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Avoiding unauthorized practice of law: how much attorney supervision of paralegals is required?

By Douglas A. Crowder, Esq.

Copyright © 2007. All Rights Reserved

If you have had an experience with a professed law firm and feel there may be violations of laws governing the unauthorized practice of law by non-lawyers, feel free to call our office for a free consultation, 800-455-1592.  For attorneys who would like guidance on adherence to the regulations, we provide free MCLE and advice.  Call our office for additional information.

To what degree must an attorney exercise supervision over his or her non-attorney staff? There is no hard and fast answer to that question, but this article gives some guidelines based on a review of several court opinions on the subject.

REVIEW OF CASE LAW

McGregor v. State Bar of Cal.
24 Cal.2d 283, 148 P.2d 865 (1944)

A collection attorney permitted his lay employee to interview clients, give clients the impression that he, the layman actually was the attorney, establish fees for clients, write letters on the attorney’s letterhead, sign the attorney’s name to letters, and acknowledge moneys collected on claims by appropriate receipts bearing the petitioner’s rubber stamp signature. Finding that this activity justified the attorney’s disbarment, the court stated, “The right to practice law not only presupposes in its possessor integrity, legal standing and attainment, but also the exercise of a special privilege, highly personal and partaking of the nature of a public trust. It is manifest that the powers and privileges derived from it may not with propriety be delegated to or exercised by a nonlicensed person.”

Louisiana State Bar Ass’n v. Edwins
540 So.2d 294 (La.,1989)

A non-attorney employed by an attorney met with a client, told the client that he was an attorney, and attorney, and agreed to handle the client’s case for a contingent fee. Sometime after the attorney-client contract had been entered the non-attorney told the client that the attorney would be the one representing the client, but claimed he was the attorney’s associate. The client did not meet with the attorney until after the suit had been filed. The court concluded the attorney aided the non-attorney in unauthorized practice of law by delegating the exercise of professional judgment with respect to the entry of contract with client, evaluation of client’s claim, preparation of documents, and written arguments, filing of documents, consultation on advisability of settlement and allowing paralegal to handle and distribute client’s money without any supervision.

The court noted noted that “a lawyer may delegate various tasks to paralegals, clerks, secretaries and other non-lawyers; that he or she may not, however, delegate to any such person the lawyer’s role of appearing in court in behalf of a client or of giving legal advice to a client; that he or she must supervise closely any such person to whom he or she delegates other tasks, including the preparation of a draft of a legal document or the conduct of legal research; and that the lawyer must not under any circumstance delegate to such person the exercise of the lawyer’s professional judgment in behalf of the client or even allow it to be influenced by the non-lawyer’s assistance.” (id., at 300)

In re Martin
97 B.R. 1013 (Bkrtcy.N.D.Ga.,1989)

When a bankruptcy petition was prepared, signed, and filed by someone other than the attorney, and without the attorney’s participation, the court found that “the most fundamental and minimal of professional services required of an attorney to his client are lacking. The apparent casual handling of this case does not reflect any actual attorney contact or representation up to the time of filing. Whatever the representation, it was performed by non-attorneys.” (at 1020).

The court observed that a “lawyer often delegates tasks to clerks, secretaries, and other laypersons. Such delegation is proper if the lawyer maintains a direct relationship with his client, supervises the delegated work, and has complete professional responsibility for the work product. This delegation enables a lawyer to render legal service more economically and efficiently.”

The court also noted that employment of an attorney creates a unique relationship between the attorney and his client. Pursuant to this relationship, the client places his reliance and trust in the professional expertise, judgment, and guidance of his attorney.

Matter of Galbasini
163 Ariz. 120, 786 P.2d 971 (Ariz.,1990)

An attorney entered into an agreement with a management firm called RMJ, which agreed to manage the attorney’s paralegal staff and assist with the attorney’s collection business. RMJ then leased an office separate from respondent’s law office, in which paralegals supposedly under the attorney’s supervision engaged in bill collection. The attorney visited the RMJ offices once or twice a week, but never actually instructed the collection agents on practices allowable under state and federal regulations or even spoke to the agents, because he was “not allowed to do that” by the principals of RMJ. (at 973). RMJ employees sent letters on the attorney’s letterhead, bearing the attorney’s purported signature, and the attorney was not aware of these letters being sent out. The attorney had no idea who his clients were, and did not know that a former client’s new attorney was trying to reach him and that the messages left with RMJ were not forwarded.

