Request By:
Joe Billy Jones, Executive Director
Board of Claims
115 Myrtle Avenue
Frankfort, Kentucky 40601-3113
Opinion
Opinion By: Frederic J. Cowan, Attorney General; Patricia Todd Thomas, Assistant Attorney General
As Executive Director of the Board of Claims for the Commonwealth of Kentucky, you have requested a formal Attorney General's Opinion regarding the following questions:
1. Whether or not a corporate officer may file a claim in the Board of Claims on behalf of his company or claims by a corporation must be filed by an attorney?
2. Whether or not a corporate officer may represent a claim on behalf of his company at a Board of Claims hearing or corporations must be represented by an attorney?
The response to both questions is negative. The general rule, as discussed in American Jurisprudence 2nd and American Law Reporter 3rd, is that corporations must be represented by legal counsel in administrative proceedings.
The Kentucky Court of Appeals, now the Supreme Court, addressed the question of lay representation before an administrative body in the
Kentucky Bar Association v. Henry Vogt Machine Company, Inc., Ky., 416 S.W.2d 727 (1969). There, the Director of Personnel of the corporate defendant appeared on behalf of his company at a hearing before the Unemployment Insurance Commission. The representative of the corporation, who was not a licensed attorney, objected to a motion, and examined and cross-examined witnesses. The special commissioner who heard the case found the company and its representative quilty of the unauthorized practice of law and recommended that they be held in contempt of court. The Court of Appeals affirmed the recommendation of the special commissioner. Any representatives of the corporation who were not licensed attorneys were permanently enjoined by the Court from making legal objections in hearings before referees of the Unemployment Insurance Commission and from examining or cross-examining witnesses, i.e., practicing law.
In 1984, the Legislature amended the Unemployment Insurance Commission statute, KRS 341.470, to allow an employee or other agent to represent the employer before the Unemployment Insurance Commission. KRS 341.470(3)(a). This amendment does not affect the validity of the Court's affirmation of the determination of the hearing officer that a representative of a company engages in unauthorized practice of law by representing a corporation before an administrative body. Additionally, it serves to reaffirm the general rule that, unless statutory authority exists to allow lay representation, it is not permitted.
The Board of Claims, even if it should wish to enact a regulation or a policy which would permit lay representation of a corporation, could not. The Board of Claims, like any administrative body, has only those powers granted to it by the Legislature. It has no "inherent" powers. As was discussed on page five by the Court of Appeals in Board of Claims v. First Security National Bank, released by the Court of Appeals, December, 1988,
Ashland, Boyd County, City County H. Dept. v. Riggs, Ky., 252 S.W.2d 922, 923 (1952), stated that, "[t]he Board of Claims is entirely a creature of the Legislature. Its powers, like those of other administrative bodies, are "'those conferred expressly or by necessary or fair implication.' " Supra. Therefore, in review of the powers granted to the Board of Claims by Chapter 44 of the Revised Statutes, there is no statutory authority allowing the Board to permit laymen to practice claims before it.
The question of an administrative board's power to permit lay representation was discussed by the Ohio Court of Appeals in In Re Unauthorized Practice of Law, 185 N.E.2d 489 (1962). The Court held that the Industrial Commission, comparable to our Workers' Compensation Board, cannot by promulgating a rule, authorize an illegal act. By applying the Court's own definition of the "practice of law, " it found that the Industrial Commission's regulations enabling a layperson to represent corporation claims before it, illegally authorized the practice of law by a layperson. The Court defined "practice of law" as, "acting in a representative capacity in protecting, enforcing, or defending another person in the exercise of his legal rights and duties and in counseling, advising and assisting him in relation thereto." Supra, at 494.
The defining of the practice of law in our state has been granted to the Kentucky Supreme Court by the Legislature. In Rule 3.020, the Supreme Court defines practice of law in our Commonwealth as:
. . . any service rendered involving legal knowledge or legal advice, whether of representation, counsel or advocacy in or out of court, rendered in respect to the rights, duties, obligations, liabilities, or business relations of one requiring the services. But nothing herein shall prevent any natural person not holding himself out as a practicing attorney from drawing any instrument to which he is a party without consideration unto himself therefor. An appearance in the Small Claims Division of the District Court by a person who is an officer of or who is regularly employed in a managerial capacity by a corporation or partnership which is a party to the litigation in which the appearance is made shall not be considered as unauthorized practice of law.
Applying this definition to the lay representation of a corporation in actions before the Board of Claims, it is apparent that the person representing the corporation is practicing law. The only exception which permits a layperson to represent a corporation is representation before a small claims court. KRS 24A.240 permits the appearance of an attorney on behalf of any party but such appearance by an attorney is not required.
In conclusion, because the Board of Claims is a legal tribunal, albeit administrative, empowered by statute to determine questions of negligence involving agents and employees of the Commonwealth of Kentucky, and since a corporation is not permitted either by statute or by application of Rule 3.020 of the Kentucky Supreme Court to have lay representation before an administrative body, a corporation cannot be represented by a layperson at any stage of a proceeding before the Board of Claims but must have legal counsel licensed to practice law in our Commonwealth.