I am attaching a paper I wrote four years ago, The Unlicensed Practice of Law and How to Avoid It. This is a follow-up to this morning’s post warning that public adjusters should not fill out a civil remedy notice of insurer violation for a policyholder because that would be practicing law. Now a number of people are calling with questions, which this paper should more fully explain, if you care to research this topic in greater detail.

I fully appreciate that when you tell somebody that they cannot do something, a lot of us will try to prove you wrong. That is the American way and the way a lot of success has been brought about—a lot of us love challenges.

Nevertheless, it is still very sound for lawyers to remind others that all of us must follow the law or be ready to pay the consequences for failing to do so. What exactly constitutes the practice of law is not so easy to determine and that is why my paper starts with the following:

It may be a situation that you have encountered a hundred times before or a circumstance for which the resolution is obvious, but insurance claims adjusters should always take care that their actions or advice do not constitute the unauthorized practice of law, the consequence of which may be a fine, an injunction, and even imprisonment.1 And this is not always an easy task. Many factors determine whether an action crosses the line between claims adjustment and the unauthorized practice of law, including state statutes and regulations defining or regulating adjustment of insurance claims, state law defining and regulating the unauthorized practice of law, whether an adjuster is working for an insurer or representing an insured, and whether a dispute has arisen.

What might constitute the unlicensed practice of law is an abstract inquiry without reference to a specific factual scenario. Indeed, courts have recognized that “the line between lay and legal judgments may be a fine one,” and that “[e]ach given case must turn on a careful analysis of the particular judgment involved and the expertise that must be brought to bear on its exercise.

If this nerdy topic is of interest, read the paper.

If you like this topic, you will love to tune in at 2 this afternoon when I discuss some other areas developing in property insurance law. Here is the link.