PERKINS v. CTX MORTGAGE COMPANY, 137 Wn.2d 93 (1999)
969 P.2d 93
ED and JEANNE PERKINS, husband and wife and the marital community composed
thereof, on behalf of themselves and all similarly situated, Appellants, v.
CTX MORTGAGE COMPANY, a Washington corporation, Respondent.
No. 64581-7.
The Supreme Court of Washington, En Banc.
January 14, 1998.
January 7, 1999.
Page 94

[EDITORS' NOTE: THIS PAGE CONTAINED HEADNOTES AND HEADNOTES ARE
NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT
DISPLAYED.]
Page 95

  Appeal from the Superior Court for King County, No. 95-2-16285-1,
Charles W. Mertel, J., on August 20, 1996.

  David A. Leen, Leen & Moore, for Appellants.

  Edward W. Pettigrew, Larry J. Smith, Graham & Dunn, for
Respondent(s).

  Charles K. Wiggins, Attorney At Law, Mary E. Fairhurst,
Assistant Atty. Gen., Ofc of Atty. General, Kenneth W. Masters,
Wiggins Law Ofc, Amicus Curiae on behalf of Washington State
Bar Association.

  Louis D. Peterson, Hillis Clark Martin & Peterson, Lynne M.
Cohee, Hillis Clark Martin & Peterson, Amicus Curiae on behalf of
Washington Mortgagelenders Associate.

  DURHAM, C.J.

  At issue is whether a mortgage lender engages in the
unauthorized> <practice> <of> <law> by charging a fee for the production
and completion of residential home loan documents. The trial
court dismissed the Plaintiffs' class action, concluding that
charging a fee for the production of such documents is not the
<unauthorized> <practice> <of> <law> where lay employees participating in
such <document> <preparation> do not exercise any legal discretion.
We agree and affirm.
Page 96

  Ed and Jeanne Perkins borrowed money from CTX Mortgage Company
(CTX) to purchase their home. CTX charged a $250 "<document>
<preparation>" fee. The fee is not charged with respect to any
particular document.[fn1] Instead, it is charged to offset the
overhead associated with the preparation of the extensive
documentation necessary to process and complete loan
transactions. CTX prepared various legal and nonlegal documents
necessary to process and complete the Perkinses' loan.[fn2] In
preparing these documents, CTX attorneys performed all tasks
requiring the exercise of legal judgment. For example, CTX
attorneys selected the loan products, created the documents
necessary for each loan product, and supervised the programming
of CTX's central computer, which generates form templates in the
branch offices. At the branch offices, lay employees entered
customer information such as Social Security numbers, employer
information, and bank account numbers in response to computer
prompts depending on the type of loan the Perkinses had selected.
Lay employees also entered the loan amount, interest rate, down
payment,
Page 97
and other factual data. Attorneys prepared the other documents
requiring the exercise of legal judgment. For example, the Perkinses'
attorneys prepared the purchase and sale agreement, the earnest money
agreement, the HUD-1, the excise tax affidavit, the warranty deed, and
the escrow instructions.

  The Perkinses filed a class action in King County Superior
Court on behalf of CTX borrowers who were or would be charged a
<document> <preparation> fee. They sought a declaratory judgment that
CTX engaged in the <unauthorized> <practice> <of> <law> by charging such
a fee for the preparation of loan documents. They further argued
that such <unauthorized> <practice> <of> <law> violated the Consumer
Protection Act, RCW 19.86 (CPA). The trial court certified the
class as consisting of CTX borrowers who had paid a fee for loan
<documents> <prepared> by CTX and all such future borrowers. After
discovery, both parties moved for summary judgment, which was
granted in favor of CTX, dismissing the Perkinses' claims. The
Perkinses moved for reconsideration, which was denied, before
appealing to the Court of Appeals. CTX moved for direct review by
this court, which was granted.

                                I

  The Perkinses contend that CTX engaged in the practice of law
by selecting and completing the various documents necessary to
process the Perkinses' residential home loan. This cannot be
seriously disputed. The practice of law includes the selection
and completion of legal instruments by which legal rights and
obligations are established. Washington State Bar Ass'n v. Great
W. Union Fed. Sav. & Loan Ass'n, 91 Wn.2d 48, 54-55, 586 P.2d 870
(1978) (Great Western); see also In re Discipline of Droker,
59 Wn.2d 707, 370 P.2d 242 (1962); Washington State Bar Ass'n v.
Washington Ass'n of Realtors, 41 Wn.2d 697, 251 P.2d 619 (1952)
(WSBA v. WAR). It is established that the selection and
preparation of promissory notes and deeds of trust is the
practice of law. Great Western, 91 Wn.2d at 55. CTX
Page 98
and amicus Washington Mortgage Lenders Association would have us
focus only on the data inputting tasks that lay employees perform.
However, CTX's attorneys created the loan documents and helped
program CTX's computer system to select the appropriate document
templates. Regardless of how CTX allocates tasks between attorney
employees and lay employees, CTX employees select and complete
those legal documents incident to residential home financing.
Thus, CTX engaged in the practice of law by selecting and
preparing the various legal documents involved in this case. The
question then becomes whether such activities are authorized.

                               II

  Both the Perkinses and the Washington State Bar Association
(WSBA) contend that mortgage lenders are authorized to prepare
the legal instruments necessary to complete loan transactions as
long as they do so without charge. But they argue that CTX's
otherwise permissible loan <document> <preparation> became
unauthorized upon the charging of a fee.[fn3]  This preoccupation
with the fee is misplaced. We have firmly rejected the notion
that a lay person's authority to prepare legal instruments turns
on whether a fee is charged.

