ATTORNEYS FOR APPELLANTS
        
Judy L. Woods
Indianapolis, Indiana

Joseph T. Bumbleburg
Michael J. Stapleton
Lafayette, Indiana

Norman T. Funk
Keith A. Kinney
Indianapolis, Indiana

ATTORNEYS FOR AMICI CURIAE:

Norman P. Metzger
Legal Services Organization of Indiana Indianapolis, Indiana

Kenneth J. Falk
Indiana Civil Liberties Union
Indianapolis, Indiana

Timothy J. O'Connell
UAW Legal Services Plan
Indianapolis, Indiana

Ronald E. Elberger
George T. Patton, Jr.
American International Group, Inc.
American Insurance Association
National Association of Indiana Insurers Indianapolis, Indiana

Scott Newton
Child Advocates, Inc.
Indianapolis, Indiana

John A. Floreancig
Indianapolis Legal Aid Society
Indianapolis, Indiana

ATTORNEYS FOR APPELLEES

William W. Hurst
Todd R. Ryden
Indianapolis, Indiana

Jon D. Krahulik
Indianapolis, Indiana

Jeffrey A. Cooke
Lafayette, Indiana
                    
ATTORNEYS FOR AMICI CURIAE:

James D. Johnson
Defense Trial Counsel of Indiana
Evansville, Indiana

Leonard E. Eilbacher
James P. Fenton
Indiana State Bar Association
Fort Wayne, Indiana

Gregory H. Miller
Indiana Trial Lawyers Association
The Ass'n of Trial Lawyers of America
Crawfordsville, Indiana

William F. Harvey
In-House Insurance Counsel
Indianapolis, Indiana

Steven C. Shockley
Maggie L. Smith
In-House Insurance Counsel
Indianapolis, Indiana

Stephen J. Peters
Richard Winegardner
Marjorie H. Lawyer-Smith
Indiana Chamber of Commerce
Indiana Legal Education Foundation, Inc.
American Corporate Counsel Association
Cinergy Services, Inc.
Indiana Maufacturers Association
Insurance Institute of Indiana, Inc.
Association of Life Insurance Companies
Indianapolis, Indiana    

Ronald Gifford
Elizabeth Cierzniak
State Farm Mutual Automobile Ins. Co.
Indianapolis, Indiana

CINCINNATI INSURANCE COMPANY,     )
    (Intervenor Below)                )    
CELINA INSURANCE GROUP,             )
    (Defendants Suters' Insurer Below)    )    
KEITH L. FABER,                    )
    (Defendants Suters' Counsel Below)    )
ROBERT SUTER AND BETTY SUTER,    )    Indiana Supreme Court
    (Defendants Below)            )    Cause No. 79S00-9808-CV-458
                              )    

suggests that they are outside counsel.

disqualify Faber “so long as he continues to be an employee or agent of Celina Insurance Group such that his participation aids and abets the unauthorized practice of law by Celina.” The trial court also addressed the “captive law firm” issue raised by Cincinnati's intervention and concluded that Cincinnati, in addition to the unauthorized practice of law, also engaged in deceptive practices by using the name “Berlon & Timmel.” Finally, the trial court found that the attorneys employed by Cincinnati were participating in deceptive practices and aiding the unauthorized practice of law. The trial court ordered both Celina and Cincinnati to stop “any and all practices and activities that could, under the findings of this order, be considered to constitute the unauthorized practice of law . . . ,” and found that Cincinnati “should close” its Indianapolis office operated as Berlon & Timmel.
    After the Court of Appeals stayed the trial court's orders, but before any decision on the appeal, Celina and Faber petitioned for immediate transfer to this Court under Appellate Rule 4(A)(9), and transfer was granted.

before the court. McQueen v. State, 272 Ind. 229, 231, 396 N.E.2d 903, 904 (1979). More precisely, the authority of the trial court is limited to disqualification in the case before the court. Disqualification of Faber in the suit by the Wills against Suter was within the trial court's jurisdiction in this case.
    The trial court's order was not limited to Faber's representation of Suter, however. The order also directed Celina and Cincinnati to cease their representation of all other Indiana insureds by employee-attorneys based on perceived violations of the Rules of Professional Conduct. This sweeping remedy is available only through exercise of this Court's original jurisdiction over all matters with reference to the unauthorized practice of law. Ind Const. Art. VII, § 4; Ind. Admission and Discipline Rule 24; Ind. Appellate Rule 4(A)(3). Available procedural routes to raise this general issue include reference to the Disciplinary Commission and an original action in this Court pursuant to Admission and Discipline Rule 24, but not a proceeding in a trial court. Moreover, the trial court's order as to Faber's disqualification is moot because Suter's interest in this case has been resolved through settlement. Despite these jurisdictional defects, the issue is within the original jurisdiction of this Court, and is fully developed by the parties and amici curiae. Because the issue is of importance to many members of the Bar and their clients and affects a number of pending cases, we granted transfer under Appellate Rule 4(A)(9) to resolve the issue on its merits.See footnote 2

ten state courts and one federal circuit have concluded that it is permissible for an attorney employed by an insurance company to represent the company's insureds, but have reached that result through a variety of paths.See footnote 5 Two states have disapproved of the arrangement, one focusing on the potential conflict in interest between the insurer and the insured and the second on a statutory bar against the practice of law by a corporation. American Ins. Ass'n v. Kentucky Bar Ass'n, 917 S.W.2d 568 (Ky. 1996); Gardner v. North Carolina State Bar, 341 S.E.2d 517 (N.C. 1986).
    For the reasons stated below, we now hold, consistent with the majority of state courts that have addressed the issue, that (1) insurance companies do not necessarily engage in the unauthorized practice of law when house counsel represent their insureds in claims litigation and (2) attorneys who are employees of insurance companies do not necessarily trigger an impermissible conflict in violation of the Rules of Professional Conduct when they appear as counsel to defend claims against the companies' policyholders.

court went on to conclude 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. A variant on this theme was adopted by the Kentucky Supreme Court in American Insurance Association v. Kentucky Bar Association, where it reasoned that “a corporation cannot lawfully engage in the practice of law . . . . Moreover, a corporation[] cannot obtain license to practice law, since it is wholly incapable of acquiring the educational qualifications necessary to obtain such license, nor can it possess in its corporate name the necessary moral character required therefore.” 917 S.W.2d 568, 571 (Ky. 1996) (citations omitted).
    Unlike some other states, Indiana has no express statutory prohibition against a corporation's practicing law.See footnote 6 There are, however, many restrictions either explicitly or implicitly imposed by the Rules of Professional Conduct on the forms of business entities available to an attorney for the practice of law. Thus, neither an insurance company nor a general business corporation can simply employ lawyers and hold them out to the public as offering legal services. Whether or not such an activity would involve the entity in the

unauthorized practice of law, the Rules of Professional Conduct provide explicit limitations on the persons with whom a lawyer may share fees and form partnerships.See footnote 7 Ind. Prof. Cond. R. 5.4(a) & (b). Additionally, the Rules prohibit a lawyer from practicing law in a professional corporation or other association if a nonlawyer owns any interest, is a director or officer or otherwise has the right to direct or control the lawyer's professional judgment. Prof. Cond. R. 5.4(d).See footnote 8 Justice Dickson suggests that there would be no recourse against a corporation that simply employed licensed attorneys and sold their services to the general public. N.E.2d , (Ind. 1999) Slip op 9. If this form of business organization violated, for example, the prohibition against sharing the profits of the practice, the attorneys would be subject to discipline up to and including having their licenses suspended or revoked. And if unlicensed persons did the same thing, those people, and presumably their accomplices and the organization employing them, would be subject to the same sanctions as any other person practicing without a license, including criminal prosecution. Indiana Code § 33-1-5-1 criminalizes the practice of law by a “person” who is not an attorney. “Person” includes corporations, partnerships and other legal entities. See id. §§ 35-41-1-22 (defining “person”)

