Gray-Area Nonlawyer Services

Model Rule 5.5(a) forbids a lawyer to practice law in violation of a jurisdiction's regulation of the legal profession, and forbids a lawyer to assist another in doing so.¹ The rule binds lawyers, so it reaches a nonlawyer's work only through its second prong: a lawyer who helps a nonlawyer do what local law reserves to licensed attorneys has assisted a violation, even when the lawyer's own license is in perfect order. Two questions decide each case. Did the work amount to the practice of law? If it did, had the jurisdiction authorized this person to do it?

The clear cases sit at the ends. A secretary who types a lawyer's draft does not practice law; a layperson who drafts and argues someone else's lawsuit does. The hard cases sit between, among people whose ordinary jobs put them beside legal documents: brokers who handle the contract that conveys a house, adjusters who settle claims that turn on a policy's meaning, mediators who write down what the parties agreed. Each trade is lawful. Each also has a point where a task begins to require legal knowledge applied to one person's rights, and the work on either side of that point can look almost identical. The exercise is to find the point.

Three questions usually find it. What did the person actually do? Did the person give legal advice? Did the person charge separately for the legal part? Entering a closing date the client has chosen differs from recommending the protective terms the client should demand, even when one person does both in a single afternoon. Because jurisdictions draw these lines differently, an answer should rest on the facts stated and on the jurisdiction's rule, never on a blanket claim that a profession may always, or may never, perform a task.

Real Estate Brokers

Real estate brokers press hardest on the line, because their ordinary work puts a printed sales contract in front of a buyer and a seller who often have no lawyer. The organized bar has traditionally taken the position that each party to a land sale should be represented by an attorney. No state requires it. Quite commonly, neither the buyer nor the seller of an ordinary home has a lawyer at the outset, and one lawyer may represent both sides.²

In most states, a broker or salesperson may fill in the blanks of a printed sales contract when the task only supplies factual data: the names of the parties, the time for closing, the sales price, and the method of payment.³ Brokers and salespeople may not draft or complete deeds, mortgages, and similar legal instruments, which attorneys should prepare.⁴

The two halves of that rule rest on different reasons. Each contract entry records a fact the parties have already decided, so no one applies law to anyone's rights. Deeds and mortgages differ. They are often muniments of title (documents that prove ownership), they become matters of permanent record, and they are ordinarily not executed until the purchaser's attorney has examined and approved title. Their preparation is therefore "not incidental to the performance of brokerage services but falls outside the scope of the broker's function."⁵

The permission to fill in blanks carries two conditions: the broker imposes no separate charge for the service, and the broker gives no legal advice.⁶ The fee condition separates a step in a sale from a drafting service sold at its own price. The advice condition applies the line between information and advice, because advice applies law to one client's circumstances. A broker who is asked whether a contingency clause lets the buyer back out, and who then explains and rewrites the clause, has stopped recording facts and begun exercising legal judgment.

A second scenario shows how the line divides the work of a single office by document.

A nonlawyer who does prepare a legal document also carries an added risk. If a nonlawyer real estate professional prepares a legal document negligently, the nonlawyer is generally held to the same standard of care as a lawyer in a malpractice action.⁹ The client who relies on the document is no better off for the drafter's lack of a license, and the law does not give the drafter a lower standard to hide behind.

The majority approach is not uniform. A jurisdiction may hold that simply filling in the blanks on a form contract is the practice of law, and presumably a lawyer in that jurisdiction cannot draft form documents that brokers will use that way.¹⁰ That result runs through the assistance prong of Rule 5.5(a): the lawyer holds a valid local license, but by supplying the form the lawyer helps another person practice in violation of local regulation.¹¹ In a majority state, the same lawyer may help draft the form, because the brokers who use it are not practicing law.¹²

The Restatement supplies the policy case for tolerating nonlawyer services of this kind. Several jurisdictions recognize that nonlawyers can provide many such services without significant risk of incompetent service. They point to experience in several states with extensive nonlawyer provision of traditional legal services, which shows no significant risk of harm to consumers. And they observe that people can get help at a much lower price than they would pay by segregating one portion of a transaction for a lawyer to handle for a fee.¹³ On an exam, state the majority approach and flag the minority, rather than asserting one national rule.

Adjusters and Business Advisers

A professional whose work borders the law may do the nonlegal part of the job and may not do the legal part. The line runs through the task, not the title, and it binds the lawyer who stands behind the professional: a lawyer who helps an adjuster or adviser perform work that local law reserves to lawyers has assisted a violation of Rule 5.5(a).¹⁵

Most of an adjuster's day lies outside the practice of law. Inspecting damage, pricing repairs, and documenting a loss require no law license. The trouble starts when the claim becomes a dispute over what the policy obliges the insurer to pay. The adjuster must then read the contract and tell the client what rights it confers, which is advice applying law to one person's circumstances. The adjuster has moved from adjusting to lawyering without changing jobs or business cards.