  In Great Western, the unanimous court held that a bank, by
selecting and completing legal documents, including promissory
notes and deeds of trust, engaged in the unlawful practice of law
where a lay employee filled out the documents and the bank
charged a fee for the service. After resolving that the bank had
engaged in the practice of law, the court considered whether such
actions were unauthorized.
Page 99

  [W]e have recognized that a party to a legal document
  may select, prepare or draft that document without
  fear of liability for unauthorized practice. This
  exception to our general prohibition against the
  practice of law by laypersons is analogous to the
  "pro se" exception for court proceedings. Both
  exceptions are founded upon the belief that a
  layperson may desire to act on his own behalf with
  respect to his legal rights and obligations without
  the benefit of counsel.

  The "pro se" exceptions are quite limited and apply
  only if the layperson is acting solely on his own
  behalf. Moreover, a layperson who receives
  compensation for such legal services may not rely
  upon the "pro se" exception. The receipt of
  compensation is conclusive evidence that the
  layperson is not merely acting for himself but has
  assumed the additional burden of acting for another.

Great Western, 91 Wn.2d at 56-57 (citations omitted)
(emphasis omitted). Thus, the court held that by
charging a fee, Great Western "removed itself from
the protection afforded by our `pro se' exception to
the general prohibition against the <unauthorized>
<practice> <of> <law>." Great Western, 91 Wn.2d at 57-58.
The Perkinses contend that Great Western is squarely
on point. However, our next <unauthorized> <practice> <of>
<law> case cogently explains how the fee issue in Great
Western was irrelevant to the <unauthorized> <practice>
<of> <law> question.

  In Hagan & Van Camp, P.S. v. Kassler Escrow, Inc.,
96 Wn.2d 443, 635 P.2d 730 (1981), a law firm sued
to enjoin an escrow company from preparing earnest
money agreements and other acts as the <unauthorized>
<practice> <of> <law>. The unanimous court rejected the
proposition that, by not charging a fee, the escrow
company's actions were authorized under Great
Western.

  Petitioner relies heavily upon the fact that
  no additional charges were made for the services.
  Petitioner relies on the holding in Great Western to
  support this aspect of its argument. Such reliance
  is misplaced. Great Western did charge a fee so the
  court expressly limited its holding in the case to a
  situation where a fee is charged. The fact of
  compensation is
Page 100
  irrelevant, however, except as to provide evidence
  of the fact that a lay person is acting for another.
  We have clearly held that it is the nature and character
  of the service rendered rather than the fact of compensation
  for it that governs.

Kassler Escrow, 96 Wn.2d at 451 (citations omitted) (emphasis
added).

  Notwithstanding this unambiguous language, both the Perkinses
and amicus WSBA rely on our next and last <unauthorized> <practice>
<of> <law> case, Cultum v. Heritage House Realtors, Inc., 103 Wn.2d 623,
694 P.2d 630 (1985), as further support for the proposition
that charging a fee for the preparation of legal documents by lay
persons is unauthorized.

  In Cultum, a real estate agent prepared an earnest money
agreement setting forth the buyer's offer to purchase a home. The
buyer asked the agent to insert a structural inspection
contingency clause. The agent inserted the standard clause used
by her employer. Both the clause and the preprinted earnest money
agreement were drafted by lawyers. After the inspection revealed
some minor problems, the buyer sought to rescind the offer
pursuant to the inspection contingency based on her subjective
dissatisfaction. The seller refused to rescind and construed the
inspection contingency to require major structural defects based
on an objective standard before it could be invoked. The buyer
finally recovered her earnest money and sued the real estate
company, seeking among other things an injunction against their
alleged <unauthorized> <practice> <of> <law>.

  The court held that, although the real estate agent engaged in
the practice of law, her actions were not unauthorized. The court
was divided four to four, however, on the rationale. The lead
opinion ruled narrowly:

  It should be emphasized that the holding in this case
  is limited in scope. Our decision provides that a
  real estate broker or salesperson is permitted to
  complete simple printed standardized real estate
  forms, which forms must be approved by a lawyer, it
  being understood that these forms shall not be used
  for other than simple real estate transactions which
  arise
Page 101
  in the usual course of the broker's business and that
  such forms will be used only in connection with real
  estate transactions actually handled by such broker or
  salesperson as a broker or salesperson and then without
  charge for the simple service of completing the forms.

Cultum, 103 Wn.2d at 630 (emphasis added). The Perkinses
emphasize the "without charge" language without discussion,
apparently assuming that a charge would render the action
unauthorized. Br. of Appellants at 22. Amicus WSBA similarly
suggests that the Cultum court relied on the fact that there was
no separate charge levied. Br. of Amicus Curiae WSBA at 13. Both
the Perkinses and the WSBA are mistaken.

  The lead opinion necessarily confined its holding to the facts
of the case. The realty company did not charge a fee; therefore,
the court could only have speculated in dictum whether the
charging of a fee would have rendered the realty company's
actions unauthorized. The court, therefore, properly left open
the question of whether a fee would have changed the result.

  Moreover, any suggestion in the lead opinion that the fee issue
was dispositive failed to carry a majority. Granted, four
justices reasoned that "[t]he fact that brokers and salespersons
will complete these forms at no extra charge, whereas attorneys
would charge an additional fee, weighs heavily toward allowing
this choice." Cultum, 103 Wn.2d at 628-29. However, the other
four justices agreed in the result only and disagreed with the
lead opinion's rationale. "[T]he fact that the agreement is
completed without charge is irrelevant." Cultum, 103 Wn.2d at 634
(Brachtenbach, J., concurring). Thus, Cultum does not stand for
the proposition that charging a fee for the lay preparation of
legal documents amounts to the <unauthorized> <practice> <of> <law>.

