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Unauthorized Practice of Law Handbook
Unauthorized Practice of Law Handbook
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Report an incident of unauthorized practice of law to the KBA UPL Committee.
File a complaint with the Tennessee Attorney General.
DISCLAIMER
This Handbook has been prepared by the Knoxville Bar Association Unauthorized Practice of Law Committee as a service to lawyers who employ non-lawyer personnel to assist them in their practice. In preparing this Handbook it was our hope that we would be able to aid both lawyers and non-lawyers in recognizing situations that would constitute the unauthorized practice of law. We recognize that in many cases there are no hard and fast answers as to what constitutes the unauthorized practice of law, but it is our hope that this Handbook highlights areas that both lawyers and their support staff should recognize as areas or duties reserved for licensed attorneys. Because this book can not cover every possible situation where a non-lawyer may question whether or not they are faced with a task that may constitute the unauthorized practice of law, we urge you that, when in doubt, a non-lawyer staff should ask a lawyer for guidance and the lawyer, if unsure of the proper response, should contact the Tennessee Board of Professional Responsibility for guidance.
"BPR": The Board of Professional Responsibility, which enforces the obligations lawyers have under the "RPC."
"RPC": The Rules of Professional Conduct, which are contained in Tennessee Supreme Court Rule 8. The RPC establishes the ethical duties with which lawyers must comply. Failure to abide by the RPC can result in sanctions against the lawyer.
"UPL": The unauthorized practice of law.
Tennessee's UPL statute says,
No person shall engage in the "practice of law" or do "law business"...unless such person has been duly licensed therefore.
The first step in understanding the scope of this law is to define the "practice of law" and "law business."
"Law business" means the advising or counseling for a valuable consideration (meaning payment in money or something else) of any person, firm, association, or corporation as to any secular law (meaning rules other than those governing faith-based groups),
or the drawing or procuring of or assisting in the drawing for a valuable consideration of any paper, document or instrument affecting or relating to secular rights,
or the doing of any act for a valuable consideration in a representative capacity,
or obtaining or tending to secure for any person, firm, association or corporation any property or property rights whatsoever,
or the soliciting of clients directly or indirectly to provide such services.
In other words the "law business" involves:
· Receiving payment for legal advice,
· Receiving payment for preparing legal documents (directly or indirectly), or
· Receiving payment for representing someone in obtaining something to which that person is entitled under the law.
"Practice of law" means the appearance as an advocate in a representative capacity,
or the drawing of papers, pleadings or documents,
or the performance of any act in such capacity in connection with proceedings, pending or prospective, before any court commissioner, referee or any body, board, committee or commission constituted by law or having authority to settle controversies, or the soliciting of clients directly or indirectly to provide such services.
The "practice of law," therefore, involves
· Representing another person before a court or other tribunal or
· Preparing documents in a matter pending in the tribunal.
These definitions bring us slightly closer to understanding what amounts to a UPL activity, but they do not provide a list of what type of work must be performed by lawyers and what work may be performed by non-lawyers. Limiting the practice of law to members of the bar protects the public against rendition of legal services by unqualified persons. The state sets a variety of qualifications for lawyers. Some of the rules are designed to prevent a person from obtaining a law license if he/she does not have the skill necessary to represent clients competently.
Applicants for a law license must,
· Meet certain educational requirements before being licensed and
· Pass the bar exam to make sure that their education was adequate.
After admission to the bar, the state wants to ensure that lawyers remain competent,
· They must continue their education with seminars every year to maintain a license; and
· If they deviate from the ethical standards they are sworn to uphold, they are subject to sanctions through the BPR. These sanctions range from a private reprimand to loss of the license to practice law.
Holding a law license is a "privilege," the courts tell us, not a "right." In other words, if you want to be a lawyer, you accept your license with the understanding that the state has the right to take that license away. This allows the state to oversee how skillful a lawyer is. Still, that does not explain why a non-lawyer is prohibited from doing things that the non-lawyer is as capable of doing as a lawyer.
"Instead of simply prohibiting non-lawyers from providing legal services, why doesn't the state just have education and testing for non-lawyers who want to provide a specific legal service?"
In general, when the state considers regulation of any business or profession, the people who would be subject to that regulation often object.
Unfortunately, there is no such list, which may make one wonder,
"If it is so hard to identify what UPL is, why is it against the law?"
The comments to Rule 5.5 of the Rules of Professional Conduct promulgated by the Tennessee Supreme Court address the question.
[L]imiting the practice of law to members of the bar protects the public against rendition of legal by unqualified persons.
These qualifications form the primary reason that only lawyers are allowed to offer legal services.
PENALTIES
There are three possible penalties for practicing law without a license:
1. A person engaged in UPL is guilty of a crime;
2. An unlicensed person performing legal services could be liable for damages to the client if the legal work is not done properly; and
3. A lawyer could be disciplined for helping someone in UPL activity.
The RPC says, "A lawyer shall not (a) practice law in a jurisdiction where doing so violates the regulations of the legal profession in that jurisdiction; or (b) assist a person in the performance of activity that constitutes the unauthorized practice of law."
Comment 2 to this rule provides:
Paragraph (b) does not prohibit a lawyer from employing the services of paraprofessionals and delegating functions to them, so long as the lawyer supervises the delegated work and retains responsibility for their work. See RPC 5.3. Likewise, it does not prohibit lawyers from providing professional advice and instruction to non-lawyers whose employment requires knowledge of the law, such as claims adjusters, employees of financial or commercial institutions, social workers, accountants, and persons employed in government agencies. In addition, a lawyer may counsel non-lawyers who wish to proceed pro se.
The lawyer cannot incur civil or criminal liability for practicing law without a license because the lawyer, by definition, is licensed. But lawyers who hold active licenses do run risks when UPL activities occur in their offices.
A lawyer may be liable to clients who have been damaged by the negligence of the lawyer's employee, just as any employer may be liable for an employee's conduct.
EXERCISE #1
Part A
Mr. and Mrs. Sellers, agreed to sell their property to Mr. AA Broker, a real estate agent, for $16,000. The sales contract, however, named Mr. BB Broker (AA's brother) as the buyer. The buyer agreed to pay the Sellers $1,000 in cash at closing, with the remaining $15,000 payable in six months. The contract also said that Mr. Broker would give the Sellers a note for the $15,000, with the property serving as collateral.
