The Interplay of In-house Paralegals, Legal Work and Ethics
Because paralegals are unlicensed and therefore, in contrast to licensed attorneys, are not generally subject to professional sanction by an oversight body, it can be said that paralegal ethics are largely derivative from the enforceable ethics which govern attorneys. That is not to say that there are no consequences for paralegals who breach ethical standards; however, the consequences are usually limited to loss of status within the legal community, including possible job loss. The primary ethic which is specific to paralegals (and other laypersons) is the unauthorized practice of law (UPL) prohibition. But due to paralegals’ liminal status in the legal community, in-house paralegals, in particular, may struggle to clearly understand their role and limitations in a corporate setting, where typical UPL restrictions intersect with substantive exceptions.
A paralegal, by NALA’s definition, is supervised and directed by a licensed attorney in good standing and is therefore constrained by that supervision and direction in any capacity (1997). Therefore, it is expected that an in-house paralegal who is asked to perform such tasks as drafting a contract; completing a form for a quasi-judicial administrative process, like a workers compensation claim; or preparing an eviction notice will have his/her product reviewed by a licensed attorney. Likewise, it is a reasonable inference that an in-house paralegal will not be asked or allowed to represent the corporation in any type of “judicial, quasi-judicial, or administrative proceeding, or other formal dispute resolution process” (Arizona Supreme Court Rule 31(a)2.C), both because it is generally proscribed and also because it may interfere with the role of the in-house attorney: that is, why would the company ask a non-lawyer to represent it if there is an attorney available on staff? All of the tasks above are correlated with Rule 31(a)2, which defines preparing documents that affect legal rights, representing another party in various proceedings, preparing documents for filing in various judicial venues, and negotiating legal rights as comprising the practice of law. As formally stated, paralegals are ethically and legally barred from practicing law: therefore, conceptually, they would not be able to perform any of the previously mentioned tasks independently, and the supervision duty of the attorney would enforce this restriction. The limited role of an in-house paralegal in these situations would be to prepare draft documents, only; those documents would then be reviewed, corrected and approved by the attorney, effectively rendering the product as his/her own.
However, in point of fact, each of the activities discussed are exemptions to UPL rules and can be performed by non-attorneys. Rule 31(d) makes explicit the myriad situations in which non-attorneys can create documents which affect legal rights (Rule 31(d)20), represent another party in various proceedings (Rule 31(d)(1, 2, 3, 4, et al), prepare documents for filing in judicial venues (Rule 31(d)3, 7, 9, et al) and negotiate legal rights (Rule 31(d)20). Therefore, it would seem that the additional training and expertise of a paralegal is ironically a greater and somewhat artificial ethical limitation in an in-house role, compared to a lay employee.
In 2004, the State Bar of Arizona evaluated the question of what scope of work a non-attorney, corporate employee could perform relative to UPL rules (“UPL 04-03”). In response to a scenario in which a corporate “legal coordinator” drafts legal documents for company use without review or supervision by an attorney, drafts pleadings or other filings for judicial process, coordinates outside counsel’s advice, and represents the company in arbitration or superior court, the Bar had a mixed opinion. On the first question of drafting legal documents for company use, the Bar cites Rule 31(d)20 (then (c)19), which allows the preparation of any documents incidental to the regular course of business if kept in-house, even if those documents may affect the legal rights of the company (4). However, on the second question, the Bar determined that the employee could prepare pleadings on behalf of the company, without supervision, only if s/he is also a certified legal document preparer; the Bar further warns that regardless of pleading preparation, the company cannot generally self-represent in Superior Court. On the third question, the Bar allows the employee to coordinate information from outside counsel, and further affirms that the employee can supervise outside counsel if s/he is authorized by the company to do so. However, the Bar issues a strong caveat that lay employees must not offer legal advice or opinion, even solely for consideration within the organization. Lastly, the Bar takes an unequivocal stance that the employee may not represent the company in arbitration, citing Rule 31(a)2.C (then Rule 31(a)2.A) and asserting that such representation would be “general legal representation…representing the legal rights of Company” (6), intrinsically requiring legal arguments and legal advice.
However, this ruling, nearly ten years old, seems unexpected in light of Rule 31(d). First, what comprises legal advice becomes very gray when preparing certain documents. Take, for example, the discussion in another 2004 Bar opinion, in which it was determined that employees of a property management company can prepare and record liens, evictions, and demand letters, even when doing so means that legal rights are affected and constitutes a filing with a judicial or otherwise proscribed body under Rule 31(a)2.D (“UPL 04-02”). The Bar allows this, but it is difficult to imagine how the unsupervised preparation of such documents would not entail de facto legal advice, too, because the choices of wording, amounts and other information within the document affect legal rights; therefore, is the inference that one should never risk preparing these documents, in any situation, or that in certain limited conditions, a company may evaluate its own legal position and proceed accordingly? Certainly the Arizona Bar is clear in this opinion that it is unwilling to assert the former, and it takes a step toward the latter by stating that as a matter of public policy, the Rule should be applied more toward an interpretation of pro se representation. The opinion states: “Therefore a management company with broad responsibilities regarding management of a property or management of an association may prepare legal documents that are incidental to the management of the property (just as the owner would be allowed to do) pursuant to Rule (c)19” (now (d)20) (5, emphasis mine).