  The rule remains that "[t]he nature and character of the
service rendered, rather than the fact of compensation for it,
should govern its classification and relation to the public
interest." WSBA v. WAR, 41 Wn.2d at 699; see also Great Western,
91 Wn.2d at 54 ("It is the nature and character of
Page 102
the service performed which governs whether given activities
constitute the practice of law."). CTX is not asserting its
actions are authorized under the pro se exception; therefore,
it unnecessary to look to the document fee to rebut a claim
that CTX was acting solely on its behalf. Thus, whether CTX
charged a fee is irrelevant to the question of whether they
have engaged in the <unauthorized> <practice> <of> <law>. Instead,
the essential inquiry is whether a mortgage lender is authorized
to prepare the legal documents that are ordinarily incident to
its financing activities when lay employees participating in such
<document> <preparation> do not exercise any legal discretion.

                               III

  CTX argues that its activities are authorized because lay
employees do not exercise any legal discretion during their
participation in the <document> <preparation> process. Thus, there is
no risk of public harm from incompetent lawyering. We are
persuaded that this position is consistent with our historical
approach to the <unauthorized> <practice> <of> <law>.

  Admittedly, we have often spoken broadly in condemning the
practice of lay persons selecting and completing preprinted form
legal documents. However, this broad language must be considered
in light of the particular circumstances at issue in those cases.
Our underlying goal in <unauthorized> <practice> <of> <law> cases has
always been the promotion of the public interest. Consequently,
we have prohibited only those activities that involved the lay
exercise of legal discretion because of the potential for public
harm.

  In WSBA v. WAR, this court rejected a broker's argument that he
had merely filled in the blanks in form legal documents, stating:

  The representation of qualification and competence to
  do work of a legal nature and to advise upon that
  subject . . . is implicit in the preparation of any
  legal document by the selection and completion of a
  blank form. . . .

WSBA v. WAR, 41 Wn.2d at 701. Despite this broad
Page 103
language, however, the court ruled very narrowly, enjoining
the broker from doing only the type of work he performed with
one particular deed. WSBA v. WAR, 41 Wn.2d at 701. In that deed
he had drafted and inserted an ambiguous clause regarding mortgages
to which the property was subject. WSBA v. WAR, 41 Wn.2d at 698. The
concurrence pointed out that by limiting its holding, the majority
tacitly approved of the broker's other activities in which he filled
in the names of parties and other objective information. WSBA v. WAR,
41 Wn.2d at 702 (Donworth, J., concurring). This result is not surprising
given that the court's guiding principle was to protect against "[t]he
probability of injurious consequences from the acts of the unskilled."
WSBA v. WAR, 41 Wn.2d at 699. The potential harm of allowing lay persons
to draft clauses was manifested in the uncertainty regarding the
number and value of mortgages to which the property was subject.
In contrast, the court allowed the mere inputting of objective
data because of the unlikelihood that such action would
significantly prejudice individuals' legal interests.

  In In re Discipline of Droker, 59 Wn.2d 707, 370 P.2d 242
(1962), the court held that lay employees of an escrow company
engaged in the <unauthorized> <practice> <of> <law> by completing form
legal documents. The court observed that "the preparation of a
legal form is doing work of a legal nature, and if done by
a . . . layman, may be enjoined." Droker, 59 Wn.2d at 719. Yet,
the lay employees went far beyond entering objective data into
these forms. The employees drafted escrow instructions, selected
the forms they deemed appropriate for various transactions,
drafted earnest-money receipts, drafted clauses modifying form
legal documents, and explained to buyers and sellers the meaning
and effect of the documents they drafted. Droker, 59 Wn.2d at 719.
It is self-evident that the public policy concern of guarding
against incompetent lawyering is well served by our prohibiting
such activities by lay persons.

  In Great Western, this court held that a bank had engaged in
the <unauthorized> <practice> <of> <law> by permitting a lay employee
Page 104
to select and complete form legal documents involved in closing both
the real estate loan between it and the buyer, and the sale
between the buyer and the seller. The court concluded that "the
selection and completion of form legal documents, or the drafting
of such documents, including deeds, mortgages, deeds of trust,
promissory notes and agreements modifying these documents
constitutes the practice of law." Great Western, 91 Wn.2d at 55.
Yet, the lay employee at issue went well beyond the mere inputting
of data. She modified the form deeds of trust and promissory notes,
and closed both the loan and the sale between the purchaser and
seller. Great Western, 91 Wn.2d at 50. The court observed that

  "[t]he services at issue here are ordinarily performed by
  licensed attorneys, involve legal rights and obligations,
  and by their very nature involve the practice of law." Great
  Western, 91 Wn.2d at 55. The court's decision rested firmly
  on the public interest rationale.

  It is our duty to protect the public from the activity of
  those who, because of lack of professional skills, may
  cause injury whether they are members of the bar or persons
  never qualified for or admitted to the bar.

Great Western, 91 Wn.2d at 60-61 (citation omitted). This same
public policy language guided our two subsequent <unauthorized>
<practice> <of> <law> cases. See Hagan & Van Camp, P.S. v. Kassler
Escrow, Inc., 96 Wn.2d 443, 447, 635 P.2d 730 (1981); Cultum v.
Heritage House Realtors, Inc., 103 Wn.2d 623, 627, 694 P.2d 630
(1985).

  The deciding principle in each of these cases is our duty to
protect the public from the potential harm of the lay exercise of
legal discretion. But we have never prohibited the mere clerical
entry of data into a printed legal form.[fn4] Indeed, we have
tacitly authorized lay persons to fill in the
Page 105
names of parties, the legal descriptions of properties, and other
similar information[fn5] and have expressly left open whether
mere scrivening would constitute the <unauthorized> <practice> <of> <law>.[fn6]

  Most recently, we have even authorized nonlawyers to exercise
some legal discretion by allowing them to insert lawyer drafted
clauses into lawyer drafted real estate forms. Cultum, 103 Wn.2d
at 630. The Cultum lead opinion was persuaded that the strong
public interest in convenience and limiting costs weighed in
favor of allowing real estate professionals to prepare the legal
instruments necessary for conveyancing. Cultum, 103 Wn.2d at 628.
Likewise, the concurrence's pragmatic concern that certain real
estate practices are "fact[s] of life in the real world"
implicitly recognizes the logistical and financial burden on the
public that would result from imposing lawyers on every stage of
real estate conveyancing. Cultum, 103 Wn.2d at 636 (Brachtenbach,
J., concurring). Thus, our decision should also be guided by the
public interest in convenience and low cost.

