The practice of law requires you to making sure to renew your license each year.

I am a young attorney who failed to timely pay my annual fee. I was placed on administrative suspension, but not aware of it initially since I had moved my office. What are my obligations and what issues will I face?

Everyone worked very hard to get their law license, yet surprisingly, lawyers become somewhat cavalier about maintaining their law license. For instance, everyone knows by July 1 of each year, they have to renew their law license by paying the annual fee, which is normally $200, and filling out the application again setting forth their personal information, their IOLTA account, and whether or not they have malpractice insurance. Second, every lawyer knows that they have to have 12 CLE credits each year during the reporting year time period. Of those 12, two have to be ethics.

Knowing those responsibilities, sometimes it's hard to understand why lawyers are not more vigilant. Because the failure to do any of those can result in fines and ultimately an administrative suspension if the lawyer doesn't comply timely because the attorney on administrative suspension is practicing law without a license. But, not timely taking CLEs is fairly easy to fix. If a lawyer is short on credits, he can get an extension by paying a fee to the CLE Board to get additional time to complete the CLEs and have them submitted.

Although it seems fairly straightforward, it's very surprising how many lawyers, even very excellent and knowledgeable lawyers have let their license lapse. Most of the time, it's through inadvertence or sometimes due to mental illness or stress or addiction.

One of the most common reasons for the lawyers' licenses to lapse is when a lawyer leaves a former law firm. Many of those firms take care of license requirements and CLEs for the lawyer. The annual fee is often handled by the firm and the lawyer sometimes never sees it. Apparently, it's actually signed by someone else in the firm. But, of course, that would be wrong since every lawyer has to sign their own form.

When the lawyer leaves the firm, whether it's because they're on bad terms or the former firm doesn't care, often times the renewal documents are not sent to the lawyer. Presently, the procedure for renewal is now done electronically, so there shouldn't be the same problem in the future, but presumably there will be. Similarly, with CLEs, if a lawyer fails to take them, then notices of administrative suspension are sent to the prior address and often times not sent to the lawyer by the old firm. These notices are several in nature. Lawyers are notified several times and then they are notified they are going to be placed on administrative suspension. They then get an administrative suspension letter and they have 30 days to straighten it out. Therefore, there are ample notices being sent.

One of the problems becomes if a lawyer is still practicing law when they are on administrative suspension (inactive status), it can cause a serious problem for the lawyer. The case law usually favors at least a year and a day suspension, which requires a full reinstatement hearing and adds another year or two to the suspension. There are cases where if the lawyer can prove that they did not actually receive the orders then often times there is lesser discipline, sometimes reprimands or admonitions. But, it's a very dangerous thing for a lawyer not to keep on top of the status of their law license.

Although, sometimes it is inadvertence, it's still something that shouldn't happen. For instance, not paying the annual fee is very important because that annual fee is what funds the attorney disciplinary system and the Client Security Fund. That's all part and parcel of the Supreme Court's regulation of the legal profession. The 1968 Constitutional Amendments in Pennsylvania allowed the Supreme Court to solely regulate the bar and the bench. That is very important because it allows for the independence of not only the judiciary, but also for the legal profession. But, this annual fee funds this independence. It's not taxpayers' money that does. The lawyers have to understand conceptually it's very important to timely pay that annual fee.

Usually, the attorney finds out they are suspended because the administrative suspension orders are circulated among the judiciary, both Common Pleas and often the federal courts. When a lawyer shows up for a hearing, the judge recalls the name and points out to the lawyer they are not licensed to practice since they are on administrative suspension. Once the panic and shock is overcome, the lawyer has to take some steps rather rapidly.

First, if it's for not paying the annual fee, the attorney should immediately call the register's office and have the forms faxed down to him or her. There will be a fine now of about $1,000, including the $200 that's due. The lawyer should drive the check and forms to the Judicial Center in Harrisburg where the Attorney Register and Disciplinary Board's offices are located. But, to fill out the form one also has to fill out a certificate of compliance. That is where a second problem can arise if this is not filled out accurately.

Similarly, if a lawyer failed to take CLEs, the lawyer should take them and have the CLE Board send them in and then the lawyer will be reinstated. This takes a little longer, but it could be done fairly quickly. But, again, the lawyer has to fill out the certificate of compliance which can create a problem.

The problem with the Certificate of Compliance is most lawyers work for firms. The new firm does not want the lawyer to send notices to all the clients saying the lawyer was suspended. On the other hand, one has to certify in the Certificate of Compliance that they have complied and the compliance under Rule 217 of the Rules of Disciplinary Enforcement requires notification of clients and opposing counsel of the lawyer's administrative suspension. If the lawyer files a certificate of compliance and it turns out to be false or incorrect, then that creates additional problems which can result in more enhanced discipline.

Also, when one fills the certificate out, the lawyer should be absolutely candid. The lawyer should not, if they are not able to notify clients because they are firm clients, that they were precluded from doing so. Obviously, in any case where the lawyer is entered of record they should certainly at least notify the judge and opposing counsel by letters as required by Rule 217 of the Rules of Disciplinary Enforcement. But, the critical point is to accurately state what the lawyer has done or not done. If they are represented by counsel, sometimes the best way is to fill it out and indicate that their counsel can fill in more information.

