If a North Carolina law firm uses a nonlawyer to represent Social Security claimants, must it disclose that in its advertising and to the client, and is the nonlawyer bound by the ethics rules?

Plain-English summary

Federal law lets both lawyers and nonlawyers represent claimants before the Social Security Administration, though nonlawyers cannot handle federal-court appeals (42 U.S.C. § 406). With a 2005 change allowing fee withholding for qualified nonlawyer representatives, more firms are expected to use nonlawyers, and a claimant assigned to a nonlawyer may never meet a firm lawyer.

On advertising, the opinion concludes the firm must disclose that a nonlawyer will provide the representation. Rule 7.1 bars false or misleading communications, including one that omits a fact necessary to keep the statement from being materially misleading (Rule 7.1(a)(1)). Because most consumers assume a lawyer will provide advertised representational services, a firm whose representation will be provided by a nonlawyer must disclose that fact.

On the nonlawyer's conduct, the opinion concludes it is governed by the Rules. Even though the task is assigned to a nonlawyer, the firm's lawyers are responsible for ensuring the nonlawyer's conduct complies with their professional obligations (Rule 5.3), and this holds even where the nonlawyer may legally provide unsupervised representation.

On disclosures to the client, the opinion concludes the prospective client must be advised that the representative is not a lawyer and informed of any client-lawyer protections that will not be present, for example that the attorney-client privilege may not extend to communications with the nonlawyer representative (a question of law the Committee does not resolve). The client may nonetheless be assured that the nonlawyer must comply with the firm lawyers' professional obligations, including confidentiality and the duty to avoid conflicts of interest.

In practice

Under the North Carolina rules as they stood at the time of the opinion, the analysis turns on consumer expectations and lawyer supervision. The opinion holds that a firm must disclose nonlawyer representation in its advertising and to the prospective client, and that the firm's lawyers remain accountable under Rule 5.3 for the nonlawyer's conduct.

Per the opinion, the client must be told the representative is not a lawyer and which protections, such as the privilege, may not apply, while being assured the nonlawyer is bound by the lawyers' duties of confidentiality and conflict avoidance.

Common questions

Q: Must a firm disclose in its advertising that a nonlawyer will handle Social Security representation?

A: Yes. The opinion concludes omitting that fact is materially misleading under Rule 7.1, because consumers assume a lawyer provides advertised representation.

Q: Is the nonlawyer representative bound by the Rules of Professional Conduct?

A: Yes, through the firm's lawyers. The opinion concludes the lawyers are responsible under Rule 5.3 for the nonlawyer's compliance with their professional obligations, even when the nonlawyer works unsupervised by law.

Q: What must the firm tell a client who will be assigned to a nonlawyer?

A: That the representative is not a lawyer, and which client-lawyer protections may not be present, including that the privilege may not extend to communications with the nonlawyer.

Q: Does the client get any assurance about confidentiality?

A: Yes. The opinion concludes the client may be assured the nonlawyer must comply with the firm lawyers' duties, including confidentiality and conflict avoidance.

Background and rules framework

The opinion interprets Rule 7.1 and Rule 7.1(a)(1) (false or misleading communications and material omissions, corresponding to Model Rule 7.1) together with Rule 5.3 (responsibilities regarding nonlawyer assistance, corresponding to Model Rule 5.3), against the federal authorization for nonlawyer SSA representation (42 U.S.C. § 406).

Citations and references

Rules of Professional Conduct:

• MR 7.1 / NC Rule 7.1, 7.1(a)(1) (false or misleading communications; material omissions)
• MR 5.3 / NC Rule 5.3 (responsibilities regarding nonlawyer assistance)

Statutes:

• 42 U.S.C. § 406 (nonlawyer representation of Social Security claimants)

See also

• NC State Bar 2005 FEO 6: Compensation of a Nonlawyer SSA Representative
• NC State Bar 2003 FEO 10: Fee Sharing With Nonlawyer Social Security Representative

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/2005-formal-ethics-opinion-2/

Original opinion text

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

Inquiry #1:

The Social Security Act permits lawyers and nonlawyers to represent claimants before the Social Security Administration; however, nonlawyers are not allowed to represent claimants on appeals to a federal district court. 42 U.S.C. §406. The Social Security Administration currently withholds up to one-quarter of a claimant's past due benefits for payment of legal fees but it does not withhold funds to pay nonlawyer representatives. Nonlawyer representatives must collect their fees directly from claimants. In 2005 this practice will change and nonlawyer representatives who pass an open book test will be eligible for withholding. Although some firms already employ nonlawyer representatives, with the change to allow withholding, it is anticipated that more law firms will employ nonlawyer representatives to represent Social Security claimants.

A law firm that employs a nonlawyer representative need not assign a firm lawyer to oversee the work of the nonlawyer. Therefore, a claimant may never meet with a firm lawyer.

If a law firm advertises that its services include representation before the Social Security Administration, should the advertisement disclose that a nonlawyer will provide the representation?

Opinion #1:

Yes. Rule 7.1 prohibits a lawyer from making a false or misleading communication about the lawyer or the lawyer's services. The prohibition extends to a communication that omits a fact necessary to make an entire statement not materially misleading. Rule 7.1(a)(1). Most consumers assume that a lawyer will provide any representational services advertised by a law firm. Therefore, when representation will be provided by a nonlawyer, as allowed by law, the law firm must disclose this fact in its advertising.

Inquiry #2:

If a law firm employs a nonlawyer to represent Social Security claimants, is the conduct of the nonlawyer governed by the Rules of Professional Conduct?

Opinion #2:

Yes. Although a task is assigned to a nonlawyer employee of a law firm, the lawyers in the firm are responsible for assuring that the conduct of the nonlawyer is in compliance with the professional obligations of the lawyers. Rule 5.3. This is true even when the nonlawyer may, by law, provide unsupervised representation.

Inquiry #3:

If a law firm employs a nonlawyer claimants' representative, what disclosures must be made to a prospective client who seeks representation before the Social Security Administration and who will be assigned to the nonlawyer representative?

Opinion #3:

The prospective client must be advised that the person who will be providing the representation is not a lawyer. The prospective client must also be informed if any of the protections afforded by the client-lawyer relationship will not be present. For example, the attorney-client privilege not to testify to communications made for the purpose of obtaining or providing legal assistance may not extend to the client's communications with the nonlawyer representative. (Whether the privilege extends to communications with a nonlawyer representative who, although an agent of the law firm, will be providing representation without supervision from a lawyer, is a question of law outside the purview of the Ethics Committee.) Nevertheless, the prospective client may be assured that the nonlawyer must comply with the professional obligations of the firm's lawyers including the duty of confidentiality and the duty to avoid conflicts of interest.