Purpose of UPL Rules

Unauthorized Practice of Law

Purpose of UPL Rules

Each state decides who may practice law within its borders, and unauthorized-practice rules, usually shortened to UPL, enforce that decision. UPL is the practice of law by a person, typically a nonlawyer, who has not been licensed or admitted to practice in the jurisdiction.¹ Model Rule 5.5(a) turns the prohibition on lawyers: a lawyer may not practice law in a jurisdiction in violation of that jurisdiction's regulation of the legal profession, and may not assist another in doing so.² The next unit takes the rule apart. This one asks why the rule exists, because each later doctrine either applies the answer or limits it.

The traditional answer is that the monopoly protects the person served. Bar associations have long taken the position that a nonlawyer who provides legal services denies the client the attorney-client privilege, the lawyer's duty of confidentiality, and protection against conflicts of interest. The client also loses the rules that govern lawyer trust accounts and the rules that require lawyers to supervise nonlawyer personnel.³

The same rules that protect clients also exclude competitors, and critics build their case on that fact. New Jersey supplies the best-known evidence. Brokers and title companies could handle residential closings in South Jersey, while North Jersey required lawyers. A study in the 1990s found no greater rate of error in the closings handled by brokers and title companies. What differed was cost: closings in North Jersey ran about $800 more on average.⁴ See In re Opinion No. 26, 654 A.2d 1344, 1359 (N.J. 1995). For that routine task, the higher fee produced no visible drop in errors.

The argument is therefore over scope, not existence. Some tasks can be performed only by those with specialized legal training, but there is reason to believe that routine documents such as residential leases, simple wills, and uncontested divorce petitions where no children are involved could be handled competently by nonlawyers.⁵ Lawyers answer that no representation is truly routine and that a nonlawyer might miss a subtle complication visible only to a lawyer. Critics reply that consumers should decide for themselves whether the added protection is worth the added fee.⁶ The Restatement records that several jurisdictions side with the critics. They recognize that many such services can be provided by nonlawyers without significant risk of incompetent service, that experience in several states with extensive nonlawyer provision shows no significant risk of harm to consumers, and that many people can ill afford the typically higher cost of lawyer services. Restatement (Third) of the Law Governing Lawyers § 4 cmt. c (1998).⁷

The Supreme Court has confronted the same competition problem in another profession, in North Carolina State Board of Dental Examiners v. Federal Trade Commission, 574 U.S. 494 (2015). That ruling will likely have little effect on UPL enforcement to the extent state courts promulgate UPL rules. It still shows the anticompetitive impact of legal restrictions that confine certain services to one professional group.⁸

The prohibition reaches two groups, and both belong in view from the start. The first is nonlawyers, the obvious targets of any monopoly on legal work. The second is lawyers licensed in some other state. Because enforcement runs state by state, a lawyer admitted in New York is as subject to New Jersey's UPL limits as a nonlawyer would be, subject to exceptions for temporary practice taken up later.⁹ A lawyer may also not assist either group in practicing without authority, whether the helper is an out-of-state lawyer or a nonlawyer. Lawyers must therefore understand the scope of UPL restrictions on anyone they employ or retain for a particular purpose.¹⁰