Can a supervised legal assistant investigate and negotiate insurance claim settlements without engaging in the unauthorized practice of law?

Plain-English summary

The Committee considered whether a legal assistant engages in the unauthorized practice of law when he investigates workmen's compensation claims, deals by telephone with insurance claim managers and agents regarding settlement, and dictates correspondence setting forth his employer's position as a client's representative, where at all times his status as a legal assistant is fully disclosed and his activities are consistently supervised and reviewed by an Alaska-admitted attorney.

The opinion noted that, although ABA Opinion 198 held that whether conduct constitutes the unauthorized practice of law in a given locality is for the local courts rather than an ethics committee, the Committee believed its opinion would help resolve the matter without court intervention. It reviewed Canon 35 and Canon 47 of the former Canons of Professional Ethics, and Ethical Consideration 3-6, which recognizes that a lawyer may delegate tasks to lay persons if the lawyer maintains a direct relationship with the client, supervises the delegated work, and has complete professional responsibility for the work product.

Relying on ABA Opinions 316 and 85, the opinion concluded that an attorney may employ nonlawyers for any task except counseling clients on law, engaging directly in the practice of law, or appearing in court, so long as the attorney takes the work, vouches for it to the client, and remains responsible to the client, and any employee negotiating adjustments reports proposed settlements to the lawyer for final decision. The opinion concluded that the lay assistant is bound by the Code, that the employing attorney is personally subject to discipline for the assistant's violations, and that disclosure of the assistant's nonlawyer status must be made in all transactions so the other person knows and understands that fact.

Currency note

This opinion was issued in 1973, before the Alaska Bar Association's adoption of the Alaska Rules of Professional Conduct (it applies the former Code of Professional Responsibility and Canons of Professional Ethics) and before the 2009 revisions to those rules. The rules on supervising nonlawyer assistants and the unauthorized practice of law have since been recodified. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific point mentioned here.

Common questions

Q: Can a paralegal negotiate insurance settlements?

A: The opinion concluded a supervised legal assistant may deal with insurers about settlement, but any proposed settlement must be reported to the supervising lawyer for the final decision; the lawyer cannot delegate that professional judgment.

Q: Does the assistant have to disclose that he is not a lawyer?

A: Yes. The opinion concluded that disclosure of the assistant's nonlawyer status must be made in all transactions, in a manner that assures the other person knows and understands the fact.

Q: Is the supervising lawyer responsible for the assistant's conduct?

A: Per the opinion, the lay assistant is bound by the Code, and the employing attorney is personally subject to discipline if the assistant violates a disciplinary rule.

Background and rules framework

The opinion applied the former Canons of Professional Ethics (Canon 35, intermediary control of a lawyer's services; Canon 47, aiding unauthorized practice) and Canon 3 / EC 3-6 of the Code of Professional Responsibility on delegating work to nonlawyers under a lawyer's supervision. Those subjects are now treated by Model Rule 5.3 (responsibilities regarding nonlawyer assistance) and Model Rule 5.5 (unauthorized practice of law). It relied on ABA Opinions 198, 316, and 85 and on Drinker's Legal Ethics.

Citations and references

Rules of Professional Conduct (former Canons/Code; cf. Model Rules):

• Canon 35 and Canon 47 of the former Canons of Professional Ethics
• Canon 3, EC 3-6 (delegation to lay persons under supervision) (cf. Model Rule 5.3, Model Rule 5.5)

Other opinions cited:

• ABA Formal Op. 316 (1967): nonlawyers may do any task except practicing law, with lawyer responsibility
• ABA Formal Op. 85 (1932): supervised employees must report proposed settlements to the lawyer
• ABA Formal Op. 198 (1939): unauthorized-practice determinations are for the local courts

See also

• Alaska Ethics Op. 79-3: Law Firm Employing an Accountant
• Alaska Ethics Op. 2010-1: Out-of-State Lawyer in an Immigration Office
• Alaska Ethics Op. 2014-3: Cloud Computing and the Practice of Law

Source

• Landing page: https://alaskabar.org/ethics-discipline/ethics-opinions/adopted-ethics-opinions-chronological/
• Original PDF: https://alaskabar.org/wp-content/uploads/73-1.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.
Ethics Opinion No. 73-1
Use of Legal Assistants.
The question to be considered is whether or not a legal assistant who
investigates workmen's compensation claims, directly deals by telephone with
the claim managers and agents of insurance companies regarding the
settlement of such claims and who additionally dictates letters of
correspondence setting forth his employer's position, as a representative of a
client, regarding their settlement is engaged in the unauthorized practice of law
if at all times his status as a legal assistant is fully disclosed to the other party
with whom he is dealing and his activities are consistently supervised and
reviewed by an employer attorney admitted to practice law in the State of
Alaska.
Although American Bar Association Opinion 198, October 21,1939 held
that a determination of what constitutes the unauthorized practice of law in a
given locality, is not for an ethics committee to decide but rather a question for
the local courts to decide, it is the position of the Ethics Committee of the
Alaska Bar Association that its opinion would be helpful in resolving this
particular matter without the necessity of court intervention.
Canon 35 of the Canons of Professional Ethics states in part:
The professional services of a lawyer should not be controlled or exploited by any
lay agency, personal or corporate, which intervenes between client and lawyer. A
lawyer's responsibilities and qualifications are individual. He should avoid all
relations which direct the performance of his duties by or in the interest or such
intermediacy. A lawyer's relation to his client should be personal and the
responsibility should be direct to the client. . . .
Canon 47 of the Canons of Professional Ethics states:
No lawyer shall permit his professional services, or his name, to be used in aid of,
or to make possible, the unauthorized practice of law by any lay agency, personal
or corporate.
As stated in American Bar Association Code of Professional
Responsibility, Canon 3, Ethical Consideration 3 - 6, it is not unusual for a
lawyer to delegate tasks to clerks, secretaries, and other lay persons. It further
states that such a delegation is proper if the lawyer maintains a direct
relationship with his client, supervises the delegated work, and has complete
professional responsibility for the work product. Such a delegation enables a
lawyer to render legal services more economically and efficiently.
As further pointed out in American Bar Association Opinion 316, 1967,
an attorney may employ non-lawyers to do any task for him except counsel
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clients about law matters, engage directly in the practice of law, or appear in
court or in formal proceedings a part of the judicial process, so long as it is the
attorney who takes the work and vouches for it to the client and is responsible
to the client. While a lawyer cannot delegate his professional responsibility to a
law student employed in his office, "[He] may avail himself of the assistance of
the student in many of the field of the lawyer's work, such as examination of
case law, finding and interviewing witnesses, making collections of claims,
examining court records, delivering papers, conveying important messages, and
other similar matters . . .. The student in all his work must act as agent for the
lawyer employing him, who must supervise his work and be responsible for his
good conduct. . . . Any such employee negotiating adjustments must report
proposed settlements to the lawyer for final decision." American Bar
Association Opinion 85, 1932. Drinker, Legal Ethics, 1954 at page 180 also
states that it is not unethical for a lawyer to employ a layman to negotiate
insurance adjustments for the lawyer's approval provided that such services do
not constitute the practice of law and the layman's compensation is not a
proportion of the lawyer's fee.
It is, of course, true that that lay assistant is, in all cases, bound by the
Code of Professional Responsibility, and the attorney who employs the lay
assistant will be personally subject to discipline if the lay assistant violates a
disciplinary rule. Also, disclosure that the lay assistant is not an attorney must
be made in all transactions in such a manner as to assure that that fact is
known and understood by the person with whom the lay assistant is dealing.
Adopted by Board of Governors on October 6, 1973.
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