Likewise, “UPL 04-03’s” prohibition against representation in arbitration seems troublesome based on its own logic. If representation before an arbitrator would comprise general legal representation by intrinsically requiring legal advice, it is difficult to align this rationale with the exemptions otherwise provided. Currently, non-attorneys are permitted under Rule 31(d) to represent a company at DES Appeal Tribunals (1); in any quasi-judicial hearing addressing personnel matters (2); in Office of Administrative Hearings and before the State Bar of Arizona Fee Arbitration Committee (11); in justice or police courts (3); in Arizona Tax Court (4); before review boards at the Industrial Commission and OSHA (5); and the list goes on, even including Superior Court if the matter is about certain water rights (9). The scope and implications of the exempted venues are so broad that it seems entirely arbitrary to limit such permissible representation in a private arbitration, as all of the exemptions require legal arguments and therefore, by the Bar’s logic, legal advice. More, in some areas, such as with workers compensation or personnel matters, the law can be quite complex and rife with significant financial, procedural and legal impacts for the company. And if a company can self-represent in a justice court, how does the Bar reconcile an implied mandate that it cannot also file its own paperwork in the process?
The issue of representation by non-attorneys in alternative dispute resolution (ADR) procedures is confounding, as well. One purpose of ADR is to streamline the process, and no Arizona statute requires parties to be represented by an attorney: in fact, A.R.S § 12-1506 provides for the right to representation, but not for the requirement of representation. In some respects, such a requirement is antithetical to the spirit and purpose of ADR, especially mediation, which generally prefers to strip the dispute discussion down to only primary decision-makers (Fisher 2000). In this author’s mediation training, delivered by the Arizona Attorney General’s Office in 2007, it was asserted that ideal mediations included only decision-makers representing the interests of the parties; no requirement for representation of the parties, regardless of legal status (i.e., a natural person or corporation), was cited. While there is ample case law to support the restriction on corporations representing themselves in Superior Court, it is less clear whether it could be legal to require them to hire an attorney for ADR in the absence of a statute, especially if the ADR is outside of the court system and undertaken as a private matter. Yet, that is precisely the result of prohibiting non-attorney representation.
The question of representation by a lay employee, both in front of a body as specified in Rule 31(a)2.C and through documents or acts which affect legal rights in Rule 31(a)2.A, D and E, may change as public policy evolves. Amendments to Rule 31(d) continue, increasing the types and scope of exemptions, and as the Arizona State Bar’s opinion in “UPL 04-02” suggests, public policy is pushing toward more permissions to conduct company affairs as the company sees fit, rather than less. Further, it is a logical argument that as so-called corporate personhood garners more legal rights equivalent to a natural person’s, it will become an inevitable leap for corporations claim the right to pro per/pro se representation. As Joel Seligman writes, “Corporations have been considered ‘persons’ or ‘citizens’ in various provisions long before this case [Citizens United]…The real issue is what legal rights flow from the status of being a person” (“Is the Corporation a Person?”).
How this discussion pertains to in-house paralegal ethics is again an issue of what unique situations paralegals face in that role: conceptually, s/he may be asked to represent the company at a proceeding or to prepare a document exempted by Rule 31(d) that would normally comprise a UPL violation. This is because in the process of conducting and managing the business’ interests, there are substantive overlaps between operational or management functions and legal procedures. These overlaps would not normally arise for paralegals working in other settings, especially a traditional law office, and are therefore important to consider: the in-house paralegal role likely requires more UPL vigilance and discernment on an ongoing basis. It is interesting to note that in-house paralegals, by definition, may be ironically more constrained than completely untrained personnel performing legal tasks within the organization – not by law, but by practice. This is because attorney supervision of the paralegal tautologically eliminates him/her performing legal work which is unsupervised, and assigned roles of attorney and paralegal within a corporation make it unlikely that the paralegal could fall afoul of UPL restrictions. However, a lay employee, such as the legal coordinator cited in “UPL 04-03,” may routinely perform unsupervised work which is generally UPL, but for its inclusion under the 31(d) exemptions. So, while the UPL ethics for both paralegal and lay employee are the technically the same, the application of those ethics to respective roles creates a notable divergence in freedom of practice.
Works Cited
Alternatives to Trial: a Guide to Alternative Dispute Resolution. State Bar of Arizona. Web. 20 Mar. 2013.
Definitions of “Paralegal.” NALA, Jan. 1997. Web. 20 Mar. 2013.
Fisher, Paul. All You Need to Know About Mediation But Didn’t Know to Ask – a Parachute for Parties in Litigation! Mediate.com, Nov. 2000. Web. 20 Mar. 2013.
Order Amending Rule 31(d), Rules of the Supreme Court: Rule 31(d)28. Supreme Court of Arizona, Sept. 2009. Web. 20 Mar. 2013.
Order Amending Rule 31(d), Rules of the Supreme Court: Rule 31(d)29. Supreme Court of Arizona, Sept. 2009. Web. 20 Mar. 2013.
Rules of the Supreme Court of Arizona: V. Regulation of the Practice of Law. Supreme Court of Arizona. Web. 20 Mar. 2013.
Seligman, Joel. Is the Corporation the Person? University of Rochester, Office of the President, May 2010. Web. 20 Mar. 2013.
UPL 04-02: Property Management Companies. State Bar of Arizona, Oct. 2004. Web. 20 Mar. 2013.
UPL 04-03: Non-lawyer In-house Employee Legal Services. State Bar of Arizona, Dec. 2004. Web. 20 Mar. 2013.