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Legally Speaking

 

Issue: June, 2005
Author: John M. Burman

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Ethically Speaking - Defining the Practice of Law: An Update

In December of 2003, an article entitled “Defining the Practice of Law” appeared in this column. That article noted that the Wyoming Supreme Court had “defined the ‘practice of law’ broadly . . . [and p]art of the definition is vague and difficult to apply . . .” Since then, the Court has adopted two definitions of the “practice of law,” one of which is much more comprehensive and answers many of the questions previously left open, though some questions can never be answered, as the concept of “the practice of law” will always be a judgment call. The rules containing the definitions were adopted on October 28, 2004, and became effective on March 1, 2005. Given the adoption of the new definitions, it seems appropriate to update the earlier article. Accordingly, this article is an updated version of that one.


The Rules of Professional Conduct

Lawyers in Wyoming are governed by the Wyoming Rules of Professional Conduct (“the Rules”). The Rules do not, however, define the practice of law. The only direct reference is in the commentary to Rule 5.5: “The definition of the practice of law is established by law and varies from one jurisdiction to another.” One must look outside the Rules, therefore, and examine Wyoming’s substantive law to determine what is the practice of law in this state. (Although the Rules do not define the practice of law, the ABA has recommended that “every jurisdiction . . . adopt a definition of the practice of law.” The definition should include “the basic premise that the practice of law is the application of legal principles and judgment to the circumstances or objectives of another person or entity.” The ABA also recommends that each jurisdiction determine who may practice law, and in making that determination, consideration should be given to “the potential harm and benefit to the public.” Finally, the ABA created a task force to develop a model definition of the practice of law.)

The Wyoming Supreme Court recently adopted amendments to the rules that govern attorneys’ right to practice law and regulate the unauthorized practice of law. Each rule contains a definition of the “practice of law.” The definitions are discussed below.


The Rules Providing for the Organization and Government of the Bar Association and Attorneys at Law of the State of Wyoming

As with the previous definition of “the practice of law,” the new ones are not easy to find. They are located in Rules 11 and 11.1 of the Rules Providing for the Organization and Government of the Bar Association and Attorneys at Law of the State of Wyoming (the Bar Rules). Rule 11 is entitled “Attorneys’ right to practice law; pro hac vice admission.” Section (a)(3) defines the “practice of law.” A new rule (Rule 11.1) is entitled” “Unauthorized practice of law.” Part (a) of the rule is its definitional section. It contains a comprehensive definition of the “Practice of Law.”

As before, the Court has defined the “practice of law” broadly in both rules. The first definition, in Rule 11, defines “practice of law” for the purpose of describing who may practice law. The second, the one in Rule 11.1, defines the term for the purpose of describing in which activities a non-lawyer may not engage. The first definition is quite general. The second definition is much more detailed (it contains six subparts). The reason for the specificity is apparently to make clearer what non-lawyers may not do. Both definitions encompass three general concepts (the same three concepts covered by the previous definition): (1) giving legal advice; (2) drafting legal documents; and (3) appearing and advocating for another before a tribunal. Each is discussed in more detail below.

Lawyers spend much of their time advising others about the law. It makes sense, therefore, that the definitions of the practice of law include giving legal advice, and they do. First, Rule 11 says the practice of law includes “providing professional legal advice.” Rule 11.1 refers to “[p]reparing or expressing legal opinions . . . to obtain or secure the prevention or the redress of a wrong or the enforcement or establishment of a right.” Rule 11.1 also says that the practice of law includes “[p]roviding advice or counsel” about any of the other activities described in subparts (A) through (C) which “might be done, or whether they were done, in accordance with applicable law.” Although the rules refer to “providing advice” and “expressing legal opinions” as part of the “practice of law,” the terms “advice” and “opinions” are necessarily somewhat vague – a phenomenon that is not unique to Wyoming. Defining “advising” is a problem in every jurisdiction.

The spectrum of potential advice about legal matters is very broad. It runs the gamut from telling another that one may turn right on red in Wyoming, to evaluating whether one has a valid claim for professional malpractice. It seems that the former should not result in a finding that one who has given such advice has engaged in the unauthorized practice of law and should, therefore, be subject to injunctive or other judicial action. The latter, by contrast, seems to fall squarely within the purview of what only lawyers should be allowed to do. The question is, therefore, where to draw the line?