  The resolution of this case, therefore, depends on balancing
the competing public interests of (1) protecting the public from
the harm of the lay exercise of legal discretion and (2)
promoting convenience and low cost. Washington <unauthorized>
<practice> <of> <law> cases are replete with instances of lay exercise
of legal discretion causing public
Page 106
harm.[fn7] Yet, when the role of lay persons in selecting
and completing form legal documents is reduced to entering objective
data, the lay person's actions are unlikely to result in the uncertain
legal rights with which this court has been concerned. Thus, the risk
of public harm is low. Indeed, the Perkinses have never alleged that
their loan documents were deficiently drafted or that their legal rights
were prejudiced in the least.

  Moreover, permitting mortgage lenders to prepare loan documents
in the way the CTX does relieves borrowers of the cost and
inconvenience of having attorneys prepare their loan documents.
Ironically, were the Perkinses to prevail, future borrowers would
bear the additional cost of having attorneys prepare their loan
documents, which would likely exceed that portion of the
Perkinses' <document> <preparation> fee attributable to legal
documents.

  Thus, we hold that, whether or not a fee is charged, lenders
are authorized to prepare the types of legal documents that are
ordinarily incident to their financing activities when lay
employees participating in such <document> <preparation> do not
exercise any legal discretion. Moreover, even though the
Perkinses have not alleged any harm, in order to fully safeguard
the public interest we further hold that lenders must comply with
the standard of care of a practicing attorney when preparing such
documents. See Cultum, 103 Wn.2d at 631; Bowers v. Transamerica
Title Ins. Co., 100 Wn.2d 581, 586-87, 675 P.2d 193 (1983). Our
result necessarily disposes of the CPA claim. The trial court
dismissal of the Perkinses' class action is affirmed.

[fn1] Decl. of Larry J. Smith Re Exs. in Supp. of Def.'s Summ. J.
Mot. at Ex. A-19 (this declaration is designated part of the
Clerk's Papers, but was transmitted as an original without
Clerk's Papers indexing numbers).

[fn2] CTX prepared the following documents: (1) Uniform
Residential Loan Application; (2) Truth in Lending Disclosure
Statement; (3) Adjustable Rate Mortgage Truth in Lending
Disclosure; (4) Authorizations to Verify Employment, Income,
Asset Balances and Credit History; (5) Good Faith Estimate of
Charges; (6) Request for Verification of Deposit; (7) Request for
Verification of Employment; (8) Request for Verification of Rent
or Mortgage Account; (9) Appraisal Order Form; (10); Request for
Verification of Deposit; (11) Tax Information Sheet; (12)
Interoffice Communication; (13) Underwriting Action; (14)
Assignment of Lien to Texas Commerce Bank; (15) Assignment of
Lien to Fleet Real Estate Funding Corp.; (16) Assignment of Lien
(Fleet Real Estate to the Federal National Mortgage Association
(FNMA); (17) Mortgage Loan Closing Instructions; (18) Adjustable
Rate Note; (19) Adjustable Rate Rider; (20) Deed of Trust; (21)
Property Appraisal Disclaimer; (22) Borrower's Affidavit and
Agreement; (23) Borrower's Agreement to Correct Errors and
Omissions; (24) Signature Certifications; (25) Identity
Certificates; (26) Seller's and/or Purchaser's Statement; (27)
Truth in Lending Disclosure Statement; (28) Calculation of Amount
Financed for Truth in Lending Disclosure; (29) Request for
Taxpayer Identification Number and Certification; (30) Occupancy
Affidavit and Financial Status; (31) Errors and Missing Document
Report; (32) Letter Regarding Physical Defects Corrected; (33)
First Payment Letter; (34) Conventional Delivery Transmittal;
(35) Hazard/Flood Insurance Endorsement Letter; (36) Fleet
Funding Delivery Transmittal; (37) Transmittal Summary to
FNMA.

[fn3] Br. of Appellant at 9 ("What converts the practice from
authorized under the pro se exception (as CTX is a party to the
loan and authorized to prepare its own documents) to the
<unauthorized> <practice> <of> <law> is the charging of a fee to the
plaintiffs of $250.00.") (emphasis omitted); Br. of Amicus Curiae
WSBA at 18 ("CTX Could Use Non-Lawyer Employees To Complete Legal
Documents Under The Pro Se Exception If CTX Did Not Charge A Fee
For Legal Services.") (emphasis omitted).

[fn4] The dissent argues that Cultum v. Heritage House Realtors,
Inc., 103 Wn.2d 623, 694 P.2d 630 (1985) demonstrates that the
entry of customer information into standardized legal forms
requires the exercise of legal discretion. Dissent at 5. Yet, in
Cultum, a real estate agent did not merely enter customer
information into a standardized earnest money agreement. Rather,
the agent inserted an inspection contingency clause, which
purported to establish the legal basis upon which the purchaser
could rescind the agreement.

[fn5] Washington State Bar Ass'n v. Washington Ass'n of Realtors,
41 Wn.2d 697, 702, 251 P.2d 619 (1952) (Donworth, J., concurring).

[fn6] Washington State Bar Ass'n v. Great W. Union Fed. Sav. &
Loan Ass'n, 91 Wn.2d 48, 60, 586 P.2d 870 (1978) (Great Western).
Despite the Perkinses' suggestion that Great Western rejected the
"scrivener defense," Br. of Appellants at 14, the court expressly
declined to address this amicus argument because "[t]he unchallenged
findings of fact demonstrate that Great Western did in fact select
the deed form and thus did not act merely as a `scrivener.'" Great
Western, 91 Wn.2d at 60.

