Avoiding Unauthorized Practice
California Joan reviews the perils faced by non-admitted associates and out-of-state
lawyers working here
By Ellen R. Peck
© 2008. All rights reserved.
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Peck |
Meryl Terpitude peered around the corner of her doorway, brandishing a bribe
of California Joan’s favorite café mocha latte. “I have a tiny
ethics question . . .”
Meryl, sitting comfortably in her easy chair, posed his question:
“It’s June; law school graduations are sending would-be lawyers
to take the General California Bar Examination and thereafter our new ‘associates’ who
have taken the bar but not been admitted to practice will start their careers
with this firm. The management committee has put me in charge of looking at
our procedures for supervising new non-admitted associates, lateral hires and
transfers of out-of-state lawyers not admitted in California. I need your help!”
“One café mocha latte is not enough, Meryl!” Cali almost choked
on the enormity of issues to be discussed.
Meryl grinned, “Cali, if you leave it to us, we’ll get it wrong
and be charged with aiding and abetting the unauthorized practice of law in
violation of rule 1-300(A), Rules of Professional Conduct (CRPC). You’d
also be condemning innocent associates and out-of-state lawyers to potential
admission delay or denial for engaging in the unauthorized practice of law
in violation of Business and Professions Code §6125.”
“Or for holding out that they were entitled to practice law in California
in violation of §6126(a),” Cali retorted heatedly. “Section 6126(a)
also provides potential criminal exposure for violating these statutes:
“Any person advertising or holding himself or herself out as practicing
or entitled to practice law or otherwise practicing law who is not an active
member of the State Bar, or otherwise authorized pursuant to statute or court
rule to practice law in this state at the time of doing so, is guilty of a
misdemeanor punishable by up to one year in a county jail or by a fine of up
to one thousand dollars ($1,000), or by both that fine and imprisonment.”
“Yikes!” Meryl exclaimed, pondering the risk. “Section 6125
just states, ‘No person shall practice law in California unless the person
is an active member of the State Bar.’ The baffling mystery is: what
constitutes the unauthorized practice of law in California?”
“Meryl,” responded Cali, “you have just stated the three
elements to determine: First, does the conduct or activity constitute the practice
of law? Second, if it does, is it authorized? Third, was the conduct ‘in
California’?” Cali began the framework for analysis.
“Cali, I understand that in Birbrower, Montalbano, Condon & Frank
v. Superior Court (1998) 17 Cal.4th 119, 128-129, the California Supreme
Court held that an attorney, not physically present in California, can virtually be ‘in
California’ by advising a California client on California law in connection
with a California legal dispute by telephone, fax, computer or other modern
technological means,” Meryl said. “Since all of the associates
or out-of-state transfers will occur here in California, we can dispense
with discussion of the third element.”
“Meryl, Birbrower also held that the practice of law falls into
three broad categories,” Cali added. (Id., at p. 128.) “The first
is ‘the doing and performing services in a court of justice in any matter
depending therein throughout its various stages and in conformity with the
adopted rules of procedure.’” (People ex rel. Lawyers’ Institute
of San Diego v. Merchants’ Protective Corp. (1922) 189 Cal. 531,
535 (Merchants.))
Meryl conceded, “O.K., so we won’t send non-admitted associates
to court on behalf of our clients.” But, he asked, “Can’t
out-of-state lawyers not admitted in California represent clients in court
proceedings so long as another admitted California attorney is associated on
the case?”
“No!” Cali replied. “Birbrower observed that there
is no statutory exception to §6125 which allows out-of-state attorneys to practice
law in California as long as they associate local counsel in good standing
with the State Bar, except by pro hac vice admission.” (Id., at p. 126,
fn. 3; Cal.Rls. Ct. 9.40.)
“Don’t even think,” Cali spoke quickly, seeing the glint
in Meryl’s eye, “that you can have out-of-state attorneys who transfer
here admitted pro hac vice. Any resident out-of-state lawyers are not eligible
for pro hac vice admission.”
