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                                         126 N.J.L.J. 1306
                                        November 15, 1990
                                        Modified In re Opinion No. 24,
                                        128 N.J. 114 (1992)


Appointed by the New Jersey Supreme Court


Independent Legal Assistants

    This Committee has conducted an investigation to determine whether paralegals or legal assistants, who perform their services outside the environment of employment by a law firm, are engaged in the unauthorized practice of law. The issue has become significant because there is an increasing number of paralegals and legal assistants who have organized to offer their services independent of employment by lawyers. A number of complaints with respect to paralegals engaged in the independent practice have been held pending this Committee's investigation and the promulgating of this opinion.
    The Committee sought written comment from interested individuals through a notice published in the New Jersey Law Journal. That request resulted in the Committee receiving information from a variety of paralegal groups, associations, state-wide organizations, and the like. The information received was consistent in the following two respects:
    1.    All of the material received expressed positive views as to the value of work being performed by paralegals; and

    2.    All of the material expressly or implicitly recognized that the work of paralegals must be done under the supervision of attorneys. None of the written materials submitted focused on the distinction between the paralegal who works as an employee of an attorney or a law firm on the one hand, and the paralegal who functions as an independent contractor offering services to attorneys generally on the other hand.

    Paralegals or legal assistants (the terms appear to be synonymous) fall into one of three categories:

    1.    The paralegal who works as an employee of an attorney or law firm;

    2.    The paralegal who offers legal assistance directly to the public; and

    3.    The paralegal who is not employed by an attorney or a law firm but who, as an independent contractor, offers services only to attorneys.

    It is clear from the material submitted that questions presented by the first two categories present easy answers. The paralegal employed by the attorney works under attorney supervision and functions appropriately. The paralegal who offers services directly to the public has no such supervision and is engaged in the unauthorized practice of law. It is the third category -- the independent contractor who offers services to attorneys -- which presents the more difficult problem and whose activities have been the focus of this Committee.
    Following receipt of the written information, the Committee determined to hold a hearing. Testimony was invited through a notice published in the New Jersey Law Journal for several weeks in advance of the date of the hearing. The hearing was well attended. The witnesses were primarily either paralegals or legal assistants, some engaged in independent practice and some employed by attorneys. The issue on which the Committee sought testimony was, again, whether paralegals or legal assistants who practice independently of employment by attorneys are engaged in the unauthorized practice of law.
    There are a number of paralegal organizations. Some were represented at the Committee's hearing. One such organization, the National Federation of Paralegal Associations, has undertaken to prepare a listing entitled "Paralegal Responsibilities." That document states that it is a "compilation of discrete activities that can be and are performed by paralegals in various specialties of law." The list "is not meant to be all inclusive, but is an example of the types of assignments that can be delegated to paralegals." There follows a 19-page listing of activities which includes drafting of many kinds of legal documents from motions to avoid liens in bankruptcy to shareholder and buy-sell agreements in corporate work. The list includes almost all activities except court appearances -- in the collection field, the list includes appearing in court and conducting examination on garnishment and execution. The all-encompassing view of the work properly delegable to a paralegal is instructive when viewed in the light of the problem, discussed below, inherent in the work of independent paralegals.
    Many of the witnesses took as a starting point the definition of legal assistant promulgated by the Board of Governors of the American Bar Association:

        A legal assistant is a person, qualified through education, training or work experience, who is employed or retained by a lawyer, law office, governmental agency or other entity in a capacity or function which involves the performance, under the ultimate direction and supervision of an attorney, of specifically-designated substantive legal work, which work, for the most part, requires a sufficient knowledge of legal concepts that, absent such assistant, the attorney would perform the task.

    That definition contains three elements of significance to the
Committee's inquiry:

    1.    The legal assistant should be "qualified through education, training, or work experience."

    2.    The legal assistant is a person "who is employed or retained by a lawyer."

    3.    The legal assistant is a person who does work "under the ultimate direction and supervision of an attorney . . . which work . . . requires a sufficient knowledge of legal concepts that, absent such assistant, the attorney would perform the task."

