UPL Opinion 214
Non-Lawyer Representation, for Compensation, of a Party to Arbitration
You have asked the Committee to opine as to whether it is the unauthorized practice of law for a Certified Public Accountant ("CPA"), who is not a licensed attorney in any jurisdiction, to represent a Claimant in an arbitration proceeding against the Claimant’s former brokerage firm and former stock broker. The CPA is not, and never has been, an employee of Claimant. Among the services the CPA is providing to the Claimant are: counseling to the Claimant regarding potential legal claims against the brokerage company, drafting a statement of claim asserting the causes of action identified, drafting discovery requests, responding to discovery requests and objecting to discovery requests as appropriate. During representation at the hearing the CPA will introduce exhibits, conduct examination of witnesses, including expert witnesses, object to exhibits and make legal argument on behalf of the Claimant. The CPA is receiving compensation from the Claimant for his representation of Claimant in the arbitration proceeding. This arbitration proceeding is before the National Association of Securities Dealers, Inc. ("NASD").
The Definition of the Practice of Law in the Commonwealth of Virginia, Part 6, §I (B) states that "one is deemed to be practicing law whenever":
(1) One undertakes for compensation, direct or indirect, to advise another, not his regular employer, in any matter involving the application of legal principles to facts or purposes or desires.
(2) One, other than as a regular employee acting for his employer, undertakes, with or without compensation, to prepare for another legal instruments of any character, other than notices or contracts incident to the regular course of conducting a licensed business.
(3) One undertakes, with or without compensation, to represent the interest of another before any tribunal — judicial, administrative, or executive — otherwise than in the presentation of facts, figures, or factual conclusions, as distinguished from legal conclusions, by an employee regularly and bona fide employed on a salary basis, or by one specially employed as an expert in respect to such facts and figures when such representation by such employee or expert does not involve the examination of witnesses or preparation of pleadings.
(4) One holds himself or herself out to another as qualified or authorized to practice law in the Commonwealth of Virginia.
The Committee has issued three opinions addressing the issue of a "non-lawyer" representing a party in an arbitration proceeding. In UPL Opinion 92, the Committee found that:
It is not the unauthorized practice of law for a non-Virginia-licensed attorney to present evidence and argue matters of law before an arbitration panel of the American Arbitration Association in Virginia in order to represent a client from the attorney’s jurisdiction in a franchise contract dispute.
In UPL Opinion 200, the Committee addressed the issue of whether a non-Virginia/foreign attorney, licensed to practice law in Maryland, could represent a corporation in an arbitration proceeding held in Virginia. The Committee found that the foreign attorney could proceed with such representation and that it would not be unauthorized practice. The corporate client was an existing client, which the attorney represented elsewhere. An arbitration proceeding involving this client was set to take place in Virginia. The Committee determined that an attorney is "practicing law" in Virginia when representing a party in an arbitration proceeding but that an arbitration proceeding is not practice before a "tribunal." The Committee then applied the factors under Pt. 6, §I (C)(1)-(3) Rules of the Virginia Supreme Court, allowing for certain "temporary practice" by a foreign attorney:
1. Such foreign attorney must be admitted to practice and in good standing in any state in the United States; and
2. The services provided must be on an occasional basis only and incidental to representation of a client whom the attorney represents elsewhere; and
3. The client must be informed that the attorney is not admitted in Virginia.
The Committee concluded that the attorney satisfied these requirements and it would not be unauthorized practice of law for the foreign attorney to represent his client in the arbitration proceeding in Virginia.
In UPL Opinion 206 the Committee addressed the issue of whether it was the unauthorized practice of law for a non-attorney corporate officer to represent the corporation at an arbitration conducted in Virginia and determined that this would not be unauthorized practice.
The definition of the practice of law allows "a regular employee acting for his employer" to provide legal advice and prepare legal documents for this employer. While the definition and Rule 1-101 prohibit a non-lawyer from representing the interests of or appearing on behalf of his employer or a corporation before "a tribunal," the definition of "tribunal" in UPC 1-1 does not include an arbitration proceeding. It follows, therefore, that a non-attorney officer of a corporation can represent that corporation and provide legal advice to the corporation/employer within the context of an arbitration proceeding.
UPL Op. 206 (Feb. 10, 2004).
The individual in the present inquiry is neither an attorney licensed in another jurisdiction coming into Virginia to handle a matter for a client the attorney represents elsewhere nor is the person or entity who is a party to the arbitration the regular employer of this individual. Rather, this individual is a CPA, in Virginia, not a licensed attorney in any jurisdiction, who appears to be independently offering to provide to customers from the public, services related to arbitration, including representation, and charging a fee for those services and representation. Based on the Definition of the Practice of Law in the Commonwealth of Virginia, in particular, subsection (1), and the decisions of the Committee in UPL Opinions 92, 200 and 206, the conduct of this CPA is the unauthorized practice of law.
Of note, in September 2006, the NASD, (n/k/a Financial Industry Regulatory Authority, Inc. ("FINRA")) filed with the Securities and Exchange Commission ("SEC") a proposed rule amendment relating to representation of parties in arbitration and mediation.1 On September 26, 2007, the SEC entered an order approving the proposed rule amendment.2 This rule amendment came about in light of decisions from two jurisdictions, Florida and California,3 addressing the issues of out-of-state lawyer and non-lawyer representation of parties in arbitration and the expanding multi-jurisdictional practice of law in jurisdictions throughout the country generally. The changes in the rule (1) codified the current practice by explicitly stating that parties may represent themselves in arbitration; (2) codified current practice permitting multijurisdictional practice by attorneys in NASD Dispute Resolution to the extent permitted by state law and required that the attorney must be licensed to practice and in good standing in a U.S. jurisdiction; (3) allowed that parties may be represented by a person who is not an attorney unless applicable law prohibits such representation or the person is currently suspended or barred from the securities industry in any capacity or is currently suspended or disbarred from the practice of law; and (4) allowed an attorney to represent a client in NASD arbitration or mediation held in any U.S. location, regardless of where the attorney is licensed, the representation being subject to the applicable law of the particular jurisdiction.
While it is beyond the purview of the Committee to apply or interpret the rules of the NASD, it appears that the Committee’s conclusion in this matter is consistent with the NASD’s rule as amended regarding representation in NASD arbitration and mediation.
April 8, 2008
Supreme Court Approved
February 27, 2009
1 http://www.sec.gov/rules/sro/nasd.shtml: Notice: Rel. No. 34-55604
3 Florida Bar v. Rapoport, 845 So. 2d 874 (Fla. 2003); Florida Bar Re: Advisory Opinion on Nonlawyer Representation in Securities Arbitration, 696 So. 2d 1178 (Fla. 1997); Birbower, Montalbano, Condo & Frank v. Superior Court, 949 P. 2d 1(Cal. 1998).
Updated: Mar 16, 2009