[fn7] See Cultum, 103 Wn.2d at 626 (buyer's earnest money refund
delayed because real estate agent prepared ambiguous contingency
clause); Bowers v. Transamerica Title Ins. Co., 100 Wn.2d 581,
591-92, 675 P.2d 193 (1983) (seller unable to execute against
property upon buyer default because escrow agent prepared
unsecured promissory note); Hogan v. Monroe, 38 Wn. App. 60, 62,
684 P.2d 757 (1984) (lessors' repossession rights inadequately
protected by lease-option agreement drafted by real estate
agent); Hecomovich v. Nielsen, 10 Wn. App. 563, 518 P.2d 1081,
review denied 83 Wn.2d 1012 (1974) (seller unable to recover
personalty upon buyer default because real estate agent failed to
provide for personalty in real estate sales contract).
Page 107

  MADSEN, J. (dissenting) I respectfully dissent.

  The majority affirms the trial court's dismissal
of the Perkinses' class action suit against CTX
Mortgage Co. (CTX), finding that although CTX engaged in the
practice of law by preparing legal documents, such practice was
authorized because CTX bifurcated the process between its lay
employees and lawyers. The majority is persuaded that CTX's
bifurcation limits the risk of public harm and promotes
convenience and low costs. The majority's general policy
considerations, however, cannot be reconciled with the fact that
the practice of law in this case is conducted by unqualified lay
employees and unlicensed (in Washington) lawyers who are
drafting, selecting, and completing legal documents. Washington
case law clearly prohibits lay persons from preparing legal
documents, such as those at issue in this case, unless
specifically exempted by this court, or certified by the Limited
Practice Board. Moreover, Washington's Admission to Practice
Rules (APR) strictly prohibit unlicensed lawyers from practicing
law in Washington. Nevertheless, the majority holds that mortgage
lenders, such as CTX, are authorized to prepare legal documents
because lay employees participating in such <document> <preparation>
do not exercise any legal discretion. I dissent because
bifurcation of a real estate loan transaction between unqualified
lay persons and unlicensed lawyers circumvents the rules of legal
practice in our state, particularly APR 12, and as a result
compromises, rather than promotes, the public interest.

  Drafting, selecting, and completing legal documents is a
process that entails the exercise of legal discretion at each
stage.[fn1] Indeed, Washington holds that the practice of law
even includes the selection and completion of preprinted
Page 108
form legal documents. Washington State Bar Ass'n v. Great W. Union
Fed. Sav. & Loan Ass'n, 91 Wn.2d 48, 55, 586 P.2d 870 (1978); In
re Discipline of Droker, 59 Wn.2d 707, 370 P.2d 242 (1962);
Washington State Bar Ass'n v. Washington Ass'n of Realtors,
41 Wn.2d 697, 251 P.2d 619 (1952). The only exceptions to this
prohibition are closing officers certified by the Limited
Practice Board,[fn2] and real estate brokers or salespersons who
are both licensed under RCW 18.85[fn3] and held to the standard
of care demanded of a lawyer. Cultum v. Heritage House Realtors,
Inc., 103 Wn.2d 623, 627, 694 P.2d 630 (1985) (in addition to the
licensing requirements of RCW 18.85, the court held real estate
brokers and salespersons to a lawyer's standard of care). I note
it is not surprising that our series of <unauthorized> <practice> <of>
<law> cases involve real estate transactions and that we have
traditionally applied a strict analysis where lay persons
participate in the selection and completion
Page 109
of legal documents.[fn4] This is because the preparation of
legal documents such as deeds, mortgages, and promissory notes fix the
various parties' legal rights and duties. Cultum, 103 Wn.2d at 627.

  In this case, there is no question that CTX engaged in the
practice of law by preparing legal documents for the Perkinses'
real estate loan transactions. However, in determining whether
CTX was authorized to practice law, the majority does not analyze
the nature of how CTX drafts, selects, and completes its legal
documents. Instead, the majority is persuaded that CTX's
bifurcation of the process is proper, simply characterizing such
practice as "consistent with our historical approach to the
<unauthorized> <practice> <of> <law>." Majority at 11. The majority
states that Cultum "left open" whether mere clerical entry of
objective data on legal forms is prohibited.

  Contrary to the majority's view, however, Washington has never
held that the practice of law may be severed into two categorically
separate tasks of legal discretion and scrivener-like activities.
Such a position construes the practice of law as an easily divisible
process whereby the skill of legal analysis may be divorced from
application of the facts.[fn5] Instead, our line of
<unauthorized> <practice> <of> <law> cases actually demonstrates that
completion of legal documents
Page 110
not only constitutes the practice of law, but the act itself, which
includes the entry of a customer's profile, entails the exercise of
legal discretion. Indeed, the facts in Cultum clearly demonstrate that
merely entering information on the blanks of standardized legal forms
constitutes the exercise of legal discretion, which thereby prompted
the creation of a narrow exception for real estate agents.

  Responding to the majority's view is made difficult in this
case because  the majority adopts an inconsistent view of whether
CTX lay employees are engaged in the <unauthorized> <practice> <of>
<law>. The majority initially treats the conduct of CTX lay
employees as mere scrivening that does not involve legal
discretion and is, therefore, not an activity that constitutes
the <unauthorized> <practice> <of> <law>. In articulating its policy-based
holding, however, the majority supports the opposite proposition by
suggesting that even if inserting data on legal forms does constitute
the <unauthorized> <practice> <of> <law>, in Cultum this court already
authorized some lay persons to do so based on the strong public
interest in convenience and limiting costs. Cultum, 103 Wn.2d at 630.
Herein lies the majority's contradiction: when CTX lay employees
complete legal forms, they merely act as scriveners who do not
exercise legal discretion; but when a licensed real estate agent
engaged in the same activity, Cultum implicitly found that completion
of legal forms involves legal discretion.[fn6] Because of this
fundamental inconsistency, the majority provides no clear guidance
for later courts to determine how and when legal discretion is
effectively parceled out from the entry of "objective" information.

