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Ethics Advisory Opinion 06-07

April 13, 2006

South Carolina Bar Ethics Advisory Opinion 06-07

RULES 5.5, 7.1 and 7.5

Date

May 18, 2006

Facts

Attorney handles only Social Security and SSI disability cases.  Attorney markets his or her practice as “Social Security disability only.”

Attorney hired Associate, an attorney licensed to practice in another state “State A” but not South Carolina.  Associate works in Attorney’s South Carolina office, the only office maintained by Attorney.

Associate’s practice is limited exclusively to administrative proceedings in the Social Security Administration (“SSA”).  Associate’s only appearances are in the Office of Hearings and Appeals, the administrative court of the SSA.  Associate’s representation of persons before the SSA is undertaken pursuant to federal statutory or regulatory law authorizing attorneys licensed to practice law in any state to appear before the SSA on behalf of claimants.

Attorney’s law practice is named “Attorney, PC.”  Associate does not appear in any advertisement for Attorney’s firm by name or picture, except for a brief biographical statement on Attorney’s website.

Questions

1.         Is Attorney aiding in the unauthorized practice of law in violation of Rule 5.5 by hiring Associate, who only holds an out-of-state license?

2.         What disclosures, if any, must be included on firm letterhead with respect to Associate to comply with Rule 7.5?

Summary

1.         No.  The exceptions to the unauthorized practice of law set forth in Rule 5.5 for attorneys like Associate who are licensed in a state other then South Carolina were recently addressed in Frequently Asked Question #8 which can be found at www.scbar.org/member/committees/faq8.asp.  Based on the facts presented, Associate appears to fall within an authorized exception to the unauthorized practice of law; consequently, Attorney is not aiding in the unauthorized practice of law.

2.         Rule 7.5(a) requires a lawyer to “not use a …letterhead…that violates Rule 7.1”  Rule 7.1 prohibits truthful statements that are misleading; that is, statements that omit a fact necessary to make the lawyer’s communication considered as a whole not materially misleading.  Including Associate’s name on firm letterhead without any indication of the legal limitations upon Associate’s ability to practice law in South Carolina is misleading since a reasonable person would conclude from viewing the letterhead that no limitations existed and that Associate could engage in the general practice of law in South Carolina.

Opinion

1.         Rule 5.5 (along with specific statutes) prohibit the unauthorized practice of law in South Carolina or aiding others in the unauthorized practice of law in South Carolina.  In Frequently Asked Question #8, the Committee thoroughly addressed Rule 5.5 and its exceptions.  Based on the facts presented to the Committee, the practice of Associate appears to fall squarely within the exception to the unauthorized practice of law set forth in Rule 5.5(d)(2); consequently, it is the opinion of the Committee that Attorney would not commit an ethical violation under Rule 5.5 of aiding in the unauthorized practice of law.  However, whether the conduct of an in-state lawyer or out-of-state lawyer constitutes aiding or engaging in the unauthorized practice of law is also a legal, rather than a purely ethical, issue, and the Committee is not empowered to make binding statements of substantive law.  Pursuant to the procedures set forth in Doe v. McMaster, 355 S.C. 306, 585 S.E.2d 773 (2003) and Rule 229, SCACR, Attorney may seek a decision as to the substantive legal question.

2.         Rule 7.5 governs the use of firm names and letterheads.  Section (a) of the rule states that a lawyer “shall not use a … letterhead … that violates Rule 7.1.”  Rule 7.1 provides:

A lawyer shall not make false, misleading, deceptive, or unfair communications about the lawyer or the lawyer’s services.  A communication violates this rule if it:  a) contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading.

Comment 2 to Rule 7.1 states:

Truthful statements that are misleading are also prohibited by this Rule.  A truthful statement is misleading if it omits a fact necessary to make the lawyer’s communication considered as a whole not materially misleading.  A truthful statement is also misleading if there is a substantial likelihood that it will lead a reasonable person to formulate a specific conclusion about the lawyer or the lawyer’s services for which there is no reasonable factual foundation.

Although Rule 7.5(b)’s express requirements regarding disclosure of a lawyer’s jurisdictional limitations do not apply since Attorney operates only one office in South Carolina, Rules 7.5(a) and 7.1 operate together to require disclosure of the jurisdictional limitations on Associate’s practice on firm letterhead.  Absent such disclosure, a reasonable person receiving the firm’s letterhead with a South Carolina address could reasonably conclude that Associate was authorized to practice law generally in South Carolina and in South Carolina courts contrary to fact.

In order to comply with Rule 7.5(a), the firm’s letterhead should disclose the jurisdictional limitations that exist on Associate’s right to practice.  Based on the information submitted to the Committee the following examples should satisfy the Rule’s requirements:  (1) Authorized to practice only before the Social Security Administration, its Office of Hearings and Appeals, and in State A; (2) Licensed in State A only; authorized to practice before the Social Security Administration and its Office of Hearings and Appeals; (3) Practice in SC restricted to matters before the Social Security Administration and its Office of Hearings and Appeals; for all other matters, licensed in State A only.  Any combination of language that unequivocally conveys that Associate is licensed only in State A for the general practice of law and practices only before the Social Security Administration and its administrate court(s) within South Carolina should be sufficient to dispel any misleading impression that Associate is authorized or licensed to practice law in South Carolina generally.

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