Can a law firm supervise a company that represents employers for a fee before a state agency tribunal?

Plain-English summary

A law firm was approached by a company that proposed to act as an authorized agent of employers in unemployment proceedings before an Appeal Tribunal or the Appeals Board of the Department of Economic Security, charging a fee for that representation. The firm would advise and supervise the company and review its materials for a standard per-appeal sum, with the agreement specifying that the company could not direct the firm's professional judgment and that the firm had no attorney-client relationship with the company's clients.

The opinion concluded there was no problem under ER 7.2(g) and no fee-splitting issue of the kind raised in earlier opinions. It identified a more fundamental problem: whether Rule 31(a)(4)(A) of the Rules of the Supreme Court of Arizona permits a corporate entity to be an "authorized agent." The committee observed that a corporation can act only through its officers and employees, so the actual appearance would be made by a sub-delegated agent, and questioned whether the rule was broad enough to let a corporation serve as a paid authorized agent appearing through an officer or employee.

The opinion concluded it could not decide the scope of Rule 31(a)(4)(A), because interpreting the rule was for the Supreme Court and beyond the committee's jurisdiction. It stated that if the rule was not broad enough to cover the arrangement, the company would be engaged in the unauthorized practice of law, and the firm's participation in the program would violate ER 5.5(b).

Currency note

This opinion was issued in 1986, before the State Bar of Arizona's adoption of the 2003 revisions to the Rules of Professional Conduct. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Did the opinion approve the firm supervising the company?

A: It found no advertising or fee-splitting problem, but it did not approve the arrangement; it concluded the controlling question was a matter of law it could not decide.

Q: Why might the arrangement be the unauthorized practice of law?

A: The opinion questioned whether Supreme Court Rule 31(a)(4)(A) lets a corporation be a paid authorized agent appearing through an officer or employee; if it does not, the company would be engaged in unauthorized practice and the firm would violate ER 5.5(b).

Q: Who decides the scope of the rule?

A: The opinion concluded that interpreting Rule 31(a)(4)(A) is for the Arizona Supreme Court and outside the committee's jurisdiction.

Background and rules framework

The opinion applied ER 5.5(b) (Model Rule 5.5), which bars a lawyer from assisting in the unauthorized practice of law, and ER 7.2(g), an advertising provision it found inapplicable. The central issue turned on Rule 31(a)(4)(A) of the Rules of the Supreme Court of Arizona, governing who may appear as an authorized agent before administrative tribunals.

Citations and references

Rules of Professional Conduct:

• ER 5.5(b) / Model Rule 5.5 (unauthorized practice of law; assisting)
• ER 7.2(g) / Model Rule 7.2 (advertising)

Other opinions cited:

• Ariz. Ops. 85-7 and 84-4: prior opinions on similar fee and representation questions

See also

• AZ Ethics Op. 85-07: Nonlawyer Agents and Professional Independence
• AZ Ethics Op. 99-13: Paralegals, Nonlawyers, and Unauthorized Practice
• AZ Ethics Op. 86-07: Conflicts and Nonlawyer Assistance

Source

• Landing page: https://tools.dev.azbar.org/RulesofProfessionalConduct/ViewEthicsOpinion.aspx?id=546

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

10/1986

Law firm's representation of a company to supervise the (client) company's representation before the Department of Economic Security under Supreme Court Rule 31(a)(4)(A).

FACTS

The inquiring law firm has been approached by a Company which proposes to engage the law firm to supervise the Company's representation as an authorized agent of employers in proceedings before an Appeal Tribunal or the Appeals Board of the Department of Economic Security. Such entity will receive a fee for its representation of employers in this capacity and in these proceedings. The contractual arrangements will be strictly between the law firm and the Company, thus excluding any contractual responsibility of the law firm to the Company's clients and will be as follows:

a. The law firm will provide advice and supervision to the Company in matters pertaining to hearings before the DES;

b. The law firm will review all material pertaining to the Company's representation before DES;

c. The Company will pay to the law firm a standard sum for each appeal supervised by the law firm. The calculation for this standard amount was based on the estimated amount of work to be done on each review of individual cases submitted to the law firm. If time reveals that a re-evaluation of the amount is justified, then fee schedules will be renegotiated, based upon time expended on each individual case;

d. A provision will be inserted in the agreement stating that the Company may not direct or regulate the professional judgment of the law firm; and

e.The law firm is directly responsible only to the Company. There will be no attorney/client relationship between the law firm and any clients, or employees of clients, of the Company.

QUESTION

Is it ethically proper, on the facts presented, for the law firm to undertake the representation of the Company?

ETHICAL PULPS INVOLVED

E.R. 5.5(b), Unauthorized Practice of Law

E.R. 7.2(g), Advertising

OPINION

Similar questions have come before this Committee on past occasions. (See our Opinions Nos. 70-6, 73-21, 75-11, 75-19, 76-18, 79-87-51-34, 84-4 and 85-7.) The instant request for an opinion was drafted specifically with the points raised in Opinion No. 85-7 in mind.

Under the foregoing described circumstances, the Committee. agrees that ER 7.2(g) is inapplicable and that there is no fee-splitting problem of the type raised by the fact situations of Opinions Nos. 85-7 and 84-4.

A more fundamental problem, however, is raised by the factual scenario proposed by the inquiry, i.e., whether Rule 31(a) (4)(A) of the Rules of the Supreme Court of Arizona, as amended, Permits a corporate entity to be an "authorized agent?"

Under the proposed scenario, it appears that the Company would be designated the authorized agent of the employer and would receive a fee. The Company, however, can only act through its officers and employees. Thus, such sub-delegation of authority would have to occur and an officer or employee of the Company would actually appear before the tribunal. In fact, this sub-delegated agent would have to be the "authorized agent whom the attorney must supervise and be responsible for. The Rule appears to contemplate that the person actually making the appearance before the tribunal would either not be compensated for his services or be the one charging the fee. There appears no provision in the Rule for a person being paid by the Company to appear before the tribunal for a party and for that party to be charged a fee by the Company.

The Committee has no reservations about an individual as an authorized representative appearing before the tribunal and charging a fee, provided, of course, he is supervised by a lawyer who is responsible for his actions. Also, under the amended Rule, it is clear that a corporate employer can appear before the tribunal through an officer, employee or an authorized agent who is to receive a fee. The Committee questions, however, whether the Rule is broad enough to allow a corporation to be an authorized agent for a corporate or individual employer or to permit the corporate authorized agent to appear through an officer or employee. Certainly, if the Rule is not so broad as to cover such a situation, the Company would be engaged in the unauthorized practice of law and the law firm's participation in the program would constitute a violation of ER 5.5(b).

Unfortunately, the Committee is not in a position to provide an opinion as to the scope of Rule 31(a) (4) (A), as such an opinion would be beyond the jurisdictional limits of the Committee. The interpretation of the scope of the Rule is for the Supreme Court to decide.

© State Bar of Arizona 1986