Wyoming Case Law

The Wyoming Supreme Court has only addressed the issue of the definition of the practice of law twice, both in cases involving allegations of the unauthorized practice of law. While neither opinion provides a clear test, both make important points about when a person is engaged in the practice of law, and especially whether one is giving legal “advice.” In addition, the Bankruptcy Court in Wyoming has considered the issue, providing more important guidance on what is the practice of law.

Nearly sixty years ago, long before the adoption of the previous rule defining the practice of law, the Bar brought a contempt action against G. W. Hardy, alleging that he was engaged in the unauthorized practice of law; the resulting decision in State v. Hardy is the only time the Wyoming Supreme Court has discussed in any detail what it means to practice law.

G. W. Hardy was not a lawyer. He had, nevertheless, allegedly spent some 25 years helping others draft wills. During that time, he drafted “not less than one hundred” wills and held himself out as qualified “to give advice concerning the preparation and drafting” of such documents. The question was, said the court, “whether the preparation and drafting of wills for other persons as a business, together with the giving of legal advice . . . is to be regarded as the practice of law.” Perhaps presaging Rule 11.1, the court said “[w]e have not the least doubt that it is . . .”

The drafting of wills is the practice of law for three reasons: (1) it requires “profound legal knowledge;” (2) wills can be effective only after they are admitted to and administered by the courts; and (3) the “weight of authority” in other jurisdictions so holds. Accordingly, while a non-lawyer “is privileged to draw his own will, and perhaps to offer advice in his own family . . that is far different than holding himself out as a competent and qualified adviser to the general public . . .”

Hardy contended that he was not engaged in the practice of law because he was a middleman who simply obtained information from clients, submitted it to a licensed lawyer, and drafted the will under the lawyer’s “direction and with the use of forms approved” by the lawyer. The court rejected that argument, holding that Hardy’s activities in interviewing clients to obtain the “data [necessary] to accurately preserve legal rights is unquestionably the duty of a lawyer . . . [who] must shape the will from a careful assembly of facts and conditions . . .” Important principles emerge from the decision.

First, any activity which calls for the exercise of discretion, such as interviewing or advising another about the effect of certain choices, involves the practice of law. Second, receiving money for drafting documents or performing other services involving legal matters will often be found to constitute the practice of law. Third, holding one’s self out as qualified to assist others in legal matters virtually ensures a finding of practicing law. Finally, performing work under the nominal supervision of a lawyer is not adequate. Perhaps most importantly, the reason for restricting the practice of law to lawyers is to protect the public; anything which threatens that protection will likely be considered the practice of law.

The court also briefly addressed the question of what is the practice of law in the context of a criminal appeal, in which a law student’s participation in drafting a brief before the client gave consent was alleged to be ineffective assistance of counsel. While rejecting the ineffectiveness of counsel argument, the court held that “writing an appellate brief constitutes the practice of law.” It seems clear, therefore, that some tasks constitute the practice of law.

In In re Herren the Bankruptcy Court in Wyoming addressed the issue of the definition of the practice of law in deciding whether to recover the fee paid by a debtor to the “Wyoming Document Center,” which had assisted the debtor with the bankruptcy filing. Citing Hardy, the court had no difficulty finding that the Wyoming Document Center had engaged in the practice of law.

As in Hardy, the Wyoming Document Center charged a fee, and made a profit, by providing services, in this case providing information to customers about bankruptcy. Simply furnishing information, providing forms, or even providing typing services would have been permissible. The problem was that the center provided “specific direction” about how to fill out bankruptcy forms, solicited individual financial information, gave its customers “definitions” of legal terms, solicited business, and advised them about “available exemptions.” In other words, the center provided specific advice about a legal procedure, filing bankruptcy, and held itself out as having “special expertise.” Those two concepts, specificity of advice and holding one’s self out, are primary components of any definition of the practice of law.


The Factors Regarding What is Legal Advice

Neither the Wyoming Supreme Court nor courts in other jurisdictions have been able to draw a clear line in attempting to define when giving advice is the practice of law. Rather, courts have considered a variety of factors, focusing on three to determine whether a person is practicing law by giving legal advice: (1) the degree of specificity of the advice; (2) the likelihood that the advice may be incorrect; and (3) the degree of harm to the recipient of the advice if the advice is incorrect. Applying those facts to the above situations yields very different results.