Typically, this transaction would involve the following documents:
· Deed from the Sellers to BB Broker,
· Promissory Note from BB Broker to the Sellers,
· Deed of Trust from BB Broker (and his spouse, if any) to the Seller's trustee.
AA Broker was a long time client of Law Firm, and he asked Law Firm's Secretary to arrange for Law Firm to:
Check the title to the property,
Prepare a deed with the name of the purchaser left blank,
Prepare a note from Broker Brothers, Inc., to Mr. and Mrs. Sellers, and
Prepare a deed of trust from Broker Brothers, Inc., to the Sellers' trustee.
Q: Why would Broker have the deed leave the purchaser's name blank?
A: Testimony at the trial was unclear, but it was probably because Broker planned to sell the property to a third party as soon as he closed the deal with the Sellers. If Broker recorded a deed from the Sellers to himself, he would have to pay a transfer tax. Then, when he re-sold the property, transfer tax would be due again.
Secretary asked Lawyer # 1 to check the property's title, and he prepared a title report. Secretary then prepared the documents AA Broker had requested. Broker brought the Sellers to Law Firm's office for the closing. Mr. and Mrs. Sellers signed the deed to "____________,"and AA Broker signed the note and the deed of trust, which named Lawyer # 1 as the trustee. Secretary notarized the deed and deed of trust. She gave the deed to Mr. Broker and gave the note and deed of trust to Mr. and Mrs. Sellers.
Mr. and Mrs. Sellers took the note and deed of trust home and put them in a safe place. Later, the Brokers sold the property for $36,500 to Mr. and Mrs. Buyers, filling in the Buyer's name on the deed from Mr. and Mrs. Sellers.
Eventually, Mr. Broker paid Mr. and Mrs. Sellers only $4,163.11 of the $15,000 due under the promissory note.
Q 1: What recourse do Mr. and Mrs. Sellers have to collect the rest of the money owed to them?
Q 2: Law Firm's instructions came from Mr. Broker. Did Law Firm owe any duty to Mr. and Mrs. Sellers?
Q 3: Secretary prepared the documents. Did she owe any duty to Mr. and Mrs. Sellers?
Q 4: Law Firm sent Mr. Broker a bill for preparing the deed and for the title exam, but Mr. Broker never paid the bill. Does that affect whether Law Firm owed a duty to Mr. and Mrs. Sellers?
Q 5: Typically, Law Firm would have charged Mr. and Mrs. Sellers a fee for preparing the note and deed of trust. In this case, Law Firm never got around to billing them. Does that affect whether Law Firm owed a duty to Mr. and Mrs. Sellers?
Q 6: The contract between Mr. and Mrs. Sellers and BB Broker identified BB Broker as the buyer. Why would AA Broker tell Secretary to make the note from Broker Brothers, Inc.?
The Importance of Recording the Deed of Trust: The purpose of giving Mr. and Mrs. Sellers a deed of trust was to give Mr. and Mrs. Sellers the right to foreclose if Broker did not pay the note. (By foreclosing, Mr. and Mrs. Sellers would sell the property to raise the money to pay the balance due under the note). Even if Broker sold the property to someone else before Broker paid off the note. The deed of trust would still bind the property, which means that the new owners would have to pay the debt to prevent the Sellers from foreclosing. The only way the new owners could avoid this result is if they did not know about the deed of trust. However, regardless of whether the new owners had actual knowledge of the debt, the law says that the new owners are "on notice" automatically if the deed of trust has been recorded at the courthouse. If the deed of trust was not recorded and the new owners did not have actual knowledge of the debt, Mr. and Mrs. Sellers could not foreclose against the new owners.
Q 7: When Mr. and Mrs. Buyers decided to buy the property, they had the title examined. Suppose that Mr. and Mrs. Sellers had recorded the deed of trust from Broker Brothers, Inc. How would Mr. and Mrs. Buyers have found the deed of trust in their chain of title?
HINT: To find out there are any deeds of trust against the property, the title examiner would check the index under the name of the person who owned the property according to the courthouse records. Who owned the property according to these records at the time Mr. and Mrs. Buyers would look at those records? Would the deed of trust have appeared under that owner's name?
The story in Exercise #1 comes from a 1987 Tennessee Supreme Court decision. The sellers sued the law firm that handled the closing, arguing that they had lost the opportunity to collect their debt because the documents were not prepared properly.
There were two major problems with the documents:
1. In their contract, the sellers agreed to finance the sale to an individual, but the promissory note was from a corporation. Since many corporations have no assets, the sellers probably would not have accepted a note from the corporation, unless the individual signed as guarantor to pay the note if the corporation did not.
2. The deed of trust was from the corporation, but the deed from the sellers was to "________." If the broker had filled in the name of the corporation on the deed, then the corporation would have been the owner of the property and entitled to encumber the property with a deed of trust. If the corporation's name was not filled in on the deed, the deed of trust from the corporation was worthless because the corporation had no interest in the property.
The sellers decided that the law firm that prepared the documents should be liable for the loss they sustained when the broker never paid the debt, so they sued both of the lawyers in the firm. One of the lawyers had written the title report to the broker. The other lawyer had nothing to do with any part of the transaction. Neither lawyer had seen the documents that the secretary prepared.
Since the lawyers had never billed the sellers for anything, and all of their instructions had come from the broker, they persuaded the trial court to dismiss the case, arguing that they represented the broker, not the sellers.
The sellers appealed, and the Tennessee Supreme Court sent the case back to the trial court, ordering the court to hold a trial. The Supreme Court did not rule on whether the lawyers were liable to the sellers. That would have to be decided at a trial. There is no appellate court record of what eventually happened in the case, but in ordering a trial, the Supreme Court did observe.
We recognize that [the lawyers] insist that they represented only [the broker] in this case and that they followed his instructions to the letter. At best, however, the transaction was loosely and inexpertly handled, with a legal secretary being permitted to conduct an apparently routine matter without submitting the legal documents to her employers for approval.
EXERCISE #1
Part B
What would lawyers have done to prevent this problem?
ETHICAL IMPLICATIONS
It is almost impossible for a lawyer to practice law effectively without staff support. As the RPC acknowledges,
Lawyers generally employ non-lawyers in their practice, including secretaries, investigators, law student interns, and paraprofessionals. Such employees act for the lawyer in rendition of the lawyer's professional services. A lawyer should give such employees appropriate instruction and supervision concerning the ethical aspects of their employment, particularly regarding the obligation not to disclose information relating to the representation of the client, and should be responsible for their work product. The measures employed in supervising non-lawyers should take account of the fact that they do not have legal training and are not subject to professional discipline.
