Francorp Attorneys Walk Out over Illegal Practice of Law
OLYMPIA FIELDS, Ill. (BlueMauMau) - According to undisclosed sources, two of three Francorp attorneys have resigned from their positions, leaving a gaping hole in the legal division of franchising’s most renowned, yet controversial, consulting firm. Frank Johns and Layne Marino are now practicing law in Illinois under the banner of Johns Marino LLP. The two attorneys submitted their letters of resignation at the end of August, detailing specific reasons why they left, namely over issues related to the "unauthorized practice of law." Now, BlueMauMau has anonymously obtained copies of the two resignation letters, which we learned, were circulated among certain of Francorp’s employees.
The resignations come on the heels of reports on Blue MauMau and Franchise Times magazine, stating that Donald Boroian's Francorp had been sued by a client's franchisees when it crossed the boundaries of being a "consulting firm" by stepping into the arena of "practicing law." The lawsuit, scheduled for trial in October, was filed against South Beach Franchising, Boroian and Francorp, alleging that they not only made misrepresentations when selling franchises to prospects, but also that Francorp participated in the unauthorized practice of law in providing legal advice to his client, when neither Boroian nor Francorp was admitted to practice law in any jurisdiction.
Letters Point to Francorp's Disrespect for Attorneys and Law
One letter states, "At Francorp, I have been placed and continue to be placed in positions that question the oath I have pledged as an attorney to uphold. I am concerned that attorneys and Compliance Administrators are asked on a daily basis to engage in what could be interpreted as the unauthorized practice of law." It further proclaims, "Due to the company's blatant disrespect for the Law, the attorneys at Francorp and for the hard earned law licenses of its attorneys, I have been left with no recourse but to submit my resignation."
The other letter expresses basically the same apprehensions. "I am concerned that the Management asks its attorneys to work on project that no corporate legal department is legally allowed to do, and which only a law firm can provide." It gives as an example that attorneys are asked to draft various legal contracts for clients.
Both letters convey further concerns with non-attorneys managing the attorneys or directing their caseload. One states, "I have witnessed and have expressed concerns that the attorneys in the Legal Department are exposed because they must rely on the work of others inside Francorp that are frequently inaccurate."
But it exposes other problems saying that Francorp seeks the advice of its attorneys only for inconsequential matters, such as handling traffic tickets for the president, handling the personal affairs of management, or assisting in establishing private charitable foundations for CEO Donald Boroian.
In the letter, one attorney expressed concern that the job at Francorp required the attorney to perform functions the attorney feared might involve breaking Illinois laws and the laws of different states, or contravening the ethical oath the attorney had pledged to uphold.
In both letters the attorneys claimed they related their concerns to Francorp management with no results. As a final example, one attorney wrote that a vice president had created the Francorp 1 blog and to give it more credibility he copied material from the International Franchise Association website concerning their attorneys and the development of the new franchise disclosure regulations. In the letter, the attorney rebuked the vice president's changing of "IFA Attorneys" to "Francorp Attorneys," by stating, "Such utter disrespect and ignorance affects all of the attorneys as well as Francorp. As an attorney I am not respected and what is even more pathetic is that as an employee I am not respected."
Johns and Marino have declined to make comment for this article.
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Related reading:
Blue Maumau is "going green"
Blue Maumau is "going green!" Green with envy...
Damage Control
Rumor has it that Richard Quick has been spotted coming out of the Country Club and getting into the Francorp limo with Don. Has he been hired by Francorp for Damage Control? Rich is this true?
Where to start....
This report is absolutely rich. Another solid effort by Ms. Sparks to further highlight Don Boroian and his morally and legally challenged ways. I think my favorite part of the report is the fact that Francorp management used the in house counsel for personal matters such as traffic tickets and setting up personal foundations. Boroian has used his staff of attorneys for his personal real estate dealings as well as many ither personal matters.
