Opinion ID: 853748
Heading Depth: 3
Heading Rank: 4

Heading: The Trial Court's Holdings

Text: The trial court correctly held that Celina was engaged in the practice of law, that its practice was unauthorized, and that its house counsel assisted in this unauthorized practice. As to Celina's engaging in the practice of law, it held: Celina does in fact engage in the practice of law when its salaried attorneys represent its insureds. A corporation acts through its agents and the acts of the agent are the acts of the corporation. Because Celina's attorneys are its agents, and the acts of those attorneys are therefore those of Celina, Celina is engaged in the corporate practice of law when it assigns its salaried attorneys to represent its insureds. See Record at 1209 (internal citations and footnote omitted). The majority rearranged the trial court's reasoning and reduced it to the following syllogism: (1) the attorney-agents of Celina are engaged in the practice of law; (2) Celina, a corporation, can act only through agents; (3) the acts of the attorneys are those of Celina; therefore (4) Celina is engaged in the practice of law. Op. at 156. [13] While the majority dismissively characterized this as a syllogism based on a series of propositions of dubious general validity, op. at 160, I am not persuaded that the trial court's propositions are false or even dubious. These propositions are well-established legal principles in Indiana law. First, the trial court states its conclusion that Celina is engaged in the practice of law when its house counsel represent its insureds. Next, the trial court recites the established legal principles that a corporation can only act through its agents and that the acts of a corporation's agents are the acts of the corporation. See Bud Wolf Chevrolet, Inc. v. Robertson, 519 N.E.2d 135, 137 (Ind. 1988) (Actions of employees and agents of corporation, when done in the scope of their employment, are attributable to the corporation.); Hibschman Pontiac, Inc. v. Batchelor, 266 Ind. 310, 315, 362 N.E.2d 845, 848 (1977) (A corporation can act only through its agents, and their acts, when done within the scope of their authority, are attributable to the corporation.); Soft Water Utilities, Inc. v. LeFevre, 159 Ind.App. 529, 539, 308 N.E.2d 395, 399 (1974) (A corporation acts through its agents and the acts of the agent are the acts of the corporation.) (citing Johnston v. Baker, 445 F.2d 424 (3d Cir.1971); Pearson v. Youngstown Sheet & Tube Co., 332 F.2d 439 (7th Cir.1964); Nelson Radio & Supply Co. v. Motorola, Inc., 200 F.2d 911 (5th Cir.1952)); Evansville & Terre Haute R.R. Co. v. McKee, 99 Ind. 519, 522 (1885) (Where the particular act [of an agent of a corporation] is within the scope of the agency, then it is, in legal contemplation, the act of the principal, no matter by what name the agent is designated[, as t]he material element is the authority of the agent, and not his mere name or position.). It logically follows that, because Celina is a corporate entity, Celina can only act through its agents, and the acts of Celina's agents are the acts of Celina. Next, the trial court states that Celina's attorneys are its agents and that the acts of those attorneys in practicing law are the acts of Celina. When house counsel represents one of the insurance company's insureds, house counsel as an agent-attorney of the company is practicing law on behalf of the company; thus, the agent-attorney acts as the corporation in representing the third party. The attorney is not operating simply as counsel for the insurance company (conduct that is authorized by law). As an agent of the insurance company, the attorney's acts are the acts of the company, and the acts of the agent-attorney in representing insureds are properly attributed to the corporate entity. [14] It is in this situation that the company undertakes the practice of law. The trial court's deductive reasoning led to the conclusion that Celina, the corporation, was engaged in the practice of law. The trial court's reasoning is sound, and its conclusion is proper. The trial court also determined that Celina's practice of law was unauthorized: The next inquiry must then be whether Celina's corporate practice of law is unauthorized and therefore illegal. No statutory or common law prohibition exists directly proscribing the corporate practice of law. However, the absence of such a direct prohibition does not end the inquiry. In 1983, the Indiana legislature enacted the Professional Corporation Act, allowing one (1) or more attorneys [to] form a professional corporation to render services that may legally be performed only by an attorney. I.C. 23-1.5-3-3(a)(3). Pursuant to that statute and Article 7, § 4 of the Indiana Constitution, the Indiana Supreme Court promulgated Admission and Discipline Rule 27, which permits [o]ne or more lawyers [to] form a professional corporation ... for the practice of law ... The promulgation of this rule leads to the inference that nonprofessional corporations may not practice law. If corporations