Going for Broke

Dick Berry claims his bankruptcy services are cheaper than an attorney's, and just as effective. While court officials and many customers agree it's a scam conceived by white-collar felons, those who would shut him down are discovering they don't know Dic

Berry and his minions have evaded prosecution because Arizona is one of two states (Texas is the other) that doesn't consider the unauthorized practice of law a crime.

These days, Berry works closely with Fred Taylor, an attorney and a longtime friend.

"Instead of us being the horse, we'll be the cart," Berry said during a recent hearing. "The lawyer will be the horse, and the fees will go to him, and then he will hire us to perform whatever services he desires us to do."

But the arrangement vexes many. Some consider Fred Taylor an illegal front man for Berry: U.S. trustee Kalyna recently filed a complaint with the state Bar of Arizona against Taylor, accusing him of illegal fee-splitting and other ethical violations. In his response, Taylor denied any wrongdoing.

Speaking of the Berry-Taylor arrangement, Judge James Marlar told Berry during a June 25 hearing, "I'm not going to tolerate any shenanigans, puppetry, shell games. People can get hurt, people can overpay."

Berry tells New Times, "We truly don't think it's fee-splitting in any way. Fred has the stones to give it a try until told otherwise. What's so egregious about that?"

Court records show Taylor served as an attorney in just five bankruptcy cases in 1996. He filed just four bankruptcy cases in the first four months of this year.

Since May 1, however, Taylor has become the attorney of record in more than 400 cases, a majority of them onetime customers of People's Paralegal.

Court papers filed by Berry indicate People's Paralegal has been "selling" its bankruptcy customers to Taylor at $75 per case. Meanwhile, Taylor has subleased a suite from Berry a few doors from People's Paralegal.

Berry and many of People's Paralegal's 25 or so employees now are based at Taylor's new digs. Berry and his team sometimes wear polo shirts embroidered with the word "ATTORNEY," with a slash mark through it.

Berry sees no irony that he has flourished while posturing as the good guy in a holy war against lawyers--and is now toiling inside a law office.

"This is evolutionary," he says. "We're doing what we have to do."
Berry insists he and the staff are working at Taylor's office as independent contractors. He says People's Paralegal continues to interview potential customers/clients, to fill out bankruptcy petitions, and to perform other tasks--for an additional fee for which the firm bills Taylor.

That Berry's firm is doing any bankruptcy work at all violates the May 23 injunction. But he seems unfazed.

"We charge Fred for the use of my physical facility commensurate with fair-market value," Berry says. "It's task-oriented. He uses our bookkeeper, our staff, our everything. It's free enterprise. We spent a lot of time on this with Randy Haines--a bankruptcy and ethics expert I hired. He worked on it, and gave it his okay."

That's not exactly how Haines recalls it. A respected attorney who is on the state bar's committee on the Rules of Professional Conduct, Haines spoke with New Times after Berry waived the attorney-client privilege.

"Our conversations specifically were limited to the [1994 Bankruptcy Reform Act]," he says. "We agreed that I would not be advising him on the ethical rules that govern attorneys, because he's not an attorney. . . . We specifically did not discuss fee-splitting or referrals or advertising, or any of the other ethical issues that may be very relevant here. . . . Mr. Taylor has never sought my advice."

A state bar official says the Fred Taylor-People's Paralegal arrangement "sounds fraught with all kinds of trouble."

It appears to violate an Arizona Supreme Court rule which says, "A lawyer shall not give anything of value to a person for recommending the lawyer's services . . ."

But the deal may be a windfall for Berry and, possibly, Taylor, who didn't respond to a New Times request for an interview. Much depends on how the state bar deals with the complaint filed against Taylor, and how Bankruptcy Court judges handle the situation.

Berry says he's long referred some customers to attorneys.
He told Judge Redfield Baum in December, "There's some people that you can look at, you know they can do okay [by themselves in court]. But if you get an Hispanic or somebody who's intimidated by things--I think in my mind, they're not going to do real well. I'll send them to a lawyer."

And, truth be told, Dick Berry would be a lawyer right now, if they'd let him.

We have a money-back guarantee, always. If a debtor has a problem with the way we do business, we'll take care of them.

--Dick Berry, to New Times

[Berry's] fee was $995. . . . Then I said, "Well, I'm just not happy with the service I'm getting. There's letters from the trustee saying that there's things wrong in my bankruptcy that can cause it to be dismissed. . . . I'd like to go to another attorney and have him finish our case, and I'd like our money back." And, at that point, [Berry] got really upset and he said, "Well, I'm not going to refund any of the money." So I asked him why. He said, "Well, we have done a lot of paperwork for you. . . . I have to charge you for any of the papers I have. If I'm to return these papers, I want $500 for all the documents I did prepare for you. And if the attorney wants a copy, it's going to cost him $300." . . . And at that point, [operations director] Paul Dvorscak walked into the room. He walked in, flies off the handle. "You're not getting any of your money." I said, "I'm going to go to the court and get my money back." And he said, "You won't go to the court. Because if you do go to the court, I'll rip your head off." So we started to walk out. Paul was right behind me like he was trying to chase me out of the office. There was a waiting room full of customers. He said, "If you touch your daughter again, I'm going to call CPS."

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