    The ABA definition does not provide a simple answer to this Committee's inquiry. When it defines a legal assistant as a person who is "employed or retained by a lawyer", it appears, without more, to recognize that the independent contractor legal assistant who is retained rather than employed would fit its definition. Whether the assistant is employed or retained by the lawyer, however, the requirement of supervision by the attorney is clear.
    All of the witnesses who practice as independent contractors testified that they offered their services only to attorneys and did not make their services available to the public. All of them stated, therefore, that, whether engaged as an employee of an attorney or whether retained as an independent contractor, the work done was under the supervision of the attorney and, therefore, did not constitute the unauthorized practice of law. See footnote 1 1

    It became apparent from the testimony of the witnesses that, although the independent paralegals who testified offer their services only to members of the bar and consider themselves to be working under the supervision of attorneys, there are problems inherent in that independent practice of the paralegal or legal assistant's work. Most significant has to be the absence, in the case of the retained independent contractor paralegal, of the inquiry as to the paralegal's credentials that would always be conducted when the attorney hires the paralegal as an employee. The hired paralegal would necessarily be subject to the interview process by the hiring attorney to determine that the person's level of training and experience is such to justify the attorney turning over the substantive legal work to the paralegal. The retaining of an independent paralegal for a single transaction, however, presents neither the necessity for the interview process nor the day-to-day supervision of the paralegal's work. Because of the ongoing, day-to-day relationship between the employed paralegal and the attorney, the opportunity for observation of the paralegal's skills and for the training as well as direct supervision, are clearly at the highest possible level.