I am sure when Francorp clients called the firm's project manager to complain and get answers as to why their respective projects were stuck in legal (a historic bottleneck in the Francorp production process), the client's were not told "Sorry, your legal documents have yet to be drafted because the attorney on your project is busy fixing a speeding ticket for the lead footed President of the firm."
I think it is only a matter of time before attorney number three flees the firm as well.
Sparks & Bororian
Bororian has a very high profile in franchising, and as Nick Bibby points out , Bororian is one of the industry's colorful figures. Like the Weeble of old , Bororian may wobble but he bounces right back.
I don't see this as the reporter out to "highlight" and make moral judgments; rather it is a valid news story discussing someone of interest to the target demographic of the media outlet. There is a vast gulf between the two.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Dreaming of High Court Drama
"I think my favorite part of the report is the fact that Francorp management used the in house counsel for personal matters such as traffic tickets and setting up personal foundations." - Guest
I suspect in-house counsel are not infrequently used to resolve personal legal matters of the CEO and founder, especially if they are an ex-con with a lot of personal matters to resolve.
It may be humiliating for a lawyer who dreams of more, but such mundane filial work is part of the experience of a small company and part of the perks of being the founder of a company who pays the check.
Think of it as building character.
Francorp's Duck
Paul,
You are arguing semantics. Whatever you call it, there have been enough stories over the years like this one to raise doubts about the legitimacy of this company's operations. It is besides the point that Boroian will "weeble" or "bounce" back. You are way too forgiving and indulgent of this particular bad seed. The old cliche holds in Boroian's case, if it walks like a duck, talks like, then it is a duck.
Was making other point
I was actually addressing the issue of Sparks' motivation in writing the piece.
As to "unauthorized practice of law" there is a huge self-interest issue on the part of bar associations and a fair amount of illogic in UPL regulations.
My beef with Boroian (and other alleged UPL violators) is not the drafting of documents but the incompetent drafting of documents.
As Richard Solomon pointed out, if Joe Attorney prepares a legal document, he is violating the UPL statutes if he prepares it as an employee of "FranchiseConsult Corp." Yet if he moves into a broom closet down the hall and puts up a velcro sign "Joe Attorney P.C." all of a sudden that same legal document is kosher.
As to the Francorp decision , the flaw in the court's reasoning is the premise that the mere posession of a parchment written in Latin ipso facto qualifies one to draft specialized contracts. So someone like Nick Bibby or Michael Seid could not draft such documents because they lack "specialized training" but a 23 year-old graduate from the bottom of the class at the worst law school in the country is deemed --as a matter of law-- to have such "specialized training."
Indeed one of the problems with Boroian seems to be his unwillingness to hire qualified people. But let us be clear here: if his in-house attorney had moved down the hallway and become a solo, there would be no UPL violation.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Being An Expert Is Not Reason To Practice Law
I think you overstate the bar associations' position on what a licensed attorney is qualified to do. I think most bar associations would agree that it is one thing for a person to qualify into a profession, but quite another to say that that qualification alone gives the person "specialized" knowledge. That's part of the reason why lawyers are required to carry malpractice insurance.
You may have have a quarrel with the rules of the legal profession, but, on net, they have served the profession well. Lord knows I have my own quarrel. One of mine is the elitism within the legal profession to presume that a lawyer is qualified because he or she went to some tony law school while dismissing someone's qualification, as you did, for going to what some consider "the worst law school." It is no surprise to say I have met incompetent ninnies from both.
Regardless, if franchise experts want to draft frachise agreements, all they have to do is go to law school and pass a bar exam. Thank god for the bar associations' self interest, or else, Boroian would legally be drafting franchise agreements by himself.
Specialized Knowledge
Guest writes: "I think you overstate the bar associations' position on what a licensed attorney is qualified to do.
I think most bar associations would agree that it is one thing for a person to qualify into a profession, but quite another to say that that qualification alone gives the person "specialized" knowledge."
Guest is right here, Paul.
The license is a necessary, but not sufficient condition.
