Law of Lawyering in Washington Updates

This page contains updates to Andrews, Aronson, Fucile & Lachman, The Law of Lawyering in Washington (2012).   It is intended for the use of those who have purchased the book and wish to know whether the information contained in the book has been updated and/or amplified in any way.  Needless to say, the updates are a work in progress.

Chapter 1 (Authority to Regulate)

 

Page 1-9

At the end of the last sentence on this page, add a new footnote (“NFN”) as shown below:

But the assertion of judicial power reflected in GR 24 does not resolve the question of the respective powers of the court and the legislature.NFN1.

NFN1: In this connection, it is interesting to notice that while GR24 contains an exception for nonlawyer practice where it is authorized by administrative agencies (GR 24(b)(3)), and contains an exception for nonlawyers filling out harassment and domestic violence protection order forms authorized by the legislature (GR 24(b)(6)), there is no general exception for nonlawyer practice where authorized by the legislature, thus requiring a case by case examination of whether a particular instance of nonlawyer practice authorized by the legislature is likely to be considered authorized by the court.   Thus, for example, legislative authority for nonlawyer agents to fill out writs of garnishment under RCW 6.27.190 remains in doubt.

Page 1-11

At the end of the last full paragraph on this page, immediately following footnote call 74, the following language should be added to the text:

In 2011, the IRS amended Circular 230 so as to extend “compliance” responsibility to those responsible for overseeing a firm’s practice for taking reasonable steps to ensure the firm complies with Circular 230.NFN [NFN   76 Fed. Reg. 32292 (June 3, 2011).  In 2014, the IRS again amended Circular 230.  The amendments eliminated the so-called “covered opinon rules” that had singled out tax shelter opinions for specific treatment.NFN [NFN: 79 Fed. Reg. 33685, 33686 (June 12, 2014).]   They also adopted standards of practice for all “practitioners” — a class that now includes not only lawyers and CPAs, but also paid tax preparers.NFN [NFN 31 CFR 10.3.]  The new practice standards include a standard of competence and limit the extent to which a practitioner may rely upon representations made by taxpayers or other practitioners to what is “reasonable” and “in good faith.”NFN [NFN 31 CFR 10.35-10-.37.]  The standards themselves are not novel. What is new is that a federal agency —the IRS –is imposing more detailed general practice standards on lawyers who practice before the agency.NFN [NFN   79 Fed. Reg. 33686-87.]

Chapter 2 (Admission to Practice & Unauthorized Practice)

Page 2-2, fn 1, lines 13-15, beginning “If not so limited”:   The sentences  do not take into account the temporary practice exceptions now found in RPC 5.5(c) and identical or analogous rules in most states.   Technically, one might argue that lawyers who are permitted to practice temporarily under 5.5(c) are practicing “without admission.”  Thus the footnote is in error in stating that “no state grants attorneys of Washington a right to practice `without admission.'”  On the other hand, the “temporary practice” exceptions are not conditioned on reciprocal permissions in the licensing state, so the statute remains inconsistent with the temporary practice exceptions.

Page 2-4

At the beginning of the carryover paragraph at the bottom of the page, the first two sentences should be replaced with the following:

Whether a corporation, partnership, or other business organization may represent itself pro se through a nonlawyer employee, agent, or representative in a legal “proceeding” has been addressed by the court of appeals but not by the supreme court.   In  Dutch Vill. Mall v. Pelletti, a man named Lei,  the “the sole owner, member, and officer of Dutch Village Mall,” filed an action against a tenant, alleging non-payment of rent along with other misconduct.NFN [NFN 162 Wash. App. 531, 534, 256 P.3d 1251, 1252 (2011).]  When it appeared that Lei was proceeding pro se on behalf of his LLC, the court concluded he was engaged in the unauthorized practice of law and struck his pleadings unless he obtained representation by an attorney within thirty days:

Because a corporation is an artificial entity, necessarily its interests in a court proceeding must be represented by a person acting on its behalf. Representing another person or entity in court is the practice of law. To practice law, one must be an attorney. RCW 2.48.170. Thus Washington, like all federal courts, follows the common law rule that corporations appearing in court proceedings must be represented by an attorney. Lloyd, 91 Wash.App. at 701, 958 P.2d 1035.  Id. at 535-6.     

