What Exactly Is The Unauthorized Practice of Law?

This is an extract from CCBA’s CLE Article #9.*

Introduction

The unauthorized practice of law does not just violate the rules of professional conduct. It is also a crime. Despite the threat of incarceration, neither the statutes nor the rules offer a bright-line definition of what constitutes the unauthorized practice of law. The Supreme Court of Nevada emphasizes that it is a fact-intensive issue, and what constitutes the practice of law may change over time. This article describes the current state of the law and the implications for violations.

What is the unauthorized practice of law?

Simply put, the unauthorized practice of law is practicing law without a license. While that seems obvious, the regulatory framework can seem a bit convoluted. The starting point is Rule 5.5(a)(1) of the Nevada Rules of Professional Conduct (“NRPC”), which prohibits people from practicing law in a jurisdiction where the regulations of that jurisdiction prohibit them from doing so. In the jurisdiction of Nevada, anyone who is not an active member of the State Bar of Nevada is prohibited from practicing law. NRS 7.285(1)(a). Membership in the State Bar is limited to licensed attorneys and is compulsory. SCR 77. Thus, if you are not licensed in Nevada, you cannot be a member of the State Bar and therefore cannot practice law.

What is the practice of law?

NRPC 5.5 and the statutes do not define what constitutes the practice of law. Instead, the Supreme Court of Nevada has the inherent power to determine what constitutes the practice of law. Marfisi v. District Court, 85 Nev. 445, 447, 456 P.2d 443, 444 (1969). Two main cases address this issue.

The first case is Pioneer Title Ins. & Trust Co. v. State Bar of Nev., 74 Nev. 186, 326 P.2d 408 (1958). That case involved a title company that prepared purchase and sale agreements, deeds, and other documents related to real estate closings. Id. at 187, 326 P.2d at 408. The State Bar sought an injunction claiming that the title company was engaged in the unauthorized practice of law. Id.

The Court explained that the prohibition of the unauthorized practice of law was intended to protect the public and not to protect attorneys from competition. Id. at 189, 326 P.2d at 409. The Court recognized that the public would be ill-served if everyone had to retain a lawyer whenever they faced a situation that routine forms or mere custom could handle. Id. at 190, 326 P.2d at 410. The Court held that the presence of two factors implicated the practice of law: (1) the issue could not be handled through resort to routine forms or customs, and (2) the party decided in their own judgment that they needed the assistance of someone else who was not part of the transaction. Id. at 190-191, 326 P.2d at 410. What types of matters were routine would evolve over time. Id. For example, the Court found that real estate purchase contracts at the time (1958) could not be handled by forms or customary practices. Id. at 195, 326 P.2d at 412-413. That may be different now given the widespread use of standardized forms for the purchase and sale of homes.

The Court returned to Pioneer Title fifty years later in In re Discipline of Lerner, 124 Nev. 1232, 197 P.3d 1067 (2008). The Court affirmed that the definition of the practice of law did not lend itself to a bright-line rule and must be analyzed on a case-by-case basis. Id. at 1247, 197 P.3d at 1078. The Court focused on the “touchstone principle” that the practice of law includes activities “calling for the exercise of trained judgment in applying the general body of legal knowledge to the specific problem of a client and recommending a course of action.” Id. Applying these principles, the Court held that the following actions constituted the practice of law:

• Interviewing potential clients and deciding whether to accept their case
• Evaluating the merits of a personal injury claim
• Advising a client of the claim’s merits
• Negotiating a client’s claim with an insurance carrier
• Engaging in settlement discussions
• Discussing legal strategy with clients
• Preparing and signing demand letters

Id. at 1241-1242, 197 P.3d at 1074.

The following actions have also been held to involve the practice of law:

• Appearing before state administrative agencies on behalf of a party (see Ms. Connie Westadt, 1983 Nev. Op. Att’y Gen. No. 14, *4)
• Filing a notice of appeal on behalf of a trust (Guerin v. Guerin, 116 Nev. 210, 993 P.2d 1256 (2000))

Therefore, you will need an active law license in Nevada to perform any of these tasks.

Can you aid and abet the unauthorized practice of law?

NRPC 5.5(a)(2) specifically prohibits a person from assisting another in the unauthorized practice of law. Thus, allowing a paralegal to advise clients as to the merits of their claims without the attorney’s supervision is a violation of Rule 5.5. In re Discipline of Lerner, 124 Nev. at 1241, 197 P.3d at 1074. Note, the Court does not refer to someone as an aider or abettor and simply finds them to be in violation of the rule.

While NRS 7.285 makes the unauthorized practice of law a crime, it does not discuss those who might assist. Attorneys should be aware, though, that by facilitating people with the unauthorized practice of law, they may be aiding and abetting a crime under NRS 195.020.

Who enforces the law?

The Supreme Court of Nevada is the primary authority over attorneys when it comes to enforcing NRPC 5.5, regardless of where the offender is licensed. In re Discipline of Droz, 123 Nev. 163, 167, 160 P.3d 881, 884 (2007). Indeed, the Court has said that it had a special interest in enforcing the rules governing the legal profession. Id. The Court has taken the position that it can sanction attorneys who are not licensed in Nevada but are elsewhere. Id. at 168, 160 P.3d at 884.