However, if the lawyer delegates a task that constitutes UPL, the lawyer will be in violation of the RPC:
"A lawyer shall not ...assist a person in the performance of an activity that constitutes the unauthorized practice of law.
Of course, we have already seen how difficult it can be to identify what UPL activities are. Some guidance is available to lawyers in the context of assigning work to paralegals:
· "Model Guidelines for the Utilization of Legal Assistance Services" adopted by the ABA Standing Committee on Legal Assistants.
· The annotated "Model Standards and Guidelines for Utilization of Legal Assistants" enacted by the National Association of Legal Assistants, Inc.
However, there is little guidance available regarding the scope of supervision that is required for other staff members. In addition, regardless of whether the lawyer adheres to recommended policies, the lawyer is ultimately responsible for the negligence of an employee.
The breadth of this rule can be seen in this 1988 Tennessee Supreme Court decision: Seller hired Lawyer to prepare a deed to Buyer. One of Lawyer's employees prepared the deed, which Lawyer reviewed. However, Lawyer did not notice that the section on the deed for the notary's acknowledgment did not contain the words "with whom I am personally acquainted." Without these words, the law does not recognize a deed as being recorded, even though a copy of the deed is physically present in the courthouse records. When Seller filed bankruptcy, the bankruptcy trustee sued Buyer to recover the house, alleging that the transfer to Buyer was void because the deed was not recorded. The bankruptcy judge agreed that the deed was not recorded and that the bankruptcy trustee was the true owner of the property, but the court also said that the trustee held the property in trust for Buyers. The court ordered the trustee to deed the property to Buyers-as soon as Buyers paid the court costs and attorney fees for the trustee's lawsuit. Buyers then sued Lawyer to recover these expenses, and the court ruled that Lawyer was liable.
Moral: A lawyer must review everything that a staff member prepares. If the notary public does not personally know the person signing the document, the acknowledgment may recite that the signer's identity was proved to the notary by "satisfactory evidence."
Potential UPL examples – Criminal Practice
Example 1
Client calls office of his/her civil attorney and speaks with secretary/paralegal. Client tells staff person that his/her college student child received a speeding ticket. Client is worried about the effect of the ticket on his/her insurance premium. Client asks staff person if he/she could call the District Attorney's office to find out if there is any way to keep the ticket from being reported to the State.
Example 2
Client calls criminal defense attorney after criminal charge has been dismissed to inquire about having the record expunged. Client states that he/she has a job interview next week and expects that a background check will be performed by the potential employer. Client is worried about the potential discovery of the recent arrest. Attorney offers to file Order of Expungement for client. Since attorney is preparing to leave town for a week to attend a CLE conference, attorney asks secretary to obtain a blank Expungement Order form from the Clerk's office, fill in the blanks, sign the attorney's name, and file the Order with the Court.
Example 3
Client is on probation for criminal charge. Client's probation officer gave him/her a list of probation rules, but client lost his/her copy. Client cannot remember if he/she is permitted to travel out of the state while he/she is on probation. Client calls criminal defense attorney's office and asks secretary/paralegal if he/she thinks it is okay for client to travel to Florida for a family reunion next week.
Example 4
Citizen owns a rental house. Citizen's tenant paid this month's rent with a check that was returned by the bank due to insufficient funds. Citizen is not sure whether his/her remedy is in civil or criminal court. Citizen calls District Attorney's office and asks the receptionist (a non-lawyer support staff) what he/she should do to try to collect the worthless check.
Example 5
Secretary for criminal defense attorney calls secretary for Assistant District Attorney. Defense secretary tells DA secretary that defendant who is scheduled to be in court for trial tomorrow has called and says that he/she cannot appear in court. When defense secretary called the Clerk's office, the Clerk said that it would reset the case if "someone from the DA's office" will come to the Clerk's office and say that the continuance is okay. Defense secretary asks DA secretary to go to the Clerk's office so the case can be reset.
Example 6
Victim of crime comes to court for preliminary hearing in assault case. Victim's friends and family have told him/her that he/she needs to sue the defendant to recover medical expenses related to the assault. It has been 10 months since the assault occurred. While victim is speaking to District Attorney's victim-witness coordinator (non-attorney support staff) outside the courtroom, victim asks victim-witness coordinator what he/she should do to collect medical expenses from the defendant.
Example 7
Client calls for Divorce lawyer who is unavailable. Client informs Divorce lawyer's secretary that his wife wrongfully had him arrested for assault two days ago and that while charges are still pending they have made up and she wants him to come back to the house. Client wants to return to his home so that he can work on his marriage. Secretary responds that Client should have the wife sign a statement agreeing to his return to the home before Client does so.
IV. WHAT ARE UPL ACTIVITIES FOR LAW FIRM STAFF?
While there are no precise rules, there is a consensus that non-lawyers who work for lawyers are not allowed to engage in four common practices. The first two are easy to understand, even if they are not always easy to follow:
1. The non-lawyer may not create an attorney-client relationship. This means that the non-lawyer is not allowed to commit the lawyer to representing the client. However, if the non-lawyer leads the client to believe that the attorney-client relationship has been created, the lawyer (and the non-lawyer) will owe duties to that client just as if the lawyer had intended to create an attorney-client relationship.
2. Enter into a fee agreement with the client. Again, however, the lawyer may be bound by an agreement the non-lawyer makes with the client.
The next two prohibited practices are the most difficult to define:
3. A non-lawyer may not represent a client in a court or other tribunal except when the tribunal authorizes appearance by a non-lawyer.
4. A non-lawyer may not give legal advice or opinions.
EXERCISE: # 2: Representation in Court
There are tribunals that explicitly permit a non-lawyer to appear on behalf of a client, such as the Social Security Administration and the State Board of Equalization. But the definition of "appearing in court" can be ambiguous when the court's rules are not explicit. For example, may a non-lawyer appear at a docket call? According to the BPR,
The [unauthorized practice of law statutes] would appear to prohibit non-lawyers from appearing as an advocate in a representative capacity in any court proceeding. The Board has also previously opined that any appearance before a tribunal in a representative capacity constitutes the practice of law. When an individual appears at docket calls and answers that docket call on behalf of another, he/she is acting in a representative capacity. Any attorney who assists a non-lawyer to appear for him or his clients would then be assisting in the unauthorized practice of law and violating the disciplinary rules.