Michael Webster PhD LLB
Franchise News
Qualified vs. Permitted
I should point out that when we speak of "bar associations" we may be speaking of mandatory groups which may regulate professional conduct or voluntary groups (as in my state) which do not regulate behavior by means of state-backed discipline. Many attorneys question the need for a mandatory bar , but that is a topic in itself. (It is, however, linked with the issue of access to legal assistance--i.e., affordability)
The issue with unauthorized practice of law ("UPL") is not whether someone is qualified to do a particular task, it is whether they are lawfully permitted to do so.
In Francorp decision, the court was referring to the "lawfully permitted" aspect, and the court did not distinguish between competence among attorneys, it distinguished between attorneys and laypeople as classes.
I have seen people at the top of their classes at low-ranked law schools who are very very good. But I specifically noted someone at the bottom of their class, and I have yet to see someone at the bottom of a class who was decent.
From the tenor of some of the remarks, people not familiar with the profession might be under the impression that lawyers are somehow statutorily governed (UPL is statutory) with respect to what cases they are qualified to handle. At least in my state, this is simply not true. As Richard Solomon notes, the chances of holding a minimally-qualified counsel to account for venturing in over his head is rather slim (there are some valid reasons why this is so, but that's beyond our BMM scope).
As to the statement that: "You may have have a quarrel with the rules of the legal profession, but, on net, they have served the profession well" I entirely agree. The rules have served the profession quite well. That was also a point raised by Mr. Solomon in his comparison to a labor union or guild.
Whether the public has been well-served is another matter. Up till a few decades ago, lawyers got together and set minimum fees and actively fought against anything that would take away business--even suing book publishers such as Nolo Press. Even today, the ABA's accreditation process is widely faulted for raising barriers to entry into the legal profession. In some states you must use an attorney to sell a house, in other states the real estate broker does much of the work an attorney would otherwise do.
Whether someone should use an attorney when engaging in a particular transaction is a different matter; with UPL we are speaking of whether someone must use an attorney.
In the old days, you used to have to hire an attorney to do the type of work title companies do nowadays. In some states, lawyers have sued Notaries Public for UPL when a homeowner refinances their mortgage and needs to have the loan docs notarized! (Needless to say, the National Notary Assn disagrees with the lawyers)
Bottom line here is that those who get into UPL arcana are not addressing the real issue which is the quality of the work performed. As a pragmatic aside, I would note that defending the monopoly of the legal profession is not likely to gain much sympathy but focusing on incompetent work is something anyone can see needs rectification.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Many years ago I was counsel for the Sullivan County Indiana
Bar Assn. It was accused by the Justice Dept of attempting to monopolize the business of certifying the quality of titles to real property, in violation of the Sherman Antitrust Act.
The Bar Assn had gone after Chicago Title Company for issuing title policies that were not based upon the title opinions of a licensed attorneys. Chicago Title had decided that actuarially a certain percentage of land titles are defective, and that the cost of remediation of titles was calculable. This enabled an insurance underwriter to calculate a title policy premium on the basis of that actuarial data, eliminating the need for any underlying lawyer's title opinion.
The Sullivan County Bar Assn went to the Indiana Bar Assn with a UPL complaint, and the Indiana Attorney General opened a file on the title company for unauthorized practice of law. The title company had more money than the couty bar assn, and got the justice department to go after the bar assn under the Sherman Act. The bar assn hired me.
There have been a number of such disputes. This shows the territoriality of the bar associations regarding perceived poaching on their turf. The definition of poaching is that it is unlawful for a non lawyer to do things that are traditionally the business of licensed attorneys. That is a doctrinal definition that arose in early Massachusetts cases and that has been generally adopted as the test of UPL.
The case was "amicably" resolved (consent order). How that came to be is a very funny story that I wish I could tell. --
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Disbarrment
The lawyer could probably be disbarred too for drafting agreements they have no specialized knowledge in.
On what planet?
Have you even heard of such an attempt? For a host of reasons, this is less likely than Webster spelling "behavior" correctly. As someone pointed out earlier, many things may give rise to a malpractice claim but that does not mean such claims (even if accurate) would result in disbarrment.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
It helps to differentiate between the "rules" and the realities.
