ABA's proposed lawyer definition runs afoul of FTC, justice department.

For the first time in its 125-year history, the American Bar Association (ABA) is proposing a definition of the practice of law. It hasn't been adopted yet, but the proposal has already drawn fire from some of the most powerful lawyers in the land.

It defines law as "the application of legal principles and judgment with regard to the circumstances and objectives of a person that require the knowledge and skill of a person trained in the law." A person is "presumed to be practicing law' when he or she is "giving advice or counsel to persons as to their legal rights and responsibilities or to those of others."

ABA President Alfred Carlton Jr. noted that some states vigorously prosecute nonlawyers for the unauthorized practice of law. The new definition, he said, was a way of "taking the ambiguity and vagueness" out of the process.

But the Justice Department and the Federal Trade Commission (FTC) called the proposal "overly broad." In a December 20 letter to the ABA, FTC Chairman Timothy Muris and Acting Assistant Attorney General R. Hewitt Pate predicted that the definition "likely will reduce competition from nonlawyers. Consumers, in turn, will likely pay higher prices and face a smaller range of services."

For example, they asked, would a real-estate agent who filled out and explained purchase and sale documents to a couple interested in buying a house be in violation of the section on drafting documents?

The proposal would also have a "significant chilling effect on electronic commerce," they wrote, including the flourishing online lending industry and the use of software for writing wills.

The debate exemplifies how much the legal profession is changing: Nonlawyers offering legal services have become more organized and have grown in political power, while undertakings that once required three years of law school and passage of the bar exam can now be accomplished online.

Though rejecting the accusation that the association is trying to stifle competition, Carlton acknowledged that the ABA

and the FTC are at loggerheads. "Competition is already limited," he said. "We're a legal monopoly.... The FTC's job is to be antimonopolistic. So we're on something of a collision course."

FTC staffers were scheduled to argue against the proposal at the ABA's midyear meeting last month. The ABA's House of Delegates is not due to vote on a final draft until August. If passed, the proposal will then be offered to state and local bar associations for adoption.

In proposing the definition, the ABA said it is trying to act as a watchdog for consumers: Lawyers are subject to ethics reviews, malpractice suits, and court discipline; nonlawyers are not.

But some legal scholars doubt the association's motives.

"A lot of these non-lawyers doing legal services have greater experience at what they're doing than those who have gone to law school for three years and passed the bar," said Deborah Rhode, a professor at Stanford University Law School and an expert in the area of legal services. "This is really about competition. This is about status."