Q 1: Based on this rule, could a non-lawyer employee of a creditor attend a Section 351 Meeting of Creditors in bankruptcy court to question the debtor on behalf of the creditor?
A 1: According to a 1993 case, there is no problem with a non-lawyer asking a debtor questions at a Section 351 meeting.
Q 2: What is the difference between appearing at a docket call and appearing at a Section 351 meeting?
Q 3: Would the result have been different if the person questioning the debtor had been a non-lawyer employee of the creditor's lawyer instead of the creditor?
Q4: What would the result be if a non-lawyer employee of a creditor filled out forms (such as a civil warrant in General Sessions Court) to collect a debt for the creditor?
A4: In a 1939 case, the Tennessee Supreme Court held that UPL involved "appearance as an advocate" for another person. While filling out the form arguably amounted to making an "appearance" on behalf of the creditor, it did not amount to being an "advocate." The employee, therefore, had not engaged in UPL.
EXERCISE: # 3A MISCELLANEOUS SITUATIONS
How should a non-lawyer handle the following situations?
(1) Frank gets a speeding ticket. He asks his wife (who is a chiropractor) what he should do. Is Frank's wife allowed to give him advice? _________________________________
(2) Frank gets a speeding ticket. He asks his neighbor (who is a paralegal in a law firm) what he should do. Is Frank's neighbor allowed to give him advice? _________________
Why are the situations in (1) and (2) different? ____________________________
(3) Ladawna's landlord wants to evict her for making lewd comments to other tenants. Farley is the paralegal who has been working on Ladawna's case and every time he has seen her, she has been wearing a halter-top and a towel wrapped around her waist. Can Farley advise Ladawna what to wear to court?___________________________________
(4) Ladawna wants to call her boyfriend as a witness at the trial to testify that she only makes lewd remarks when she is on crack. Can Farley advise Ladawna not to bring her boyfriend to court? ________________________________________________________
(5) Ladawna asks Farley what a "detainer warrant" is. May Farley answer her question?
________________________________________________________________________
(6) Farley does not believe that Ladawna can prevent the eviction; but he does believe that if Ladawna will agree to leave (instead of going to trial), the landlord will give her more time to move. May Farley tell Ladawna that?_______________________________
(7) The lawyer who will be handling Ladawna's case does not believe that Ladawna can prevent eviction; but he does believe that if Ladawna will pay the landlord $50, the landlord will give her more time to move. The lawyer asks Farley to tell Ladawna that. May Farley convey that message to Ladawna?__________________________________
(8) Ladawna wants to sue her grandmother for damages to Ladawna's dirt bike, which her grandmother drove into a river. May Farley tell Ladawna how to file a lawsuit in General Sessions Court? __________________________________________________________
(9) Ladawna picked up a General Sessions Court civil warrant form from the court clerk's office. She asks Farley to help her fill it out because she cannot write. May Farley fill the form out for her?__________________________________________________________
(10) Ladawna wants to sue her cousin for setting her winning lottery ticket on fire. The amount in controversy exceeds the General Sessions Court jurisdictional limits. May Farley tell Ladawna how to file a lawsuit in Circuit Court? ________________________
(11) May Farley prepare the complaint to file in Circuit Court and give it to Ladawna to file?____________________________________________________________________
EXERCISE: #3 B
How should a non-lawyer who works in a lawyer's office answer these questions from clients?
(1) Client in a divorce case; "He wants to have the kids every other weekend. Should I agree?"
(2) Defendant in a debt collection suit: ''Can I set up a payment plan?"
(3) Client wants an order of protection: "What will happen when we get in the courtroom?"
(4) Client being evicted: "What should I say in court?''
(5) Client wants to collect a debt: ''Can I tell him I'll have him arrested if he won't pay?"
(6) Client got a bad check from someone: "Can I tell him I'll have him arrested if he won't pay?"
(7) Client is dissatisfied with the outcome of a case: "I'm going to the judge's office. Where is it?"
(8) Client is dissatisfied with services received from another lawyer: "What can I do about that jerk?"
(9) Client wants to sue McDonald's for firing her for being late: "What can I do about this?"
(10) Client has been beaten by a spouse: "What can I do about this?"
EXERCISE: #3 C
How should a non-lawyer staff member answer these questions from someone who is not a client?
(1) Divorce case: "He wants to have the kids every other weekend. Should I agree?"
(2) Defendant in a debt collection suit: ''Can I set up a payment plan?"
(3) Wants an order of protection: "What will happen when we get in the courtroom?"
(4) Being evicted: "What should I say in court?"
(5) Wants to collect a debt: ''Can I tell him I'll have him arrested if he won't pay?"
(6) Got a bad check from someone: "Can I tell him I'll have him arrested if he won't pay?"
(7) Dissatisfied with the outcome of a case: "I'm going to the judge's office. Where is it?"
(8) Dissatisfied with services received from another lawyer: "What can I do about that jerk?"
(9) Wants to sue McDonald's for firing her for being late: "What can I do about this?"
(10) Has been beaten by a spouse: "What can I do about this?"
Guidelines for Paralegals and Other Members of a Law Firm's Support Staff
DO NOT give information if you are not sure of the answer.
DO NOT suggest that person take a particular action. (Questions usually begin, "Should I?")
DO NOT take sides in a case pending in court.
DO NOT give information to one party that you would not give to all parties.
DO NOT tell anyone what a judge has decided until the decision is public.
epilogue
In 1947 two sisters in Obion County operated "an office purporting to be an insurance and real estate office .... [But plaintiffs claim] that the real business conducted by defendants in this office ... is the illegal practice of law." The sisters prepared deeds, contracts, wills, and title opinions, and generally offered legal advice on a variety of issues. The Tennessee Court of Appeals found them to be engaged in the unauthorized practice of law.
The court ordered an injunction against the sisters' continuation of the UPL. But question (2) helps illustrate one of the most misunderstood concepts about the unauthorized practice of law, that it is merely a way to protect lawyers from competition. As the Court of Appeals said in a 1959 case in which the Tennessee Bar Association sued a title company to prevent the company from drafting documents incident to conducting closings:
It is apparent from a consideration of the Chancellor's opinion [which held in favor of the Bar Association]... that his decision was influenced or motivated by a desire to protect the lawyers of general practice from what he considered unfair competition. In our opinion, this is not the proper test to be applied in determining whether or not the defendants ... are guilty of unauthorized practice of law...
Report an incident of unauthorized practice of law to the KBA UPL Committee.
