Linder v. Ins. Claims Consultants, Inc. - 348 S.C. 477, 560 S.E.2d 612 (2002)

Rule:

The business of public insurance adjusting does not per se constitute the practice of law. Public adjusters may act as appraisers. Since a public adjuster may use his expertise to determine a value, it is not beyond his expertise to discuss that value, and the insurer's competing value, with the client and the insurer's adjuster. This type of negotiation activity - as long as it is limited to valuations of property and repairs - does not require legal skill and knowledge. Nonetheless, the activities of public insurance adjusters may bring them close to the line between permissible business conduct by non-attorneys and the unauthorized practice of law. A suitable accommodation may be made to preserve the business of public adjusting, yet protect the public from the dangers of the unauthorized practice of law.

Facts:

The insureds hired the adjusters to resolve a coverage dispute with their homeowners’ insurer. A settlement was reached, but the insurer delayed payment. The adjusters sued the insureds for their contractual commission. The insureds filed a counterclaim, and asserted that the adjusters engaged in the unauthorized practice of law and therefore the contract between them was void ab initio. While that suit was pending, the insureds sought a declaratory judgment from the supreme court that the actions of the adjusters constituted the unauthorized practice of law.

Issue:

Did the business activities of first-party public adjusters, per se, constitute the practice of law? 

Answer:

No.

Conclusion:

The supreme court held that the business of first-party public insurance adjusting did not, per se, embody the practice of law; therefore, the contract was not void ab initio. Public adjusters could perform purely appraisal-oriented activities, submit claims to the insurer, and even negotiate with the insurer, as long as the discussions involved only property-damage valuations. However, if public adjusters (1) held themselves out as having legal skill, (2) advised clients of their rights under a policy regarding matters requiring legal skill, or (3) became involved in coverage disputes between the client and the insurer, they were engaging in the unauthorized practice of law. The adjusters violated (2) and (3), and were not entitled to commissions to the extent they did so. The adjusters' use of scales in its adverting was not equivalent to claiming to have legal skill. There was no private right of action for the unauthorized practice of law.