People v. Merchants Protective Corp

In People v. Merchants Protective Corp. (1922) 189 Cal. 531, a quo warranto proceeding, the state challenged the practices of a corporate entity known as the Lawyers' Institute of San Diego as constituting the practice of law. The corporation was specifically formed for the purpose of having individuals, other firms and corporations pay a set price for the services of a central organization that would appoint attorneys to handle collections and " 'render such other professional services as is needed and required by the various members and subscribers thereto.' " (Merchants Protective, supra, 189 Cal. at p. 532.) The court held the corporation, which employed attorneys as its agents and representatives to dispense legal advice and counsel, was indeed engaged in the practice of law. (Id. at p. 538.) Adopting the reasoning of the Washington Supreme Court in State ex rel. Lundin v. Merchants Protective Corp. (1919) 105 Wash. 12 177 P. 694, it held: " 'The practice of law is not a business that is open to a commercial corporation. "Since, as has been seen, the practice of the law is not a lawful business except for members of the bar who have complied with all the conditions required by statute and the rules of the court, and as these conditions cannot be performed by a corporation it follows that the practice of law is not a lawful business for a corporation to engage in. As it cannot practice law directly it cannot do so indirectly by employing competent lawyers to practice for it, as that would be an evasion which the law will not tolerate." ' " (Merchants Protective, 189 Cal. at p. 538.)