File a complaint with the Tennessee Attorney General.
DISCLAIMER
This Handbook has been prepared by the Knoxville Bar Association Unauthorized Practice of Law Committee as a service to lawyers who employ non-lawyer personnel to assist them in their practice. In preparing this Handbook it was our hope that we would be able to aid both lawyers and non-lawyers in recognizing situations that would constitute the unauthorized practice of law. We recognize that in many cases there are no hard and fast answers as to what constitutes the unauthorized practice of law, but it is our hope that this Handbook highlights areas that both lawyers and their support staff should recognize as areas or duties reserved for licensed attorneys. Because this book can not cover every possible situation where a non-lawyer may question whether or not they are faced with a task that may constitute the unauthorized practice of law, we urge you that, when in doubt, a non-lawyer staff should ask a lawyer for guidance and the lawyer, if unsure of the proper response, should contact the Tennessee Board of Professional Responsibility for guidance.
Abbreviations Used in the Text
"BPR": The Board of Professional Responsibility, which enforces the obligations lawyers have under the "RPC."
"RPC": The Rules of Professional Conduct, which are contained in Tennessee Supreme Court Rule 8. The RPC establishes the ethical duties with which lawyers must comply. Failure to abide by the RPC can result in sanctions against the lawyer.
"UPL": The unauthorized practice of law.
I. RULES GOVERNING THE UNAUTHORIZED PRACTICE OF LAW
Tennessee's UPL statute says,
No person shall engage in the "practice of law" or do "law business"...unless such person has been duly licensed therefore.
The first step in understanding the scope of this law is to define the "practice of law" and "law business."
"Law business" means the advising or counseling for a valuable consideration (meaning payment in money or something else) of any person, firm, association, or corporation as to any secular law (meaning rules other than those governing faith-based groups),
or the drawing or procuring of or assisting in the drawing for a valuable consideration of any paper, document or instrument affecting or relating to secular rights,
or the doing of any act for a valuable consideration in a representative capacity,
or obtaining or tending to secure for any person, firm, association or corporation any property or property rights whatsoever,
or the soliciting of clients directly or indirectly to provide such services.
In other words the "law business" involves:
· Receiving payment for legal advice,
· Receiving payment for preparing legal documents (directly or indirectly), or
· Receiving payment for representing someone in obtaining something to which that person is entitled under the law.
"Practice of law" means the appearance as an advocate in a representative capacity,
or the drawing of papers, pleadings or documents,
or the performance of any act in such capacity in connection with proceedings, pending or prospective, before any court commissioner, referee or any body, board, committee or commission constituted by law or having authority to settle controversies, or the soliciting of clients directly or indirectly to provide such services.
The "practice of law," therefore, involves
· Representing another person before a court or other tribunal or
· Preparing documents in a matter pending in the tribunal.
These definitions bring us slightly closer to understanding what amounts to a UPL activity, but they do not provide a list of what type of work must be performed by lawyers and what work may be performed by non-lawyers. Limiting the practice of law to members of the bar protects the public against rendition of legal services by unqualified persons. The state sets a variety of qualifications for lawyers. Some of the rules are designed to prevent a person from obtaining a law license if he/she does not have the skill necessary to represent clients competently.
Applicants for a law license must,
· Meet certain educational requirements before being licensed and
· Pass the bar exam to make sure that their education was adequate.
After admission to the bar, the state wants to ensure that lawyers remain competent,
· They must continue their education with seminars every year to maintain a license; and
· If they deviate from the ethical standards they are sworn to uphold, they are subject to sanctions through the BPR. These sanctions range from a private reprimand to loss of the license to practice law.
Holding a law license is a "privilege," the courts tell us, not a "right." In other words, if you want to be a lawyer, you accept your license with the understanding that the state has the right to take that license away. This allows the state to oversee how skillful a lawyer is. Still, that does not explain why a non-lawyer is prohibited from doing things that the non-lawyer is as capable of doing as a lawyer.
"Instead of simply prohibiting non-lawyers from providing legal services, why doesn't the state just have education and testing for non-lawyers who want to provide a specific legal service?"
In general, when the state considers regulation of any business or profession, the people who would be subject to that regulation often object.
Unfortunately, there is no such list, which may make one wonder,
"If it is so hard to identify what UPL is, why is it against the law?"
The comments to Rule 5.5 of the Rules of Professional Conduct promulgated by the Tennessee Supreme Court address the question.
[L]imiting the practice of law to members of the bar protects the public against rendition of legal by unqualified persons.
These qualifications form the primary reason that only lawyers are allowed to offer legal services.
II. UPL AND LAWYERS
PENALTIES
There are three possible penalties for practicing law without a license:
1. A person engaged in UPL is guilty of a crime;
2. An unlicensed person performing legal services could be liable for damages to the client if the legal work is not done properly; and
3. A lawyer could be disciplined for helping someone in UPL activity.
The RPC says, "A lawyer shall not (a) practice law in a jurisdiction where doing so violates the regulations of the legal profession in that jurisdiction; or (b) assist a person in the performance of activity that constitutes the unauthorized practice of law."
Comment 2 to this rule provides:
Paragraph (b) does not prohibit a lawyer from employing the services of paraprofessionals and delegating functions to them, so long as the lawyer supervises the delegated work and retains responsibility for their work. See RPC 5.3. Likewise, it does not prohibit lawyers from providing professional advice and instruction to non-lawyers whose employment requires knowledge of the law, such as claims adjusters, employees of financial or commercial institutions, social workers, accountants, and persons employed in government agencies. In addition, a lawyer may counsel non-lawyers who wish to proceed pro se.
The lawyer cannot incur civil or criminal liability for practicing law without a license because the lawyer, by definition, is licensed. But lawyers who hold active licenses do run risks when UPL activities occur in their offices.
A lawyer may be liable to clients who have been damaged by the negligence of the lawyer's employee, just as any employer may be liable for an employee's conduct.
III. EXERCISES
EXERCISE #1
Part A
Mr. and Mrs. Sellers, agreed to sell their property to Mr. AA Broker, a real estate agent, for $16,000. The sales contract, however, named Mr. BB Broker (AA's brother) as the buyer. The buyer agreed to pay the Sellers $1,000 in cash at closing, with the remaining $15,000 payable in six months. The contract also said that Mr. Broker would give the Sellers a note for the $15,000, with the property serving as collateral.
