Ethics Roundtable

A New Job and Possible UPL

By Therese A. Cannon, Nancy B. Heller, RP, and Stacey Hunt, CLA, CAS

July/August 2008 Table of Contents

Question:

I am a new paralegal looking for my first job. Recently, I went on an interview for a paralegal position that seems like it would involve the unauthorized practice of law. As part of my responsibilities, I would be answering client questions regarding incorporation via e-mail, with no apparent attorney supervision. Would this be UPL and, if so, should I report it? The business appears to primarily be run by paralegals so where would I report the UPL if there is no attorney involved?

Heller: You have identified a couple of ethical issues and questions regarding your job interview: potential UPL and the lack of attorney supervision. I refer to it as “potential” UPL because it’s unclear what type of questions you would be expected to answer regarding incorporation. If the questions are of a procedural nature, your responses might not constitute UPL. For example, if a client asks where he or she can obtain the proper forms to incorporate a business and you respond that the forms are available from the Secretary of State’s office, that doesn’t constitute UPL. However, if the questions are of a more substantive nature that prompt a response in the form of a legal opinion, advice or a recommendation, this clearly would be UPL. For example, if a client asks what type of corporation he or she should form for the greatest tax benefits and you advise this person to form a particular type of corporation, that would constitute the rendering of legal advice by a nonlawyer, which is strictly prohibited.

The second ethical concern is the issue of attorney supervision. An attorney must be involved in the chain somewhere, regardless of whether the attorney works in the same office as the paralegals, is located remotely or is otherwise involved. If this is a business that is run by independent contractors or freelance paralegals, the attorney would need to be involved as the client. In other words, these freelance paralegals would be performing work for that attorney as their client, and supervision must be imposed by that attorney, as well as the assumption of ultimate responsibility for the work. The requirement for attorney supervision is clearly articulated in the American Bar Association’s Model Guidelines for the Utilization of Paralegal Services: Guideline 1 (“a lawyer is responsible for all of the professional actions of a paralegal performing services at the lawyer’s direction and should take reasonable measures to ensure that the paralegal’s conduct is consistent with the lawyer’s obligations under the rules of professional conduct of the jurisdiction in which the lawyer practices”), Guideline 2 (“provided the lawyer maintains responsibility for the work product, a lawyer may delegate to a paralegal any task normally performed by the lawyer except those tasks proscribed to a nonlawyer by statute, court rule, administrative rule or regulation, controlling authority, the applicable rule of professional conduct of the jurisdiction in which the lawyer practices, or these Guidelines”) and Guideline 4 (“a lawyer is responsible for taking reasonable measures to ensure that clients, courts, and other lawyers are aware that a paralegal, whose services are utilized by the lawyer in performing legal services, is not licensed to practice law”).

As to reporting the UPL, I suggest you check with your local bar association or state Supreme Court. In the state of Ohio (where I reside), the Columbus Bar Association has bar counsel who sit on the Professional Ethics and Grievance Committee, which evaluates complaints and investigates situations involving lawyers. These complaints can include allegations of UPL. In addition, the Ohio Supreme Court has a Commission on the Unauthorized Practice of Law, which hears and decides UPL violations. Your state probably has similar channels for reporting UPL violations and I strongly encourage you to report any such violations. An attorney doesn’t need to be involved for UPL to occur and, in many instances, UPL violations occur because an attorney isn’t involved.

Cannon: The way you have described the work required for this position does make it sound ethically questionable so it’s good that your ethics radar picked up the two issues: UPL and supervision. As with any ethical dilemma, understanding and analyzing the facts are critical to developing the solution. Some questions about incorporation might not elicit “legal advice” but would require you to provide legal information. For example, telling a client how much incorporation costs, providing the names of the agencies with which forms are filed or referring clients to a Web site for more information or resources don’t constitute giving legal advice and therefore are not UPL. As Nancy points out, making a decision that incorporation is the best avenue for the business and conveying that to a client is UPL. However, if you convey the decision to incorporate from the lawyer to the client, you are not giving legal advice, but are the conduit for legal advice, and are not engaged in UPL.

This particular job position also raises questions about the meaning of attorney supervision. Does a lawyer have to figuratively “stand over your shoulder” when you are working and monitor everything you do and say on a minute-to-minute basis? This extreme view of supervision isn’t in keeping with standard practices or with the expanding role of paralegals. There were various debates during the 1990s about state certification and licensing of para­legals, and many paralegals and lawyers advocated for an expanded role for para­­legals that called for “general supervision.” General supervision would mean that the lawyer had overall responsibility for the para­legal’s work but could be free to delegate more extensively than now is the case. For example, a lawyer might be able to serve more clients if paralegals could meet with prospective clients and give basic legal advice on common matters conveyed by the paralegal before the lawyer gets involved in the case. The lawyer would create a standard template of advice that could be given and authorize the paralegal to convey it in advance. However, this new thinking about supervision has not been tested in practice yet, so you need to abide by the existing rules. I would advise asking the potential employer for more information about the actual nature of the communication you will have with the clients.

