## Facts

- After a car accident, Jan Mlynarik hired Terri Bergantzel, a nonlawyer, under a written contingent-fee agreement to assist in negotiating and settling his personal-injury claims.
- The agreement provided Bergantzel would receive 15% of the amount recovered after medical expenses; it stated she was not an attorney and described the payment as covering “expenses.”
- Bergantzel performed tasks including locating witnesses, preparing affidavits, obtaining records, securing a physician letter, and communicating with and negotiating with insurers.
- The tortfeasor’s liability insurer paid policy limits of $100,000, and Bergantzel received more than $12,000 under the agreement.
- Bergantzel continued efforts to obtain underinsured-motorist (UIM) benefits and negotiated an initial UIM offer of $35,000.
- Bergantzel told Mlynarik he would need to hire an attorney to obtain a larger UIM recovery; Mlynarik retained counsel, who obtained a $65,000 UIM settlement and received an attorney contingent fee.
- Mlynarik refused to pay $1,650 of Bergantzel’s claimed 15% fee on the UIM settlement, asserting the contract was unenforceable because it paid a nonlawyer for legal services.
- Bergantzel sued in small claims to recover the $1,650; the small-claims court entered judgment for Bergantzel, and the district court affirmed.

## Issues

1. Whether a nonlawyer’s negotiation of another person’s UIM settlement constitutes the unauthorized practice of law.
2. Whether a contingent-fee contract compensating a nonlawyer for such services is unenforceable as contrary to public policy.

## Decision

- The Iowa Supreme Court reversed.
- The court held that negotiating the UIM settlement on another’s behalf required professional legal judgment and constituted the unauthorized practice of law.
- Because the contingent-fee agreement compensated unlicensed legal services, the agreement was contrary to public policy and unenforceable to the extent it sought payment for those services.
- The case was remanded with directions to dismiss Bergantzel’s claim.

## Legal Principles

- Contracts compensating a person not licensed to practice law for performing legal services, including contingent-fee arrangements, are unenforceable when nonenforcement best serves the public interest underlying lawyer-licensing regulation.
- The “practice of law” includes services requiring professional legal judgment, such as evaluating liability and damages, assessing coverage and settlement value, and negotiating settlement on another’s behalf.
- Disclaimers that the service provider is “not an attorney,” or characterizing compensation as “expenses,” do not control when the substance of the work involves legal representation and claim negotiation.
- Nonlawyers may perform purely factual, clerical, or investigative tasks, but may not undertake representation-like functions that depend on legal analysis and advocacy.

## Conclusion

The court refused to enforce a nonlawyer’s contingent-fee agreement for negotiating an insured’s UIM claim because the work involved unauthorized legal practice, and public policy favoring regulated legal services required dismissal of the fee claim.


Bergantzel v. Mlynarik, 619 N.W.2d 309 (Iowa 2000)