More on CPA risk of unauthorized practice of law

I learned something new today on the topic of a CPA’s exposure to risk of unauthorized practice of law. In this case the matter is a small case civil dispute arising from a tax matter in Pennsylvania. This matter would be brought in the Magisterial District Court, so local court rules apply. The question was whether my preparation of documents detailing the transactional basis of the legal action might be considered to be unauthorized practice of law.

The background of my interest in this topic is that some of the work I do in the employee benefits field may come close to legal practice. After all, I’ve often said and written that the practice of employee benefits is largely the manipulation of legal documents. It is impossible, in my opinion, to be effective in the employee benefits field without extensive exposure to the workings and reworkings of legal documents. In one instance a member of the ethics committee of a state CPA association felt compelled to contact me with a warning that led to my earlier investigation and blog posts (“Changing opinions…” in 2014 and “Evolving risks…” in 2016) on this topic. As a result of my prior exposure, I tend to be a bit overly cautious in this area.

Recently a client in Pennsylvania asked me to gather and organize documentation of transactions specifically for use in a planned legal action. While the client had retained a tax attorney for related issues, they had not reached an agreement for representation in this specific civil action, a non-tax matter. We understood that my work would essentially be the preparation of the guts of the legal complaint.

I was concerned about the Pennsylvania Bar Association’s broad interpretation of unauthorized practice of law, specifically as detailed in “FORMAL OPINION 2010-01“. The practical difference is that I am not in the business of providing legal work and I certainly don’t advertise as such (apparently the key issue that riled up the Bar). The real question was whether I could inadvertently be caught on the wrong side of the issue.

What I learned is that “in accordance with Rule 207, Representation in Magisterial District Court Proceedings, a non-lawyer representative, employee or authorized agent may appear on behalf of an individual, partnership or corporation or similar entity or unincorporated association…”. The rule is intended to apply when the non-attorney has personal knowledge of the subject matter of the litigation, as is the case here.

Another accountant pointed out that the rule does not specifically state its application to a non-attorney preparing documentation in advance of and in anticipation of a legal proceeding. However, it does specifically apply to a person with “personal knowledge of the subject matter of the litigation” and I think that is the key point here. Obviously a person could not effectively “represent” who hasn’t done an adequate job of “preparing” in advance of the representation. As the accountant, I have the personal knowledge of the transactional basis of the small civil claim matter and am likely best-suited (more so than the client or the attorney) to prepare the summary documentation for use in the action. In this case I expect that the client will be able to present my work at the hearing as a summary of the substantive evidence. I have no expectation at this point of actually being asked to represent the client at the hearing but apparently that is an allowable possibility.

One final point: an accountant asked if my professional errors and omission insurance would cover such action and I presume that the answer is no. So there is business risk associated with this type of work.


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