& 35-41-1-3 (applying definition to all statutes relating to penal offenses). See also id. § 33- 21-2-1 (the practice of law by a person who is not an attorney is prohibited).
    Despite the absence of a statute addressing a corporation's practicing law, for decades courts and commentators alike have agreed that it is unlawful for a corporation to practice law in Indiana.See footnote 9 Over sixty years ago we were told that “[t]he general rule that a corporation cannot practice law seems to be well settled in the United States today.” David Gleber, Attorney and Client - Unauthorized Practice of Law, 13 Notre Dame Lawyer 289 (1938). Addressing the State Bar Association, one Indiana commentator stated:
    Of course, it is unlawful for a corporation to practice law. It is now unlawful, and it     has always been unlawful for a corporation to practice law. The very statement of the     proposition is its answer. It is just as sensible, it seems to me, to repeal the law of     gravitation or to pass a law making it unlawful for objects to fall to the ground.

Glen D. Peters, Bootleggers in Law, 7 Ind. L. J. 46, 53 (1931). This rule was apparently so well settled that those asserting it felt no need to provide any basis for it other than the “common law prohibition of the practice of law by a corporation.” Gleber, supra at 290. And in more recent times this Court has stated, although in a quite different context, that “[a]

corporation is a creature of statute and can neither practice law nor act in person.” Department of Pub. Welfare v. Chair Lance Serv., Inc., 523 N.E.2d 1373, 1377 (Ind. 1983).     It is not obvious, however, precisely what it means to say a “corporation may not practice law,” or why that is true in every potential sense of that phrase.See footnote 10 The modern statements of the “rule” that a corporation may not practice law typically reflect no more than the point that only a natural person can be admitted to the bar. This is of course correct. The admission provisions requiring a lawyer to graduate from law school and to sit for the bar exam do not contemplate a legal entity as a bar candidate.See footnote 11 As the Supreme Court of Georgia put it, “[i]t is manifest from these [admission] provisions of the law that no corporation can be licensed to practice law in this state. No corporation can comply with the requirements which are imposed upon applicants as prerequisites to enable them to obtain license to practice law.” Boykin v Hopkins, 162 S.E. 796, 800 (Ga. 1932). Similarly, it is

clear that only licensed attorneys may lawfully “practice law.” Indeed, as already noted, unlicensed practice of law by any person is criminal.
    From these general propositions in concert with conventional agency principles the Wills and the trial court concluded that the insurer-employer of a licensed attorney is unlawfully practicing law. However, it is clear that some provisions of our Rules and statutes assume or contemplate that entities that cannot sit for the bar may nonetheless employ lawyers who practice law and in that sense “practice law” themselves. All agree that a group of attorneys may lawfully organize as a partnership, limited liability partnership or professional corporation. Each of these legal entities has individuals who are shareholders, partners or employees of the organization and who, as licensed lawyers, also practice law. Despite the obvious fact that neither the partnership nor the professional corporation graduated from law school, etc., there is no claim raised that any of these entities is engaged in the unauthorized practice of law. Moreover, our Rules of Professional Conduct at least implicitly confirm that a partnership's “activities” may consist of the practice of law by, for example, Rule 5.4(b)'s prohibition against formation of such a partnership with a non-lawyer partner.
    The statutory provisions for professional corporations are also relevant. The trial court pointed to Indiana Code § 23-1.5-2-3 in support of its conclusion that Celina, an insurance company, engaged in the unauthorized practice of law. This section authorizes professional corporations to be formed to render professional services. Specifically, it provides for a legal entity that is authorized “to render services that may legally be performed

only by an attorney.” Ind. Code § 23-1.5-2-3(3) (1998). This provision seems to assume that the professional corporation, by “rendering services” will itself be practicing law, just as Rule 5.4(b) describes a partnership as practicing law. The practice is not unauthorized, however. The professional corporation statute goes on to provide that “[a] professional corporation may render professional services only through individuals permitted to render such services in Indiana.” Id. § 23-1.5-2-5. This statute reinforces the conclusion that entities may lawfully “render” legal services if the activities are conducted by a licensed attorney. It also authorizes professional corporations to conduct a general practice of law. We do not agree, however, that it impliedly prohibits employees of a general business corporation or an insurance company from practicing law. Rather, it simply leaves them where it found them, subject to the confinements of other rules but not inherently incapable of practicing law.
    Finally, the Rules also explicitly recognize that corporations may have house counsel. The definition of a “law firm” includes “lawyers employed in the legal department of a corporation or other organization.” Prof. Cond. R. preamble. Rule 1.13 by its terms applies to attorneys “employed or retained” by a corporation or other organization. As a result, employee-attorneys are subject to the same obligations, including supervision, etc., that apply to attorneys in other forms of practice. There is no dispute that properly admitted employee- attorneys practice law in representing their employer and as such are subject to the Rules of

Professional Conduct.See footnote 12 Moreover, as elaborated in Part II.C., it is not uncommon for house counsel to represent both the corporation and its officers, directors or other employees in matters where the potential for conflict does not preclude common representation.See footnote 13 There, as in the insurer situation found in this case, the attorney's obligations run to both clients. Both situations present the possibility of a conflict between the interests of the two clients. Despite that possibility, in many cases the matter is resolved without any significant divergence of those interests, and the interests of economy and simplicity clearly justify the practice.
    Notwithstanding the continuing ban, indeed criminalization of “practicing law” by any “person” not an attorney, the Rules of Professional Conduct, statutes and well accepted forms of practice clearly imply that the entity itself is not unlawfully practicing law as long as the activity is conducted through licensed attorneys.See footnote 14 It is of course true that a legal entity can be responsible for the professional actions of its partners, employees and agents under