Improperly advising a person about a traffic law, e.g., whether a person may turn right on red, is not specific, the likelihood that the advice is wrong is not especially great, and, perhaps most importantly, the potential harm to the recipient of incorrect advice is not great. The person might get a traffic ticket. By contrast, applying those factors to the question of whether a person has a valid claim for professional malpractice leads to the opposite conclusion.

First, advising a person about the validity of a malpractice claim is specific to that person and the circumstances which gave rise to the potential claim. Second, the likelihood of erroneous advice is much greater. A person who is not familiar with the facts and the law will likely give an incorrect answer. Finally, if the advice is wrong, the consequences for the recipient may be significant. On the one hand, if the recipient is incorrectly told that he or she has no valid claim, when there actually is one, that claim will ultimately, and perhaps soon, be lost by operation of the applicable statute of limitations. If, on the other hand, the recipient is told that there is a valid claim, when there is not, and he or she pursues the claim, the recipient may spend money and/or become subject to sanctions for filing a frivolous claim.

Important rights should not rise or fall based on potentially erroneous advice from a person who is neither trained nor licensed to give it, especially when the recipient of the advice has no real recourse against the non-lawyer who gave incorrect advice. A lawyer who gives incorrect advice is potentially subject to a malpractice action, the filing of a grievance, or both.

Given the foregoing, a useful definition of “legal advice” is giving specific advice to a person or entity where the likelihood of erroneous advice is fairly high, and the risk to the recipient of erroneous advice is significant.


Drafting Legal Documents

Both definitions of the practice of law include, as they should, drafting legal documents. Rule 11 refers to “drafting pleadings or other documents . . .” “Rule 11.1 refers to “[p]reparing any legal document . . .” “Document” is then defined in Rule 11.1 to include “deeds, mortgages, assignments, discharges, leases, trust instruments or any other instruments intended to affect interests in real or personal property . . .” In addition, “wills, codicils . . . articles and amendments for business entities, other instruments intended to affect or secure legal rights, and contracts .. . .” are expressly mentioned. “[R]outine agreements incidental to a regular course of business” are not, however, legal documents. It is clear, therefore, that preparing one of the documents listed in Rule 11.1 is the practice of law, unless it is a “routine agreement incidental to a regular course of business.” The problems with the list are that no list can be exhaustive and it is not clear which documents are “routine agreements [that] are incidental to a regular course of business.” New Rule 11.1 thus raises two important questions which will, ultimately, have to be answered by the Court. First, should the term “legal documents” be construed narrowly or broadly? And second, how should the phrase “routine agreement incidental to a regular course of business” be construed?

Documents that are filed in court must be signed by a party or a lawyer representing that party. For that reason, drafting a pleading, such as a complaint, is the practice of law. As the definition suggests, many documents which affect legal rights are never filed in court or have their primary effect outside of court. Although the list in the definition makes it clear that preparing some documents is the practice of law, many types of documents are not listed, and the list could go on and on. For example, one who borrows money to buy a car invariably signs both a promissory note and a security agreement. On the one hand, one may argue that such documents are “instruments intended to affect or secure legal rights . . .. ,” which would bring them within the definition of “document” for purposes of the rule. On the other, one may argue that such promissory notes and security agreements are “routine agreements incidental to a regular course of business” and, therefore, fall within the rules exception. The difficulty is that more and more documents that affect legal rights are part of “routine agreements” that are “incidental to a regular course of business,” and they are drafted by non-lawyers or lawyers who are not licensed in Wyoming.

Loan documents are generally prepared by a loan officer (though the form may have been originally prepared by the lender’s lawyer, it is often a non-Wyoming lawyer who practices in the state where the lending institution has its headquarters). The number and type of such instruments is almost limitless, but loan documents are among the most common. Having them prepared by a non-lawyer raises troublesome questions given the statement that the practice of law includes “[p]reparing any legal document . . .” While the issue is troublesome, some reasonably clear guidelines exist.

The first, and clearest, line is between the non-lawyer who prepares a document (fills in the blanks) as directed by the affected party (such as the borrower), and a non-lawyer who advises about how the document should be completed. A realtor, for example, who simply asks buyers how they wish to hold title to property and then prepares the deed in accordance with the buyers’ expressed desires, is in a much different position that the realtor who advises the buyers about the options for holding property jointly. The former is referred to as a “scrivener,” and is not engaged in the practice of law. The latter is “[p]roviding advice or counsel,” and preparing a legal document “to affect or secure legal rights.” As advising one about how to complete a document, such as the deed to real property, involves specific advice where the risk of harm if the advice is incorrect is relatively high, acting as an adviser converts the activity from merely being a “scrivener” to engaging in the practice of law.