“One of my non-admitted associates is quite good at drafting stipulations
and releases for transactions and simple litigation matters. I give her a term
sheet, she gets the stip and releases done, sends them out to the client and
opposing counsel and we are done,” Meryl boasted proudly. “I would
like to expand this program for the new non-admitted associates.”
Cali’s eyes blazed with horror. “Under California law, the practice
of law includes the preparation of contracts and other documents that secure
legal rights, whether the matter is pending in court or not. Preparation of
stipulations and releases constitutes the practice of law. (In re Garcia (9th
Cir.BAP 2005) 335 B.R. 717, 728.) Without your direct review and authorization
of the documents, you are aiding the unauthorized practice of law (CRPC 1-300(A)
and your non-admitted associate is engaging in the unauthorized practice of
law. (Bus. & Prof. §6125.)”
“But the documents are so simple!” Meryl protested.
“The courts have observed that a document’s complexity is not
dispositive as to whether their drafting is properly within the sphere of legal
services, since the preparation of any legal document that secures legal rights
is considered practicing law,” Cali retorted. (Id.)
“O.K., so I have to review every stipulation, release or other legal
instruments or contracts by which legal rights are secured prepared by any
non-admitted person,” Meryl conceded. “I guess the documents should
go out with a cover letter with my signature or that of another admitted attorney.”
“Yes!” Cali hissed.
Meryl tried another issue. “We have this great attorney from Mexico,
awaiting his bar results. Our clients doing business in Mexico just love him.
He is very effective in advising them about strategies for negotiating contracts,
how the local laws in Mexico work on any given assignment . . .”
Cali, gritting her teeth to keep from screaming, said, “Giving advice
regarding the law of a foreign country constitutes the practice of law. A person
who gives advice as to local law, federal law, the law of a sister state, or
the law of a foreign country, is GIVING LEGAL ADVICE!” (The lawyer from
Mexico therefore is practicing law. Bus. & Prof.C. §6125; Bluestein
v. State Bar (1974) 13 Cal.3d 162, 174. Aiding the conduct is a violation
of CRPC 1-300(A) by the supervising attorney.)
“So I guess someone in the firm who specializes in Mexican law should
supervise his work. . .” Meryl looked dejected.
“Yes, and the lawyer from Mexico should be advised to never, either
orally or in writing, give advice to clients until admitted,” Cali underscored.
“Cali, now that I understand these unauthorized practice issues, I need
to ask you about what happened yesterday.” Meryl looked puzzled. “Yesterday,
at a deposition of my client by the plaintiff, a young woman who had recently
graduated from an out-of-state law school but was not yet admitted to practice
in any state, appeared for another co-defendant. She handed me a business card
that showed her firm’s name and her name above the words “attorney
at law.” She also introduced herself to the parties as an attorney from
the co-defendant’s law firm. No other attorney from the law firm was
present. During the deposition, she asked questions of my client and objected
to some of the forms of questions.
“One of the other lawyers told her after the deposition that she is
not yet permitted to hold herself out as an attorney until she is admitted
to a state bar in this state. However, she said that it was just a deposition;
that she had a juris doctor degree and her employer, a lawyer of more than
30 years’ experience, had authorized her appearance. What do you think
Cali?” Meryl asked.
“I think that appearing and participating in a deposition on behalf
of another constitutes the unauthorized practice of law in violation of §6125.
A deposition is a discovery proceeding for an action pending in a court of
law. Therefore, it is a court appearance, meeting the first prong of the Birbrower definition.
Additionally, she is orally and in writing (the business card) holding herself
out as an ‘attorney at law.’ This constitutes ‘holding out’ as
eligible to practice law, in violation of section 6126(a),” Cali said
firmly.
