The United States Law Week

Employers’ Association Can’t Provide Legal Advice, 4th Cir. Says

April 19, 2019, 5:10 PM

A North Carolina trade association’s multi-year quest to provide legal services to its members ran into another wall April 19 when the Fourth Circuit ruled against it.

North Carolina laws prohibiting the practice of law by corporations are constitutional and don’t infringe Capital Associated Industries Inc.'s rights to association, free speech, or due process, the U.S. Court of Appeal for the Fourth Circuit said.

Nor are the laws vague or in violation of the state constitution’s ban on monopolies, the court said in an opinion by Judge Albert Diaz.

CAI is a membership association of North Carolina employers, according to the court. It provides numerous services to its members, including a popular human resources call center. But when call center inquiries include legal questions, CAI’s experts can’t answer them.

CAI has wanted to double its membership, partly through providing legal services to its members, the court said. It twice lobbied the legislature to pass laws allowing corporations to practice law, but its efforts failed both times.

It then sued the North Carolina attorney general and some district attorneys, who have the authority to enforce the existing statutes against the unauthorized practice of law. It asked the U.S. District Court for the Middle District of North Carolina to declare the laws unconstitutional as applied to CAI and to prevent the prosecutors from enforcing them.

The court ruled against them, and CAI appealed.

CAI’s situation is different from that of the National Association for the Advancement of Colored People and the American Civil Liberties Union, which were allowed to retain attorneys to protect members’ civil rights under U.S. Supreme Court precedent, the Fourth Circuit panel said.

And CAI’s free speech rights aren’t violated because the laws only incidentally affect speech and survive an intermediate level of scrutiny, the court said.

CAI’s other contentions also fail, the court said.

Judges Roger L. Gregory and Allyson K. Duncan also served on the panel.

Brooks, Pierce, McLendon, Humphrey & Leonard LLP represented CAI.

The North Carolina Department of Justice and Mullins Duncan Harrell & Russell PLLC represented the state officials and the North Carolina State Bar.

The case is Capital Associated Indus., Inc. v. Stein, 4th Cir., No. 17-2218, 4/19/19.

To contact the reporter on this story: Martina Barash in Washington at mbarash@bloomberglaw.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com

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