Payment for preparing a document does not necessarily convert an otherwise permissible activity into the practice of law. The key inquiry is whether the preparation of the document involves the exercise of discretion. The safest route for non-lawyers, therefore, is to not give advice about how to prepare a document or which document to use, and to have a lawyer involved if that needs to be done.


Appearing Before a Tribunal

The Bar Rules both make it clear that a non-lawyer may not appear in a representative capacity before a tribunal. Rule 11's definition includes “appearing as an advocate in a representative capacity . . . in connection with a prospective or pending proceeding before any court, court commissioner, or referee.” Rule 11.1 says that “[a]ppearing as an advocate in a representative capacity” is the practice of law. While the act of physically appearing before a tribunal on behalf of another was a part of the former definition, the new definitions encompass more. Under Rule 11, advocating includes “drafting pleadings or other documents; or performing any act in such [representative] capacity in connection with a prospective or pending proceeding . . .” Rule 11.1, too, broadens the notion of representing another party. “[D]rafting pleadings . . . or performing any act in such [representative] capacity in connection with a prospective or pending proceeding” also constitute the practice of law. The definitions are consistent with the general concept that one who “appears” on behalf of another before a tribunal is engaged in the practice of law. The word “appear,” of course, is a term of art in the legal profession. It means advocating for another before a tribunal, which can be done orally or in writing.

The Uniform Rules for District Courts (“the Uniform Rules”) define how and when an attorney “appears” (Appearances in Circuit Courts are also governed by the Uniform Rules for the District Courts). The Uniform Rules provide that an attorney may enter an appearance on behalf of a client in any one of three ways: (1) by “attending any proceeding as counsel” for a party; (2) by “permitting the attorney’s name to appear on any pleadings or motions;” or (3) by “a written appearance.” Only one of those three involves physically appearing in court. The others involve written appearances. Allowing attorneys to appear in writing is consistent with the new definitions of the “practice of law.”

Also consistent with the Uniform Rules, the new definitions of the “practice of law” create some exceptions, which allow a non-lawyer to appear in certain types of proceedings.


Exceptions

Amended Rule 11 contains two exceptions that allow a person other than a Wyoming lawyer to appear as an advocate and not be engaging in the unauthorized practice of law. New Rule 11.1 lists four more.

Rule 11 sets out the general rule that “[o]nly active members of the Wyoming State Bar may engage in the practice of law within this state.” Rule 11.1 contains similar language. “No person may engage in the practice of law in the State of Wyoming . . . unless enrolled as an active member of the State of Wyoming Bar . . .” Together, the rules list six exceptions.

First, “[m]embers of the bar of any other state, district or territory of the United States may be admitted to practice pro hac vice . . .” Second, “[a]ny person may act pro se in a matter in which that person is a party.” Those exceptions are consistent with the Uniform Rules of District Courts. Third, a person may appear “as an advocate in a representative capacity” before any tribunal “when such conduct is authorized by Wyoming Supreme Court rule,” or any federal, state, or local law. Fourth, a non-lawyer may perform acts “which would normally be construed as the practice of law” if such acts “are performed under the supervision and control of an attorney . . .” Fifth, “partnerships . . . and sole proprietorships may appear through the owners” pursuant to Rule 101 of the Uniform Rules for District Courts. Finally, while other legal entities must normally appear through an attorney, “in small claims actions” non-lawyers may appear on behalf of an entity.


Summary

Defining the practice of law with clarity and specificity is impossible, though the new rules provide important guidance on what acts only a lawyer may perform. Although the increased specificity of the new definitions is helpful, questions about whether something is or is not the practice of law will inevitably arise. In answering such questions, the key will be to remember why non-lawyers are not allowed to practice law–to protect the public “against lack of knowledge or skill on the one hand and lack of integrity or fidelity on the other.” Accordingly, any activity which so threatens the public is likely to be, and should be, construed to be the practice of law.

Finally, when all is said and done, “the core element of practicing law is the giving of legal advice to a client . . .” The focus should, therefore, be on what constitutes giving such advice. A clear line between non-legal and legal advice cannot, and should not be drawn. But while the line can never be clear, the factors to be used are: (1) the specificity of the advice; (2) the likelihood that the advice will be erroneous; and (3) the degree of harm to the recipient if the advice is erroneous.


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