“Well,” said Meryl, “we will not send out any non-admitted
persons to discovery proceedings on behalf of clients, without another lawyer
present. But what about a non-lawyer negotiating simple agreements in less
costly or less complex litigation matters?”
“Negotiating and settling claims on behalf of others may amount to the
practice of law. If a law firm is retained for a matter that includes the negotiation
of a contract or other agreement on behalf of a client, this conduct constitutes
the practice of law. Therefore, an attorney may not delegate such functions
to a non-attorney.” (In re Carlos (Bkrtcy.C.D.Cal. 1998) 227 B.R.
535, 538-539.)
“What can non-admitted future lawyers do for the firm?” Meryl
asked in exasperation.
Cali answered, “Work by law firm non-attorneys must be preparatory in
nature. Such work may include research, investigation of details, the assemblage
of data or other necessary information, and other work that assists the attorney
in carrying out the legal representation of a client. All work must be supervised
by an attorney and must become or be merged into the work of the attorney,
so that it becomes the attorney’s work product.” (Id., p.
539.)
“What procedures should we put in place for associates who are not admitted?” Meryl
asked.
Cali ticked off a checklist of basic points:
First, any designation of the non-admitted associate in business cards, letterhead,
Web sites, announcements or any other written designations should indicate
that the associate is not admitted to practice in California. This will ensure
that the firm does not hold the person out as entitled to practice law in violation
of §6126(a).
Second, if the associates meet with clients, in person or by telephone, the
clients should be told that the associate is not admitted and is not entitled
to practice law yet. This, too, will clarify for clients that the person is
not a lawyer and not entitled to practice law. (Bus. & Prof. C., §6126.)
Third, all work by non-admitted associates should be supervised to ensure
that they are not inadvertently engaged in the practice of law and that the
firm is not aiding the practice of law.
Fourth, the associate’s name should not appear on the caption of a pleading
to be filed or presented to a tribunal. Appearing on behalf of another in the
caption of pleadings filed with the court may constitute the unauthorized practice
of law where the filer is not licensed to practice or otherwise authorized
to appear before the court. (See Gentis v. Safeguard Business Systems, Inc. (1998)
60 CA4th 1294, 1308—denying petition for rehearing where attorney not
licensed in California was listed in caption as representing petitioner.)
Fifth, the associate should not give legal advice, including any oral legal
advice to a firm client or signing any written communication that includes
the giving of legal advice.
Sixth, the associate can prepare the first draft of legal instruments and
contracts by which legal rights are secured but the version sent to the client
or other parties on behalf of the firm must be the “merged” work
product of the supervising attorney.
Seventh, all non-admitted associates should be trained about activities in
which they should not engage.
“What about lateral hires and transfers of out-of-state attorneys?” Meryl
asked.
Cali responded with some basic procedures, borne of difficult experiences
by Cali’s outside lawyer clients:
- The admission records of all attorneys to be hired by the firm should be
checked to ensure that the person is truly admitted. There are a number of
cases of firms hiring people without checking their admission. After the supposed
lawyers represented firm clients for months or years, the firms discovered
to their dismay that the purported attorneys graduated from law school, passed
the California bar examination but were never actually admitted to practice
in California.
- Any out-of-state lawyer who is hired and who resides in California should
be subjected to the same procedures for non-admitted associates.
- There is an exception. State law cannot regulate or interfere with the practice
of law before federal administrative agencies. (Benninghoff v. Sup.Ct. (State
Bar) (2006) 136 Cal. App 4th 61, 74.) But be careful: federal law relevant
to the practice of law before a federal agency may adopt or incorporate state
law standards and requirements regarding such practice. (Augustine v. Department
of Veterans Affairs (Fed. Cir. 2005) 429 F.3d 1334, 1340–1341.)
- Regarding business cards, Web sites, letterheads and other communications
showing a non-California-admitted out-of-state lawyer: the communication may
state the other jurisdictions in which the lawyer is admitted but should also
clarify that the lawyer is not admitted in California, if the out-of-state
lawyer resides in California.
