ABA Formal Ethics Opinion on "non-lawyer" assistants -- UPDATED

 The ABA Standing Committee on Ethics and Professional Responsibility has issued a Formal Ethics Opinion (No. 506) on a lawyer's responsibilities regarding non-lawyer assistants.  You can read it here. The abstract reads as follows:

A lawyer may train and supervise a nonlawyer to assist with prospective client intake tasks including obtaining initial information about the matter, performing an initial conflict check, determining whether the assistance sought is in an area of law germane to the lawyer’s practice, assisting with answering general questions about the fee agreement or process of representation, and obtaining the prospective client’s signature on the fee agreement provided that the prospective client always is offered an opportunity to communicate with the lawyer including to discuss the fee agreement and scope of representation. Because Model Rule 5.5 prohibits lawyers from assisting in the unauthorized practice of law, whether a nonlawyer may answer a prospective client’s specific question depends on the question presented. If the prospective client asks about what legal services the client should obtain from the lawyer, wants to negotiate the fees or expenses, or asks for interpretation of the engagement agreement, the lawyer is required to respond to ensure that the non-lawyer does not engage in the unauthorized practice of law and that accurate information is provided to the prospective client so that the prospective client can make an informed decision about whether to enter into the representation.

UPDATE 6-18-23:  2Civility has analysis of the opinion here. 

Article: Five Ethical Considerations for Judicial Law Clerks

 Here is a short article on ethical considerations for judicial law clerks.

Podcast on paralegal ethics

Because paralegals hold vulnerable information in trust, competence in ethical rules is crucial to protecting their firm, clients, and even themselves. But what exactly are paralegal ethics and why do they matter?

Those are some of the questions that are addressed in this recent podcast of the Paralegal Voice, in which the hosts discuss a broad overview of basic ethics definitions and then zero in on best practices for conscientious adherence to ethics rules.

You can listen to the podcast by clicking on the button below, or (if you can't see the controls below) by going here.

Can a paralegal (or other non-lawyer employee) cause a conflict that disqualifies a law firm when the paralegal joins the firm?

This is a question that is addressed in the comments to Model Rule 1.10, but it is not a bad idea to review it once more.  Michael Kennedy, of Ethical Grounds, did so earlier this week here.

Should a law firm be allowed to bill a client for work performed by an unpaid intern? -- UPDATED

Suppose a law firm hires a student as a law clerk and the student does some work for one of the lawyers.  The lawyer would be allowed to bill the client for the "cost" of the law clerk's time, right?  But what is the client paying for?  Is it an amount that reflects a portion of the firm's overhead costs or is the client paying the firm for the value of the time of one of its employees (the law clerk)?  Is there a difference?

Now, what if the firm is not paying the law clerk at all.  It would seem odd that the firm could claim the client has to pay certain value for "overhead" when in reality there is no overhead.  On the other hand, since the law clerk is not a lawyer, can the firm charge the client for the value of the time of the law clerk?

My guess is these questions have probably been addressed by ethics opinions, but I have not done the research.

What I can tell you is that there is a new opinion (available here) out of the New York State Bar Association that holds that a "law firm may bill a client for work performed by a student-intern despite the fact that the law firm does not pay the intern, because the intern receives academic credit for the work, as long as (i) the internship program complies with applicable law, (ii) the educational institution does not object to the client charges, and (iii) the charge is not excessive."

Not everyone agrees this is the correct decision.  See this article in Above the Law for a negative review of the opinion.

UPDATE (8-26-16): The ABA Journal online is reporting that various law student groups and some labor groups have signed a letter to the New York Law Journal calling the ethics decision “fundamentally flawed” and asking the ethics committee to reconsider.

UPDATE (9/6/16):  Legal Ethics in Motion has an update here.  It states, in part: "In response to the opinion, several organizations wrote an open letter, printed in the New York Law Journal, criticizing the decision as “fundamentally flawed.” . . .  In the letter, the signatories ask the ethics committee to reconsider its decision because the opinion “fails to consider the circumstances of most unpaid legal internships and the important moral questions they raise.”  The letter also challenges the assumption that unpaid internships at private firms comply with the applicable labor laws. The organizations contend that when a law firm charges for an intern’s free labor, they implicitly derive a substantial and economic benefit that cannot be offset by the academic credit that the interns receive, and they therefore may be entitled to pay."

Second Circuit on what constitutes "the practice of law" and its implications for issues related to unauthorized practice and more (including artificial intelligence)

The United States Court of Appeals for the Second Circuit recently issued an opinion in an interesting case with important implications for the definition of what it constitutes to practice law, which in turn is important to the broader debates on who can practice law, whether lawyers can practice in jurisdictions where they are not admitted and whether companies that provide legal services by non lawyers are practicing law illegally.

The case involved a lawyer who was hired to conduct document review by a law firm.  The lawyer was licensed in California but not in North Carolina where the document review would take place.  The lawyer, who typically worked 45-55 hours per week, sued because he was not paid overtime as required by the Fair Labor Standards Act.  However, because the FLSA does not apply to the “practice of law,” the court had to determine if he was engaged in the practice of law or was merely performing clerical or other ministerial tasks.

The court held the lawyer was not engaged in the practice of law under the circumstances, which raises the question of whether we can agree on a definition for what constitutes the practice of law.

The best discussion of the case and it implications I have seen is at the Faculty Lounge, here, and it is worth reading (including the comments).  You can read the opinion itself here.

The Legal Profession Blog has a summary here and Above the Law has a short comment here.