Regarding reporting possible UPL, most states have a “snitch law” that requires lawyers to report unethical conduct, though some states, like California, don’t. Ethical Consideration 1.3(d) of the National Federation of Para­legal Association’s Model Code of Ethics and Professional Responsibility says, “A paralegal shall advise the proper authority of non-confidential knowledge of any action of another legal professional that clearly demonstrates fraud, deceit, dishonesty, or misrepresentation.” The Ethical Consideration goes on to say that paralegals who fail to report misconduct are themselves in violation of the code, although the code itself isn’t legally binding on paralegals.

Whether or not you are obligated to report this conduct depends partly on whether your jurisdiction requires it, but also on the degree to which you are certain that the practices of this business are unethical. Without more facts than what you have provided, I don’t think you can conclude with certainty that this business is breaking any ethics rules. Short of reporting the possible violation, you might want to submit the facts to an ethics hotline or see if your state has a relevant advisory opinion.

Hunt: This subject brings to mind an infamous case involving paralegals in a bankruptcy practice that was decided by the U.S. District Court, Northern District of California — In re Hessinger & Associates, 192 B.R. 211 (1996). In that case, the court found the Hessinger law firm to be in violation of, among many other things, California Rules of Professional Conduct Rule 3-110(A) (prohibiting lawyers from intentionally, recklessly or repeatedly failing to perform legal services competently) by aiding nonlawyers in conducting UPL. The Hessinger firm had seven offices staffed by six attorneys and a very large volume bankruptcy debtors practice. The firm authorized its paralegals and nonlawyer “credit specialists” to be in charge of clients and their bankruptcy petitions. Paralegal and attorney members of the firm testified that it was routine practice for the paralegals to prepare schedules, file petitions and make decisions on exemptions the clients could claim. The paralegals testified their direct supervisors were not necessarily attorneys.

The court found that given this testimony and the large volume of clients, there was no way the para­legals could have been properly supervised by six lawyers. The court noted that “a persistent theme in [Hessinger’s] position on the role of paralegals in its practice is the argument that ‘everybody does it;’ that is, all large consumer bankruptcy firms rely on para­legals to perform a large amount of the work. …” Echoing Teri’s statements about the expanding role of paralegals, the court, in a heartening comment, said, “This may well be true; it may also be true that, given sufficient training, paralegals are fully capable of competently handling most aspects of a consumer bankruptcy case.” However, also supporting Teri’s comments that this new thinking has not been put to the test, the court went on to say, “The court, however, is not in a position to decline to enforce the Rules of Professional Conduct merely because application of those rules results in attorneys being required to perform work which could be performed less expensively and more efficiently by nonlawyers. Nor is the court in a position to condone an unethical practice merely because most consumer bankruptcy firms are engaging in it.”

As Teri and Nancy have said, you must check out this new employer very carefully to make sure you will not be put in the same position as the Hessinger paralegals. As far as to whom you should report the possible violation, in California, California Business & Professions Code section 6455 states that paralegals who provide legal service without lawyer supervision are guilty of an infraction. If your state has a similar rule, prosecution would be made by your local district attorney’s office, and UPL should be reported there.         

Therese A. Cannon is the asso­ciate director of the Western Association of Schools and Col­leges, Senior Commission in Ala­meda, Calif. She also serves as the educational consultant to the American Bar Association Stand­ing Com­mittee on Para­legals. She is the author of “Ethics and Profes­sional Responsibility for Paralegals” and “A Concise Guide to Paralegal Ethics,” both published by Aspen Publishers, Inc., and is co-author of “Para­legals, Profitability, and the Future,” published by the ABA. She has been teaching and lecturing on legal ethics for more than 25 years.

Nancy B. Heller, RP, has been a litigation paralegal since 1978, and has been employed with the Columbus, Ohio-based law firm of Vorys, Sater, Seymour and Pease for the past 20 years. She has been a frequent seminar lecturer on the topic of ethics and is a co-author of the National Federation of Paralegal Associations’ Model Code of Ethics. Since 1999, she has served on the adjunct faculty for the Capital University Law School Paralegal Program where she teaches Ethics and Law Office Practice and Civil Litigation II: Trial Preparation and Practice. She also is a co-author of the ethics section for NFPA’s Paralegal Advanced Competency Exam Study Manual.

Stacey Hunt, CLA, CAS, is a graduate of the Fresno City College paralegal program and a litigation paralegal with Duggan Smith in San Luis Obispo, Calif. She is the co-author of Evidence Management for the Paralegal (Cengage, 2007), as well as two other paralegal books. Hunt taught legal writing and ethics for the paralegal studies program at California Polytechnic State University in San Luis Obispo. She is a past president of the California Alliance of Paralegal Associations and currently is working on modules for the Commission for Advanced California Paralegal Specialization’s new online program.