  In its desire to uphold CTX's bifurcation of the real estate
loan transaction, the majority purports to rely on Cultum.
Because Cultum permitted real estate brokers and salespersons to
complete forms prepared by lawyers, the majority,
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on policy grounds, would extend that principle to other lay
persons such as CTX employees. The analogy, however, overstates
the policy announced in Cultum and overlooks a critical distinction
between that case and the majority's resolution here. In Cultum, a
real estate agent completed a standardized earnest money agreement
and addendum, which involved filling out forms drafted by lawyers.
Cultum, 103 Wn.2d at 625-26. The majority finds that CTX is
similarly engaged in completing preprinted legal forms. However,
it gives short shrift to the critical fact that Cultum authorized
only licensed real estate brokers or licensed salespersons to
prepare, i.e., fill out, preprinted legal documents in connection
with real estate transactions. Id. Unlike the majority's
resolution here, Cultum did not authorize an overbroad class of
lay persons to prepare such documents without standards of
accountability.

  The majority fails to realize that the conduct at issue here is
the same as in Cultum, and that the court authorized the practice
only because the group of newly exempt lay persons were licensed
real estate agents subject to RCW 18.85 and held to a lawyer's
standard of care.[fn7] Here, the majority's broad holding offers
no protection of the public interest. Although the majority holds
that lenders must comply with the standard of care of a
practicing attorney when preparing such documents, the majority
goes far beyond Cultum, allowing any lay person to prepare and
complete legal documents even though the lay person is neither a
real estate agent nor a certified closing officer under APR 12.
Thus, contrary to the principles articulated in Cultum, the
majority expands the class of nonlawyers to practice law without
regard to the limitations established in both Cultum and APR
12.[fn8]

  The Cultum court's reluctance to create the exception
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for real estate agents must be understood in light of both
the court's ruling in Hagan & Van Camp, P.S. v. Kessler Escrow, Inc.,
96 Wn.2d 443, 635 P.2d 730 (1981)
and the stringent language which followed in APR 12. In Hagan & Van Camp,
the court ruled unconstitutional a statute that authorized escrow agents
and officers to select, prepare, and complete documents and instruments.
Not only did the court find the statute an invasion of the Supreme Court's
exclusive power to regulate the practice of law, but the court also found
that the statute was dangerously flawed because "it virtually [gave] free
reign to almost anyone of any degree of intelligence to perform any task
related to real property or personal property transactions." Id. at 448.
In a similar vein, the Cultum court's reluctance stemmed from the concern
that not all lay persons possess the skills and training required to
properly perform the tasks related to real estate transactions. To
this end, the Cultum court reasoned that authorizing licensed real
estate brokers and licensed salespersons is proper given RCW 18.85
and provided that preparation of documents is limited to those
documents related to the main business of real estate transactions,
and that such individuals adhere to the standard of care of a
practicing lawyer. Cultum, 103 Wn.2d at 631.

  In January 1983, after Hagan & Van Camp, and just two years
prior to Cultum, APR 12 was adopted to authorize certain lay
persons, deemed "closing officers," to select, prepare, and
complete legal documents. APR 12 not only defines specific
prerequisites and application procedures for closing officers,
but it also limits a closing officer's scope of practice to
selecting, preparing, and completing documents for specific use
in closing a loan, extension of credit, or sale or other transfer
of real or personal property. See APR 12(d). Moreover, the rules
further provide that prior to the performance of services, all
parties must have agreed in writing to the basic terms and
conditions of the transaction. See APR 12(e). The closing officer
must also advise the parties that a closing officer is not an
advocate for either party; the documents will affect the parties'
legal
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rights; the parties' interests may differ; the parties may
obtain counsel; and  inform the parties that a closing officer
cannot provide legal advice as to the manner in which the
documents affect the parties. Id. Contrary to Hagan & Van Camp
and APR 12, the majority expands the class of exempt lay persons
by authorizing mortgage lenders' lay employees to participate in
legal <document> <preparation>. Such a view renders the requirements
of both APR 12 and Cultum superfluous.

  CTX claims that documents which require the exercise of legal
discretion are prepared by lawyers or closing officers, and that
all documents are reviewed by a closing officer prior to their
execution by CTX. Decl. of Larry J. Smith Re Exs. in Supp. of
Def.'s Summ. J. Mot., Ex. H at 2-4. CTX concedes that a closing
officer participated in the entire loan process in only some of
the loans provided to the plaintiff class. Id. Otherwise, CTX's
lay employees are assigned the primary task of completing legal
documents on the computer prior to a closing officer's review.
Id. Presumably, although not clear from the record, CTX loan
officers conduct the interviews and consultations with customers
to determine the type of loan that best fits the needs of
customers. From there, however, the computer-generated forms
require CTX's lay employees to input data based on customers'
credit reports, intake forms, and other information gained from
the "loan qualification process" and "credit investigation." Id.
CTX further admits that some of its lay employees who participate
in the <document> <preparation> process are not certified closing
officers, and are neither licensed real estate brokers nor
licensed salespersons. Based on CTX's own description of its
bifurcated process, CTX fails to demonstrate that its lay
employees who complete form legal documents satisfy either the
requirements of APR 12 or the Cultum exception. Thus, I would
hold CTX's lay employees are engaged in the <unauthorized> <practice>
<of> <law>.

  Still, the majority is convinced that CTX should be authorized
to prepare legal documents because, to the extent
Page 114
that CTX exercises legal discretion, the task is delegated to in-house
counsel in Dallas, Texas. In this regard, the majority finds that
CTX lawyers perform all tasks requiring the exercise of legal
judgment.