Typically, this transaction would involve the following documents:
· Deed from the Sellers to BB Broker,
· Promissory Note from BB Broker to the Sellers,
· Deed of Trust from BB Broker (and his spouse, if any) to the Seller's trustee.
AA Broker was a long time client of Law Firm, and he asked Law Firm's Secretary to arrange for Law Firm to:
Check the title to the property,
Prepare a deed with the name of the purchaser left blank,
Prepare a note from Broker Brothers, Inc., to Mr. and Mrs. Sellers, and
Prepare a deed of trust from Broker Brothers, Inc., to the Sellers' trustee.
Q: Why would Broker have the deed leave the purchaser's name blank?
A: Testimony at the trial was unclear, but it was probably because Broker planned to sell the property to a third party as soon as he closed the deal with the Sellers. If Broker recorded a deed from the Sellers to himself, he would have to pay a transfer tax. Then, when he re-sold the property, transfer tax would be due again.
Secretary asked Lawyer # 1 to check the property's title, and he prepared a title report. Secretary then prepared the documents AA Broker had requested. Broker brought the Sellers to Law Firm's office for the closing. Mr. and Mrs. Sellers signed the deed to "____________,"and AA Broker signed the note and the deed of trust, which named Lawyer # 1 as the trustee. Secretary notarized the deed and deed of trust. She gave the deed to Mr. Broker and gave the note and deed of trust to Mr. and Mrs. Sellers.
Mr. and Mrs. Sellers took the note and deed of trust home and put them in a safe place. Later, the Brokers sold the property for $36,500 to Mr. and Mrs. Buyers, filling in the Buyer's name on the deed from Mr. and Mrs. Sellers.
Eventually, Mr. Broker paid Mr. and Mrs. Sellers only $4,163.11 of the $15,000 due under the promissory note.
Q 1: What recourse do Mr. and Mrs. Sellers have to collect the rest of the money owed to them?
Q 2: Law Firm's instructions came from Mr. Broker. Did Law Firm owe any duty to Mr. and Mrs. Sellers?
Q 3: Secretary prepared the documents. Did she owe any duty to Mr. and Mrs. Sellers?
Q 4: Law Firm sent Mr. Broker a bill for preparing the deed and for the title exam, but Mr. Broker never paid the bill. Does that affect whether Law Firm owed a duty to Mr. and Mrs. Sellers?
Q 5: Typically, Law Firm would have charged Mr. and Mrs. Sellers a fee for preparing the note and deed of trust. In this case, Law Firm never got around to billing them. Does that affect whether Law Firm owed a duty to Mr. and Mrs. Sellers?
Q 6: The contract between Mr. and Mrs. Sellers and BB Broker identified BB Broker as the buyer. Why would AA Broker tell Secretary to make the note from Broker Brothers, Inc.?
The Importance of Recording the Deed of Trust: The purpose of giving Mr. and Mrs. Sellers a deed of trust was to give Mr. and Mrs. Sellers the right to foreclose if Broker did not pay the note. (By foreclosing, Mr. and Mrs. Sellers would sell the property to raise the money to pay the balance due under the note). Even if Broker sold the property to someone else before Broker paid off the note. The deed of trust would still bind the property, which means that the new owners would have to pay the debt to prevent the Sellers from foreclosing. The only way the new owners could avoid this result is if they did not know about the deed of trust. However, regardless of whether the new owners had actual knowledge of the debt, the law says that the new owners are "on notice" automatically if the deed of trust has been recorded at the courthouse. If the deed of trust was not recorded and the new owners did not have actual knowledge of the debt, Mr. and Mrs. Sellers could not foreclose against the new owners.
Q 7: When Mr. and Mrs. Buyers decided to buy the property, they had the title examined. Suppose that Mr. and Mrs. Sellers had recorded the deed of trust from Broker Brothers, Inc. How would Mr. and Mrs. Buyers have found the deed of trust in their chain of title?
HINT: To find out there are any deeds of trust against the property, the title examiner would check the index under the name of the person who owned the property according to the courthouse records. Who owned the property according to these records at the time Mr. and Mrs. Buyers would look at those records? Would the deed of trust have appeared under that owner's name?
The story in Exercise #1 comes from a 1987 Tennessee Supreme Court decision. The sellers sued the law firm that handled the closing, arguing that they had lost the opportunity to collect their debt because the documents were not prepared properly.
There were two major problems with the documents:
1. In their contract, the sellers agreed to finance the sale to an individual, but the promissory note was from a corporation. Since many corporations have no assets, the sellers probably would not have accepted a note from the corporation, unless the individual signed as guarantor to pay the note if the corporation did not.
2. The deed of trust was from the corporation, but the deed from the sellers was to "________." If the broker had filled in the name of the corporation on the deed, then the corporation would have been the owner of the property and entitled to encumber the property with a deed of trust. If the corporation's name was not filled in on the deed, the deed of trust from the corporation was worthless because the corporation had no interest in the property.
The sellers decided that the law firm that prepared the documents should be liable for the loss they sustained when the broker never paid the debt, so they sued both of the lawyers in the firm. One of the lawyers had written the title report to the broker. The other lawyer had nothing to do with any part of the transaction. Neither lawyer had seen the documents that the secretary prepared.
Since the lawyers had never billed the sellers for anything, and all of their instructions had come from the broker, they persuaded the trial court to dismiss the case, arguing that they represented the broker, not the sellers.
The sellers appealed, and the Tennessee Supreme Court sent the case back to the trial court, ordering the court to hold a trial. The Supreme Court did not rule on whether the lawyers were liable to the sellers. That would have to be decided at a trial. There is no appellate court record of what eventually happened in the case, but in ordering a trial, the Supreme Court did observe.
We recognize that [the lawyers] insist that they represented only [the broker] in this case and that they followed his instructions to the letter. At best, however, the transaction was loosely and inexpertly handled, with a legal secretary being permitted to conduct an apparently routine matter without submitting the legal documents to her employers for approval.
EXERCISE #1
Part B
What would lawyers have done to prevent this problem?
ETHICAL IMPLICATIONS
It is almost impossible for a lawyer to practice law effectively without staff support. As the RPC acknowledges,
Lawyers generally employ non-lawyers in their practice, including secretaries, investigators, law student interns, and paraprofessionals. Such employees act for the lawyer in rendition of the lawyer's professional services. A lawyer should give such employees appropriate instruction and supervision concerning the ethical aspects of their employment, particularly regarding the obligation not to disclose information relating to the representation of the client, and should be responsible for their work product. The measures employed in supervising non-lawyers should take account of the fact that they do not have legal training and are not subject to professional discipline.