While the unauthorized practice of law is a crime under NRS 7.285, the Supreme Court of Nevada has commented that violations are a low priority for a prosecutor particularly when compared to violent crimes. Id. at 167, 160 P.3d at 884. The data seems to bear this out. A public records request to the Clark County District Attorney’s office for information going back to 2010 found that no one had been charged with the unauthorized practice of law. At roughly the same time, the Supreme Court sanctioned no fewer than 80 attorneys for violating NRPC 5.5.

As for persons who are not licensed anywhere, the Nevada State Bar can bring a civil action for an injunction under NRS 7.285(3). That seems to be a fairly uncommon occurrence. A review of Odyssey shows that the State Bar has only sought four preliminary injunctions under NRS 7.285 in Clark County since 2010. The number may be the result of few people attempting the practice of law who are not licensed anywhere else.

Consequences of the unauthorized practice of law

The unauthorized practice of law is a crime, and NRS 7.285 takes a graduated approach. The first violation is a misdemeanor. NRS 7.285(2)(a). The second is a gross misdemeanor if it occurs within seven years of the first. NRS 7.285(2)(b). A third offense during the same seven-year period is a category E felony punishable by 1 to 4 years in prison. NRS 7.285(2)(c).

Violations of NRPC 5.5 may result in discipline by the Supreme Court of Nevada. SCR 39, 99–102. Forms of discipline include letters of reprimand, suspension, and disbarment. SCR 102.

Can I be sued for the unauthorized practice of law?

Yes, you can. A person attempting to provide legal services but who is not licensed to do so can be separately sued for malpractice. For example, in Busch v. Flangas, 108 Nev. 821, 824, 837 P.3d 438, 440 (1992), the Supreme Court of Nevada held that a law clerk who attempted to practice law had opened themselves to malpractice claims.

Is there a private right of action for the unauthorized practice of law? The short answer is maybe. The Supreme Court of Nevada has looked at this issue at least twice but declined to give a definitive answer. In Paso Builders, Inc. v. Hebard, 83 Nev. 165, 426 P.2d 731 (1967), the plaintiff sued a title company for negligence. The plaintiff claimed that the title company was engaged in the unauthorized practice of law that constituted negligence per se. Id. The Court did not reach the issue of whether it was negligence per se, finding that any damages were not the proximate cause of the title company’s actions. Id.

In Jordan v. State of Nev. Dep’t of Motor Vehicles, 121 Nev. 44, 110 P.3d 30 (2005), abrogated on other grounds by Buzz Stew, LLC v. City of North Las Vegas, 124 Nev. 224, 181 P.3d 670 (2008), the plaintiff asserted a claim based on the unauthorized practice of law. The Court noted that Nevada had not yet recognized a tort based on the unauthorized practice of law but that other jurisdictions had done so. Id. at 73, 110 P.3d at 50. The Court did not expressly adopt or reject the existence of such a claim under Nevada law, instead finding that the plaintiff had improperly pleaded the claim given the specific facts of that case. Id. at 74, 110 P.3d at 51. Thus, whether Nevada will recognize the unauthorized practice of law as a private cause of action is seemingly an open question.

Other implications of the unauthorized practice of law

Essentially any transactions involving the unauthorized practice of law are null and void ab initio. This rule can have rather severe consequences. For example, in Guerin v. Guerin, supra, the Supreme Court of Nevada found that the notice of appeal in the case was the product of the unauthorized practice of law. There, a trustee filed a notice of appeal on behalf of a trust. Id. at 213-214, 993 P.2d at 1258. Noting that trusts must be represented by counsel, the Court found that the trustee had engaged in the unauthorized practice of law. Id. at 214, 993 P.2d at 1258. On that basis, the Court found that the notice was invalid, depriving it of jurisdiction to hear the appeal. Id. By that point, the time for filing a proper notice had expired.

Similarly, the Court found that contracts that are the product of the unauthorized practice of law are void as a matter of law. In Krieg v. Crain, 128 Nev. 911, 381 P.3d 681, No. 57793, 2012 WL 170136 (Jan. 17, 2012) (unpublished disposition), the plaintiff agreed to provide paralegal services to someone in their employment claim in exchange for a percentage of the recovery. Id. at *1. When the defendant reneged on the agreement, the plaintiff sued. Id. The Court upheld the district court’s dismissal of the lawsuit reasoning that the contract was for the unauthorized practice of law, which is a crime. Id. As such, the agreement was unenforceable. Id.

Conclusion

The unauthorized practice of law can be a trap for the unwary given the lack of a bright-line definition and the Supreme Court of Nevada’s recognition that standards will evolve over time. The best practice is to keep a close watch on what your clerks, paralegals, and support staff are doing when interacting with clients.

About the author

John M. Naylor, Esq. has been licensed for 30 years and is a cofounder of Naylor & Braster, a Las Vegas law firm specializing in business litigation. He practices in the areas of commercial litigation, appellate work and construction law. Contact John at john@nblawnv.com.