    While the ABA definition imposes the requirement that a legal assistant be a person "qualified through education, training or work experience", no law or regulation would prohibit a person lacking that qualification from holding himself out to the Bar as an independent contractor offering to do paralegal work for attorneys. While most of the paralegals who testified do possess education, training or work experience, and many of them recommended that paralegals should have certain minimum amounts of experience or education or a combination thereof, all of the witnesses recognized that there is no supervisory body which would prevent untrained or otherwise unqualified persons from working as independent paralegals. While it may be suggested that there is no difference in levels of supervision by the attorney in the case of the employed paralegal as against the independent contractor paralegal, common experience and evidence presented to the Committee demonstrate that the contrary is true and, in the case of the independent contractor, the supervision is far less and, unfortunately in all too many cases, non-existent.
    Rule of Professional Conduct 5.3 promulgated by the Supreme Court of New Jersey requires attorneys to maintain reasonable efforts to insure that the conduct on non-lawyers (retained or employed) is compatible with the attorney's professional obligations. See footnote 2 2
That rule makes the lawyer responsible for the conduct of a retained or employed paralegal that would violate the Rules of Professional Conduct if (i) the conduct is ordered or ratified by the lawyer; (ii) the lawyer has failed to make reasonable investigation that would disclose prior instances of misconduct by the non-lawyer; or (iii) if "the lawyer 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." It is the view of the Committee that, where there is an employment relationship between the paralegal and the attorney, the attorney will have that direct supervisory authority and will be in a position to take steps to avoid or mitigate the consequences of improper bad actions by the paralegal. If the relationship is one of independent contractor, however, the lawyer cannot have the same direct supervisory authority over the paralegal and is unlikely to learn of conduct in a way that would permit him to avoid or mitigate its consequences. RPC 5.3, by limiting the attorney's responsibility to those circumstances wherein he knows of conduct and can avoid it, makes it clear that the protection afforded by the Rule will not extend to the independent paralegal with the same force and effect as it will to the employed paralegal. Since there is no body maintaining files or information with respect to misconduct by paralegals, it is difficult to determine how a lawyer could comply with RPC 5.3(c)(3) by making "reasonable investigation" in instances of past misconduct.
    As matters presently stand, there is no mechanism that would regulate the conduct of the paralegal other than the supervision of the attorney for whom the work is done, which, more often than not, may be sporadic, uneven or non-existent. That is demonstrated by the following:
    1. While there are a number of different associations and organizations with which paralegals may affiliate, there have been no standards or guidelines set down by any body with regulatory authority to control and regulate the activities of independent paralegals.
    2. At least one New Jersey college provides an American Bar Association-approved paralegal program and provides a Certificate of Completion to successful candidates. A Bachelor of Arts degree is a prerequisite to the obtaining of the Certificate of Completion. Those requirements are applicable only to matriculating students and it is clear that no law or regulation imposes the requirement of obtaining such a Certificate of Completion on those students who propose to practice.
    3. Neither the State of New Jersey, any Bar Association, nor any organization or affiliation of paralegals or legal assistants provides for licensing procedure or any other procedure to regulate and control the identity, training and conduct of those who engage in the work. See footnote 3 3
    4. While the ABA definition states that a legal assistant should be "qualified through education, training or work experience" which will serve as a guideline for its members in the use of paralegal assistants, that requirement is not imposed or binding upon a person who desires to engage in independent paralegal practice. Most of the witnesses testified that they believed there should be a requirement of a minimum number of years of training or education to permit one to practice as an independent paralegal. All of them agreed, however, that no such requirement presently exists.
    5. There is no paralegal association or organization which functions in a way that can impose any uniform mechanism of standards of ethics, disciplinary proceedings, and rules and regulations to oversee the activities of paralegals. Those who function as paralegals, therefore, do so pursuant to standards and rules either of their own devising or of the devising of the variety of different groups or organizations, none of which have the power to impose adherence to standards or to control or discipline those who do not adhere to standards.
    Problems raised by the absence of direct supervision and regulation of the independent paralegal are highlighted by the kind of work being undertaken by some independent paralegals. For example, one of the witnesses testified that she had become an expert in probate matters as a result of experience in the probate field and learned from that experience that many attorneys who do probate work do not specialize in estate work and are generally unfamiliar with the field. Many of those attorneys do not want to refer their matters to attorneys who are specialists, but desire to retain control of their files and clients. Accordingly, those attorneys retain the witness to handle the estates that come into their offices. She testified that she handles matters for approximately forty-five attorneys. She stated that she 'ultimately takes full responsibility for making sure that I get done what needs to be done and, believe it or not, that the attorney gets done what he or she need to get done." She signs correspondence for the attorneys, initialing it to make it clear that she has written the correspondence. She states that she never signs a letter "that contains a legal opinion, legal advice." She does, however, prepare many of those letters for her attorney clients and she has much client contact (Tr. at 24). See footnote 4 4 She handles safe deposit box openings, takes clients to motor vehicle departments to transfer vehicles, handles social security matters for them. She charges the attorneys at the rate of $45 per hour. She testified that she accepts work from many attorneys who have no experience or training in estate or probate work. See footnote 5 5 Therefore, as a result of her perceived expertise, she does all of the technical estate and probate work for the attorney and the attorney who participates in this practice and collects a fee over and above the charges of the witness faces the possibility of ethical problems. See, e.g., RPC 1.5(a).
    Another paralegal described a different specialty which permits her to provide a service for attorneys who do not have in- house competence in that specialized area. She stated the following:
    On occasion a matter will come into the attorney's office in
a very specialized area of law that the in-house staff is unfamiliar with. Rather than send their client away, the attorney can call me to assist.
For instance, one of my specialties is bankruptcy law and of late my work in assisting attorneys has been in that area. (Tr. at 69)
    To the extent that paralegals such as the probate specialist and the bankruptcy specialist are providing expertise to attorneys who do not have that expertise in-house, their work demonstrates that the concept of direct supervisory control by the attorney is illusory. It seems highly unlikely that an attorney who does not do estate work or bankruptcy work in his office would employ a full-time paralegal to perform that work in the attorney's office. There appears, however, to be some significant group of attorneys who do retain the services of an independent paralegal to fill in that area of specialty and expertise for the attorney that the attorney does not have in-house. While the attorney who retains that specialist paralegal may, on the surface, appear to have responsibility for the work of the paralegal, it is difficult to determine how that attorney can utilize reasonable efforts to insure that the conduct of the paralegal, who is working in a field unfamiliar to the attorney, will be "compatible with the professional obligations of the lawyer" (RPC 5.3). Based on the testimony and evidence considered by the Committee, the paralegal admittedly is performing legal services in an area not included within the attorney's range of expertise. It is difficult to see how the lawyer can either order or ratify the paralegal's conduct or provide that direct supervisory authority over the paralegal which would permit the avoidance or mitigation of improper conduct required by RPC 5.3. In these areas, the paralegal is becoming a substitute for the attorney, not an assistant to the attorney, and that is a situation which comes about because of the independent nature of the paralegal's work relationship.
    The nature of the work of independent paralegals presents other problems. Those paralegals employed in an attorney's office do prepare correspondence that is routinely reviewed and signed by the attorney. The independent paralegals made it clear through their testimony, however, that a much looser arrangement exists in their practices with respect to correspondence and communication. Some of the paralegals keep supplies of the attorneys' letterheads in the paralegals' offices. The paralegals acknowledge that they send out letters, signed in the name of the paralegal, but that they do so without prior review by the attorney. In some instances, the attorneys whose letterheads are used do not receive copies of the letters from the paralegals. The potential for misunderstanding by the public which may receive those letters, and the absence of supervision by the attorney in the use of the attorney's letterhead, is an example of the kind of problem that the practice of the independent paralegal presents.
    Conflict of interest is another area of concern created by the practice of the independent paralegal. When a paralegal is employed by a single law firm, conflict can be avoided through the law firm's own techniques for avoidance of potential conflicts. When the independent paralegal works for numerous law firms, however, the possibility of being involved in situations of real or apparent conflict must exist. One of the paralegals testified:
        I realize and I have had instances where two attorneys, an attorney involved in a contest [sic] estate where we filed the complaint order to show cause contesting an issue, and an attorney on the other side has called me who happens to be my client in other estate matters who is unable to use me in this contest because I'm working for another firm. And I've just said I'm sorry. You know I'm working on the side that's filing against your client. I certainly can't work on your side as well. (Tr. at 33) (Emphasis added)