  In order to practice law in Washington, however, an individual
must pass the Washington State bar examination, be an active
member of the Washington State Bar Association, and be admitted
by order of the Washington State Supreme Court. APR 1(b).
Out-of-state lawyers who wish to appear as a lawyer in the trial
of any action or proceeding in this state, must apply for special
admission with the court or tribunal where the action is pending.
APR 8(a), (b). Thus, even if this court were to adopt the
bifurcation model advanced by CTX, the Admission to Practice
Rules dictate that CTX must retain counsel who either have been
admitted to the Washington State Bar or granted special
permission.

  CTX does not claim that its legal work is conducted by licensed
Washington lawyers or Texas lawyers granted special admission.
Rather, CTX simply defends its practice on grounds that it
retains in-house counsel in Dallas, Texas where much of the legal
discretion is exercised in preparing legal documents for use in
Washington real estate transactions. Given that CTX is engaged in
the practice of law but has delegated legal discretion to lawyers
who have neither been shown to be admitted to the Washington Bar
nor granted special permission by a Washington tribunal, this
court should conclude that CTX's in-house counsel are
unauthorized to practice law in Washington.

  CTX fails to demonstrate how bifurcation of the real estate
loan transaction ensures that qualified individuals exercise
legal discretion. If CTX's lay employees do not exercise legal
discretion because their task is reduced to scrivening, and if
CTX's in-house counsel are unlicensed to practice law in
Washington, then CTX is improperly drafting, selecting, and
completing legal documents. It is at this juncture where CTX's
bifurcation model collapses and the circumvention of our rules of
legal practice becomes most apparent.
Page 115

  Despite the concerns expressed in our cases and the restrictive
language dictated by our rules of practice, however, the majority
argues that the inquiry in this case turns on an analysis of
competing policy interests: the risk of public harm and the
promotion of convenience and low cost. The majority believes that
CTX's activities are unlikely to result in uncertain legal
rights, and that the public interest in convenience and low cost
weigh in favor of permitting mortgage lenders to prepare legal
documents. To justify this dual policy, the majority cites the
pragmatic concerns and policy interests expressed in Cultum.
However, in Cultum the court found that public policy was in
conjunction with its narrow holding permitting licensed real
estate brokers and licensed salespersons to complete preprinted
legal forms, provided such individuals comply with the standard
of care of a practicing lawyer. Cultum, 103 Wn.2d at 631. This
heightened standard of care was in addition to the licensing
requirements already in place for real estate brokers and
salespersons. Id. at 628, 631. Thus, the court furthered the
public interest by specifically requiring that only licensed real
estate brokers and salespersons would be permitted to prepare
legal documents which arise in the usual course of their
business, and in completing those documents would be held to the
same standard as a practicing lawyer.

  In this case, the bifurcated real estate loan transaction
provides no similar protection to the public. CTX's lay employees
are not subject to the standard of care of a practicing lawyer
because they are presumed to exercise no legal discretion.
Moreover, there is no assurance or indication in the record that
CTX's in-house counsel have been properly admitted to practice
Washington law and are beholden to the local standard of care.
Hence, the majority's general policy considerations cannot be
reconciled with the fact that CTX employs unqualified lay persons
and unlicensed lawyers to prepare legal documents in connection
with real estate loan transactions. See Washington State Bar
Ass'n, 91 Wn.2d at 60 ("[i]t is our duty to protect the public
from the activity of those who, because of lack of professional
Page 116
skills, may cause injury whether they are members of the bar or
persons never qualified for or admitted to the bar.").

  As the majority itself points out, Washington's <unauthorized>
<practice> <of> <law> cases are replete with instances of lay exercise
of legal discretion causing public harm; and each case is
directly within the context of real estate transactions. Although
the majority attempts to distinguish CTX from those cases on
grounds of public policy, those cases present similar facts where
lay persons were found to exercise legal discretion in the
completion of legal documents.[fn9] The only distinguishing
feature of CTX's practice is that lay employees enter data into a
more sophisticated computerized system. Thus, because the nature
of the real estate loan transaction remains the same as our prior
cases, the facts here do not warrant authorizing such an
overbroad class of individuals to engage in the practice of
law — especially where there is great difficulty ascertaining the
extend to which CTX's lay employees actually refrain from
exercising legal discretion.

  That the plaintiff class in this case demonstrates little or no
harm was suffered should not color the issue of whether all
mortgage lenders should be authorized to practice law. Moreover,
that the Perkinses hired their own lawyer can neither preclude
the plaintiff class of declaratory relief, nor discount the
prospect of future harm to customers of other mortgage lenders.
For it is not this court's function merely to redress past injury
but to prevent future harm where possible. Washington State Bar
Ass'n, 91 Wn.2d at 60-61 (citing In re Discipline of Droker, 59
Wn.2d at 721).

  Finally, the majority discusses at great length the $250 fee
which CTX charged as part of its <document> <preparation> costs. This
fee is just further evidence that CTX is engaged in the
<unauthorized> <practice> <of> <law>. Contrary to the majority's reading
of their argument, the Perkinses and Amicus Washington State Bar
Association (WSBA) do not concede that CTX's lay employees could
properly fill in
Page 117
legal forms as long as no fee is charged. Rather, the class action
argues that CTX is engaged in the <unauthorized> <practice> <of> <law>, and
that, even if CTX were to assert a potential pro se defense under
Washington State Bar Ass'n, it is barred from charging such a fee.
WSBA further clarifies the issue objecting to the <document>
<preparation> fee on grounds that the charge makes CTX's conduct
even more egregious.[fn10] Granted, the majority correctly explains,
at length, the condition of a fee for what appears to be legal
services is not dispositive.

  Compensation for such services, however, is conclusive evidence
that the recipient is acting on behalf of another. See Washington
State Bar Ass'n, 91 Wn.2d at 57.