As Meryl prepared to implement these and other procedures to ensure that the
firm did not aid an unlicensed person to engage in the unauthorized practice
of law in California, he thanked Cali for once again showing him the path away
from perdition.
• Ellen R. Peck, a former State Bar Court judge, is a sole practitioner in
Escondido and a co-author of The Rutter Group California Practice Guide:
Professional Responsibility.
Certification
- This self-study activity has been approved for Minimum Continuing Legal
Education credit by the State Bar of California in the amount of one hour
of legal ethics.
- The State Bar of California certifies that this activity conforms to
the standards for approved education activities prescribed by the rules and
regulations of the State Bar of California governing minimum continuing legal
education.
Self-Assessment Test
Indicate whether the following statements are true or false after reading
the MCLE article. Use the answer
form provided to send
the test, along with a $25 processing fee, to the State Bar. If you do not
receive your certificate within four to six weeks, call 415-538-2504.
- A person who engages in the unauthorized practice of law in violation of
Business and Professions Code §6125 may be guilty of a crime.
- An out-of-state lawyer who is not eligible to practice law in California,
but who holds herself out as entitled to practice law in violation of Business
and Professions Code §6126(a), is not guilty of a crime.
- A lawyer who aids a person to engage in the unauthorized practice of law
in violation of rule 1-300(A), Rules of Professional Conduct (CRPC) may be
subject to professional discipline.
- Useful elements for determining what is the unauthorized practice of law
are: (1) does the conduct or activity constitute the practice of law; if so,
is it authorized and was the conduct “in California.”
- It is necessary to prove that an out-of-state lawyer, who is not eligible
to practice in California, engaged in the practice of law within the boundaries
of California in order to prove that the lawyer violated the unauthorized practice
of law statute.
- An out-of-state lawyer, not eligible to practice law in California and
not physically present in California, can practice law by advising a California
client on California law in connection with a California legal dispute by telephone,
fax, computer or other technological means.
- Appearing in a court of law on behalf of another in California constitutes
the practice of law.
- A non-admitted out-of-state lawyer who resides in California may still
be eligible to be admitted pro hac vice in a case in California.
- An out-of-state lawyer not admitted in California may represent clients
in court proceedings so long as another admitted California attorney is associated
on the case.
- The practice of law includes the preparation of contracts and legal instruments
by which legal rights are secured, whether or not the matter is pending in
court.
- Preparation of a simple stipulation and release is not the practice of
law.
- A lawyer admitted to the practice of law in France but not eligible to
practice in California may nevertheless give legal advice in California solely
about French law.
- Giving legal advice affecting the legal rights of others constitutes the
practice of law.
- Law firm is retained for a matter which includes the negotiation of a
contract or other agreement on behalf of a client. Firm attorney may delegate
the negotiation of the contract to a non-attorney.
- Work by non-attorneys can include research, investigation of details,
the assemblage of data or other necessary information and other work that assists
the attorney in carrying out the legal representation of a client as long as
the work becomes or is merged into the work of the attorney, so that it becomes
the attorney’s work product.
- Appearing on behalf of another in the caption of pleadings filed with
a California court may constitute the unauthorized practice of law where the
filer is not licensed to practice or otherwise authorized to appear before
the court.
- An out-of-state lawyer ineligible to practice law in California may be
able to practice law before federal administrative agencies.
- A law firm may authorize a firm employee who is a graduate of a California
law school awaiting bar examination results to use a business card that states
the name of the firm, the person’s name and “attorney at law.”
- A non-admitted law school graduate awaiting bar examination results, employed
by a law firm, may prepare the first draft of legal contracts or other legal
instruments by which legal rights are secured if supervised by an attorney.
- As a matter of risk management, clients first meeting an associate who
is a non-admitted law school graduate awaiting bar examination results should
be told that the associate is not a lawyer and is not entitled to practice
law.
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