UNAUTHORIZED PRACTICE OF LAW
Since 1866, the Nebraska Legislature has prohibited the unauthorized practice of law in the state. Section 7-101 of the Nebraska Statutes prohibits anyone from practicing law unless they have been admitted to the bar by the State Supreme Court. A person who violates the statute can be criminally prosecuted. The violation is a Class III misdemeanor.
Statutes prohibiting the unauthorized practice of law are common throughout the United States.
In 1992, the Nebraska Court of Appeals explained that the statutory bar was necessary for three primary reasons. First, it protects citizens from injury caused by persons who are untrained and inexperienced in the law. Second, the bar protects the courts from interference by persons who are unlicensed and not officers of the court. Third, it prevents the unscrupulous from using the legal system for their own purposes to the harm of the judicial system and the public who may detrimentally rely upon them. Waite v. Carpenter, 1 Neb. App. 321, 496 N.W.2d 1 (1992).
One issue that arises when determining whether a non-lawyer is engaging in the unauthorized practice of law, is defining the term “practice of law.” The Nebraska State Bar Association and the Nebraska judiciary realized it was necessary to more clearly define the term and clarify which activities require a lawyer and what services a nonlawyer can provide to the public without crossing the line.
In October of 2007, the Nebraska Supreme Court adopted formal rules to better guide lawyers and nonlawyers on the subject. The rules became effective January 1, 2008. The complete rules can be found on the Nebraska Supreme Court’s website at:
This article will briefly summarize the 14 page document.
A nonlawyer is any person, entity, organization or corporation not duly licensed to practice law in the State of Nebraska.
The Rule states, “No nonlawyer should engage in the practice of law in the Nebraska or in any manner represent that such nonlawyer is authorized or qualified to practice law in Nebraska except as may be authorized by published opinion or court rule.”
The term “practice of law” is defined as:
the application of legal principles and judgment with regard to the circumstances or objectives of another entity or person which require the knowledge, judgment, and skill of a person trained as a lawyer.
Some specific examples of “practice of law” include, but are not limited to:
1. Giving advice or counsel in exchange for compensation on the legal rights of another person or entity where a relationship of trust or reliance exists between the involved parties;
2. Selection, drafting, or completing, for another entity or person, of legal documents which affect the legal rights of the entity or person;
3. Representing another person or entity in a court proceeding, a formal administrative adjudicative proceeding or other formal dispute resolution process, or in an administrative adjudicative proceeding in which legal pleadings are filed or a record is established as the basis for judicial review;
4. Negotiation of legal rights or responsibilities on behalf of another entity or person;
5. Holding oneself out to another as being entitled to practice law as defined herein.
Sections 2.1.1 to 2.1.5
At first glance, it may appear that non-lawyers would be prohibited from engaging in many of the activities which real estate agents, title insurance companies and banks frequently handle during real estate transactions. The Nebraska Supreme Court adopted several Exclusions and Exceptions which recognize that it is appropriate for nonlawyers to engage in some activities which have historically been conducted by nonlawyers without any controversy.
The following activities are not prohibited by the Court’s Rule:
1. Title insurance companies authorized to do business in Nebraska and their licensed agents, real estate rental agencies, licensed real estate brokers and their affiliated licensees and employees of such entities may prepare certain documents that would normally involve the practice of law subject the to the following:
a). The transaction involved is merely incidental to their lawful business as a title insurance company or licensed agent thereof, rental agency, real estate broker or affiliated licensees of a real estate broker.
b). The transaction arises in the usual course of business for the title insurance company issuing title insurance, the rental agency as agent for the lessor or the lessee, the broker who is the listing or selling broker, or the real estate licensee affiliated with the broker.
c). Licensed real estate brokers and their affiliated licensees, as agents for the seller and/or buyer, may prepare purchase agreements and contracts of sale.
d). Real estate rental agencies representing the lessor and/or lessee may prepare residential, commercial or farm leases.
e). In closing a real estate sale, licensed real estate brokers and title insurance companies and their licensed agents may prepare deeds, releases which do not affect judgment liens, deeds of reconveyance, title affidavits, closing statements and related documents.
f). The documents listed in paragraphs c, d and e above if prepared by nonlawyers shall be on standardized forms which may contain various blanks to be filled in, the completion or selection of which does not require the knowledge, judgment or skill of a trained lawyer.
g). A nonlawyer may shall not give any advice or counsel as to the meaning, validity or legal effect of the document or regarding the rights and obligations of the parties.
The end result is that nonlawyers such as real estate agents, title escrow agents, bankers, etc. may continue to fill out pre-printed forms as they have historically done in standard real estate transactions.
If a situation arises where a buyer or seller needs an explanation of his or her rights or the meaning of a document, then the buyer or seller should be advised to contact a lawyer. If a client asks you about his or her rights or the meaning of a legal document, you should advise the buyer or seller that you are not an attorney, and you are not allowed to give legal advice.