  Here, there is no question but that CTX is acting on behalf of
its customers to secure real estate loans.[fn11] The Perkinses
and WSBA object to CTX's practice of law because they contend
that it is unauthorized and that the fee further demonstrates how
the public interest is harmed. Thus, that CTX charged $250.00 for
its <document> <preparation> services[fn12] does not determine
whether the nature of the service was unauthorized, but rather
the fee underscores the egregious nature of CTX's <unauthorized>
<practice> <of> <law>.

  Given the well-established case law strictly prohibiting lay
persons from preparing legal documents, and that
Page 118
bifurcation of the real estate loan transaction both circumvents
our rules of legal practice and harms the public interest, this
court should conclude that CTX engaged in the <unauthorized> <practice>
<of> <law> and that the trial court improperly dismissed the Perkinses'
class action suit against CTX.

[fn1] See, e.g., Hagan & Van Camp, P.S. v. Kassler Escrow, Inc.,
96 Wn.2d 443, 446, 635 P.2d 730 (1981) ("The `practice of law'
does not lend itself easily to precise definition. However, it is
generally acknowledged to include not only the doing or performing
of services in the courts of justice, throughout the various stages
thereof, but in a larger sense includes the legal advice and
counsel . . . by which legal rights and obligations are established.").

[fn2] Washington's Admission to Practice Rules provide that
certain persons may select, prepare and complete legal documents
incident to the closing of real estate and personal property
transactions upon certification and approval by the Limited
Practice Board. Certification requires that such person be at
least 18 years of age; be of good moral character; satisfy the
examination requirements established by the Board; and undergo
continuing education to retain his or her certified status. Upon
certification such person is deemed a "closing officer" and is
authorized to select, prepare and complete documents for use in a
loan, extension of credit, sale or other transfer of real or
personal property. Such documents shall be limited to deeds,
promissory notes, guaranties, deeds of trust, reconveyances,
mortgages, satisfactions, security agreements, releases, Uniform
Commercial Code documents, assignments, contracts, real estate
excise tax affidavits, and bills of sale. A certified closing
officer may render those services provided that, prior to the
performance of the services, all parties to the transaction agree
in writing to the basic terms and conditions of the transaction;
and that the closing officer advise the parties of the
limitations of the services rendered in addition to advising the
customer in writing that the closing officer is not acting as an
advocate of either party; the documents to be prepared affect the
legal rights of the parties; the parties' interests may differ;
the parties have a right to be represented by an lawyer; and the
closing officer cannot give legal advice as to how the documents
affect the legal rights of the parties. Washington COURT RULES,
Admission to Practice Rules, Rule 12(a),(c),(d),(e),(f) (1998).

[fn3] RCW 18.85.090 provides the licensing requirements for real
estate brokers and RCW 18.85.095 provides similar licensing
requirements for real estate salespersons.

[fn4] See Hogan v. Monroe, 38 Wn. App. 60, 62, 684 P.2d 757
(1984) (lessors' repossession rights inadequately protected by
lease-option agreement drafted by real estate agent); Bowers v.
Transamerica Title Ins. Co., 100 Wn.2d 581, 591-92, 675 P.2d 193
(1983) (seller unable to execute against property upon buyer
default because escrow agent prepared unsecured promissory note);
Hagan & Van Camp, 96 Wn.2d 443 (escrow agents' and officers'
preparation of documents in connection with real estate
transactions constitutes <unauthorized> <practice> <of> <law>, and
Legislature's enactment of statute authorizing escrow agents and
officers involved with real estate transactions to select,
prepare, and complete legal documents violated the Supreme
Court's exclusive power to regulate the practice of law);
Hecomovich v. Nielsen, 10 Wn. App. 563, 518 P.2d 1081 (1974)
(escrow company and its manager engaged in <unauthorized> <practice>
<of> <law> when they determined which forms to prepare to effectuate
earnest money receipt and completion of preprinted legal forms).
But cf. Cultum, 103 Wn.2d at 626 (permission given licensed real
estate brokers or licensed salespersons to complete standard
earnest money agreements provided they comply with the standard
of care of a practicing lawyer).

[fn5] See Hagan & Van Camp, 96 Wn.2d at 446 (the practice of law
"`is generally acknowledged to include not only the doing or
performing of services in the courts of justice, throughout the
various stages thereof, but in a larger sense includes the legal
advice and counsel . . . by which legal rights and obligations
are established.'").

[fn6] The court was thereby compelled to create a specific
exception for licensed real estate brokers and salespersons.

[fn7] Cultum, 103 Wn.2d at 631 (real estate brokers and
salespersons authorized to complete form legal documents but must
comply with the standard of care of a practicing attorney in
addition to real estate licensing requirements).

[fn8] This decision may have implications for the practice of law
that reach far beyond the real estate industry.

[fn9] See footnote 5, supra . . .

[fn10] See Br. of Amicus Washington State Bar Ass'n. In Cultum, the
Washington State Bar Association (WSBA) took the position that the
public interest was best served by allowing licensed real estate
agents to complete standard form earnest money agreements, whether
or not such activities technically constitute "the practice of law."
Br. of Amicus Washington State Bar Ass'n at 15.

[fn11] As amicus WSBA points out, many of the documents at issue
significantly affect the legal rights of CTX's customers:
assignment of lien from CTX to Texas Commerce Bank, mortgage loan
closing instructions, deed of trust, borrower's affidavit, etc.

[fn12] CTX claims that its <document> <preparation> fee is not based
directly upon the creation of any particular document, that CTX
does not charge the $250.00 fee for legal services, and that the
fee is charged to recoup some of CTX's overhead costs associated
with the paperwork necessary for mortgage loans. Br. of Resp't at
7. However, the U.S. Department of Housing and Urban Development
clearly defines the <document> <preparation fee as a separate fee some
lenders or title companies charge to cover their costs of preparation
of final legal papers, such as a mortgage, deed of trust, note or
deed. U.S. Dept. of Housing and Urban Development, Buying Your Home:
Settlement Costs and Helpful Information (June 1997).