standard doctrines of respondeat superior, and in that sense is viewed as engaged in the activity. But that does not mean the entity unlawfully practices law any more than Federal Express unlawfully pilots airplanes. Rather the practice of law, the piloting of airplanes and many other activities are required to be performed by licensed professionals. And, as a general proposition, where the law requires a license, agency doctrine permits an unlicensed legal entity to employ licensed agents to perform those acts requiring a license. Restatement (second) of Agency § 19 cmt. d (1958). In each case the lawfulness of the entity's activities turns on whether the individual is properly licensed.
    Regardless of whether a partnership, a professional corporation, an insurance company, or any other legal entity may be said to be practicing law in some sense, we believe the proper focus of the unauthorized practice inquiry is whether the challenged activity results in the “unauthorized” practice by the individuals involved.See footnote 15 Rather than turning on a syllogism based on a series of propositions of dubious general validity, the unauthorized practice issue boils down to whether a non-lawyer is performing tasks requiring a lawyer, or a lawyer not admitted in this State is practicing in Indiana. See 2 Geoffrey C. Hazard, Jr. & W. William Hodes, The Law of Lawyering: A Handbook on the Model Rules of Professional Conduct § 5.5:102 (1985 & Supp. 1998) (“Most of the law on unauthorized practice has been developed by the courts in criminal prosecutions and

injunction proceedings against [nonlawyers] for practicing without a license and in civil cases attempting to hold such persons liable for malpractice where they held themselves out as lawyers.”).
    There is no dispute that the attorney-employee who represents the organization that employs the attorney is practicing law. There is also no dispute that the attorney in this case can properly represent his employer in connection with the Wills' claim. The only issue is whether the concurrent representation of the insured renders the representation unauthorized or makes it somehow the practice of law by someone other than the attorney. Given that the attorney's representation of the insurer-employer is lawful, the representation of a policyholder whose interests are essentially aligned with the insurer's does not inherently result in unauthorized practice by either the insurer or the attorney. Nor, in our view, is this tantamount to offering legal services to the general public. Suter undoubtedly perceived herself as buying insurance coverage and only incidentally acquiring the prospect of legal services. Indeed, if outside counsel were employed to defend her claim, Celina would have been offering her the same package of services from her point of view.
    In sum, as explained in Part II.C., there may be many other reasons why an employee- attorney may not concurrently represent both the employer and someone else, but the attorney's status as an employee of an insurance company or any other legal entity is in and of itself no bar. We conclude that Celina does not necessarily engage in the unauthorized practice of law when its employed attorney represents its insureds. Accordingly, Faber does not assist Celina in the unauthorized practice of law when he represents insureds. Our

conclusion is the same with respect to Cincinnati and its employed attorneys on the issue of the unauthorized practice of law.
    C. The Representation is not Inherently Problematic
    There are plainly many situations where representation of both an insured and the insurer is inconsistent with the Rules of Professional Conduct. However, the issue in this case is whether these potential conflicts are so inherent in the representation that it is a violation of the Rules of Professional Conduct to enter into the arrangement in the first place. We think not.
    1. The Insurance Company as Co-Client
    As a related matter, there is extensive debate in the literature as to whom the attorney represents in this situation.See footnote 16 Specifically, whether the attorney is an employee or an outside lawyer, the debate focuses on whether only the insured or both the insured and the insurer should be viewed as the client. We think it unrealistic to ignore the client relationship with both. Joint representation may become problematic, particularly if issues of disclosure of confidences arise. For example the attorney may gain information from the policyholder- client that may affect the insurer-client's coverage obligation. But that is no basis for prohibiting the arrangement in all cases. Whatever issues joint representation raises appear to be wholly independent of the attorney's status as an employee of the insurer or a member

of a law firm. Second, there is nothing inherently wrong in common representation of two parties where their interests are aligned. Professional Conduct Rule 1.7 provides direction “[w]hen representation of multiple clients in a single matter is undertaken . . . .” In this respect, the insured and insurer present no qualitatively different situation from any other pair of commonly represented clients.
    If a conflict arises, it will have to be handled, and there are a variety of means to do that. But a vast number of claims have been and presumably will be handled with no significant issue between the insurer and the policyholder. Interests of economy and simplicity dictate that this be permitted to continue. Any abuses can be handled on a case- by-case basis rather than by adoption of the broad prohibition the Wills seek. Although issues may arise in dual representation, none are apparent in this case. In any event, Celina has by contract subordinated its interests as a client to those of Suter. Presumably, this resolves by agreement the priority of counsel's obligations if, for example, counsel learns of information that affects the insurer's and the policyholder's interests differently.
    2. Specific Rules of Professional Conduct
    The Rules of Professional Conduct prohibit an attorney from representing a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person. Prof. Cond. R. 1.7(b). In addition, the professional independence of a lawyer is not impaired so long as the lawyer does not “permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer's professional judgment.” Prof. Cond. R. 5.4(c). “Where someone

other than the client pays the lawyer's fee or salary, or recommends employment of the lawyer, that arrangement does not modify the lawyer's obligation to the client.” Prof. Cond. R. 5.4 cmt.
    The Wills contend that Faber violated each of these as well as Rules 1.8(f) (no compensation from those who interfere with the lawyer's independence); 7.3(f) (lawyer shall not compensate those who recommend employment); 5.4(a) (no sharing of legal fees with nonlawyer); and 5.4(d)(2) and (d)(3) (no practice in an association or a professional corporation if nonlawyer holds interest). All of these contentions relate to the inherent inappropriateness of the arrangement. The trial court's order includes detailed discussions of the Wills' claims and the evidence they offered to support those claims.See footnote 17 None of the evidence was specific to Faber's relationship to Celina. Rather it focused on the general issue of house counsel as counsel for policyholders. Specifically, as the trial court noted, the Wills “presented nothing beyond mere allegation that Celina directs or regulates Mr. Faber's professional judgment based upon the employment relationship.” The trial court found that Faber's employment by Celina did not inherently result in any unethical practice or conflict of interest.
    Amicus Curiae, the Defense Trial Counsel of Indiana, argued before this Court that house counsel are less aware of the Rules of Professional Conduct and the discipline matters

decided by this Court than attorneys who practice in traditional firms. They point to no evidence in support of this assumption and we decline to adopt it. All members of the Bar accept their obligations to their clients and the Court under the Admission and Discipline Rules and the Rules of Professional Conduct. The vast majority of practicing attorneys discharge their obligations without complaint over an entire career. As to the remainder, this state, like all others, has in place disciplinary procedures to protect the public. In Groninger v. Fletcher Trust, we rejected the plaintiff's claims that “one who is the regular attorney for a trust company will be more loyal to his employer than to the trust for which he is rendering legal services . . . .” 220 Ind. 202, 208, 41 N.E.2d 140, 142 (1942). Over half a century later we still agree with the trial court's conclusion that “[t]here is nothing to suggest that attorneys who are house counsel for insurance corporations are ignorant or numb to the expectations of the Rules of Professional Conduct.”
    In this respect we join the several states that reject the contention that house counsel representation of insureds presents an inherent conflict in violation of the Rules of Professional Conduct. “Compliance with the Code in all cases will be measured against the Code itself, rather than some variation of the 'outside counsel' practice, which, depending upon the circumstances of the particular situation, may not conform to the requirements of the Code.” Petition of Youngblood, 895 S.W.2d 322, 328 (Tenn. 1995); see also In Re Allstate Ins. Co., 722 S.W.2d 947, 953 (Mo. 1987) (en banc) (“There is no basis for a conclusion that employed lawyers have less regard for the Rules of Professional Conduct than private practitioners do.”) In rejecting a proposed conduct rule prohibiting house