Dutch Vill. Mall v. Pelletti, 162 Wash. App. 531, 535-36, 256 P.3d 1251, 1252 (2011).   The court refused to carve out an exception even for single-owner corporations such as Lei’s, stating further:
[P]rotecting the interests of other persons who may have financial interests in the artificial entity is only one of the reasons for the common law rule. A major reason for prohibiting the conduct of litigation by a nonlawyer is that it creates burdens both for the represented party’s adversaries and also for the court itself. “The lay litigant frequently brings pleadings that are awkwardly drafted, motions that are inarticulately presented, proceedings that are needlessly multiplicative. In addition to lacking the professional skills of a lawyer, the lay litigant lacks many of the attorney’s ethical responsibilities.” Jones v. Niagara Frontier Transp. Auth., 722 F.2d 20, 22 (2d Cir.1983). The elaborate and inappropriate claims pled by Lei in this case and his refusal to withdraw a moot and pointless motion for default demonstrate that sole ownership does not dispel these concerns.
Another reason for prohibiting lay representation of a corporation is the inequity of allowing an individual “to establish the protections of a corporation and then not require that he also face the burdens of incorporation.” Lloyd, 91 Wash.App. at 702–03 & n. 5, 958 P.2d 1035. This consideration is not a mere technicality. As Lei acknowledges, the purpose of forming an LLC is to limit liability. If Dutch Village Mall were the defendant in this lawsuit instead of the plaintiff, it is unlikely that Lei would accept the personal liability that would come with him and his company being one and the same person.
Third, to make an exception for single owner LLCs would invite threshold disputes over an LLC’s claim to have but a single owner. For example, Lei now claims that Dutch Village Mall is a single-person LLC. But when the trial court asked him, “In what capacity are you here representing the plaintiff?” he responded, “As an owner-partner of the Dutch Village Mall.” Courts and opponents should not have to get bogged down by the need to ascertain whether other persons have an interest in the entity the purported sole owner desires to represent. And even if the single-owner status of an LLC could be conclusively determined at the outset, that status could change during the course of a lawsuit, leading to more delay so that legal representation could be obtained.
We conclude there is no principled basis for making an exception for a single member limited liability company. See Lattanzio v. COMTA, 481 F.3d 137, 140 (2d Cir.2007) (“Unlike a sole proprietorship, a sole member limited liability company is a distinct legal entity that is separate from its owner;” such a company may appear in federal court only through a licensed attorney). The lay individual, having chosen to accept the advantages of an artificial form, must bear the burdens of that choice. Dutch Village Mall was created as a separate and artificial legal entity. RCW 25.15.070(2)(c). As a matter of law, it is obligated to have its legal claims presented in court through a licensed attorney.
Id. 162 Wash. App. at 537-39, 256 P.3d at 1253-54.   Accord Cottringer v. State, Dep’t of Employment Sec., 162 Wash. App. 782; 257 P.3d 667 (2011).    It should be noted, however, that corporations are permitted to appear through non-lawyer lay representatives in small claims court because the legislature has generally prohibited attorneys from representing corporations there.   RCW 12.40.080; State ex rel. Long v. McLeod, 6 Wn. App. 848, 850, 496 P.2d 540, review denied,81 Wn.2d.1004 (1972).    See also Practice of Law Board Adv. Op. 5 (2014).

 

In this same paragraph, the third sentence beginning “Although our Supreme Court” should be made the beginning of  a new paragraph and the word “Although” should be deleted.

Page 2-5

After footnote 21, before the Commentary, the following new paragraph should be added:

Where a nonlawyer has improperly appeared on behalf of a corporation or other entity, the states are divided as to what the consequences should be.

Some courts … have held that such actions are a nullity and warrant dismissal, the entry of a default judgment against the corporation, or vacatur of any judgment rendered. The defect is deemed incurable and goes to the court’s power to exercise subject matter jurisdiction.….Other jurisdictions take the approach that actions by nonattorneys on behalf of a corporation are curable defects, allowing the corporation a reasonable time to obtain counsel and make any necessary amendments. These courts liberally construe the rules of civil procedure and emphasize substance over form to advance the policy favoring resolution of cases on the merits.

Downtown Disposal Servs., Inc. v. City of Chicago,  979 N.E.2d 50, 55 (Ill 2012).   The Washington Court of Appeals, in both the Dutch Village Mall and Cottringer cases cited above, affirmed trial courts which had viewed the error as curable and had allowed the offending party a reasonable time to retain counsel.  But again, our supreme court does not seem to have addressed the issue.
Page 2-6:
The paragraph immediately following the carryover Author’s Commentary was inadvertently omitted from that Commentary.  It should appear within the boxed Commentary at the end rather than outside of it.
Page 2-16
At the end of footnote 101, the following should be added:
The Supreme Court has held that an adverse inference may be raised when a prison inmate defending himself against prison discipline, refuses to testify, at least so long as no criminal charges are pending against the person refusing to testify.
[T]he prevailing rule[is]  that the Fifth Amendment does not forbid adverse inferences against parties to civil actions when they refuse to testify in response to probative evidence offered against them: the Amendment “does not preclude the inference where the privilege is claimed by a party to a Civil cause.”

Baxter v. Palmigiano, 425 U.S. 308, 318 (1976)
Page 2-17
The final two sentences in the second paragraph on this page should be moved down to the end of the third paragraph, to follow footnote 109.