    While the paralegal in that instance expressed a sensitivity for the conflict, the appearance of and potential for conflict will increase dramatically when independent paralegals offer their services to multiple law firms to assist them in litigated matters. Although the paralegal may be sensitive to avoid functioning for two adversary attorneys in the same case, the potential for conflict increases in the same magnitude as is represented by the number of different law firms represented by the one paralegal. Attorneys know how difficult it can be for their law firms to avoid conflicts of interest when there are multiple attorneys working within the same firm. The problem is exacerbated to a point which may not be controllable when the relationships multiply by virtue of a single, independent paralegal representing multiple law firms.
    The Committee is sensitive to the fact that the practice of law becomes ever more complex and that there is a need to provide legal services to the public. Some of the witnesses who appeared before the Committee expressed the view that the work of the independent paralegal would have the result of bringing legal services more extensively to the public and at fee levels that would be more affordable because of the lesser charges involved in the work of the paralegals. It is the view of the Committee that the need to bring services to the public and the need to provide legal services at more affordable rates should not be met by permitting legal services to be performed by non-lawyers who, by virtue of their independent status, cannot be subject to the kind of direct supervision by attorneys that is otherwise required. There certainly are differing levels of complexity in the legal issues and matters to be handled by attorneys and paralegals. When the paralegal is employed by the attorney, the nature of the employment relationship makes it possible for the attorney to make the decisions as to which matters are appropriate for handling by the paralegal and which matters require direct hands-on work by the attorney. When the attorney and the paralegal are separated both by distance and the independent nature of the paralegal's relationship with the attorney, the opportunity for the exercise of that most important judgment by the attorney becomes increasingly difficult.
    This is not to say that there are not matters that could be handled by an independent paralegal with appropriate supervision by the attorney contracting with the paralegal. The problem is that the decisions as to what work may be done by the paralegal should be the attorney's to make but the distance between attorney and paralegal mandated by the independent relationship may result in the making of those decisions by the paralegal or by default.
    It is the view of the Committee, moreover, that the paralegal practicing in an independent paralegal organization, removed from the attorney both by distance and relationship, presents far too little opportunity for the direct supervision necessary to justify handling those legal issues that might be delegated. Without supervision, the work of the paralegal clearly constitutes the unauthorized practice of law. We found, from the testimony and materials presented to our Committee, that the opportunity for supervision of the independent paralegal diminishes to the point where much of the work of the independent paralegal is, in fact, unsupervised. That being the case, the independent practice by the paralegal must involve the unauthorized practice of law. The fact that some of the work might actually be directly supervised cannot justify the allowance of a system which permits the independent paralegal to work free of attorney supervision and control for such a large part of the time and for such a large part of the work.
    Without the direct supervisory control contemplated by RPC 5.3, the attorney who utilizes the independent paralegal might not have professional responsibility for the paralegal's misconduct. With the separation of the independent paralegal from the attorney, both by distance and relationship, the ability of the attorney to make reasonable efforts to insure that the paralegal's conduct is compatible with the professional obligations of the lawyer must diminish. The danger of legal work being done without appropriate professional responsibility to the public increases to a point wherein it cannot be condoned.
    The attorneys who use independent paralegals are not free of ethical problems. Where the specialized paralegal, for example handling probate matters, charges an hourly fee to the attorney, the attorney may well be put in a position to charge a fee to the probate client which will constitute a percentage of the estate. Most or all of the work will have been done by the paralegal. Since the attorney is not sufficiently skilled in the area to supervise properly the work of the paralegal, the attorney will be compensated for work done by the paralegal that, because of the lack of supervision, will constitute the unauthorized practice of law. That presents a clear ethical dilemma created by the existence of the independent paralegal. See footnote 6 6 Where the work of the independent paralegal constitutes the unauthorized practice of law, the attorney retaining that paralegal will be in violation of RPC 5.3(d)(2).
    It is suggested that the availability of the independent paralegal makes paralegal services available to the single practitioner who might not be able to employ a full-time paralegal. While there might be merit to making some of the paralegals' time available to the single practitioner, that value does not, in the opinion of this Committee, override the very real problem of lack of supervision inherent in that relationship. There well may be mechanical things to be done by the independent paralegal for the single practitioner. Any part-timer could accomplish that kind of work for the attorney without the risk of unsupervised work that is created by the independent paralegal's distance from the attorney.
    We are involved in this inquiry, moreover, with the work of a legal assistant which the ABA defines as being "substantive legal work" which "requires a sufficient knowledge of legal concepts that, absent such assistant, the attorney would perform the task." If the case is beyond the capacity of the single practitioner, whether by virtue of complexity or sheer volume of detail, this Committee does not believe that the problem is properly solved by work done by the independent paralegal who cannot properly be the subject of the kind of supervision that would be required. There are alternatives: The work could be referred to a specialist attorney or to a firm which has, in-house, the personnel to handle the volume. This Committee finds, based on the presentation of both documentary and oral materials to it, that the use of the independent paralegal to do the substantive legal work which the attorney would otherwise do, represents an inappropriate level of delegation.
    The Committee does not believe that the need for the supply of legal services requires that the Bar utilize independent paralegals whose work is unregulated either by an employment relationship with the attorney or through any systematic body of regulations.
    If there is an argument that legal services have not been brought to the consumer over the past years, it is no answer to that argument to permit those legal services to be performed by persons not subject to uniform standards, not subject to training, and who can work independently of the supervision of attorneys which must be the keymark of paralegal work. The Committee believes that the increasing number of attorneys entering the practice, the availability of legal service programs, and the availability of attorneys to do pro bono work can fill those needs appropriately. It is inappropriate to suggest that there is such a void in the providing of legal services at reasonable rates that independent paralegals should move in to fill that void. At its best, the Committee believes that the remedy of providing legal services through the independent paralegal can create more harm than the perceived ill which it purports to be designed to correct.
    The Committee recognizes that the bringing of legal services to the public must be an issue of continuing concern to the Bar. We believe, however, that it is totally inappropriate to suggest that legal services can better be brought to the public by a group that is not subject to any kind of uniform educational, training, professional or ethical standards.
    For the reasons expressed herein, it is the opinion of the Committee that paralegals functioning outside of the supervision of an attorney employer are engaged in the unauthorized practice of law.