What does this have to do with "artificial intelligence," the subject of my two previous posts today?   Two things:  1.  part of the reasoning by the court was based on the argument that what the lawyer was doing could be performed by a machine, implying it did not require any independent professional judgment.  Whether that is true or convincing remains a matter of debate, but that was part of the reasoning.  2.  to the extent that work usually performed by lawyers can be done by a machine, then companies that provide those services either by machines or non lawyers can defend against accusations of violating rules or statutes against the unauthorized practice of law.

Texas Bar Ethics Opinion finds Texas rule on conflicts is more strict than Model Rule -- then (two years later) changes its mind (UPDATED)

In a recent opinion, the Texas bar's ethics committee found that a law firm must stop representing a litigation client if it hires a lawyer who formerly worked on the case as a law clerk at the firm representing the opposing party. Screening the tainted lawyer to prevent the sharing of any confidential information he learned in his prior employment won't enable the firm to continue representing the client.

UPDATE: 3-22-19:  However, two years later, in 2016, the opinion was withdrawn and replaced with a new one which concludes "Under the Texas Disciplinary Rules of Professional Conduct, a law firm is not required to withdraw from representing a client in a lawsuit if the law firm hires a new lawyer who, before becoming a lawyer, was employed as a law clerk for the law firm representing the opposing party in the lawsuit and in that capacity helped provide services to the opposing party with respect to the lawsuit, so long as the law firm screens the new lawyer from any personal participation in the matter to prevent the new lawyer’s communicating to others in the law firm confidential information that the new lawyer and the law firm have a legal duty to protect."

You can read the new opinion here. 

Under the Model Rules, a firm would be allowed to continue the representation of the current client if it screened the newly hired attorney.

Attorneys disciplined when employees steal money from clients

In two recent cases, attorneys have been disciplined when employees stole money from clients. In one case, it was a paralegal and in the other it was a secretary (who also happened to be the attorney's wife). The key to remember here is that in these cases, discipline is not imposed as a form or vicarious liability. The attorneys are not disciplined for the other person's misconduct. The attorneys are disciplined for their own misconduct in not having mechanisms in place to supervise or control in a way that would prevent the misconduct of the employees. Read more about these recent cases here and here.

Suspension for poor supervision and employee's mishandling of client's funds

In class we emphasize how important it is to handle client's funds properly. As everybody knows, mishandling clients' money is one of the most, if not the most, common grounds for disbarment. That part is easy to remember. Here is a story that reminds us of another aspect of this important duty. The lawyer can be disciplined (and liable) for an employee's conduct too. The ABA Journal.com is reporting today that a New Hampshire attorney has had his license suspended for six months because his paralegal allegedly embezzled $80,000 from clients. Go here for the story.

What constitutes "practicing law"?

What conduct constitutes "practicing law" is a question that has defied clear answers. An attempt to define the concept of "practice of law" by an ABA Commission proved so difficult, the project was abandoned a few years ago.

Yet, courts and disciplinary boards have to address this question every time they have to decide cases where a person is accused of practicing law without a license. For example, the Illinois Hearing Board recently concluded that work performed by a suspended lawyer involved practice of law in violation of a suspension order.

The lawyer had been suspended temporarily from the practice of law and arranged for another lawyer to take over his cases, but continued to work "behind the scenes" on one of his cases. He worked on several drafts of a brief adding significant legal arguments to it and met with the other lawyer to discuss them.

Given these facts, the Board concluded that the lawyer had been practicing law during his suspension. The Board concluded that it was clear that the lawyer "used legal skills and knowledge to identify the legal issues, conduct legal research, and apply the case law to the facts of his case. This is the essence of practicing law."

One problem with this formulation, though, is that it can apply to law clerks at the firm too. In fact, the attorney argued that "he did nothing more than paralegals and law clerks do" -- which is definitely true. We all know that attorneys often ask students to prepare drafts of documents that the lawyers later file under their names. Sometimes the attorneys make substantial changes to the documents but sometimes they don't. Does that mean the students are practicing law illegally before they are admitted. If so, students should be worried.

The Board, without explaining it further, simply dismisses the argument saying "We are not breaking new ground by finding Respondent practiced law. We are simply applying well-established case law to the facts of this case. Respondent was not a law clerk or a paralegal. He was a suspended attorney."

That last sentence, obviously, is the key. The Board does not really care that students are helping lawyers do their work by applying legal skills students develop while in law school. The Board is concerned with the fact that the lawyer in the case was told to stop working and he continued to do so.

That being the case, the Board probably should have cited Illinois Supreme Court Rule 764(b), which expressly states what a disbarred attorney can and cannot do. And, the bottom line of this rule is that a suspended lawyer can't do even what a law student clerk can. Interestingly, also, the rule states that a violation of the rule would be enforced as contempt of court. I wonder if that sanction was mentioned in this case and how often it is invoked in cases like this one.

The concern is that suspended and disbarred lawyers are still out there doing legal work (or something very close to it) "behind the scenes." Unfortunately, there is no good way to monitor this type of activity until it is discovered, which usually happens by accident.


Thanks to Legal Profession Blog for the information.

Sanctions for sending paralegal to court

Yesterday, the Disciplinary Review Board in New Jersey imposed sanctions on a lawyer who who sent his paralegal to a court hearing. At the hearing, the paralegal identified herself as a lawyer. Law.com has more on the story here.

I often hear students mention that the lawyers they clerk for send them to court for simple motion calls. I think students should be very careful with this kind of thing. it is a dangerous situation for both the lawyer and the student/law clerk. Going to court to file something is one thing, but making an appearance before the court is quite another. Unless the student has a special license that allows him or her to do so and is supervised by a lawyer or clinical professor, the student would be engaging in unauthorized practice of law.