Bar Association ethics and disciplinary rules are, in sound, quite high minded. They are also guild like in that they purport to fence off areas of activities for the use and benefit of those certified by the bar associations to be authorized to exploit the field.
In that respect, it is not unlike any guild or labor union.
The rules run the gamut from fiduciary duty to competence/experience.The discipline protocols vary all over the place, and - like any adjudicatory system - depend also upon who is prosecuted and who is complaining and who represents the accused. The high and mighty commit with seeming impugnity many offenses for which the low and dusty are censured. You may lose your license for showering accident scenes with your business cards/paying police and cab drivers to direct the injured to your office. On the other hand, it is perfectly OK for the high and mighty to do the same thing with respect to large corporate clients, though the style is different. Country clubs, board memberships and various other collaborative mechanisms exonerate the shenannigans of the large prestigeous law firms that are doing similar things to the personal injury scenario just described.
When you get to the issue of lawyers taking on busness for which they are ill equipped, damn few disciplinary proceedings focus on such practices. Illustratively, that's how, for a few hundred dollars, members of the bar will ill advise franchise invewstors by "reading the contract". So long as the investing public is unaware of the value of "specialized knowledge" in the vettng of franchise investment opportunities, the rules of bar associations will not fill in the void of lack of "insight". As Webster, Steinberg and I have been saying for so long, competent franchise investment due diligence is the cardio pulmonary conditioning that makes open heart surgery less likely.--
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Quiznos advertising...
and Quiznos has the gall to advertise franchise sales after the posts regarding Boroian. Well....come to think of it...in may be appropriate after all. Rumor has it unethical people hang out together.
Quiznos Advertising
I'm not surprised at all.
Francorp
Don Boroian preaches one thing above all else, loyalty to the firm. It is amazing how much information "leaks" out of Francorp. The last time their was a leak like this, Noah built himself a boat!
Francorp Loyalty
Very true. Boroian always thinks he has a good handle on where the "leak" is coming from. Always, after an employee who was accused of being the mole was fired, Don would have long board meetings with the entire compant discussing that person's transgressions and reinforcing loyalty, but Don has always underestimated how much people hate him. People are just motivated to bring Don down. I guess the old saying has some truth -
What comes around, goes around.
Unauthorized, Unbotherized
What is surprising is that Francorp has been down this road before (pdf) in 2002 with competitor Michael Seid and Associates saying that his company was at a competitive disadvantage because he liked obeying the laws, which ban franchisor consultants from providing legal assistance. (BTW, there are some great links at the bottom of Ms. Sparks' news story.)
Having lost before, Francorp should know better. But hey, the unauthorized practice of law (UPL) clause is a dumb law anyhow.
The Illinois state bar association says that the UPL law was established in order "To keep would-be hustlers and scammers from taking advantage of the public..." My question is—How so? Where is the potential for scam in having in-house attorneys prepare legal franchise documents for Francorp clients? Where's the harm?
Does Boroian Go After the Lawyers Now
I vote that Boroian will go after the lawyers since by setting up their law firm they will now be competiting with him.
Going after the lawyers
I don't think attorneys are bound by a non-compete in the same sense that other employees would be. Besides, Don has no money to enforce a non-compete, it is not easy to do anyway, and Francorp has bigger fish to fry at this time.
Boroian is not going after the lawyers
Heard that he does not plan to pursue this. Met with his legal department yesterday.
Probably a good thing for him. Would have a hard time arguing both sides of the same issue.
Buyers Beware
people who use this company and are defrauded, or cannot sell franchises, should never be able to sue it. What else will it take for the public to get it? and how long did it take the two lawyers to figure out this guy was a crook.
i wished Janet Sparks had this information when i dropped 100K of my hard earn dough with this company years ago and never sell one franchise. This guy has a lot to answer for!