counsel from representing insured, the Supreme Court of Florida found no basis for distinguishing between house counsel and outside counsel. It observed that all attorneys engaged to represent insureds pursuant to an insurance contract face the same ethical decision: an attorney, whether house counsel or outside counsel, “is employed to represent two clients.” In Re Rules Governing Conduct of Attorneys, 220 So.2d at 7. The court concluded that the lawyer owes “undivided loyalty to the client whom he purports to serve, not to the third party source of his compensation.” Id. at 8. The Supreme Court of Georgia observed that “both [attorneys employed and compensated on a case by case basis] and staff counsel owe duties to and therefore represent both the insurer and the insured.” Coscia v. Cunningham, 299 S.E.2d 880, 881 (Ga. 1983).
    It is of course true that conflicts may arise in the course of representation of an insured by house counsel. The same is true if the insurer pays for a law firm to represent its insured. In either case there may be a conflict based on coverage disputes, the risk of a claim in excess of policy limits, the acquisition of information from the insured that bears on coverage, or a variety of other items. If such a situation arises retention of new counsel to represent the policyholder may be either preferred or necessary. But this potential does not require the abandonment of a mode of doing business that the insurer finds efficient and cost effective, and the insured knowingly accepts. Presumably ultimately the marketplaces of ideas and premium charges will sort this out and strike a balance between claimed cost advantages and perceived desirability of wholly independent counsel. We find nothing in our Rules of Professional Conduct to prevent the parties from continuing to duke this issue

out in those marketplaces without interference from the judiciary. If and when abuses are perceived by policyholders they may seek the aid of the courts or the insurance commissioner. Our point is not, as Justice Dickson concludes, that two wrongs make a right. N.E.2d , (Ind. 1999).(slip op at 36) Rather it is that the potential for conflict is inherent in the insurer-insured relationship regardless of whether the attorney is house counsel or outside counsel, and the employment relationship is not qualitatively different in this respect.
    Finally, as already noted, apart from the unauthorized practice issue, most of the problems identified by the Wills exist whether house counsel or outside counsel are used. If there is any difference between house and outside lawyers in this respect it is quantitative and not qualitative and varies from situation to situation. Employee-attorneys may be subject to pressures from their employer. But it is also unrealistic to suggest that an outside lawyer is immune from the blandishments of a client, particularly a high volume client that may be the source of a significant portion of the firm's revenues. For a decade the legal press has been full of stories of various cost containment programs implemented by insurers and others to reduce their outside legal expenses. Ultimately all attorneys are bound by their professional obligations to place the interests of their policyholder-client ahead of their own if pressure from an employer or a co-client insurer conflicts with those of the policyholder. We will not assume that an attorney employed by an insurance corporation is in violation of any of the Rules based solely on that employment relationship. The full range of disciplinary sanctions and civil remedies are available to deal with hopefully isolated instances of trouble.

This is true whether the attorney is an employee of an insurance company, a partner in a firm significantly dependent on the insurer's business or a lawyer relatively free of direct economic pressure.
    In sum, we hold that an insurance company does not engage in the unauthorized practice of law when it employs attorneys to represent insureds and that attorneys employed by insurance companies may represent insureds under circumstances and to the extent permitted by their ethical obligations defined in the Admission and Discipline Rules and the Rules of Professional Conduct. This holding does not, as Justice Dickson suggests, turn on the fact that the employer is an insurance company; it depends on the commonality of interests of the jointly represented clients. N.E.2d , (Ind. 1999). (slip op at 2)
    D. Protection of the Public
    The Court's ability to prohibit the unauthorized practice and regulate the conduct of licensed attorneys “emanates from the need to protect the public from those not properly licensed or otherwise qualified to act as attorneys.” State ex rel. Disciplinary Commission of the Supreme Court of Indiana v. Owen, 486 N.E.2d 1012, 1014 (Ind. 1986); see also Hulbert v Mybeck, 220 Ind. 530, 532, 44 N.E.2d 830, 831 (1942). In addition, the preamble to the Rules of Professional Conduct cautions that “[t]he profession has a responsibility to assure that its regulations are conceived in the public interest and not in furtherance of parochial or self-interested concerns of the bar.”
    As demonstrated by this case, free access to the market of legal services and the protection of the public is a delicate balance with results that are not always predictable. As

noted in Part II.C.2., in the realm of insurance defense, the public may ultimately reap the benefits of better service at lower cost through the use of house counsel. Although we find no inherent detriment to the general public in the defense of insurance claims by house counsel, we reiterate the fact that the Rules of Professional Conduct, the disciplinary procedures, and other civil remedies exist for the protection of all clients, whether the attorney is house counsel, a sole practitioner, affiliated with a traditional law partnership, or anything else.

entity but also an independent status that is not enjoyed by the insurer's employees. There is greater danger for the public to be misled in permitting an insurance company to pass off its legal department as an independent entity. Second, there is at least some practical sense in permitting groups of financially independent lawyers to benefit from the economies of a shared name such as the convenience of one sign on shared offices or the cost savings of one advertisement. Cincinnati provides no rationale for using “Berlon & Timmel” as a designation for its house counsel. Perhaps the name was adopted without much reflection. In any event, it is difficult to come up with a proper reason for this designation and we conclude that it is improper to create the perception of a law firm at least partially independent of Cincinnati.
    For these reasons we agree with the Supreme Court of Tennessee that the use of captive law firm names is not permissible under the Rules of Professional Conduct. That court reasoned that “[t]he representation that the attorney-employee is separate and independent from the employer is, at least, false, misleading and deceptive. It may be fraudulent, depending on the circumstances under which the representation is made.” Petition of Youngblood, 895 S.W.2d 322, 331 (Tenn. 1995); see also Supreme Court of Ohio, Board of Comm'rs on Grievances and Discipline, Op. 95-14 (1995) (attorneys employed by an insurance company may not represent themselves to be outside counsel when they are house counsel). From the record before us, it appears that Berlon & Timmel identifies itself as an aggregate of employee-attorneys at the first contact with the policyholder. If so, the fraud conclusion may well be inappropriate here.

