Practicing law without a license

I’m thinking about becoming a business consultant and advising new business owners about what kind of entity to form and drafting corporate formation documents. A friend says I should be worried about practicing law without a license. What does that mean?

California law prohibits people from practicing law in California unless they are an active member of the State Bar. “Practicing law” includes giving legal advice or counsel, as well as preparing legal instruments that affect the client’s legal rights.

There have been a growing number of complaints of consumer fraud stemming from the unauthorized practice of law, especially in the areas of immigration, estate planning, evictions, bankruptcy and criminal law.

You may, of course, represent yourself in court in any matter, but the practice of law doesn’t just include appearing in court. The problem occurs when “consultants” start giving legal advice, offering legal opinions and/or actually preparing legal documents or pleadings. Preparing any legal document that affects legal rights, regardless of the document’s complexity, can be considered practicing law.

In other countries, the legal system is different. For example, in some Latin American countries, you can hire a “notario,” who is authorized to perform some legal services. Often, people who come to California from these countries confuse “notarios” with notary publics, who are not allowed to provide the same legal services.

If you’d like to provide business consultancy services, there are some things you can do that do not constitute the practice of law. For example, you can help people fill out legal forms, or educate the public about the law in general. Certain acts may also require you to comply with the registration and bonding process of becoming a legal document assistant. Keep in mind that “educating” is different than interpreting and applying the law.

Examples of what courts have deemed the “practice of law” include: providing legal advice and counsel, preparing a trust deed, operating an eviction service, providing bankruptcy legal services, selection and preparation of divorce documents, counseling and/or drafting services for corporate formation, selling estate planning services and holding oneself out as a licensed attorney.

There are some activities that are perfectly acceptable, even if you don’t have a license, including representing yourself in court or giving someone a manual or information about the law. Legal document assistants may fill out forms at the client’s direction.

Practicing law without a license is a misdemeanor punishable by up to one year in a county jail or by a fine of up to $1,000, or both. Subsequent convictions carry harsher penalties.