Challenges Beset Low-Cost Paralegal Aid

Such an idea would once have been thought ludicrous. In 1971, it was considered revolutionary when a new company, Nolo Press, published its first self-help book, "How to Do Your Own Divorce in California." Today, Nolo publishes more than 150 titles and, thanks to the Internet, the consumer has plenty of places other than books to find legal information and forms.

Over the objection of local bar associations, the self-help books helped spawn the paralegal business, at first in California and then gradually in other states, particularly in the West. The result is that more consumers are doing their own legal work. Stanford University law professor Deborah Rhode says that consumers now represent themselves in about a quarter of all new civil cases; in divorces, surveys have shown that between 65 and 90 percent of uncontested cases have at least one party appearing without a lawyer, up from 25 percent in 1980.

When the paralegal movement started, it was designed to help consumers who had already done a lot of research on their problems but wanted help filling out the daunting paperwork, said Stephen Elias, a co-author of Nolo's "The Independent Paralegal's Handbook" and "How to File for Chapter 7 Bankruptcy." Today, some have evolved into business ventures that market their low-priced services. We the People, in particular, stands out, in its push to take the do-it-yourself movement national, making it an easier target than other firms for legal challenges, he added.

As the document-preparation offices proliferate, Elias said, he is concerned that customers "aren't really getting the information part, are not working from the self-help law books and may not know what to ask for." And because paralegals are barred from giving advice -- or they will be sued for practicing law without a license -- not knowing what to ask can be detrimental to a consumer's case, Elias said.

His recommendation: "If you're confused and don't know what you're doing, you've got to find a way to find a lawyer. If you're confused, you're going to make mistakes, and sometimes it will be mistakes you wish you didn't make. You could lose a house in bankruptcy or, in a divorce, if you don't claim the right things, you could lose half of a pension."

Glen Burnie residents Michael and Melinda Douglas thought they had asked the right questions when they used We the People in 2002 to file for bankruptcy (at that time, Ramsey was not the owner of or even employed at the Glen Burnie office). According to an enforcement action brought by the U.S. Trustee's Baltimore office seeking to bar the office from practicing law without a license, a We the People employee repeatedly assured the couple that they would not lose their home if they filed a Chapter 7 bankruptcy petition. Under Chapter 7, all assets are liquidated to pay off debts.

The Douglases' petition has turned into a long-running nightmare that has yet to end. After trying to represent themselves, they hired a lawyer to redo their bankruptcy petition under Chapter 13, in which debts are reorganized, often reduced and then repaid over several years. It has been two years since the Douglases first filed for bankruptcy protection; their request has yet to be approved, and Melinda Douglas said it could take another two years. "I can't count how many court dates we had, the heartaches we had because of one person telling us something and not knowing the true laws." Until February, they managed to hold on to their home of nearly 10 years. But then they had to move out, after concluding they had to sell it to repay their debts and avoid foreclosure. "We didn't expect to be selling the house; it was such a mess," she said.

Searns, We the People's general counsel, said the employee who worked with the Douglases "was terminated for being out of compliance with our standards," which bar giving advice beyond the printed materials. However, he said, the company will continue to defend its overall customer practices being questioned by the U.S. Trustee.

Despite the handful of problems, Searns said, there are thousands of satisfied customers, such as Nick Martin, a 71-year-old Santa Barbara bar manager who used We the People earlier this year to file for bankruptcy. Martin had run up nearly $25,000 in debt from bad investments and overusing his credit cards. He couldn't afford a lawyer, he said; We the People was "very affordable and the only way I could get help. They explained everything thoroughly," making the process far less stressful than the bankruptcy Martin filed in the late 1980s after a divorce. Then, he said, he paid a lawyer $1,500; this year, he paid $399 -- $199 to We the People and $200 for court filing fees.