Allegations of unauthorized practice of law [“UPL”] have increased over the last few years. Most of us are familiar with the scenario of a non-lawyer doing prohibited legal work. However, in a different context, some young NC lawyers are getting wooed by “national” or out-of-state law firms. Typically, these firms will ask the young lawyer to be “of counsel” to their out-of-state firm so the firm can then practice law in NC. This can be a potential trap for the unwary from a UPL standpoint.
Under North Carolina law, out-of-state firms looking to set up shop in NC must register as an interstate law firm with the NC State Bar and will also likely need a Certificate of Authority to transact business as a foreign professional corporation from the Secretary of State’s office, even if they hire a NC lawyer to handle NC cases. In addition, the North Carolina lawyer must certify to the State Bar that other lawyers in the firm not licensed in North Carolina will abide by the NC Rules of Professional Conduct and that all professional services rendered to NC citizens by the firm are only provided by a duly licensed active member of the NC State Bar. Among other consequences discussed below, failure to follow the appropriate procedure may result in a bar grievance against the young NC attorney for assisting in the unauthorized practice of law in violation of the NC Rules of Professional Conduct, Rule 5.5(d).
The NC State Bar Council and any of its committees appointed by it for that purpose, (i.e. the Authorized Practice Committee), as well as District Attorneys, have the authority to investigate UPL allegations. Following such an investigation, the State Bar may issue a warning letter, issue a cease and desist letter, or seek an injunction to prohibit a person or business from engaging in the unauthorized practice of law depending on the circumstances. Engaging or assisting in the unauthorized practice of law may also expose a person to potential civil liability. Further, the unauthorized practice of law is a misdemeanor criminal offense. Other more serious felony offenses, such as false pretenses, could be involved where an unlicensed person accepts fees while in engaging in the unauthorized practice of law.
Under the right circumstances, it may be a good opportunity for young lawyers to associate with an interstate law firm, especially in a tepid legal hiring market. But, beware: make sure you know the potential pitfalls and closely follow the procedures outlined by the Administrative Rules of the State Bar, Subchapter E, Section .0200, and NC law, before embarking upon any association with an out-of-state firm looking to practice in NC.