anyone other than their supervising attorneys.  Id. § 6450(b)(3).  While paralegals can perform “substantial legal work,” they must do so “under the direction and supervision” of a licensed attorney.  Id. § 6450(a).  In short, then, the statutes reinforce the limitations in Landlords Professional concerning what what non-attorneys can do in the legal field.

In addition, paralegals are prohibited from working for themselves, and must work for someone else.  Id. § 6450(a).  Legal document assistants may work for themselves, but are expressly limited to four categories of activities, all of which are categorized as “self-help services.”  Those activities are as follows:

(1) Completing legal documents in a ministerial manner, selected by a person who is representing himself or herself in a legal matter, by typing or otherwise completing the documents at the person’s specific direction.

(2) Providing general published factual information that has been written or approved by an attorney, pertaining to legal procedures, rights, or obligations to a person who is representing himself or herself in a legal matter, to assist the person in representing himself or herself.

(3) Making published legal documents available to a person who is representing himself or herself in a legal matter.

(4) Filing and serving legal forms and documents at the specific direction of a person who is representing himself or herself in a legal matter.

Cal. Bus. Prof. Code § 6400(d).

These statutes shows a legislative intent to reserve the practice of law to members of the State Bar, and to ratify the holdings in Landlords Professional as to what it means to “practice law.”   Indeed, part of the intent of the statute governing legal document assistants was to codify the Landlords Professionaldecision.  See Legislative History of SB 1418, 1997-98, August 24, 1998 Senate Floor Analyses.

Conclusion.

Both the decision in Landlords Professional and the regulatory scheme in the California Business and Professions code severely proscribe what non-lawyers in California can do, unless they are directly supervised by a licensed attorney.  Non-lawyers must certainly refrain from any act that constitutes the practice of law, they may not give advice on any substantive aspect of a legal proceeding or document, and they must abstain from any discretionary role in the preparation of pleadings, agreements, and other legal documents.  All of those discretionary decisions must be made exclusively by the customers themselves.  The role of the non-legal professional, then, is little more than a scrivener with familiarity as to the forms being used.

It happens in a majority of our cases. Right after a favorable settlement or ruling, we receive a call or an E-mail from an excited lead counsel. At some point after the blow-by-blow description of what happened and the expression of thanks for our help, counsel blurts out “They didn’t see it coming.” In response, I simply smile and nod.

Lawyers make assumptions like everyone else. They see you at the depositions and settlement conferences, they know how long it takes to write quality paper, and they know how many hours are in a day. When they do the math, they realize you don’t have the time to do all that needs to be done. They therefore assume that it won’t get done (or at least get done well), and they breathe a sigh of relief because they are probably in a similar situation.

Our presence, however, changes the equation without the other side knowing until it is too late. We do the work that needs to be done, and we do it completely behind the scenes. We never sign a pleading, we never speak to anyone on the other side, and opposing counsel never knows we’re involved. All they see is the quality paper, signed by lead counsel, and all they can do is wonder how it all got done.

And it just happened again. A solo practitioner (I’ll call her Lauren) was representing an employer in a large wrongful termination case. The plaintiff was demanding hundreds of thousands in settlement in a case Lauren felt wasn’t worth anywhere near that much. The court had denied cross-motions for summary judgment, and the trial date was looming. Lauren also felt that if a judge looked at several aspects of the plaintiff’s damages, he or she would realize they just could not be recovered.

Lauren and I quickly agreed that the best strategy would be to raise these issues in a series of in limine motions. Our office then began drafting what became a set of related motions that tackled all the major weaknesses in the plaintiff’s case. We then prepared the trial brief and drafted the opposition to the plaintiff’s in limine motions, thereby allowing Lauren to prepare witnesses and attend to her other cases. The result: all but one of our motions were granted, thereby knocking out plaintiff’s RICO claim and the vast majority of his damages; and all of the plaintiff’s motions were denied. The case then settled for far less than what our client was willing to pay at the last settlement conference.

The other side had no idea we were involved. They also had no idea they would be served with all those motions, and they had no ability to respond to everything. They certainly had no idea how Lauren managed to draft all that paper. In short, they just didn’t “see it coming.” Now, the motions were meritorious and the result was just. Lauren’s argumentation at the hearing, I am sure, was brilliant. Without our office’s help, however, at least some of the issues in those motions would have been buried in the sound and fury of trial, without a ruling before the entry of the verdict. The result: a settlement before a jury was impaneled, an extremely satisfied Lauren, and an ecstatic client. And it happened in large part because of our work behind the scenes and because of the element of surprise.