prohibited from practicing law. The majority today redefines this prohibition, specifically exempting insurance companies from its application and holding that insurance companies do not necessarily engage in the unauthorized practice of law when house counsel represent insureds in liability claims litigation. The majority further holds that the representation provided by house counsel to both insurance companies and their insureds is not so inherently problematic and the interests not so inherently conflict-laden as to violate the Rules of Professional Conduct. I strongly disagree with both of these holdings.
    The Indiana Supreme Court has exclusive jurisdiction in matters involving the admission and discipline of attorneys. Ind. Const. art. VII, § 4; Matter of Fletcher, 655 N.E.2d 58, 59 (Ind. 1995); In re Kesler, 272 Ind. 161, 163, 397 N.E.2d 574, 575 (1979). This Court has original jurisdiction in matters relating to the unauthorized practice of law. Ind. Const. art. VII, § 4; Matter of Contempt of Mittower, 693 N.E.2d 555, 558 (Ind. 1998); Fletcher, 655 N.E.2d at 59. We hold these responsibilities not for the sake of the bar, but for the sake of the public. Id. at 60.
    This Court has explained that "[t]he practice of law is restricted to natural persons who have been licensed upon the basis of established character and competence as a protection to the public against lack of knowledge, skill, integrity, and fidelity." Groninger v. Fletcher Trust Co., 220 Ind. 202, 207, 41 N.E.2d 140, 141 (1942). See also Professional Adjusters, Inc. v. Tandon, 433 N.E.2d 779, 783 (Ind. 1982). The license to practice law "is a privilege rather than a natural or vested right." In re Holovachka, 245

Ind. 483, 510, 198 N.E.2d 381, 394 (1964) (quoting In re Harrison, 231 Ind. 665, 667, 668, 109 N.E.2d 722, 723 (1953)). Thus, as Chief Judge Benjamin Cardozo wrote, "'Membership in the bar is a privilege burdened with conditions.'" People ex rel. Karlin v. Culkin, 248 N.Y. 465, 470, 162 N.E. 487, 489 (1928) (quoting In re Rouss, 221 N.Y. 81, 84, 116 N.E. 782, 783 (1917). We have long noted the conditional nature of this privilege:
    The privilege is contingent upon the faithful performance of the duties imposed upon the attorney by the society which grants him the privilege. The first and continuing requirement of an attorney is that he be of good moral character. Being of good moral character necessarily implies that he will conform to the moral standards of his profession as provided (1) by law, (2) by his oath of office and (3) by the code of ethics of the legal profession.
    
Baker et al., v. Keisker, 236 Ind. 617, 620, 142 N.E.2d 432, 434 (1957) (internal citation omitted). Dean Roscoe Pound reflected a similar sentiment:
    [W]hat we mean by the term profession when we speak of the old recognized professions (medicine, the law, ministry). We mean an organized calling in which men pursue a learned art and are united in the pursuit of it as a public service_as I have said, no less a public service because they may make a livelihood thereby. Here, from the professional standpoint there are three essential ideas_organization, learning, and a spirit of public service. The gaining of a livelihood is not a professional consideration. Indeed, the professional spirit, the spirit of a public service, constantly curbs the urge of that instinct.

Dean Roscoe Pound, Address Before the Nebraska State Bar Association (Oct. 20, 1949), quoted in Edwin M. Otterbourg, A Study of Unauthorized Practice of Law 2 (1951).
    It is the province of this Court to determine what the practice of law is and what acts constitute the practice of law. Mittower, 693 N.E.2d at 558; Matter of Perrello, 270

Ind. 390, 398, 386 N.E.2d 174, 179 (1979). We have indicated:
    The core element of practicing law is the giving of legal advice to a client and the placing of oneself in the very sensitive relationship wherein the confidence of the client, and the management of his affairs, is left totally in the hands of the attorney. The undertaking to minister to the legal problems of another creates an attorney-client relationship without regard to whether the services are actually performed by the one so undertaking the responsibility or are delegated or subcontracted to another. . . . [M]erely entering into such relationship constitutes the practice of law.

Id. The Court also explained:
    [W]e do not recognize a division of the practice of law into a practice side and a business side. To manage any profession, there are incidental business elements that are a part of the total process. The performing of these business processes are a part of the total process and certainly cannot be separated and isolated from the total transaction. The conducting of the business management of a law practice, in conjunction with that practice, constitutes the practice of law.

Id. We have observed that "a person who gives legal advice to clients and transacts business for them in matters connected with the law in the settlement, adjustment, and compromise of claims is engaged in the practice of law." Fink v. Peden, 214 Ind. 584, 593, 17 N.E.2d 95, 99 (1938). See also State ex rel. Pearson v. Gould, 437 N.E.2d 41, 42 (Ind. 1982). "Thus, the practice of law is not defined only as the giving of legal advice or acting in a representative capacity_it also had been extended by this Court to conducting the business management of a law practice." Matter of Thonert, 693 N.E.2d 559, 563 (Ind. 1998) (per curiam). See footnote 1

acknowledges that "[i]n the most general sense this term denotes an agent or substitute, or one who is appointed and authorized to act in the place or stead of another. An agent, or one acting on behalf of another." Black's Law Dictionary 128 (6th ed. 1990) (citation omitted).

attorney-at-law by the supreme court of this state.

Ind. Code § 33-1-5-1 (1998). Another statute provides: "The practice of law by a person who is not an attorney is prohibited under IC 33-1-5." Ind. Code § 33-21-2-1 (1998). "Person" includes a corporation. Ind. Code § 35-41-1-22 (1998) (defining "person"); Ind. Code § 35-41-1-3 (1998) (applying definition to all statutes relating to penal offenses).
    The Indiana Rules of Professional Conduct apply only to those persons who are admitted to the bar in Indiana. Rule 5.5 relates to the unauthorized practice of law and prohibits lawyers from "(a) practic[ing] law in a jurisdiction where doing so violates the regulation of the legal profession of that jurisdiction; or (b) assist[ing] a person who is not a member of the bar in the performance of activity that constitutes the unauthorized practice of law." See footnote 3 Thus, Rule 5.5(b), in regulating attorney conduct, prohibits attorneys from assisting a person, which would include corporations and other organizational entities, in the performance of activities that constitute the unauthorized practice of law.
    Thus, an important distinction exists between the application of the professional rules and the application of the statute prohibiting the unauthorized practice of law. The statute governs all persons, whether natural or legal, whether lawyers or non-lawyers. The Professional Conduct Rules regulate only the conduct of lawyers, but not that of non- lawyers, corporations, or other organizational entities. The unauthorized practice of law

statute operates to prohibit conduct by both individuals and legal entities that the professional rules do not regulate. In so doing, the statute criminalizes conduct by natural and legal persons who are not subject to this Court's authority under the professional rules and thereby protects the public from the practice of law by individuals and entities not qualified to practice law.
    The majority departs from this statutory proscription prohibiting the practice of law by legal entities not admitted as an attorney at law. Instead, it creates and announces a new judicial exemption, henceforth permitting "an unlicensed legal entity to employ licensed agents to perform those acts requiring a license." Slip op. at 17. The majority then recognizes that "[i]n each case the lawfulness of the entity's activities turns on whether the individual is properly licensed." Slip op. at 17. The majority continues:
        Regardless of whether a partnership, a professional corporation, an insurance company, or any other legal entity may be said to be practicing law in some sense, we believe the proper focus of the unauthorized practice inquiry is whether the challenged activity results in the "unauthorized" practice by the individuals involved.