* * *



Footnote: 1 1 No witness offered justification for the paralegal or legal assistant who offers services directly to the public. That practice was uniformly condemned and is not the subject of this report.
Footnote: 2 2 RPC 5.3 reads:

    With respect to a non-lawyer employed or retained by or associated with a lawyer:
        (a) every lawyer or organization authorized by the Court Rules to practice law in this jurisdiction shall adopt and maintain reasonable efforts to ensure that the conduct of non-lawyers retained or employed by the lawyer, law firm or organization is compatible with the professional obligations of the lawyer.
        (b) 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; and
        (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 ratifies the conduct involved;
        (2) the lawyer 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; or
        (3) the lawyer has failed to make reasonable investigation of circumstances that would disclose past instances of conduct by the non-lawyer incompatible with the professional obligations of a lawyer, which evidence a propensity for such conduct.

Footnote: 3 3 Efforts are being made in California to establish licensing procedures. No licensing procedures have been adopted to date.
Footnote: 4 4 The page references are to the transcript of proceedings conducted by the Committee on September 19, 1989.
Footnote: 5 5 Of necessity, under this scenario, the attorney cannot (and does not) provide any supervision or control over her work or her work product and, as a result, the witness is providing legal services directly to the public which has been agreed by all to be the unauthorized practice of law.
Footnote: 6 6 See, generally, the strictures against attorney collection of improper forwarding fees and against attorney cooperation in the unauthorized practice of law by lay persons. RPC 1.5 and RPC 5.5(b).

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