Unauthorized Practice of Law
Q. When a company provides an online document automation application that assembles legal forms and documents automatically, does a lawyer commit the unauthorized practice of law when entering into a relationship with the company in order to make web-enabled document automation available to the lawyer’s clients as part of the lawyer’s legal services?
A. Under ABA Model Rule 5.5 and the corresponding rules of professional conduct in most states, a lawyer can commit the unauthorized practice of law in either of two ways:
- by providing legal services where the lawyer is not admitted or otherwise authorized to practice, or
- by assisting a non-lawyer in conducting the practice of law.
First, a lawyer commits the unauthorized practice of law when he or she provides legal services in a jurisdiction where the lawyer is not admitted or does not otherwise have the authority to provide those services (such as through pro hac vice or special exceptions set out in the state rules of professional conduct). Under this rule, it would generally be inappropriate for a lawyer admitted in one jurisdiction to provide legal services for clients with matters in another jurisdiction (unless the lawyer had some type of authority to do so). Therefore a lawyer who provides online document preparation to clients must be certain that the matter involves a jurisdiction where the lawyer is admitted. In other words, it would not be appropriate for a lawyer admitted only in Illinois (and without any special admission status) to provide online document preparation to a client for a matter in Wisconsin. The same would be true for documents prepared offline as well as any other legal services that would be deemed the practice of law.
Second, a lawyer commits the unauthorized practice of law when the lawyer assists a non-lawyer, whether that is a person or a corporation, to undertake the practice of law. This leads to the question of whether online document automation that creates a legal form or document from data provided by the client is the practice of law. The definition of “the practice of law” varies from state-to-state but frequently includes the drafting of legal documents and the use of legal knowledge or skill.
However, the question here revolves around whether the lawyer is “assisting” the software vendor in practicing law when the document preparation is provided as a legal service of the law firm. This is analogous to services provided by paralegals and other outsourced services. In most states, for example, paralegals have no independent authority to provide legal services. If they independently provide document preparation or use their legal skills in serving clients, they may be deemed to be in violation of their state’s UPL laws, as are any lawyers who assist them in providing those services. However, if paralegals provide those same services under the direction of a lawyer and the lawyer assumes supervisory obligations, the paralegal is not practicing law and is not violating UPL laws, nor is the lawyer who provides the supervision “assisting” in the unauthorized practice of law.
ABA Formal Opinion 08-451 (Aug. 5, 2008) clarifies that a lawyer may outsource legal services, subject to several considerations. The opinion directly addresses independent contractors, such as temporary lawyers, but also mentions sources of tasks such as a photocopy shop, a document management company and a third-party vendor for the firm’s computer services. In its discussion of Model Rule 5.5 and the unauthorized practice of law, the Opinion states, “ordinarily, an individual who is not admitted to practice law in a particular jurisdiction may work for a lawyer who is so admitted, provided that the lawyer remains responsible for the work being performed and that the individual is not held out as being a duly admitted lawyer.”
Therefore, even if a document automation application would be deemed the unauthorized practice of law (if its services were provided independently of a lawyer’s services), once those services or the documents produced by the software application are provided under the lawyer’s direction and supervision and within the scope of the lawyer’s services, the lawyer can no longer be assisting the document preparation in the practice of law.
Confidentiality
Q. Does a lawyer breach his or her obligation to maintain a client’s confidentiality when using an online document automation application for his or her clients, which is provided by a third party vendor?
A. The rules of professional conduct of every state impose an obligation on lawyers to maintain the confidences of their clients. In addition, rules of evidence protect lawyers from testifying against their clients under the attorney-client privilege.
ABA Model Rule 1.6 addresses confidentiality and has been adopted by most states. The rule provides that a “lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted” by one of the exceptions set out in the next part of the rule, none of which pertain to this situation. Paragraph 16 of the comment to the rule states, “a lawyer must act competently to safeguard information relating to the representation of a client against inadvertent or unauthorized disclosure by the lawyer or other persons who are participating in the representation of the client or who are subject to the lawyer’s supervision.”
Opinions that examine the lawyer’s obligation to maintain confidentiality when using technology generally address e-mail. The leading analysis of this is ABA Formal Opinion 99-413 (March 10, 1999). The opinion examined different modes of e-mail transmission and concluded that in all modes, “lawyers have a reasonable expectation of privacy… despite some risk of interception and disclosure.” The opinion also cautions that when a lawyer may send information that is “so highly sensitive that extraordinary measures to protect the transmission are warranted,” the lawyer should consult the client about the mode of the transmission.
