The Ethical Risks of Paraprofessionals Providing IP Legal Services (Part 1 of 2)

Michael E. McCabe, Jr.IP Ethics, OED, Office of Enrollment and Discipline, Unauthorized Practice of Law0 Comments

imagesIndividual commitment to a group effort–that is what makes a team work, a company work, a society work, a civilization work.” –Vince Lombardi

Every successful IP lawyer, whether a solo practitioner or a senior partner in a mega-firm, has one thing in common: a great support team of secretaries, legal assistants, technical advisors, and paralegals. A great paraprofessional is worth his or her weight in gold.

Indeed, the better the support team is, the greater the pressure is for IP counsel to delegate substantive legal work to their non-legal support team. After all, in a time where clients are demanding greater cost savings, one might reasonably look to the paraprofessional to do an attorney’s work at a fraction of the cost.

The tendency to move substantive legal work away from the attorney to a paralegal is especially prevalent in patent and trademark prosecution, where a large part of the practice is the preparation and filing of various forms for a flat or capped fee. But while some IP practitioners and firms may be economically incentivized to “in-source” legal services away from attorneys to lower cost paraprofessionals, such a practice model is fraught with ethical risks not only for the lawyer but potentially to the paraprofessional.

It is important for the lawyer and paraprofessional to be mindful of how the rules of legal ethics apply to them and where the law draws the “line” between lawful and illegal or unethical conduct.

Unauthorized Practice of Law

Perhaps the biggest “no no” for the paraprofessional is to engage in the “unauthorized practice of law.”  The practice of law is usually limited to members of the bar.  See, e.g., Cal Bus. & Prof. Code § 6125 (“No person shall practice law in California unless the person is an active member of the State Bar.”).

Courts have acknowledged that limiting the practice of law to members of the bar protects the public against rendition of legal services by persons who are not qualified. The UPL rules are not just for the non-lawyer. A lawyer who is admitted to practice law only in State A may not, in most circumstances, engage in the practice of law in State B. The lawyer practicing outside of his or her authorized jurisdiction is no different than the paraprofessional who engages in the practice of law. See Model Rules of Prof’l Conduct R. 5.5. A paralegal likewise is prohibited from engaging in the unauthorized practice of law.

Registered patent attorneys and patent agents are partially exempt from the  general UPL rules.  Since the Supreme Court issued its seminal decision in Sperry v. Florida, a registered practitioner may practice patent law from any jurisdiction in the United States without violating UPL laws; their federal patent bar license effectively preempts state law prohibiting the unauthorized practice of law.

These UPL exceptions are limited to USPTO practice and do not, for example, authorize a practitioner to engage in non-USPTO related services, such as litigation, without admission to the relevant state or federal bar.

handcuffed confessionWhy does UPL matter?  In most states, the unauthorized practice of law is a crime. See, e.g., Alaska Stat. § 08.08.230 (unlawful practice is class A misdemeanor); Idaho Code Ann. § 3-420 (unlawful practice of law is an offense with up to $500 fine or imprisonment up to six (6) months, or both); Tex Gov. Code § 6.017 (representation as attorney is class A misdemeanor or felony of the third degree if previously convicted under this section); Tex. Penal Code § 38.122 (falsely holding oneself out as a lawyer is a felony of the third degree).

Accordingly, even though a lawyer is ethically obligated not to allow a non-lawyer to engage in the unauthorized practice of law, non-lawyers themselves have an independent legal obligation to ensure that they too comply with the prohibition against the unauthorized practice of law.  See, e.g., In re Opinion No. 24 of Comm. On Unauthorized Practice of Law, 607 A.2d 962, 969 (N.J. 1992) (“A paralegal who recognizes that the attorney is not directly supervising his or her work or that such supervision is illusory because the attorney knows nothing about the field in which the paralegal is working must understand that he or she is engaged in the unauthorized practice of law.”); see also NFPA Model Code of Ethics and Professional Responsibility and Guidelines for Enforcement R. 1.3 (2006) (“A paralegal shall avoid impropriety and the appearance of impropriety and shall not engage in any conduct that would adversely affect his/her fitness to practice.”).