Slip op. at 17 (citation and footnote omitted).
    The majority thus reshapes the law regarding the unauthorized practice of law, even referring to it as the "unlicensed practice of law," slip op. at 14, and limits the unauthorized practice of law inquiry to the qualification and activity of the individuals (impliedly only natural persons) involved, such as when a disbarred attorney practices, an unlicensed person practices, or an out-of-state attorney practices without a license or proper approval. This new understanding obliterates the function of the statute in

criminalizing conduct by both natural and legal persons who are not subject to this Court's authority under the professional rules. Under the majority's interpretation, only limited and indirect recourseSee footnote 4 is available against general business corporations and other organizational entities that employ licensed attorneys and hold them out to the public. I am convinced that the legislature intended a broader application of the statute than the majority's interpretation allows. I believe the statute presently proscribes entities from undertaking such activities.
    Under Indiana statutory law, the unauthorized practice of law occurs when a person (whether natural or legal) not authorized to practice law in Indiana holds himself, herself, or itself out as a practicing lawyer, conducts a trial in a court, engages in the business of a practicing lawyer, or otherwise represents another person in a matter having legal consequences. The unauthorized practice of law statute is violated when either (1) an unlicensed individual engages in the practice of law, or (2) a person or entity, through its use of lawyers or non-lawyers, engages in the practice of law. See footnote 5 Under this

interpretation, recourse may be taken under this Court's Rules of Professional Conduct against attorneys who improperly practice law, and recourse may be taken under the unauthorized practice of law statute against persons, both real and legal, who engage in the unauthorized practice of law. This second means of recourse would include corporations and other entities that employ attorneys and hold them out to the public as providing legal services. See footnote 6 I believe that Celina, through its use of a licensed attorney- employee, engaged in the unauthorized practice of law in violation of Indiana statutory law.

2. The Corporate Practice of Law
    Under long-settled Anglo-American law, corporations and other organizational entities have been prohibited from practicing law. See footnote 7 This black-letter law has governed the

practice of law in Indiana, presumably since the state was founded. See footnote 8 Just over eleven years ago, Chief Justice Shepard, writing for this Court, stated:
        A corporation is a creature of statute and can neither practice law nor act in person. Out of court it must act through its agents, and in court it must generally

act only through an agent who is a licensed attorney. The fundamental principles regarding the authority of an agent of a corporation are substantially the same as those applicable to agents generally.

Indiana Dep't of Public Welfare v. Chair Lance Service, Inc., 523 N.E.2d 1373, 1377 (Ind. 1988). This Court has also said:
        "The practice of the law is personal. It is open only to individuals proved to the satisfaction of the court to possess sufficient general knowledge and adequate special qualifications as to learning in the law and to be of good moral character. . . . A dual trust is imposed on attorneys at law: they must act with all good fidelity both to the courts and to their clients. They are bound by canons of ethics which have been the growth of long experience and which are enforced by the courts.
        Practice of law under modern conditions consists in no small part of work performed outside of any court and having no immediate relation to proceedings in court. . . . Although these transactions may have no direct connection with court proceedings, they are always subject to become involved in litigation. They require in many aspects a high degree of legal skill, a wide experience with men and affairs, and great capacity for adaptation to difficult and complex situations. These 'customary functions of an attorney or counsellor at law' . . . bear an intimate relation to the administration of justice by the courts. No valid distinction . . . can be drawn between that part of the work of the lawyer which involves appearance in court and that part which involves advice and drafting of instruments in his office. The work of the office lawyer is the groundwork for future contests in courts. . . . The underlying reasons which prevent corporations, associations and individuals other than members of the bar from appearing before the courts apply with equal force to the performance of these customary functions of attorneys and counsellors at law outside of courts."

Fink, 214 Ind. at 590-91, 17 N.E.2d at 97-98 (quoting In re Opinion of the Justices, 289 Mass. 607, 612, 194 N.E. 313, 316-17 (1935)) (internal citations omitted) (emphasis added).
    Simply put, corporate and other organizational entities are unable to satisfy the admission requirements and thus are unable to be "duly admitted as . . . attorney[s]-at-law

by the supreme court of this state." See footnote 9 See Ind. Code § 33-1-5-1. Numerous reasons have been offered in support of this body of law, including primarily the concern that harm would come to the public as corporate business interests invade the attorney-client relationship, as the independence of professional judgment is eroded, and as the trust and confidence placed in attorneys is threatened. See footnote 10

market place by the corporate principal. This constitutes unauthorized practice of law by the corporate principal." ABA Comm. on Unauthorized Practice of Law, Informative Op. A (1967) (citing Land Title Abstract & Trust Co. v. Dworken, 193 N.E. 650 (Ohio 1934); Steer v. Land Title Guarantee & Trust Co., 113 N.E.2d 763 (Ohio Ct. C.P. 1953); Hexter Title & Abstract Co. v. Grievance Com., 179 S.W.2d 946 (Tex. 1944)), reprinted in Res Gestae, May 1967, at 31, 32.
    Under Indiana law, every person is entitled to act as his or her own attorney both in and out of court and to assume the consequences of those acts so performed. State ex rel. Indiana State Bar Ass'n v. Indiana Real Estate Ass'n, Inc., 244 Ind. 214, 226 n.2, 191 N.E.2d 711, 717 n.2 (1963). This right, however, is possessed only by those who are the parties to the transaction. Id. at 226, 191 N.E.2d at 717. Only qualified, licensed attorneys may appear for other persons. Matter of Estate of Rondinelli, 692 N.E.2d 915, 918 (Ind. Ct. App. 1998) ("only persons duly admitted to practice law in this state may appear on behalf of other persons") (citing Butler v. State, 668 N.E.2d 266, 268 (Ind. Ct. App. 1996)). See also Simmons v. Carter, 576 N.E.2d 1278, 1279 (Ind. Ct. App. 1991) ("[W]hile any natural person may appear in court on his or her own behalf, only persons duly admitted to practice may appear on behalf of other persons.").
    This Court has discussed the application of these rules to organizational entities involved in out-of-court actions that have legal consequences:
        We find no reason or authority for holding that a trust company, authorized by law to act as executor, administrator, guardian, or trustee, may not execute such trusts in the same manner and through the same agencies that may be resorted to

by a natural person in the same situation, except, of course, that a natural person may act in propria persona, while a corporation must act through some natural person. If a natural person, who is not admitted to practice law, may do the things which the appellee has done without illegally practicing law, so can the trust company. If it is unwise to permit a corporation to act in a fiduciary capacity, the remedy is with the Legislature and not with the courts.
        The practice of law is restricted to natural persons who have been licensed upon the basis of established character and competence as a protection to the public against lack of knowledge, skill, integrity, and fidelity. Disbarment procedure is available in the case of those who do not conform to proper practice. The practice of law involves advising or rendering services for another. A natural person may plead his own case in court or do any of the things for himself which if done for another would constitute practicing law. He may discuss the legal aspects of his affairs with other interested parties or with strangers. Either a natural person or a corporation may employ lawyers to do these things.
        A corporation may choose its own attorney as freely as a natural person may do so. Where the services of an attorney are necessary in the execution of a trust, the trustee is charged with the responsibility of selecting an attorney and with the duty to exercise reasonable care in the selection, and a corporate fiduciary has the same duty and the same right as a natural person. A natural person acting as executor, administrator, guardian, or trustee, may choose his own personal attorney, employed by him on an annual salary basis, to perform services for his trust, without expense to the trust, or he may employ such a personal attorney at the expense of the trust, or he may employ some attorney with whom he has no business or professional connection. No reason is seen why a corporate fiduciary may not do the same. . . .

