Lawyers no longer control the investigation of complaints about the unauthorized practice of law in Virginia.
The Supreme Court of Virginia has revamped the Virginia State Bar’s investigation procedures for reports of UPL in the wake of new U.S. Supreme Court guidance on self-regulated professions.
The federal justices cautioned against professional regulation unbridled by state administrative oversight. In a case where North Carolina dentists were accused of overreaching to block competition from teeth-whitening services, the high court said regulators are on safe ground when they are subject to some degree of state control.
In response, the Virginia court in May gave VSB staff the authority to investigate reports of unauthorized practice of law and eliminated the role of the bar’s Standing Committee on the Unauthorized Practice of Law. That committee has been “sunsetted,” in the language of bar officials.
Concern over ‘turf protection’
The Federal Trade Commission has sought to rein in self-protective trades and professions that use their state regulatory roles to hinder competition. The FTC targeted the North Carolina dentists, claiming the dentists wielded their power at the state dental agency to end competition from low-cost teeth whiteners.
The U.S. Supreme Court last year decided the dental board was not shielded from antitrust liability because “active market participants” held the reins of regulation. Immunity required a clear state policy and active state supervision in rule making, the court said in a 6-3 ruling in N.C. State Bd. of Dental Examiners v. FTC.
The decision struck a nerve with bar regulators across the country.
Three advocacy organizations sent letters to top state lawyers across the country warning that regulatory boards could face exposure to federal felony prosecution and civil treble damages. The groups pointed to state bars controlled by attorneys as an illustration of the “tribal grouping that our occupational associations have fostered.”
Other observers specifically spotlighted state enforcement of UPL complaints as a flashpoint. In many states, including Virginia, lawyers controlled an investigation process that could coerce or prosecute those deemed to be practicing law without a license.
Some states were quick to act. The Pennsylvania bar stopped sending cease-and-desist letters and began referring UPL complaints to that state’s attorney general, according to an article drafted by a Stanford law professor following the developments.
UPL is a crime
While a lawyer-controlled committee has long reviewed UPL complaints in Virginia, and recommended some for prosecution, it never had a monopoly on UPL investigation.
The unauthorized practice of law is a Class 1 misdemeanor, set out in Va. Code § 54.1-3904.
State and local law enforcement agencies also may investigate alleged UPL activities, and both the state attorney general’s office and local prosecutors across the state can bring charges.
The commissioner of revenue in Greene County was investigated by the Virginia State Police and charged with UPL in 2010. He allegedly typed up a legal document for a taxpayer.
Nevertheless, few prosecutors have shown interest in pursuing UPL charges. It’s only a misdemeanor, willing victims often are scarce and UPL can be hard to prove if the accused never did anything for the would-be client.
At the bar, however, a majority-lawyer committee has regularly weighed UPL complaints to determine if legal action was appropriate.
In 2000, a non-lawyer was sentenced to six months in jail for preparing bankruptcy petitions in Prince William County. The case was investigated by the VSB and prosecuted by the attorney general’s office.
In 2010, a VSB UPL investigation led to a UPL charge against a Williamsburg patent lawyer accused of practicing more than patent law.
Last year, the Disciplinary Board imposed a six-month suspension on a New York-licensed lawyer who allegedly practiced immigration law in Northern Virginia.
One VSB investigation sputtered. The bar brought a UPL charge against an Ohio-licensed attorney who served as house counsel at the Richmond housing agency. The VSB Disciplinary Board dismissed misconduct charges in December.
Committee role eliminated
In the wake of the Dental Examiners decision, VSB officials consulted with the state attorney general’s office on the ruling and its “ramifications on the actions” of the VSB UPL committee, according to committee chair Adam D. Elfenbein of Arlington. He wrote of the changes this month in what likely will be the last annual report from the committee.
Reform came from above. Without explanation or request for comment, the Supreme Court of Virginia in March announced an amended rule (Section IV, Paragraph 10 of Part 6 of the Rules of the Supreme Court of Virginia) to govern review and investigation of UPL complaints.
All references to the VSB’s Standing Committee on Unauthorized Practice of Law were struck from the rule. Although VSB bylaws still call for a UPL committee, the body no longer has any official function.
The court took a “very conservative approach” in reform of UPL oversight at the VSB, Elfenbein said in an interview. He made it clear it was not a VSB decision.
“The bottom line is that it’s a Virginia Supreme Court order,” he said.
VSB President Michael W. Robinson said UPL oversight continues, although without involvement by any VSB committee.
“The UPL committee has been sunsetted by the rule changes,” he said.
“The way the bar approaches UPL has not changed, the diligence has not changed. But there has been a change in the process there,” Robinson said.
Clerk is now gatekeeper
Under VSB bylaws, the nine-member UPL committee was made up of seven active bar members with two non-lawyers.
Under the prior rule, a majority of the UPL committee could refer a UPL complaint to prosecutors or approve an agreement for a perpetrator to cease the UPL activity. The committee also proposed advisory opinions on UPL issues.
Now, the VSB’s Ethics Counsel reviews UPL complaints and recommends a disposition to the clerk of the VSB disciplinary system.
The clerk is a VSB employee whose office provides administrative support to the discipline system and serves as official custodian of disciplinary records, according to court rules that govern the VSB.
The new rule expressly identifies the clerk as a “non-lawyer” and calls for the clerk to “actively supervise and independently review” UPL recommendations from the Ethics Counsel. The clerk can veto or modify the recommendations, and those decisions are final without review by Ethics Counsel, the rule says.
If a recommendation for action survives clerk review, Ethics Counsel can dismiss a complaint with a letter of caution, issue a forbearance agreement or refer the matter for outside prosecution.
The number of VSB UPL investigations has been on the decline, according to annual reports from the committee. The bar opened 52 new UPL investigations in the fiscal year that ended in June 2012. Since then, the annual totals of new investigations have dropped to less than half that number.
In the years following 2012, the bar opened 47, then 39, then 31 and – for the last year – 24 new UPL investigations.
In the past fiscal year, the bar referred two cases to the attorney general’s office and one case to a commonwealth’s attorney for prosecution, according to the 2016 report.
Of 36 complaints reviewed by VSB staff in the past fiscal year, 26 were determined not to be the unauthorized practice of law warranting a formal investigation.
Withdrawn UPL opinions
After the change in UPL review structure, the bar staff did some housecleaning with the published list of UPL opinions.
A notice from the VSB in July listed 35 UPL opinions that have been withdrawn or vacated.
Some of them were quite old and of uncertain provenance, Robinson said.
“We could not confirm they had been subject to review by the committee and approval by the court,” he said.
The elimination of the UPL committee does not necessarily end the flow of UPL opinions. The VSB Standing Committee on Legal Ethics now takes on the role of considering requests for advisory opinions on UPL issues, under the revised rule.
Any new UPL opinions or changes to existing opinions are to be put out for comment and then sent to the VSB Council, with final action reserved for the Supreme Court, according to the rule.