Also, when the form is received, the lawyer's correct new address should be put in. Every lawyer should know if they change their law firm or address they have to notify the Disciplinary Board through the Attorney Registry Office and they are supposed to do it within 30 days of the move. That office keeps a record of where all lawyers are, whether they are active or inactive, or suspended or disbarred. It's a requirement to keep that office up-to-date.

The problem with the lawyer who didn't pay their annual fee because they left the firm and didn't get notices would have been cleared up if that lawyer when the left the firm notified the Register's office of their new address. Then the forms would have been sent directly to the lawyer at the new address and the resulting problems would not have taken place.

Therefore, in seeking reinstatement from the inadvertent or neglectful administrative suspension, a lawyer has to be very careful how they do it and they cannot mislead in the compliance form. As noted, sometimes the lawyer is between a rock and a hard place because their firm is not going to have them sending letters to the clients. But, if the lawyer puts in there that clients were the firm's clients, at least the Board is on notice as to what occurred. There just cannot be any misleading.

Lawyers will find out when they are dealing with the people of the Disciplinary Board or Attorney Registry Office, that they are extremely courteous and will attempt to help a lawyer. They are always available to give advice. The lawyer just has to learn how to ask.

The question then becomes what happens to the lawyer after they get themselves reinstated? Usually there are complaints made either by judges or opposing counsel or one's client if a lawyer is practicing law without an active license in violation of Rules 5.4 and 5.5 of the Rules of Professional Conduct. Any issues have to be resolved with the Office of Disciplinary Counsel through an agreement or through a hearing if there cannot be an agreement.

If no one reports the lawyer to the Office of Disciplinary Counsel, the question is does a lawyer have to report themselves? This has always been an interesting issue. Under Rule 8.3 of the Rules of Professional Conduct, there is a mandatory reporting requirement if an issue goes to the lawyer's honesty, fitness, or trustworthiness. If the failure to keep one's license active was through inadvertence then obviously it doesn't go through to those points. The question is so does the lawyer have to report him or herself? It does not appear the lawyer has to.

But, there is also an argument that a lawyer never has to report their own misconduct. That may be the case, but also it is considered excellent mitigation if a lawyer does bring their misconduct to the attention of the Office of Disciplinary Counsel.

A lawyer does have to report criminal convictions pursuant to Pennsylvania Rules of Disciplinary Enforcement 214. For summary criminal offenses, a lawyer doesn't have to report the conviction if there is no jail time imposed.

There doesn't seem to be a hard and fast rule about a lawyer having to report him or herself. Not reporting him or herself does not in itself raise or violate a rule of discipline unless it's in the context of a criminal conviction. Also, a lawyer gets reciprocal discipline in another jurisdiction and has to report him or herself to any other jurisdictions But, if there is neither of those categories, it doesn't appear there is a duty to. On the other hand, a lawyer could lose mitigation if they don't report themselves and someone else does. It is always a balancing act.

The practice of law is sort of like the old-fashioned honor system. The independence of the bar depends on self-regulation. As part of self-regulation, all lawyers have to cooperate. This falls under the category of law being a profession and not a business. In any event, it's time that all lawyers take more seriously the need to do timely CLE requirements and timely renew their license and pay the annual fee by July 1 of each year. This is a minimal professional requirement that must be maintained and each lawyer has a responsibility to do so. Obviously, through inadvertence, if a lawyer doesn't know, then there's mitigation to present. But, hopefully every lawyer will not have to face the embarrassment of finding out their license is administratively suspended.

Nonlawyer employees can be included in a lawyer or law firm's retirement plan.

I have been practicing law for a number of years. I had several employees who are nonlawyers. Some of them have been with me for a while and I have now set up a pension plan for that. Am I allowed to do this or is that considered fee sharing?

The answer to the question is very simple, since the Rules of Professional Conduct deal with it. Rule of Professional Conduct 5.4, entitled Professional Independence of a Lawyer, precludes the sharing of legal fees with nonlawyers, but there are exceptions. One exception is paying the lawyer's estate monies if the lawyer passes away. A second exception would be to pay a lawyer's estate for legal fees for unfinished legal work.

The third exception, under Rule 5.4(3), states as follows: “A lawyer or law firm may include nonlawyer employees in a compensation or retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement.”

That specifically addresses the issue. Clearly, that exception had to be made. It would be difficult for firms at times to maintain competent people if they couldn't provide a retirement plan. The only way the retirement plan is going to be paid is through the profits of the law firm, which are from client's fees.

Of interest is the fact that another exception for sharing fees with nonlawyers involves the purchase of a lawyer's law practice, assuming it's done pursuant to Rule of Professional Conduct 1.17. The final exception is sharing court-awarded legal fees with a nonprofit organization that employed or recommended employment of the lawyer. That's an important exception, which is often overlooked by lawyers.

But, right now the sharing of legal fees with nonlawyers is prohibited. That famous movie, “Erin Brockovich,” where the law firm, based on her hard work as a paralegal, paid a $2.5 million fee. This would be illegal and improper if it occurred in Pennsylvania. But, there are exceptions for sharing fees and it's a wise and good exception to allow lawyers to form pension and profit-sharing for employees and use the fees of the firm to do so.

Chester County lawyer Samuel C. Stretton has practiced in the area of legal and judicial ethics for more than 35 years. He welcomes questions and comments from readers. If you have a question, call Stretton directly at 610-696-4243 or write to him at 301 S. High St. P.O. Box 3231, West Chester, Pa. 19381.