One area where a USPTO practitioner is exposed to a charge of UPL is when the  attorney is suspended or disbarred from their state bars yet continues to prepare and prosecute trademark or patent applications before the Office.  In addition, with limited exceptions, non-U.S. attorneys may not represent another in a trademark matter.  Pursuant to 37 C.F.R. Section 11.19, the OED Director may refer anyone who is found to have engaged in UPL before the Office to the appropriate state authorities for possible prosecution.

Identifying conduct constituting unauthorized practice of law can be tricky because no clear definition of the “practice of law” exists.  Indeed, the definition of the “practice of law” varies from state to state.  Accordingly, it is difficult to know when a paraprofessional’s conduct might cross the line from lawful into unauthorized practice of law.  Counsel needs to be familiar with the UPL laws of the states in which they practice to ensure that they and their support team do not run afoul of state UPL law.

Delegation and The Duty to Supervise

supervisorLawyers are not prohibited “from employing the services of paraprofessionals and delegating functions to them, so long as the lawyer[s] supervise[] the delegated work and retain[] responsibility for their work.”  Accordingly, non-lawyers may provide substantive legal support so long as they do so under the direction and supervision of a lawyer. There are many tasks that a lawyer may delegate to a non-lawyer. “While appropriate delegation of tasks is encouraged and a broad array of tasks is properly delegable to paralegals, improper delegation of tasks will often run afoul of a lawyer’s obligations under applicable rules of professional conduct.”

The lawyer may never delegate away to a non-lawyer the exercise of the lawyer’s professional judgment. The ethics rules governing lawyers mandate that “a lawyer having direct supervisory authority over the non-lawyer shall make reasonable efforts to ensure that the person’s conduct is compatible with the professional obligations of the lawyer.”  This same duty applies to those practitioners who are subject to the USPTO’s Rules of Professional Conduct.

Lawyers can be professionally disciplined if they grant their non-lawyer assistants so much leeway that they may be found to have violated the lawyer’s duty of supervision. This includes, by way of example, delegating to the non-practitioner the power to electronically sign, via the /s/ signature, documents filed in the Office under the practitioner’s name.  The USPTO rules on electronic signatures require the attorney himself or herself personally to /s/ sign their filings; this duty cannot be delegated to the paraprofessional.

Once a task is delegated to a non-lawyer, the lawyer must supervise the process by providing adequate instructions, monitoring their progress, and reviewing the completed project.  According to the NALA Code of Ethics & Prof’l Responsibility, “A paralegal may perform any task which is properly delegated and supervised by an attorney, as long as the attorney is ultimately responsible to the client, maintains a direct relationship with the client, and assumes professional responsibility for the work product.”  As indicated in the comment to Model Rule 5.3,

A lawyer must give [his or her] assistants appropriate instruction and supervision concerning the ethical aspects of their employment, particularly regarding the obligation not to disclose information relating to 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.

See ABA Model Rules of Prof’l Conduct, R. 5.3, cmt. 2.

It is very important to properly delegate tasks and supervise non-lawyers because failure to do so may result in serious consequences for the lawyer.  See, e.g., Attorney Grievance Comm’n of Md. v. Hallmon, 681 A.2d 510 (Md. 1996) (90-day suspension for failure to supervise or review the paralegal’s work); In re Nassif, 547 N.W.2d 541 (N.D. 1996) (disbarment for failure to supervise which resulted in the unauthorized practice of law by paralegals).   Model Rule 5.3 and the counter-part USPTO ethical rules provide that

(c) a lawyer shall be responsible for conduct of such a person that would be a violation of the Rules of Professional Conduct if engaged in by a lawyer if: (1) the lawyer orders or, with the knowledge of the specific conduct, ratifies the conduct involved; or (2) the lawyer is a partner or has comparable managerial authority in the law firm in which the person is employed, or has direct supervisory authority over the person, and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.

See Model Rules of Prof’l Conduct R. 5.3(c); see also Restatement (Third) of the Law Governing Lawyers § 4 (“[t]he lawyer codes have traditionally prohibited lawyers from assisting nonlawyers in activities that constitute the unauthorized practice of law.”).  For a detailed discussion of OED discipline imposed on a registered patent attorney’s failure to supervise a paralegal, see our September 26, 2014 post (click here).

Stay tuned tomorrow for Part 2.

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