Summary of Opinion: In re Unauthorized Practice of Law Rules Proposed by the South Carolina Bar

Factual and Procedural Background

In June 1991 the South Carolina Bar, through a special subcommittee of its Unauthorized Practice of Law Committee, submitted to the South Carolina Supreme Court a comprehensive set of proposed rules intended to define and delineate the practice of law and to provide guidance so non-attorneys could avoid inadvertently engaging in the practice of law. The Committee had existed approximately thirteen years and the special subcommittee spent over a year drafting the Proposed Rules. Following review of the Proposed Rules, supporting documentation, and numerous memoranda opposing adoption, the Court issued an order on September 21, 1992 declining to adopt the Proposed Rules and instead clarifying particular practices that it holds do not constitute the unauthorized practice of law.

Legal Issues Presented

1. Whether the Court should adopt the comprehensive set of Proposed Rules submitted by the South Carolina Bar governing the unauthorized practice of law.
2. Whether nonlawyers (including nonlawyer officers, agents or employees, attorneys licensed in other jurisdictions, and holders of Limited Certificates of Admission) may represent a business entity in civil magistrate's court proceedings.
3. Whether State agencies may, by regulation, authorize persons not licensed to practice law in South Carolina to appear and represent clients before the agency, and what presumptions should attach to such regulations and acts performed under them.
4. Whether Certified Public Accountants (CPAs) engage in the unauthorized practice of law when they provide professional services, including representation before agencies and the Probate Court, within their expertise and qualifications.
5. Whether police officers may prosecute traffic offenses in magistrate's and municipal courts and under what limitations or conditions.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court began by recognizing the comprehensiveness and the substantial effort reflected in the Proposed Rules, noting the special subcommittee's long involvement and the complexity of attempting to define the practice of law by rule. After careful review of the Proposed Rules, accompanying documentation, and extensive memoranda opposing them, the Court concluded that adopting a comprehensive definition of the practice of law by way of a set of rules is neither practicable nor wise.

The Court grounded its authority in the constitutional and statutory duty to regulate the practice of law (citing S.C. Const. art. V, § 4, and S.C. Code Ann. § 40-5-10) and chose instead a case-by-case approach: the Court prefers to determine what constitutes the unauthorized practice of law in the context of actual cases or controversies rather than through a broad regulatory code.

The Court then clarified several specific categories of conduct that it holds do not constitute the unauthorized practice of law:

• Representation of business entities in civil magistrate's court: The Court recognized the preexisting statute (S.C. Code Ann. § 40-5-8) allowing an individual to represent another before a tribunal under certain conditions, and noted the historical limitation (per Wells) that barred individuals from representing business entities. The Court modified Wells to permit businesses to be represented by nonlawyer officers, agents or employees (including out-of-state attorneys and those with Limited Certificates under Rule 405, SCACR) in civil magistrate's court proceedings. Such representation may be compensated, is undertaken at the business's option, and is undertaken with the understanding that the business assumes the risk of any problems arising from the representation. The magistrate must require written authorization from an appropriate corporate or business officer, or in the case of a person with a Limited Certificate, a copy of that Certificate, before allowing such representation.
• Agency-authorized representation: The Court held that state agencies may, by regulation, authorize persons not licensed to practice law in South Carolina—including laypersons, CPAs, out-of-state attorneys, and holders of Limited Certificates—to appear and represent clients before the agency. Regulations adopted by an agency are presumptively valid, and acts done in compliance with such regulations are presumptively not the unauthorized practice of law. The Court cautioned that agency practices could be abused and reserved the authority to declare unenforceable any regulation that results in injury to the public. The Court also directed that a copy of any proposed regulation be filed with the Supreme Court Clerk at the same time it is filed with the Legislative Council.
• Certified Public Accountants: Respecting the professional training, certification and licensing, continuing education, and ethical obligations of CPAs, the Court held that CPAs do not engage in the unauthorized practice of law when they render professional assistance— including compensated representation before agencies and the Probate Court—so long as that assistance is within their professional expertise and qualifications and is subject to their own professional regulation.
• Police officer prosecution of traffic offenses: The Court reaffirmed the rule that police officers may prosecute traffic offenses in magistrate's court and in municipal court. It clarified that only the arresting officer may prosecute the case, but an inexperienced arresting officer may be assisted at trial by a supervisor. The Court cited prior authorities supporting that rule.

Finally, recognizing that other novel situations will arise, the Court urged interested individuals to bring declaratory judgment actions in the Court's original jurisdiction to resolve whether particular conduct constitutes the unauthorized practice of law. This approach allows the Court to balance protection of the public with professional interests in the context of concrete disputes.

Holding and Implications

Primary Holding: The Supreme Court of South Carolina declined to adopt the comprehensive set of Proposed Rules submitted by the South Carolina Bar and ordered that the Proposed Rules not be adopted.

Other specific holdings and direct consequences of the Order include:

• The Court modified the precedent in State ex rel. Daniel v. Wells to permit a business to be represented in civil magistrate's court by a nonlawyer officer, agent, or employee (including out-of-state attorneys and holders of Limited Certificates), subject to written authorization and other conditions specified by the Court; such representation may be compensated and the business assumes the risk for problems arising from the representation.
• The Court held that state agencies may, by regulation, authorize persons not licensed to practice law in South Carolina to represent clients before the agency; such regulations and acts in compliance with them are presumptively valid and not the unauthorized practice of law, subject to the Court's reserved power to invalidate regulations that injure the public.
• The Court held that CPAs, when acting within their professional expertise and qualifications (including representation before agencies and the Probate Court), do not engage in the unauthorized practice of law.
• The Court reaffirmed that police officers may prosecute traffic offenses in magistrate's and municipal courts, with the limitation that only the arresting officer may prosecute, although assistance by a supervisor is allowed for inexperienced officers.
• The Court directed that any proposed agency regulation authorizing nonlawyer representation be filed with the Supreme Court Clerk contemporaneously with filing with the Legislative Council.
• The Court encouraged the resolution of other uncertain situations through declaratory judgment actions filed in the Court's original jurisdiction, thereby resolving issues on a case-by-case basis rather than through a single comprehensive regulatory code.

The direct effect of the Order is to reject the administrative adoption of the Bar's Proposed Rules and to set forth specific categorical clarifications regarding representation by nonlawyers. The opinion does not purport to adopt a new comprehensive rulebook; instead it announces particular exceptions and procedural safeguards and establishes the Court's preferred method of addressing the unauthorized practice issue—by adjudication in concrete cases and by review of agency regulations when necessary.

Let this order be published with the Administrative Orders of this Court. It is so ordered.