FTC and Department of Justice Comment Before the Supreme Court of Hawaii Concerning Proposed Definition of the Practice of Law

UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
Washington, DC 20580
April 20, 2009
viafacsimile (808-539-4801) and first-class mail
Judiciary Public Affairs Office
417 South King Street
Honolulu, HI 96813
DEPARTMENT OF JUSTICE
Washington, DC 20530
Re: 	Comments on Revised Proposed Rule Concerning Unauthorized Practice of Law
Dear Sir or Madam:
The Justice Department and the Federal Trade Commission ("FTC") are pleased to
provide comments on the revised version of the rule proposed by the Hawai' i State Bar
Association ("HSBA") concerning the unauthorized practice of law ("UPL").
The Department and the FTC commented on the original version of the proposed rule in
a letter to this Court dated January 25,2008. In our letter, we expressed concern that the broad,
general definition of the practice of law proposed by the HSBA likely would unduly restrict non-
lawyers from competing with lawyers to the detriment of consumers. We recommended that the
Court adopt language similar to that found in Rule 49 of the District of Columbia Court of
Appeals, which limits the definition of the practice of law to the provision of professional legal
advice or services where there is a client relationship of trust or reliance.
We are pleased that, in the revised version of the proposed UPL rule, the HSBA has
limited the definition of the practice of law to instances where there is a client relationship of
trust or reliance. 1 However, we are concerned that the definition creates an unrebuttable
presumption that the identified activities are the practice of law. 2 We recognize that the revised
1 The HSBA further limited the proposed definition by deleting "performing legal research" from the list of
activities that are the practice of law, and by adding numerous exceptions and exclusions.
2 For example, the proposed rule would bar non-lawyers from "negotiating legal rights or obligations on
behalf of another person." Proposed UPL Rule _ (c)(5) (revised as of 10/23/08 HSBA meeting). This prohibition
could prevent non-lawyers from performing a wide range of activities that involve relationships of trust and reliance
.... 	TT!'

proposed rule contains many exceptions and exclusions which allow for non-lawyers to compete
with lawyers to provide many services. But exceptions cannot capture every instance where
consumers would benefit from lawyer/non-lawyer competition. Accordingly, we recommend
that the Court modify the proposed rule to provide that the enumerated activities are presumed to
be the practice of law and make clear, perhaps in commentary to the rule, that the presumption
may be rebutted. Our recommendation is consistent with the District of Columbia Court of
Appeals' Commentary to Rule 49 and the HSBA's intent in drafting the revisions to the
proposed rule.
The District of Columbia Court of Appeals stated in its Commentary to Rule 49 that the
provision of legal advice or services is the practice of law if (1) a relationship of trust or reliance
exists and (2) specialized legal skills are required such that there is an implicit representation of
authority or competence to practice law. The Commentary explains:
[There are] two essential elements of the practice of law: The provision of legal
advice or services, and a client relationship of trust or reliance. Where one
provides such advice or services within such a relationship, there is an implicit
representation that the provider is authorized or competent to provide them; just
as one who provides any services requiring special skill gives an implied warranty
that they are provided in a good and workmanlike manner. ... The presumption
that one's engagement in [an activity] is the 'practice of law' may be rebutted by
showing that there is no client relationship of trust or reliance, or that there is no
explicit or implicit representation of authority or competence to practice law, or
that both are absent. 3
In keeping with its discussion in the Commentary, the District of Columbia Court of Appeals
identifies certain activities that are presumed to be the practice of law but does not identify any
activities that are the practice of law. By contrast, the HSBA has identified activities that are the
practice of law rather than allowing for analysis to determine whether, in a specific instance, the
provision of legal advice or services by a non-lawyer was permissible because there was no
expectation of a professional legal opinion.
In his December 17,2008, letter to the Court, Jeffrey H.K. Sia, President of the HSBA,
stated that the revisions were intended to "better clarify that certain types of [lawful] activity
conducted by non-lawyers ... would not be subject to prosecution or otherwise infringed upon
.... It was not the HSBA's intent to take away the lawful livelihood of non-lawyers or hinder
but traditionally have not been considered the practice of law and are not licensed or regulated by the state.
Accordingly, under the proposed rule, lay persons could be barred from fulfilling duties common to many
employer/employee relationships, such as ordering merchandise or entering into license agreements on behalf of
a business or supervisor.
3 D.C. Court of Appeals Commentary to Rule 49(b)(2) (2008) (citations omitted).
2

the public's access to legal services.,,4 Our suggested modifications would further illuminate
under what circumstances non-lawyers may compete with lawyers to provide services, to the
benefit of consumers. 5
The Justice Department and the FTC thank you for this opportunity to present our views.
We would be pleased to address any questions or comments regarding this letter.
Sincerely yours,
Scott D. Hammond
Acti g Assistant Attorney General
Aaron Comenetz
Trial Attorney
United States Department of Justice
Antitrust Division
By direction of the
deral Trade Commission,
!:[~~-Acting Director
Office of Policy Planning
4 Letter from Jeffrey H.K. Sia, President, Hawai'i State Bar Ass'n, to James Branham, Supreme Court,
State ofHawai'i (Dec. 17,2008).
5 The revised proposed rule defines "holding oneself out in any manner as a lawyer ... entitled and able to
engage in the practice of law in this state" as the practice of law. Proposed UPL Rule _ 	(c)(2) (revised as of
10/23/08 HSBA Meeting). We recommend deleting that provision. Holding oneself out as a lawyer already is
barred by the Prohibition, and it would be potentially confusing to include the activity in a list of activities that are
presumed to be the practice of law. See id. at (b).
3