Each fact in that scene does separate work. The valuation stops short of legal judgment. The negotiation does not, because deciding what the policy requires applies legal knowledge to the homeowner's own rights. The percentage fee then adds a stake in the answer. The rule against sharing legal fees with nonlawyers addresses a similar pull: when a lawyer and an accountant split a fee according to time spent, the accountant can increase his share by giving advice that extends beyond financial matters into the legal realm that belongs to the licensed lawyer.¹⁷ An adjuster paid by results has the same reason to press a favorable reading of the policy. By contrast, an adjuster who only measures the damage, prices the repairs, and submits an estimate does no legal work, whatever the fee.

Nonlawyers who practice law face prosecution under a criminal statute against unauthorized practice, injunctions sought by regulators, and clients who refuse to pay.¹⁸ A nonlawyer who harms a client while practicing law may also be sued for malpractice and held to the standard of care that applies to lawyers.¹⁹ Business advisers who stray into the legal realm take the same risks.

The disclosure tells the client something about the planner's status, but it does not change what she does with his advice. The same logic reaches the lawyer who helps.

Exam Analysis Steps

A problem about a bordering occupation yields to four moves, taken in order.

Identify the nonlegal core of the work, such as estimating damage, projecting finances, or explaining account terms, and set it aside as ordinary business activity.
Find the point, if any, at which the person interpreted a contract, will, or policy, or applied legal rules to the client's own rights, including through negotiation on the client's behalf.
Ask whether the jurisdiction's regulation authorizes that legal part of the work for this person, and note whether the person was paid by a share of the recovery.
Disregard the person's title and any disclosure of nonlawyer status, since neither supplies authorization, and treat a lawyer who helped as having assisted a violation of Rule 5.5(a).

Step two decides most stems. The facts usually describe a proper adjusting or advisory job and then add one task that requires reading a legal document for the client. That task is the practice of law, and neither a respectable title nor a frank disclosure changes the classification.

Nonlawyer Mediators

The law permits anyone to mediate, and no license is required, but that does not make mediation a free market.²² Legal advice and the drafting of legal documents remain the practice of law, and a nonlawyer mediator who does either faces the same consequences as any other nonlawyer who practices law.²³ Because the disciplinary rules bind lawyers and cannot reach the mediator, the lawyer who helps a mediator cross the line is the person answerable under Rule 5.5(a).²⁴

A neutral who writes down what the parties have decided has applied law to no one's rights, because each party chose the terms and the document only records them. An advocate does something different: the advocate applies law to one client's circumstances, and the client relies on that judgment. The danger appears when the mediator moves from recording to advising, above all when the listener has no lawyer. That person will treat the mediator's account of legal rights as dependable and has no counsel to test it.

The American Bar Association's dispute resolution section draws the working line on drafting. Preparing a memorandum of understanding or settlement agreement that incorporates the terms the parties specified is not the practice of law.²⁵ If the mediator drafts an agreement that goes beyond those terms, the mediator may be practicing law unless two conditions are both met. Every party must be represented by counsel, and the mediator must disclose that any proposal about settlement terms is informational, is not advice of counsel, and should be considered only in consultation with the party's own attorney.²⁶ Each condition fills a gap the other leaves open. Counsel for every party checks the proposals, and the disclosure keeps the parties from treating the mediator as a lawyer for either side. A disclosure to an unrepresented party leaves that person holding a warning and no one to consult, so the second condition cannot substitute for the first.

Hypothetical Illustration

A for-profit mediator with no law license meets with two co-owners of a shop, one of whom has no lawyer. He tells that owner which legal claims to assert against the other, then drafts a buyout clause and a release that neither owner proposed. The unrepresented owner signs on the strength of the mediator's view of the law. The mediator has advised a party who lacks counsel and has drafted beyond the parties' own terms, so a charge of unauthorized practice is a real danger.

A second nonlawyer mediator handles a dispute between two companies that each have counsel. She writes a memorandum recording only the terms the companies' negotiators stated, and she directs her few drafting suggestions to the two lawyers. She has recorded decisions that belong to the parties and has aimed her suggestions at people qualified to evaluate them, so the unauthorized practice rules are not triggered.

An exam stem often asks who bears the risk, and the answer follows the same mechanism: exposure peaks where nothing else checks what the mediator says about the law. The serious risk is confined to private, for-profit mediators who have at least one party without a lawyer.²⁷ Where the parties have lawyers and the mediator directs legal advice or drafting suggestions to those lawyers, the unauthorized practice problem is largely avoided.²⁸ The lawyer's own exposure follows the same path. A lawyer who supplies forms, office space, or review to a mediator who is advising unrepresented parties or drafting beyond their terms has assisted unauthorized practice, even though the lawyer personally advised no one and holds a valid local license.

Exam Analysis Steps

A mediator problem turns on what the mediator produced and on who stands behind each party. Work through it in this order.

Identify what the mediator wrote or said, separating a record of terms the parties themselves specified from any added provision or any statement about a party's legal rights.
If the mediator only recorded the parties' own terms, conclude that no practice of law occurred and stop there.
If the mediator went beyond those terms, ask whether every party has counsel and whether the mediator disclosed that proposals are informational only and should be weighed with the party's own attorney. Both conditions are required.
If either condition is missing, assess the setting: the risk is greatest for a private, for-profit mediator who advises an unrepresented party, and any lawyer who helped has assisted a violation of Rule 5.5(a).