In this post on his licensinghandbook.com blog, Jeffrey Gordon suggests that lawyers should consider the value that contract specialists can bring to the contract process. That got me to wondering whether any such contract specialist would have to be a lawyer. In other words, if a nonlawyer works on a contract, does that constitute the authorized practice of law?
I’m not about to start exploring what state statutes provide in that regard, but with respect to the U.S., here’s what Corpus Juris Secundum Attorney & Client § 31 has to say on the subject (footnotes omitted):
The preparation of legal documents involves difficult or doubtful legal questions which, to safeguard the public, reasonably demands the application of a trained legal mind. Thus, acts and services which constitute the practice of law include drafting, and preparing legal instruments and documents, such as trust documents, real estate contracts, deeds, notes, mortgages, and releases, drafting, preparing, and causing a will to be executed, preparing, or advising in the preparation of, income tax papers and returns, and preparing and prosecuting patent applications. A lay person’s preparation of a corporate charter, bylaws, and related documents, which are important contractual documents and legal instruments, also constitutes unauthorized practice of law.
On the other hand, the drafting or preparation of simple, elementary, legal papers or documents may not constitute the practice of law. For example, the completion of a legal form which has been prepared by an attorney, where all that is done is filling in the blanks with missing information, does not constitute the practice of law. Moreover, a person ordinarily may draw a legal instrument to which he or she is a party without being engaged in the unauthorized practice of law.
This might be something to factor into any comparison of the roles of lawyers and contracts personnel, a topic I considered in this recent blog post. I’ll let Jeff and others tell me whether this is an issue, and to what extent, both in the U.S. and elsewhere.
Ken:
I’m philosophically opposed to the oligopoly that governments grant to organized bar associations. So, take what I say with a grain of salt (or perhaps a salt shaker).
The problem I see with saying “this has to be done by a lawyer” and “that doesn’t have to be” is that it causes organizations to make non-sensical decisions. Three examples:
1. One example that I see frequently and that I believe is driven mainly by this kind of distinction is when I negotiate with a large company that has a contract management function separate from their legal function. Quite frequently, the rule about what has to go to legal is that if you change a word, then it has to go to legal; but if you re-use language that legal previously approved, you don;t have to go to legal. That context-free analysis means that I have literally had contract managers read to me all of the clauses that their legal department has ever approved on a subject and let me pick from them. That is so dysfuctional, I don’t know where to begin.
2. Contrast this to the conversation I had Friday. My business people came to me asking for my OK on language describing the price of the service we are selling. In most organizations, legal never sees that. And in our organization, we have lots of templates that allow the business person to just fill a number into a formula on a saample price list template. This was not one of those situations. The language that the business people proposed made no sense — not as language, but as substance. It was something that we didn’t have the capability of counting or billing. So, we worked through the business issues and then I produced language that described it. The former part took over an hour; the latter part took 10 minutes.
3. Now contrast another situation. At a prior job, I had a guy working for me who could have had any nubmer of titles — paralegal, contract manager, whatever. He wrote contracts; sometimes, he wrote them better than I could. As a matter of routine, he would send each draft to me to check over. But I rarely had to do anything, because his work was that good.
My point is that, when we focus on this articifical distiction of the authorized practice of law, we ignore the things that matter. In example 1, we preserve the notion that changing words is legal work, then create dysfunctional work-arounds to avoid the lawyers. In example 2, most organizations would have signed something completely unworkable because it’s not something that has to go to legal. In example 3, most organizations would make sub-optimal use of its highly capable resources.
Ken, when it comes to drafting practices, you often advise ignoring the accumulated non-wisdom of the ages and come up with something that works. I’d suggest that the notion of the unauthorized practice of law, when it comes to contract draftng, falls into the same bucket.
Best regards,
Chris Lemens
Ken:
Thanks for the link.
I think you bring up an excellent issue and one that I’ve struggled with particularly because I’m a non-licensed JD (should I ever one day decide a license is necessary, a UPL problem isn’t something I want the bar to focus on).
So here’s how I have dealt with it at virtually every place I’ve ever worked: the business decides whether to have my work reviewed by corporate counsel. Usually, in the beginning of the relationship (as Chris pointed out), they will. Then they get comfortable knowing that I’ll actually COME to them if I have a real issue. But they continue to have sign-off on every single deal I do (we usually do a contract summation and get the lawyer to sign off).
But I guess I raise the same question as Chris. What if the business didn’t HAVE a lawyer and just had business people drafting terms. Is that ok? Or is it UPL?
When I do contract negotiation consulting as I do now, I VERY CLEARLY tell my clients to have what I do reviewed by counsel – that I’m not their lawyer… and that what I’m providing them is business advice.
There are two questions here:
When, as a practical matter, do you need a lawyer to draft a contract?
and
Is a person offering third parties a service of contract drafting engaging in the unauthorized practice of law?
The latter is probably answered in the affirmative under the regs of most jurisdictions. In many cases, it’s a political, professional monopoloy issue. The former just depends on the person. A corporation can decide they want to do all of their contract drafting without lawyers, and no UPL has occurred.
Chris,
Did you read the August 2008 ABA ethics opinion?
http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202424085117&slreturn=1&hbxlogin=1
Soon, transactional attorney positions may decrease significantly (especially once automated contract services are refined and adopted for mainstream drafting). I think if lawyers not admitted to any jurisdiction in the US can draft contracts for US companies, certainly the practice you questioned would be permissible (although, perhaps not advisable).
I’ve also dealt with many “contract managers” and the quality varies. One thing most have in common is that they lack a basic understanding of contract law (not to mention other areas of law), so “minor” changes to contract language may be a drop in the bucket for them. The pick and choose option you mentioned in your first example is a horrid solution to address this problem. Contract language does require someone trained for the position and the reason legal education is necessary is because not all issues are resolved by using easy-to-read language.
Cheers,
Jason
I don’t think the UPL rules are intended to prevent businesses from having non-lawyers within the organization draft contracts, research/analyze the law, prepare a tax return, etc. The intent of UPL is to restrict non-lawyers from holding themselves out to the public as lawyers and providing legal work or advise. UPL in that way prevents the public from being harmed by unscrupulous actors.
Businesses are presumed sophisticated “persons” under the law. Thus a business using its own employee to work on a business transaction, well aware of the employee’s qualifications or lack thereof, is no different than a private individual representing herself in a business deal. You don’t need a lawyer to sell your property with a contract. You don’t need a lawyer to prepare your own will. You don’t need a lawyer to fill-out and file your tax return. A business doesn’t need a lawyer for these things either – it may use a non-lawyer employee.
On the contrary: representing a business in front of a court or agency, preparing documents for use in litigation, and advising THIRD-PARTIES on their legal rights are completely different issues that are rightfully covered by UPL.