Groninger, 220 Ind. at 206-208, 41 N.E.2d at 141-42.
    We have also explained:
    When a corporation becomes a party to a civil action its status to represent itself in that proceeding differs from that of an individual. The individual has a personal stake in the outcome of the litigation and can readily be identified as both a party litigant and an individual person. A corporation, however, although a person in the eyes of the law, cannot be wholly identified with any individual person and thus, by necessity, must be represented by its agents. Those agents can only have an indirect stake in the case for the reason that a corporation exists as an independent legal entity, separate and distinct from its shareholders, officers or any agents. . . .
        

partnerships, corporate legal departments, and group legal service plans, attorneys are also authorized to practice in other organizational contexts: professional corporations, limited liability companies, and limited partnerships. See Ind. Code § 23-1.5-1; Ind. Code § 23-18-1; Ind. Code § 23-4-1; Admis. Disc. R. 27. Nevertheless, all members of the Indiana bar, regardless of the nature or context of their practices, are subject to the same ethical and legal obligations under the professional rules.
    When attorneys practice in organizational contexts, certain limitations apply to the organizations themselves. For instance, with professional corporations, limited liability companies, and limited partnerships, statutory law and court rules place specific requirements on these organizations in terms of organizational purpose, activities, control, and liability. See Ind. Code § 23-1.5-1; Ind. Code § 23-18-1; Ind. Code § 23-4-1; Admis. Disc. R. 27. In the case of professional corporations, our statutes have authorized attorneys to form professional corporations "to render services that may legally be performed only by an attorney." Ind. Code § 23-1.5-2-3(3). However, these professional corporations "may render professional services only through individuals permitted to render such services in Indiana." Ind. Code § 23-1.5-2-5(a). And, "[a] licensed individual acting in his individual capacity may render professional services, even though the individual may be a shareholder, director, officer, employee, or agent of a professional corporation." Ind. Code § 23-1.5-2-5(b). Also, with group legal service plans, our professional rules require the group plans to meet certain conditions before an attorney may render services pursuant to the plan and to file an initial disclosure

statement, annual reports, and a final report upon the discontinuation of operation; included in these mandated filings are the names of the attorneys rendering services under the plan. See Admis. Disc. R. 26.
    The majority correctly notes that the Preamble to our Rules of Professional Conduct defines "firm" and "law firm" to include "lawyers employed in the legal department of a corporation or other organization." Prof. Cond. R. Preamble. The majority also correctly recognizes that attorneys may be retained or employed by corporations and may work in their legal departments and that Rule 1.13 applies to attorneys "employed or retained" by a corporation or other organization. Indeed, members of the Indiana bar who serve as house counsel are subject to the professional rules and the obligations arising therefrom, like all other attorneys in Indiana.
    However, none of these statutory or rule provisions constitutes authorization for insurance companies to employ house counsel to represent their insureds. As already noted, corporate and other organizational entities often employ house counsel in their legal departments to represent the entities in their legal matters and transactions. Indeed, when it comes to an entity's own legal matters and transactions, there is no real difference between an entity employing attorneys as house counsel or as outside counsel. In both cases, the entity-client hires an attorney to provide legal services. Like any other person, an organization may secure counsel to represent the company in its own affairs_whether that attorney is a salaried attorney-employee or outside counsel is unimportant.
    Indiana Professional Conduct Rule 1.13 states that "[a] lawyer employed or

retained by an organization represents the organization acting through its duly authorized constitutents." Thus, Rule 1.13 contemplates that an attorney retained or employed by an organization represents the organization. Implicit in this rule is the idea that an attorney employed in the legal department of an organizational entity represents the organization in those transactions in which the organization has a primary interest. This was the understanding at common law that provides the background and context for our statute and our professional rules.

4. The Trial Court's Holdings
    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." Slip op. at 9. See footnote 13 While the majority dismissively characterized this as "a syllogism based on a series of propositions of dubious general validity," slip op. at 17, 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. See footnote 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." Slip op. at 10. 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. See footnote 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. See footnote 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. See footnote 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. See footnote 18 Therefore, Celina engages in the unauthorized practice of law when its house counsel represents its insured. See footnote 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.

and to the extent permitted by their ethical obligations defined in the Admission and Discipline Rules and the Rules of Professional Conduct," slip op. at 25.
    Various reasons have been offered, explaining why house counsel's representation of insureds is attractive to insurance companies: it controls costs; it saves money over the cost of outside counsel; it shifts the profit-margin from outside counsel to the insurance company itself; it affords closer monitoring; it achieves more efficient claims handling; and it increases the expertise of those handling such claims. See 1 Geoffrey C. Hazard, Jr. & W. William Hodes, The Law of Lawyering: A Handbook on the Model Rules of Professional Conduct 256.10 (1990 & Supp. 1998); Ronald E. Mallen, Defense by Salaried Counsel: A Bane or a Blessing?, 61 Def. Couns. J. 518 (1994). Even though economic benefits may result when salaried house counsel represent insureds, I believe that the representation is inherently offensive to the principles and rules that govern the practice of law.
    Indiana Rule of Professional Conduct 1.7 See footnote 21 protects clients by ensuring that conflicts of interest do not compromise the singular loyalty of attorneys to their clients. See footnote 22

Indeed, "[t]he basic duties a lawyer owes to a client_competence, confidentiality, communication, and loyalty_are all implicated in conflict of interest situations." 1 Hazard & Hodes, supra, at 222. Hazard and Hodes explain:
        In the modern view, a conflict of interest exists whenever the attorney- client relationship or the quality of the representation is "at risk," even if no substantive impropriety_such as a breach of confidentiality or less than zealous representation_in fact eventuates. The law of lawyering then proceeds by assessing the risk and providing an appropriate response. Some situations are so fraught with danger of serious impropriety, for example, that a per se rule of disqualification is usually imposed_a prophylactic ban that sometimes is not waiveable, even by a sophisticated and well-counselled [sic] client. In these situations (some of which are catalogued in Rule 1.8), the public interest in maintaining public confidence in the legal system outweighs the interest of individual lawyers and individual clients in freely contracting with each other.
        When the risk of substantive harm is small, however, or when the risk is high but the harm is likely to be slight even if it occurs, only modest restrictions are imposed, and those may be waived by properly counseled clients. But that does not indicate the absence of a conflict of interest, nor does it mean that the conflict is only a "potential" conflict, as is sometimes said. Quite to the contrary. The conflict_the risk_already exists in the here and now; what is only "potential" is the actual harm_the actual breakdown of the client-lawyer relationship or actual harm to the quality of the representation.
        Since the modern approach takes into account reasonable fears that improper lawyer behaviors "may" develop, it has an historical kinship with the old method of judging conflicts of interest on the basis of "the appearance of impropriety." If a situation appears to reasonable persons to be inappropriate, after all, then it may well be so in fact. . . . Nonetheless, concern for appearances and for public confidence still underlies all of the automatic disqualification rules, and informs the balancing of interests even in cases where client waivers are permitted.