Page 2-34

In footnote 241, the references to regulations in the code of federal regulations should be deleted and moved to and amplified in the new footnote to be added to a new third sentence:  After the second sentence of the first full paragraph on this page, add a sentence and a footnote, as follows:

Federal agencies have not been shy about adopting rules governing practice before them.NFN [NFN. See, e.g., 8 C.F.R. 292.1 (Department of Homeland Security); 16 C.F.R. 4.1 (FTC); 17 C.F.R. 201.102 (practice before the SEC); 20 C.F.R. 702.334 (Longshoreman Act claimants); 20 C.F.R. 802.202 (Employee Benefits Review Board); 26 C.F.R. 601.502 (Treasury Department); 28 C.F.R. 14.3 & 29 C.F.R. 100.401 (Federal Tort Claims); 29 C.F.R. 18.34 (Department of Labor); 29 C.F.R. 102.38 (National Labor Relations Board); 31 C.F.R. 8.1 – 8.72 (Bureau of Alcohol, Tobacco and Firearms); 31 C.F.R. 10.1-10.82 (IRS);  37 C.F.R. 11.1, 11.6-.7, 11.14 (Patent and Trademark Office); 49 C.F.R. 1103.3 (Surface Transportation Board of the Department of Transportation).]

After footnotes 245, replace the sentence beginning “In August 2010” with the following:

The IRS has the most extensive set of regulations governing those authorized to practice before it, FN 246 [FN 246.  31 C.F.R. 10.1-10.82.] In 2011, the IRS attempted to add tax return preparers to the scope of its practice regulations, but the federal court of appeals for the District of Columbia Circuit concluded that the IRS lacked statutory authority to regulate tax return preparers and struck down those regulations.NFN [NFN. Loving v. I.R.S., 742 F.3d 1013, 1022 (D.C. Cir. 2014),]

After footnote 246, add the following sentence:

Although the Bankruptcy Code authorizes nonlawyers to prepare bankruptcy petitions, it expressly forbids them from practicing law or giving legal advice.NFN [NFN.11 U.S.C.A. § 110(b)(2)(B)(i).]

Add at the end of the first full paragraph on this page, immediately following footnote call 248, add the following:

The authority under GR 24(b)(3) for practice where authorized by administrative agencies should also suffice for federal agencies that authorize nonlawyer representation only if permitted by state law.NFN [NFN.  See, e.g, FINRA Regulations 12208(b)(authorizing representation by a nonlawyer in securities arbitration proceedings) and 14106(c) (authorizing representation by a nonlawyer in securities mediation proceedings) “unless: state law prohibits such representation.”  Both regulations are approved by the SEC.  72 Fed. Reg. 56410 (Oct. 3, 2007). ]

 

Chapter 12 (Integrity of the Profession)

Page 12-27

It is stated on page 12-27 that we are not aware of any Washington cases that interpret the various portions of the oath that Washington attorneys take.  We have since become aware of several relevant cases.

In In re Robinson, 92 P. 929; 48 Wash. 153 (Wash. 1907), the Court had before it a charge that an experienced lawyer by the name of Robinson had attempted to intimidate the court into rendering a favorable decision on his petition for a rehearing. Robinson had stated in his petition that there were rumors at large among the public that four members of the Court would vote to dismiss the appeal of an estate case (a dismissal for which Robinson was seeking a rehearing) worth more than $1 million because of the political influence of “the political ring who has controlled the politics of this state for years.”   Robinson suggested that the only way the Court could put these rumors to rest would be to hear the appeal on the merits.   With no real discussion of the meaning of the phrases, the Court  held that Robinson had “failed to maintain the respect due to the court; [and] that he ha[d] not abstained from offensive personalities.”  Failure to maintain the respect due to the court, and failure to abstain from offensive personalities, were, at the time, found only in the statute — the Court cites section 4765 of Ballinger’s Ann. Codes & St. (now RCW 2.48.210).   Based on its conclusion, the Court suspended Robinson for 6 months.   See also State v. Garrett, 881 P.2d 185, 194, 124 Wash.2d 504, 522 (Wash.,1994)(defense attorney conduct that was “boorish, contemptuous, discourteous, disrespectful, insolent, obdurate, obnoxious, offensive, rude and uncouth” referred to disciplinary authorities for investigation); State v. Vaughn, 19 P.2d 917, 918, 172 Wash. 263, 265 (Wash. 1933)(defense attorney rebuked for “offensive personality” in that he charged in an appellate brief that the prosecutor had wrongfully induced a defendant to testify against another and then had covered this up with perjured testimony).

More importantly, there is a ninth circuit case that found the prohibition of “offensive personalities” as found in a California statute to be unconstitutionally vague.  U.S. v. Wunsch, 84 F.3d 1110, 1119-20 (9th Cir. 1996).  While the case dealt with a California statute, not the Washington oath, the California statute is equivalent to our oath in purpose and applicability and the reasoning of the court would seem to apply to the Washington oath.