Legal Memorandum: Unauthorized Practice of Law

Issue: Do the Model Rules of Professional Conduct or the Model Code of Professional Responsibility prohibit a corporation from practicing law?

The Model Rules of Professional Conduct and the Model Code of Professional Responsibility prohibit lawyers from assisting non-lawyers in performing an activity that constitutes the unauthorized practice of law.  Model Rules of Professional Conduct Rule 5.5 (1983); Model Code of Professional Responsibility DR 3-101 (1980).

Whether particular actions constitute the practice of law is a matter of state law.  Annotated Rules of Professional Conduct at 465 (ABA 1993).   A bank that prepares an Illinois land trust agreement for its client and/or a deed into trust is engaged in the unauthorized practice of law.  Illinois Ethics Opinion No. 90-13.  In that case, the committee reasoned that the bank would necessarily be giving legal advice to its customer and accordingly, would be involved in the unauthorized practice of law.  The committee reasoned that having a trust officer who was also an attorney would not avoid the bank’s practicing law without a license and would further involve any attorney trying to effect the bank’s purposes in a conflict of interest.  Id.  The committee noted that a land trust agreement is prepared principally to benefit someone other than the bank.  Id.  Giving advice as to how that agreement will affect the beneficiary involves the bank in giving legal advice to the grantor and/or beneficiary.  Id.

A recent Illinois ethics opinion illustrates this potential violation of ethical rules.  Illinois Ethics Opinion No. 94-1.  In that case, a seller of real estate retained a realty company as its broker.  Id.  A lawyer was […]