The court noted that “the license to practice law is conferred on a person after rigorous schooling, difficult examinations and proof of good moral character. The license is personal to the lawyer, and not for sale or lease. A lawyer retains the license only so long as he or she upholds the high standards of the legal profession. If a lawyer disregards his or her professional responsibilities by allowing nonlawyers to operate a law office in his or her name, he or she cannot complain when held responsible for the nonlawyer’s misdeeds.” (at 977)

In Re Opinion No. 24 Of The Committee On The Unauthorized Practice Of Law
128 N.J. 114, 607 A.2d 962 (1992)

The Supreme Court of New Jersey held that an attorney may delegate legal tasks to a paralegal, regardless of whether paralegal is employed by the attorney or is an independent paralegal retained by attorney, so long as the attorney maintains a direct relationship with the clients, supervises paralegal’s work and remains responsible for work product.,

In reaching that conclusion, the court observed that “there is no question that paralegals’ work constitutes the practice of law. However, paralegals who are supervised by attorneys do not engage in the unauthorized practice of law.”

“Under both federal law and New Jersey law, and under both the ABA and New Jersey ethics Rules, attorneys may delegate legal tasks to paralegals if they maintain direct relationships with their clients, supervise the paralegal’s work and remain responsible for the work product.”

The court cited with approval guidelines issued by the Colorado Bar Association under which a lawyer may permit a paralegal to assist in all aspects of the lawyer’s representation of a client, provided that:

  1. The status of the paralegal is disclosed at the outset of any professional relationship with a client, other attorneys, courts or administrative agencies or members of the general public;
  2. The lawyer establishes the attorney-client relationship, is available to the client and maintains control of all client matters;
  3. The lawyer reviews the paralegal’s work product and supervises the performance of duties assigned to the paralegal;
  4. The lawyer remains responsible for the services performed by the paralegal to the same extent as if such services had been furnished entirely by the lawyer and such actions were those of the lawyer;
  5. The services performed by the paralegal supplement, merge with and become part of the attorney’s work product;
  6. The services performed by the paralegal do not require the exercise of unsupervised legal judgment; and
  7. The lawyer instructs the paralegal concerning standards of client confidentiality.

The guidelines also provide:

  1. A paralegal may author and sign correspondence on the lawyer’s letterhead, provided the paralegal status is indicated and the correspondence does not contain legal opinions or give legal advice.
  2. A paralegal may have a business card with the firm name appearing on it so long as the status of the legal assistant is disclosed. However, the name of the paralegal may not appear on the letterhead of the firm.
  3. A paralegal may conduct client interviews and maintain general contact with the client once the attorney-client relationship has been established, so long as the client is aware of the status and duties of the [paralegal], and the client contact is authorized by the attorney.

Matter of Bright
171 B.R. 799, 805 (Bankr.E.D.Mich.1994)

The Eastern District of Michigan Bankruptcy Court stated a lawyer is not adequately supervising a non-lawyer if:

(1) the lawyer does not know of the existence or content of meetings between the non-lawyer and the debtor;

(2) if the lawyer relies solely on the non-lawyer as intermediary, neglecting to meet directly with the client; or

(3) if the lawyer fails to use his independent professional judgment to determine which documents prepared by the non-lawyer should be communicated outside the law office.

In re Hessinger & Associates
192 B.R. 211 (N.D.Cal.,1996)

The federal district court upheld a bankruptcy court’s finding that a law firm failed to act competently in representing bankruptcy debtors to the extent that it allowed paralegals to complete bankruptcy petitions and schedules and to perform other work of legal character without adequate attorney supervision.

The court obsesrved that the duty of competent representation includes the duty of adequately supervising non-attorney employees. This failure of supervision created a situation in which paralegals were making final decisions on how important legal aspects of individual bankruptcy filings, such as the claiming of exemptions, should be handled; and this constituted the unauthorized practice of law by those paralegals. These nonlawyer “credit specialists” as a practical matter were in charge of the individual petitions.