other than professional corporations were allowed to practice law, no rule would be necessary to specifically permit professional corporations to practice law, for a professional corporation is merely a specialized type of corporation. Further, in addition to the implied prohibition against the nonprofessional corporate practice of law, the Admission and Discipline Rules are devoid of a rule specifically permitting the practice of law by a nonprofessional corporation. The absence of such a rule, considered in conjunction with the rule pertaining to professional corporations, leads inescapably to the conclusion that only professional corporations are permitted to practice law. If the Indiana Supreme Court chose to do so, it could promulgate a rule permitting the nonprofessional corporate practice of law, just as it has with professional corporations. Instead, the Court has extended permission only to professional corporations, thereby barring nonprofessional corporations from the practice of law. ... In light of the foregoing, because Celina is not a professional corporation, and because Celina is engaged in the practice of law when it assigns its salaried attorneys to represent its insureds, this court is compelled to conclude that such a practice by Celina constitutes the unauthorized practice of law by a corporation.... See Record at 1209-12 (internal citations and footnote omitted). The majority opinion correctly notes that the trial court concluded that Celina's practice of law was unauthorized because Indiana's professional corporation statute implicitly prohibits general business corporations and insurance companies from practicing law. Op. at 156. The statutes were enacted and the rules were adopted because organizational entities were prohibited from practicing law and attorneys were prohibited from practicing law in such contexts. The statutes specifically authorize professional corporations and a limited class of other entities to render legal services, and court rules explicitly authorize attorneys to practice in contexts in which organizational entities and attorneys were previously prohibited from practicing law. [15] The authorization of these entities, under statute and court rules, to exist for the purpose of rendering services or the authorization of attorneys to practice in such contexts should not be read to support the conclusion that such entities are themselves practicing law. [16] The statutory provisions and the court rules that authorize attorneys to form and practice in certain organizational contexts include very specific requirements, limiting these organizations to protect the public and to preserve professional independent judgment. These statutes and rules explicitly authorize attorneys to form only certain kinds of organizational entities and to render legal services only through these entities when the requirements are satisfied. The relevant statutory provisions, including the Professional Corporation Act, and the relevant court rules were adopted against the backdrop of the common law and statutory prohibitions against the unauthorized practice of law and the corporate practice of law. Together, these considerations support the trial court's reasonable inference that general business corporations may not practice law. The majority finds support in its assertion that Indiana has no express statutory prohibition against corporations practicing law. [17] In my view, however, because only certain persons, who have met specific qualifications and are licensed, may practice law in Indiana, the proper inquiry is not whether any law or rule prohibits this activity. Rather, it is whether any law or rule authorizes the insurance company to undertake this challenged activity. Under Indiana law, no statute or professional rule authorizes a general business corporation to render legal services or an insurance company to practice law. [18] Therefore, Celina engages in the unauthorized practice of law when its house counsel represents its insured. [19] See GEOFFREY C. HAZARD, JR., & SUSAN P. KONIAK, THE LAW AND ETHICS OF LAWYERING 903 (1990) ([T]he corporation is engaged in unauthorized practice if its lawyers provide legal assistance to others, such as the corporation's customers. However, the corporation can provide legal assistance to itself without thereby engaging in practice of law.). Simply put, Celina is delivering legal services to policyholders through its employee, who is an attorney. Celina is not authorized to do this. The trial court is correct on this point. After concluding that Celina was engaged in the unauthorized practice of law, the trial court found that Celina's house counsel violated the rule prohibiting an attorney from assisting in the unauthorized practice of law. The trial court determined that, [b]ecause th[e] unauthorized practice of law results when Mr. Faber represents Celina's insureds, Mr. Faber is undeniably assisting Celina in unauthorized practice of law in violation of Indiana Rule of Professional Conduct 5.5(b). Record at 1220. I agree.