Opinion 99-413 is of particular note here because it includes an examination of e-mail transmitted over the internet, like information gathered by online forms. The opinion states that confidentiality may be compromised by an ISP’s legal right to monitor what is transmitted through it or stored on its network and by illegal hacking. On the first point, the opinion indicates that e-mail providers may conduct random monitoring only for mechanical or quality service control checks. Therefore, the interception of content of a communication sent through the internet would be illegal in either situation. This gives the lawyer a reasonable expectation of privacy that requires no further action, except as noted for highly sensitive communication.
Although not required under the ABA Opinion or those of various states, encryption makes the possibility of interception even more remote and creates even greater assurances the information will be secure.
Note: All information that passes over the DirectLaw virtual law office platform is encrypted.
DirectLaw complies with, the Security Standards of the Legal Cloud Computing Association.
Division of Fees
Q. Does a lawyer violate ethics rules prohibiting the division of fees with a non-lawyer when entering into a relationship with a company that provides online document automation services in order to make web-enabled document automation available to the lawyer’s clients as part of the lawyer’s legal services?
A. Model Rule 5.4 and its state counterparts prohibit a lawyer from sharing legal fees with a non-lawyer, except under circumstances that do not apply here. The rule has been applied to relationships lawyers may develop with other service providers, such as investigators, and to lawyer referral services. In a few state ethics opinions, the prohibition has been applied when a lawyer participates in an internet-based service. For example, Arizona Opinion 99-06 concludes that a lawyer may not participate in an internet service that sends questions to individual lawyers when the lawyers pay a portion of their fee to the service.
However, in all aspects of the practice of law, lawyers incur expenses simply because they have clients. Rent for office space, telephone charges, malpractice insurance premiums and staff salaries are traced back to the fact that clients pay their legal bills and the lawyers apportion some of that money for these expenses.
The distinction is whether the payment is computed as a percentage of the fee charged to the lawyer’s client. If so, the arrangement is likely to be an improper division of fees. If not, it is likely to be an acceptable cost of doing business.
As applied to an agreement with a company providing a lawyer with online document automation applications, the question turns on whether the lawyer compensates the company based on the forms provided to specific clients, and the company is therefore is like the referral services that charge based on the service to those individuals, or whether the payment is a fixed fee, such as rent or salaries. If a lawyer pays a company that provides online document automation applications a fixed fee for a certain amount of time, such as on a monthly basis, regardless of the number of forms or number of clients who use the forms, the situation is not like those that are deemed an impermissible division of fees.
Unbundling Legal Services
Q. May a lawyer provide a limited scope of representation that includes the preparation of legal forms online?
A. ABA Model Rule 1.2(c) and its state counterparts permit a limited scope of representation if the limitation is reasonable under the circumstances and the client gives informed consent to the limitation. The limited scope of representation, or unbundling, is an increasingly common way for lawyers to deliver their services, both with the use of technology and in a more traditional setting.
It is important that lawyers understand that unbundled legal services are to be performed pursuant to the attorney-client relationship and therefore must be in compliance with the rules of professional conduct in general. See, for example, North Carolina State Bar 2005 Formal Ethics Opinion 10 (July 21, 2006).
A lawyer may provide online forms as part of an unbundled service, but must also be mindful of the lawyer’s other professional responsibilities when doing so. In particular, a lawyer must provide competent legal services when providing unbundled services. According to the North Carolina opinion, the lawyer must make the same inquiries, engage in the same level of communication and take the same precautions as a competent lawyer does in an office setting.
The ABA Standing Committee on the Delivery of Legal Services has created a website encouraging the provision of unbundled legal services and assisted pro se representation. The Standing Committee believes unbundling is an important part of making legal services available to people who could not otherwise afford a lawyer. The website also has compiled a list of state resources addressing limited scope representation.
Q. How do I establish an Attorney/Client Relationship Online?
A. When a client registers for the law firm’s web site, they are required to accept a Limited Services Retainer Agreement. DirectLaw provides a sample Limited Services Retainer Agreement appropriate for providing legal services online, but this agreement can be customized by each law firm. Before the attorney can provide online legal services to a client, a conflict of interest check must be conducted and the attorney should send a specific e-mail to the client indicating that they have been accepted as a client of the law firm. These acceptance e-mails are archived for future reference and to determine the date when the attorney-client relationship was established.