However, if the lawyer delegates a task that constitutes UPL, the lawyer will be in violation of the RPC:
"A lawyer shall not ...assist a person in the performance of an activity that constitutes the unauthorized practice of law.
Of course, we have already seen how difficult it can be to identify what UPL activities are. Some guidance is available to lawyers in the context of assigning work to paralegals:
· "Model Guidelines for the Utilization of Legal Assistance Services" adopted by the ABA Standing Committee on Legal Assistants.
· The annotated "Model Standards and Guidelines for Utilization of Legal Assistants" enacted by the National Association of Legal Assistants, Inc.
However, there is little guidance available regarding the scope of supervision that is required for other staff members. In addition, regardless of whether the lawyer adheres to recommended policies, the lawyer is ultimately responsible for the negligence of an employee.
The breadth of this rule can be seen in this 1988 Tennessee Supreme Court decision: Seller hired Lawyer to prepare a deed to Buyer. One of Lawyer's employees prepared the deed, which Lawyer reviewed. However, Lawyer did not notice that the section on the deed for the notary's acknowledgment did not contain the words "with whom I am personally acquainted." Without these words, the law does not recognize a deed as being recorded, even though a copy of the deed is physically present in the courthouse records. When Seller filed bankruptcy, the bankruptcy trustee sued Buyer to recover the house, alleging that the transfer to Buyer was void because the deed was not recorded. The bankruptcy judge agreed that the deed was not recorded and that the bankruptcy trustee was the true owner of the property, but the court also said that the trustee held the property in trust for Buyers. The court ordered the trustee to deed the property to Buyers-as soon as Buyers paid the court costs and attorney fees for the trustee's lawsuit. Buyers then sued Lawyer to recover these expenses, and the court ruled that Lawyer was liable.
Moral: A lawyer must review everything that a staff member prepares. If the notary public does not personally know the person signing the document, the acknowledgment may recite that the signer's identity was proved to the notary by "satisfactory evidence."
Potential UPL examples – Criminal Practice
Example 1
Client calls office of his/her civil attorney and speaks with secretary/paralegal. Client tells staff person that his/her college student child received a speeding ticket. Client is worried about the effect of the ticket on his/her insurance premium. Client asks staff person if he/she could call the District Attorney's office to find out if there is any way to keep the ticket from being reported to the State.
Example 2
Client calls criminal defense attorney after criminal charge has been dismissed to inquire about having the record expunged. Client states that he/she has a job interview next week and expects that a background check will be performed by the potential employer. Client is worried about the potential discovery of the recent arrest. Attorney offers to file Order of Expungement for client. Since attorney is preparing to leave town for a week to attend a CLE conference, attorney asks secretary to obtain a blank Expungement Order form from the Clerk's office, fill in the blanks, sign the attorney's name, and file the Order with the Court.
Example 3
Client is on probation for criminal charge. Client's probation officer gave him/her a list of probation rules, but client lost his/her copy. Client cannot remember if he/she is permitted to travel out of the state while he/she is on probation. Client calls criminal defense attorney's office and asks secretary/paralegal if he/she thinks it is okay for client to travel to Florida for a family reunion next week.
Example 4
Citizen owns a rental house. Citizen's tenant paid this month's rent with a check that was returned by the bank due to insufficient funds. Citizen is not sure whether his/her remedy is in civil or criminal court. Citizen calls District Attorney's office and asks the receptionist (a non-lawyer support staff) what he/she should do to try to collect the worthless check.
Example 5
Secretary for criminal defense attorney calls secretary for Assistant District Attorney. Defense secretary tells DA secretary that defendant who is scheduled to be in court for trial tomorrow has called and says that he/she cannot appear in court. When defense secretary called the Clerk's office, the Clerk said that it would reset the case if "someone from the DA's office" will come to the Clerk's office and say that the continuance is okay. Defense secretary asks DA secretary to go to the Clerk's office so the case can be reset.
Example 6
Victim of crime comes to court for preliminary hearing in assault case. Victim's friends and family have told him/her that he/she needs to sue the defendant to recover medical expenses related to the assault. It has been 10 months since the assault occurred. While victim is speaking to District Attorney's victim-witness coordinator (non-attorney support staff) outside the courtroom, victim asks victim-witness coordinator what he/she should do to collect medical expenses from the defendant.
Example 7
Client calls for Divorce lawyer who is unavailable. Client informs Divorce lawyer's secretary that his wife wrongfully had him arrested for assault two days ago and that while charges are still pending they have made up and she wants him to come back to the house. Client wants to return to his home so that he can work on his marriage. Secretary responds that Client should have the wife sign a statement agreeing to his return to the home before Client does so.
IV. WHAT ARE UPL ACTIVITIES FOR LAW FIRM STAFF?
While there are no precise rules, there is a consensus that non-lawyers who work for lawyers are not allowed to engage in four common practices. The first two are easy to understand, even if they are not always easy to follow:
1. The non-lawyer may not create an attorney-client relationship. This means that the non-lawyer is not allowed to commit the lawyer to representing the client. However, if the non-lawyer leads the client to believe that the attorney-client relationship has been created, the lawyer (and the non-lawyer) will owe duties to that client just as if the lawyer had intended to create an attorney-client relationship.
2. Enter into a fee agreement with the client. Again, however, the lawyer may be bound by an agreement the non-lawyer makes with the client.
The next two prohibited practices are the most difficult to define:
3. A non-lawyer may not represent a client in a court or other tribunal except when the tribunal authorizes appearance by a non-lawyer.
4. A non-lawyer may not give legal advice or opinions.
EXERCISE: # 2: Representation in Court
There are tribunals that explicitly permit a non-lawyer to appear on behalf of a client, such as the Social Security Administration and the State Board of Equalization. But the definition of "appearing in court" can be ambiguous when the court's rules are not explicit. For example, may a non-lawyer appear at a docket call? According to the BPR,
The [unauthorized practice of law statutes] would appear to prohibit non-lawyers from appearing as an advocate in a representative capacity in any court proceeding. The Board has also previously opined that any appearance before a tribunal in a representative capacity constitutes the practice of law. When an individual appears at docket calls and answers that docket call on behalf of another, he/she is acting in a representative capacity. Any attorney who assists a non-lawyer to appear for him or his clients would then be assisting in the unauthorized practice of law and violating the disciplinary rules.
