Can non-lawyers draft contracts? Knowing whether or not they can and understanding the limitations that apply to these circumstances is an important consideration for firms to take into account.
Paralegals play a crucial role in assisting attorneys with various tasks, including contract drafting. While paralegals are not authorized to practice law independently, they have the necessary skills and knowledge to draft contracts under the supervision of attorneys.
In this article, we will explore the role of non-lawyers and paralegals in contract drafting and their limitations when doing so, as long as some tips to help when drafting contracts.
What is contract drafting?
Contracts are designed to provide a basis of trust and allow two strangers to enter into a business arrangement. Both parties know their rights and interests will be protected in the contract.
Contract drafting is the process of putting this arrangement of the parties into a written agreement.
However, before we can understand the complexity of contract drafting as it pertains to non-lawyers, we must first understand what a contract is and why not everyone can draft one.
A valid contract requires an offer, acceptance, and consideration.
An offer is a proposal made by one person (offeror) to another person (offeree). Acceptance is when the offeree accepts the proposal made by the offeror. Consideration is something of value being exchanged between the parties.
In most cases, consideration will be money, but consideration can also be doing something or refraining from doing something.
Additional elements to consider are that the contract must be for a legal purpose and the parties must be adults of sound mind.
Keep in mind that entering into contracts with people who lack capacity makes the contract voidable.
When contracting with minors, minors can disaffirm the contract and return the consideration to the extent they are able, even if the consideration is lost or destroyed.
While this sounds simple, contract drafting can be complex as it is important that the contract includes all of the elements and terms.
Remember, once a contract is signed by both parties, it becomes legally binding and enforceable in a court of law.
When should an attorney draft a contract for you?
Anyone can draft a contract on their own behalf, but when should you hire an attorney?
An attorney is important when the proposed deal is crucial in nature, either to your life or business, or when the terms are complex.
As we will shortly get into, contracts are technical and have several required elements. Failure to include a key element can render the contract void or fail to protect your interests.
Having an attorney draft the contract is the best way to make sure all terms of the contract are included, and the terms do not conflict with state law. The attorney’s primary goal is to protect their client by avoiding expensive, time-consuming litigation.
Attorneys can identify loopholes in the contract that could expose their clients to potential liabilities, ensure the contract terms are favorable to the client, and help the client understand the contract terms.
Attorneys are familiar with using words such as “shall,” “will,” and “may” and know firsthand the problems that can arise with a misplaced comma.
They have the experience to know that “close enough” is not good enough. A precise contract protects the client and their interests and ultimately an attorney’s supervision can be crucial.
Paralegals and contract drafting
Paralegals are professionals who perform substantive legal work under the direction of a licensed attorney.
The American Bar Association adopted its current definition of a paralegal as, “A person, qualified by education, training or work experience who is employed or retained by a lawyer, law office, corporation, governmental agency or other entity and who performs specifically delegated substantive legal work for which a lawyer is responsible.”
Note that the ABA does not make specific reference to the exact limitations of whether a paralegal or a non-lawyer can draft contracts. Instead, limitations are made by individual states.
In 2000, California adopted Business and Professions Code Section 6450, et seq., regulating paralegals. Currently, California is the only state that regulates paralegals and non-lawyers.
California has a similar definition of a paralegal as, “A person who holds himself or herself out to be a paralegal, who is qualified by education, training, or work experience, who either contracts with or is employed by an attorney, law firm, corporation, governmental agency, or other entity, and who performs substantive legal work under the direction and supervision of an active member of the State Bar of California, as defined in Section 6060, or an attorney practicing law in the federal courts of this state, that has been specifically delegated by the attorney to him or her.”
Paralegals and the unauthorized practice of law
Under California Business and Professions Code section 6450 (b) paralegals are not permitted to:
- Give legal advice.
- Represent a client in court.
- Select, explain, draft, or recommend the use of legal documents to or for any person other than the attorney who directs and supervises the paralegal.
- Act as a runner or capper.
- Engage in conduct that constitutes the unlawful practice of law.
- Contract with, or be employed by, a natural person other than an attorney to perform paralegal services.
- In connection with providing paralegal services, induce a person to make an investment, purchase a financial product or service, or enter a transaction from which income or profit, or both, purportedly may be derived.
- Establish fees to charge a client.
The ABA Model Guidelines on the Utilization of Paralegals, Guideline 3, provides that an attorney may not delegate to a paralegal:
- Establishing an attorney-client relationship.
- Establishing the amount of a fee charged to a client.
- Rendering legal opinion to a client.
The New York City Bar Association Ethics Committee states that “a lawyer should not permit a paralegal within his or her employ to give advice regarding legal relationships, rights or obligations which he or she has developed independent of or unbeknownst to a supervising attorney; nor counsel on the legal consequences of actions or the application of legal precepts to facts.”
In other words, from an ethical standpoint, you can see that many states take the position of expressly noting that paralegals should operate under the exclusive supervision of an attorney, while not necessarily outright saying whether or not non-lawyers can draft contracts on their own.
Non-lawyer assistance
All 50 states have incorporated the ABA Model Rules of Professional Conduct Rule 5.3: Responsibilities Regarding Nonlawyer Assistance:
With respect to a non-lawyer employed or retained by or associated with a lawyer:
- (a) a partner and a lawyer who individually or together with other lawyers possesses comparable managerial authority in a law firm shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that the person’s conduct is compatible with the professional obligations of the lawyer;
- (b) a lawyer having direct supervisory authority over the nonlawyer shall make reasonable efforts to ensure that the person’s conduct is compatible with the professional obligations of the lawyer; and
- (c) a lawyer shall be responsible for the conduct of such a person that would be a violation of the Rules of Professional Conduct if engaged in by a lawyer if:
- (1) the lawyer orders or, with the knowledge of the specific conduct, ratifies the conduct involved; or
- (2) the lawyer is a partner or has comparable managerial authority in the law firm in which the person is employed, or has direct supervisory authority over the person, and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.
According to Paralegal Regulation by State from the National Federation of Paralegal Associations, Inc., in addition to California, 22 states have definitions that require attorney supervision and/or a lawyer to be responsible for the work.
Currently, only California regulates paralegals, but all 50 states have regulations regarding the unauthorized practice of law, as you’d expect.
In short, we can see again that paralegals are not permitted to draft contracts unless they are working under the purview of an attorney.
Conclusion
Drafting contracts requires giving legal advice and typically falls outside the permitted scope of work for paralegals.
While states vary on whether non-lawyers can draft contracts, in many states it constitutes legal work that can only be performed by attorneys or paralegals working under the direction and supervision of a qualified attorney.
I hope this article has provided a good overview of the details and limitations of contract drafting, the circumstances under which non-lawyers can draft legal contracts, and when it is appropriate for a paralegal to do so.