The firm also put extreme pressure on its employees to sign up every potential client who responded to the firm’s advertisements. These nonlawyers interviewed clients, and prepared their petitions, which were later signed by an attorney en masse. The firm was organized similar to a production line, with little or no review by attorneys, and the “credit specialists” were required to produce at least two bankruptcy petitions each day to keep their job. The law firm had seven offices which were staffed by a total of six attorneys. Given the large volume of cases which the firm handled, and given the fact that the firm had more offices than attorneys, the court concluded that a substantial amount of legal work was in fact performed by non-attorneys with little or no supervision from attorneys.

Attorney Grievance Com’n of Maryland v. Hallmon
343 Md. 390, 681 A.2d 510 (Md. 1996)

At an administrative law hearing, the attorney appeared along with his client and his office manager. The attorney repeatedly “deferred” to his office manager, who made most of the presentation. The attorney admitted during the hearing that he knew very little about the case, and that he had not met with the client prior to the hearing.

The court found that the attorney abdicated supervision of his office manager, who was therefore unauthorizedly practicing law.

The court noted that law clerks and paralegals perform a variety of services for attorneys but they may not give legal advice, accept cases, set fees, appear in court, plan strategy, make legal decisions, or chart the direction of a case. An attorney may “not under any circumstance delegate to a law clerk the exercise of the lawyer’s professional judgment in behalf of the client.

In re Stegemann
206 B.R. 176 (Bkrtcy.C.D.Ill.,1997)

An attorney represented a Chapter 7 debtor, but the debtor had absolutely no contact with the attorney until after the first meeting of creditors. The debtor met with the attorney’s secretary, who prepared the petition and paperwork, and instructed the debtor what to do at the hearing.

The court noted that a lawyer often delegates tasks to clerks, secretaries, and other laypersons. Such delegation is proper if the lawyer maintains a direct relationship with his client, supervises the delegated work, and has complete professional responsibility for the work product. This delegation enables a lawyer to render legal service more economically and efficiently.

Strict adherence to a program of supervision and direction of a paralegal is required in order to avoid any charges that the attorney is aiding his paralegal in the unauthorized practice of law. Delegation of activities which ordinarily comprise the practice of law is proper only if the lawyer maintains a direct relationship with the client involved, supervises and directs the work delegated to the paralegal and assumes complete ultimate responsibility for the work product produced by the paralegal. Supervision of the work of the paralegal by the attorney must be direct and constant to avoid any charges of aiding the unauthorized practice of law.

One of the requirements for delegating to a non-lawyer is that the lawyer maintain a direct relationship with the client. In this case, the court found that the attorney did not properly delegate responsibilities to his secretary as he had no contact or direct relationship with the debtor until after the first meeting of creditors.

Tegman v. Accident & Medical Investigations, Inc. 
107 Wash.App. 868, 30 P.3d 8 (2001),

The court found that the paralegal who knew or should have known that she did not have any supervising attorney, was thus engaged in unauthorized practice of law.

The court noted, however, that “A finding that a paralegal is practicing law will not be supported merely by evidence of infrequent contact with the supervising attorney. As long as the paralegal does in fact have a supervising attorney who is responsible for the case, any deficiency in the quality of the supervision or in the quality of the paralegal’s work goes to the attorney’s negligence, not the paralegal’s.” (id., at p. 876)

CONCLUSIONS AND GUIDELINES

Based on the foregoing, here are this author’s conclusions (the term “paralegal” used here can apply to any non-attorney employee or subcontractor).

  1. The attorney-client relationship must be established by an attorney, not by a paralegal.
  2. The fees the client is to pay must be established by an attorney, not a paralegal.
  3. An attorney may not authorize a paralegal to pose as the attorney.
  4. There is no direct prohibition on an attorney authorizing a paralegal to sign the attorney’s name, if the attorney has reviewed and approved the document to bear his signature.
  5. An attorney must have a general knowledge of cases he is responsible for.
  6. An attorney should know who his clients are.
  7. An attorney should have some direct contact, and provide direct instructions to any paralegal working on his behalf.
  8. In each attorney-client relationship, there must be SOME contact directly between the attorney and the client. It is not proper for ALL CLIENT CONTACT to be with the paralegal.