Unions Can Dispense Legal Advice. Why Can’t Trade Associations?


May a state prohibit a trade association from employing lawyers to dispense legal advice to member firms? Last spring the Fourth Circuit ruled that it does not violate the First Amendment for the state of North Carolina to maintain such a ban, and on December 16 the Supreme Court let that result stand by declining a certiorari petition. But the issues in the case are worth our attention.

It is still taught that corporations cannot practice law, but the exceptions to that maxim are big ones. Long ago the rules changed to permit corporations to hire in-house lawyers and insurance companies to employ staff lawyers to represent policyholders. Meanwhile, lawyers themselves have won the right to the advantages of incorporation, which amounts to saying a corporation can practice law so long as lawyers run it. In general, what survived was more like a rule that if you want to practice law on behalf of third party clients you need to be either self-employed or employed by other lawyers.

Whether rules like this restricting the unauthorized practice of law (UPL) make sense is a matter of debate. On the one hand, no less an authority than now-Justice Neil Gorsuch has written that opening up a bigger role for non-lawyers can sometimes “be expected to lower prices, drive efficiency, and improve consumer satisfaction.” There are, to be sure, counter-arguments about how legal practice will fare better under the putatively higher ethical standards of lawyers as opposed to regular business people.

Over the past 60 years, at any rate, courts have eroded the old rules further in a significant new way. In 1963’s NAACP v. Button, the Supreme Court ruled that Virginia UPL laws could not prevent the NAACP from dispensing legal advice to its members. In 1967’s United Mine Workers of America, District 12 v. Illinois State Bar Association, it held that the First Amendment gives a labor union the right to hire lawyers to dispense advice to its members. And in 1978’s In re Primus, it accorded the ACLU a similar right. Along the way, various state courts have extended the principle to non-profit disability and housing-rights groups, even in cases where the recipient of legal advice is not a member of the organization in question.

That makes the trade association’s claim more interesting. Why shouldn’t it be allowed to dispense legal advice to its business members, the same way a union can for its members? The advice might even come on a matter in which the other side was being represented by a lawyer from one of the unions or private advocacy groups exercising their First Amendment rights under cases like UMW, Primus, or Button.

But the Fourth Circuit rebuffed this argument. It said the difference was that the unions and advocacy groups were “expanding and guarding [members’] civil rights,” whereas all the trade association wanted to do was “help its members ‘resolv[e] private differences.’”

If the Fourth Circuit panel believes that all the idealism, all the regard for civil and constitutional rights, and all the public-spiritedness in legal work is to be found on the side adverse to business, and none on the side that defends it, that’s really… well, contestable. Talk to lawyers who represent businesses and many will tell you that defending those businesses’s rights can be just as moral and idealistic a line of work as filing claims against them, or pursuing other courtroom specialties such as criminal or local-government law. (Julie Havlak of Carolina Journal quoted me in covering the North Carolina controversy.)

The Court won’t be deciding those issues this term. But let’s hope it will have a chance to look at them in the future.

Walter Olson is a senior fellow at the Cato Institute’s Center for Constitutional Studies. His books include The Rule of Lawyers, on mass litigation, The Excuse Factory, on lawsuits in the workplace, and most recently Schools for Misrule, on the state of the law schools. His first book, The Litigation Explosion, was one of the most widely discussed general-audience books on law of its time. It led the Washington Post to dub him “intellectual guru of tort reform.” He blogs at Overlawyered.com.

Used with the permission of the Cato Institute / CC BY-NC-SA 4.0