Q 1: Based on this rule, could a non-lawyer employee of a creditor attend a Section 351 Meeting of Creditors in bankruptcy court to question the debtor on behalf of the creditor?
A 1: According to a 1993 case, there is no problem with a non-lawyer asking a debtor questions at a Section 351 meeting.
Q 2: What is the difference between appearing at a docket call and appearing at a Section 351 meeting?
Q 3: Would the result have been different if the person questioning the debtor had been a non-lawyer employee of the creditor's lawyer instead of the creditor?
Q4: What would the result be if a non-lawyer employee of a creditor filled out forms (such as a civil warrant in General Sessions Court) to collect a debt for the creditor?
A4: In a 1939 case, the Tennessee Supreme Court held that UPL involved "appearance as an advocate" for another person. While filling out the form arguably amounted to making an "appearance" on behalf of the creditor, it did not amount to being an "advocate." The employee, therefore, had not engaged in UPL.
EXERCISE: # 3A MISCELLANEOUS SITUATIONS
How should a non-lawyer handle the following situations?
(1) Frank gets a speeding ticket. He asks his wife (who is a chiropractor) what he should do. Is Frank's wife allowed to give him advice? _________________________________
(2) Frank gets a speeding ticket. He asks his neighbor (who is a paralegal in a law firm) what he should do. Is Frank's neighbor allowed to give him advice? _________________
Why are the situations in (1) and (2) different? ____________________________
(3) Ladawna's landlord wants to evict her for making lewd comments to other tenants. Farley is the paralegal who has been working on Ladawna's case and every time he has seen her, she has been wearing a halter-top and a towel wrapped around her waist. Can Farley advise Ladawna what to wear to court?___________________________________
(4) Ladawna wants to call her boyfriend as a witness at the trial to testify that she only makes lewd remarks when she is on crack. Can Farley advise Ladawna not to bring her boyfriend to court? ________________________________________________________
(5) Ladawna asks Farley what a "detainer warrant" is. May Farley answer her question?
________________________________________________________________________
(6) Farley does not believe that Ladawna can prevent the eviction; but he does believe that if Ladawna will agree to leave (instead of going to trial), the landlord will give her more time to move. May Farley tell Ladawna that?_______________________________
(7) The lawyer who will be handling Ladawna's case does not believe that Ladawna can prevent eviction; but he does believe that if Ladawna will pay the landlord $50, the landlord will give her more time to move. The lawyer asks Farley to tell Ladawna that. May Farley convey that message to Ladawna?__________________________________
(8) Ladawna wants to sue her grandmother for damages to Ladawna's dirt bike, which her grandmother drove into a river. May Farley tell Ladawna how to file a lawsuit in General Sessions Court? __________________________________________________________
(9) Ladawna picked up a General Sessions Court civil warrant form from the court clerk's office. She asks Farley to help her fill it out because she cannot write. May Farley fill the form out for her?__________________________________________________________
(10) Ladawna wants to sue her cousin for setting her winning lottery ticket on fire. The amount in controversy exceeds the General Sessions Court jurisdictional limits. May Farley tell Ladawna how to file a lawsuit in Circuit Court? ________________________
(11) May Farley prepare the complaint to file in Circuit Court and give it to Ladawna to file?____________________________________________________________________
EXERCISE: #3 B
How should a non-lawyer who works in a lawyer's office answer these questions from clients?
(1) Client in a divorce case; "He wants to have the kids every other weekend. Should I agree?"
(2) Defendant in a debt collection suit: ''Can I set up a payment plan?"
(3) Client wants an order of protection: "What will happen when we get in the courtroom?"
(4) Client being evicted: "What should I say in court?''
(5) Client wants to collect a debt: ''Can I tell him I'll have him arrested if he won't pay?"
(6) Client got a bad check from someone: "Can I tell him I'll have him arrested if he won't pay?"
(7) Client is dissatisfied with the outcome of a case: "I'm going to the judge's office. Where is it?"
(8) Client is dissatisfied with services received from another lawyer: "What can I do about that jerk?"
(9) Client wants to sue McDonald's for firing her for being late: "What can I do about this?"
(10) Client has been beaten by a spouse: "What can I do about this?"
EXERCISE: #3 C
How should a non-lawyer staff member answer these questions from someone who is not a client?
(1) Divorce case: "He wants to have the kids every other weekend. Should I agree?"
(2) Defendant in a debt collection suit: ''Can I set up a payment plan?"
(3) Wants an order of protection: "What will happen when we get in the courtroom?"
(4) Being evicted: "What should I say in court?"
(5) Wants to collect a debt: ''Can I tell him I'll have him arrested if he won't pay?"
(6) Got a bad check from someone: "Can I tell him I'll have him arrested if he won't pay?"
(7) Dissatisfied with the outcome of a case: "I'm going to the judge's office. Where is it?"
(8) Dissatisfied with services received from another lawyer: "What can I do about that jerk?"
(9) Wants to sue McDonald's for firing her for being late: "What can I do about this?"
(10) Has been beaten by a spouse: "What can I do about this?"
Guidelines for Paralegals and Other Members of a Law Firm's Support Staff
DO NOT give information if you are not sure of the answer.
DO NOT suggest that person take a particular action. (Questions usually begin, "Should I?")
DO NOT take sides in a case pending in court.
DO NOT give information to one party that you would not give to all parties.
DO NOT tell anyone what a judge has decided until the decision is public.
epilogue
In 1947 two sisters in Obion County operated "an office purporting to be an insurance and real estate office .... [But plaintiffs claim] that the real business conducted by defendants in this office ... is the illegal practice of law." The sisters prepared deeds, contracts, wills, and title opinions, and generally offered legal advice on a variety of issues. The Tennessee Court of Appeals found them to be engaged in the unauthorized practice of law.
The court ordered an injunction against the sisters' continuation of the UPL. But question (2) helps illustrate one of the most misunderstood concepts about the unauthorized practice of law, that it is merely a way to protect lawyers from competition. As the Court of Appeals said in a 1959 case in which the Tennessee Bar Association sued a title company to prevent the company from drafting documents incident to conducting closings:
It is apparent from a consideration of the Chancellor's opinion [which held in favor of the Bar Association]... that his decision was influenced or motivated by a desire to protect the lawyers of general practice from what he considered unfair competition. In our opinion, this is not the proper test to be applied in determining whether or not the defendants ... are guilty of unauthorized practice of law...