Buyer Better Beware, more today than ever in franchising
IS IT POSSIBLE TO SUE FRANCORP BASED ON THE UNOTHORIZED PRACTICE OF LAW?
Can a Francorp client take legal action against the consulting company based on illegal practice of law if the consultant did not have the legal authority to charge and practice law? There are a great number of lawyers out there, in the land of franchising, that can give us their opinions on this issue. Richard Soloman, and Paul Steinberg, you are in the box and the on deck circle.
Question: Could a Francorp current or past client successfuly litigate/bring suit on the grounds of illegal practice of law by Francorp during their contracted services, and get their money back, by order of a court, from Francorp?
Why doesn't Boroian retire
Isnt he in his seventies?
Boroian's retirement
He is in his 70's but he has no money. He has never saved or planned for retirement. He is still facing huge financial liabilities from the IRS and his pending trial in Florida, where he is embroiled in contraversy with South Beach Naturals,will cost him plenty. It will be intersting to see if any of Don's family will step up if Francorp folds, and shoulders Don's debts. I wonder if his family would provide him with the lifestyle that he is accustomed to - expensive cars, clothes, restaurants, country club, etc. His oldest grandson, incumbent president of Francorp, would most likely be on the hook for Grandpa's bills. Don has paid him enormously over the last several years and his grandson does not work very hard, if at all.
I suspect Don would declare bankruptcy.
Does anyone know what would the IRS do in that case? Can you hide behind bankruptcy when you owe Uncle Sam?
Good for them!
Congratulations to Francorp's former attorneys who stood up and did what they felt was right. Attorneys who follow their conscience! I expect that theirs will be a good firm.
Double Kudos to Those Lawyers
In all the years I have been hearing about Boroian, I think this maybe the first time I have heard any of his employees taking such a loud moral stand against what he does. It is not everyday you hear about lawyers doing the right thing. May God bless their souls and help them with their new business!
Coould it be a sham?
Are they now Francorp's outside attorneys, doing the same work for roughly the same compensation? Are they in different office address? Until we know the truth of that, these letters could be nothing but window dressing calculated to deal with their complicity in the matter of Francorp's UPL issues. These letters could have been drafted by them or by their own UPL attorney to provide "compliance"/come to Jesus exhibits for the disciplinary committee.--
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Raise Some Issues
Rich you ask good issues. the section about choosing an attorney in their website at www.johnsMarino.com seem to suggest they are definetly separating themselves from the Francorp model.
Francorp.com say that the company now only has one lawyer. So why did these two leave and the other one stay? May prove your point Rich. If these two did break away, did the other one not see UPL issues. This is good stuff; break out the popcorn!
120 clients and one lawyer
Didn't I read in Franchise Times that they take on 120 clients per year. Looks like that last lawyer is going to be plenty busy.
I wonder what their existing clients are going to think?
Nah! When you're peddling templates
it's just little more than cut and paste, so 120 clients isn't a lot for one person - even if they aint a lawyer.--
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Franchise experience "not strictly required" at Francorp
Looks like they are advertising. This from Career Builder. High degree of production needed.
FRANCORP
A leading franchise consulting firm seeks an associate attorney for its legal department with experience, skill and ability in drafting and modifying agreements to collaborate with our clients and their attorneys in preparing franchise offering compliance documents and providing guidance on franchise offering compliance requirements. Advanced drafting, writing, communication and strong computer skills needed. Knowledge of franchising and franchise registration a plus, but not strictly required. Client management talents and a high degree of production are needed. Please state desired salary.
B oroian Likes his Attorneys Inexperienced
Boroain likes his workers and attorneys young and inexperienced. With the young ones he can tell them to do things he knows are legally questionable or illegal, but they wont be able to object because they do not know better. If he hires lawyers with experience the person wont last long. If the experienced lawyer does last, it would be one of two things: the lawyers is just as crooked as he is, or the lawyer is able to convince Boroian to find Jesus. If the latter, Francorp will have to close its doors.
So, there is a reason why the majority of his staff look like it is their first job out of college or high school.