Id. at 223-25 (emphasis and parenthesis in original) (footnotes omitted).
    Rule 1.7(a) prohibits an attorney from representing a client when the representation of that client will be directly adverse to another client, thereby adversely affecting the attorney's relationship with that other client. A comment to Rule 1.7(a)

states that, "[a]s a general proposition, loyalty to a client prohibits undertaking representation directly adverse to that client without that client's consent." Prof. Cond. R. 1.7 cmt. Rule 1.7(a) "governs conflict of interest situations involving concurrent and direct adversity" and "imposes something akin to a per se ban on continued representation." 1 Hazard & Hodes, supra, at 232.10. The language of Rule 1.7(a) "suggests that any impairment of the client-lawyer relationship precludes concurrent representation in situations of direct client-to-client conflict." Id. at 239. Furthermore, Hazard and Hodes add:
    The implication is that if the direct conflict damages the relationship of the lawyer to one or more of the clients (including, presumably, a client's subjective feeling of betrayal), then Rule 1.7(a) is triggered. This result would obtain even if each client agreed that in fact the lawyer had betrayed nobody, and had given fully competent representation to all concerned.
    
Id. Thus, representation is only allowed when the attorney reasonably believes that the representation will not adversely affect the relationship with the other client and the fully counseled client has consented.
    Rule 1.7(b) prohibits an attorney from representing a client when that representation is materially limited by the attorney's responsibilities to another client or to a third party or by the attorney's own interests. The comment to Rule 1.7(b) states:
    Loyalty to a client is also impaired when a lawyer cannot consider, recommend or carry out an appropriate course of action for the client because of the lawyer's other responsibilities or interests. The conflict in effect forecloses alternatives that would otherwise be available to the client. . . . A possible conflict does not itself preclude the representation. The critical questions are the likelihood that a conflict will eventuate and, if it does, whether it will materially interfere with the lawyer's independent professional judgment in considering alternatives or foreclose courses

of action that reasonably should be pursued on behalf of the client.

Prof. Cond. R. 1.7 cmt. Rule 1.7(b) "governs the myriad of situations in which the conflict is muted or indirect" See footnote 23 and "requires a subtle calculus to determine the likelihood that the quality of the lawyer's representation will be affected." 1 Hazard & Hodes, supra, at 232.10. In the balancing process, the attorney must consider "all outside interests or responsibilities that could materially limit his ability to serve his clients." Id. at 251. In situations where these conflicts, such as liability insurance agreements where a third party pays for a lawyer's service to a client, "a danger exists that the lawyer will tailor his or her representation to please the third party, rather than the client. The distraction can become acute if the lawyer hopes to be rehired on behalf of other clients, and so curries favor with the payor of his fee." Id. at 251. Representation is allowed only if the fully counseled client has consented and the attorney reasonably believes that the representation will not be adversely affected.
    Indiana Professional Conduct Rule 1.8 applies the basic conflict of interest principles of Rule 1.7 to specific "transactions in which the lawyer's own self-interest threaten to adversely affect the quality of representation to be provided." 1 Hazard & Hodes, supra, at 261. Rule 1.8(f) prohibits an attorney from accepting compensation for

representing a client from someone other than the client when there is any interference with the attorney's independence of professional judgment or with the attorney-client relationship. See footnote 24 Before an attorney may provide representation in such a situation, the fully counseled client must consent, and information must be held in confidence as required by Rule 1.6.
    It has been recognized that "[c]onflicts of interest potentially affecting the quality of the representation are inherent in situations in which an insurance carrier has agreed to provide a defense for its insured." 1 Hazard & Hodes, supra, at 256.5. Whether the situation is analyzed as one in which the attorney provides dual representation to both insurer and insured or as one in which the attorney represents the insured alone but the legal fees are paid by the third-party insurer, the essential issues are the same: are any material limitations placed on the representation; is there interference with the attorney's independence of professional judgment; or is there interference with the client-lawyer relationship? In this "triangle," the attorney faces conflicting interests_loyalty to the insurer-client or loyalty to the insured-client. Understandably, both insurers and insureds

have a common interest in defending against claims brought by plaintiffs. However, they often have different interests in terms of indemnification, confidentiality, trial tactics, willingness and ability to settle, coverage issues, excess liability exposure, etc. See id. at 256.6-56.10. These problems are only exacerbated when house counsel represents insureds.
    While most members of the bar earnestly endeavor to fulfill their obligations under the Rules of Professional Conduct, I believe that the use of insurer-employed staff attorneys to represent insureds is inherently problematic. This situation presents conflicts of interest so inherent in the representation and so serious that the attorney-client relationship and the quality of the representation are at risk, despite the possible absence of substantive impropriety in a majority of individual cases. This practice is so fraught with danger that a per se rule of disqualification should be imposed. A prophylactic ban is justified because our interest in maintaining public confidence in the legal system outweighs the interest of individual lawyers and individual clients in freely contracting with each other.
    Indiana Rule of Professional Conduct 5.4 protects clients by guarding attorneys' professional independence of judgment. See footnote 25 See Prof. Cond. R. 5.4 cmt. This Rule is designed to protect against a "series of problems . . . that can arise when nonlawyers

combine with lawyers to provide legal services. . . . Problems are thought to arise when nonlawyers either invest in or assume positions of authority in business arrangements other than the traditional partnership law firm." See footnote 26 2 Hazard & Hodes, supra at 796. Rule 5.4(a) prohibits an attorney or law firm from sharing legal fees with a non-lawyer. See footnote 27 Rule 5.4(b) prohibits a lawyer from forming a partnership with a non-lawyer if any of the activities of the partnership consist of the practice of law. See footnote 28 Rule 5.4(c) prohibits an attorney from permitting a person who recommends, employs, or pays the attorney to direct or regulate the attorney's professional judgment. Rule 5.4(d) See footnote 29 prohibits an attorney from practicing with or in a professional corporation or association authorized to practice law for profit if a non-lawyer owns any interest therein, Rule 5.4(d)(1); if a non-lawyer is a corporate director or officer thereof, Rule 5.4(d)(2); or if a non-lawyer has the right to direct or control the professional judgment of a lawyer, Rule 5.4(d)(3). See footnote 30

directors and officers, inevitably may control and decide matters related to the legal practice of the salaried attorneys.
    I read the majority opinion to acknowledge that professional independence is to some extent compromised when employed staff counsel represent insureds. The majority states that "the marketplaces of ideas and premium charges will sort this out and strike a balance between claimed cost advantages and perceived desirability of wholly independent counsel." Slip op. at 23.
    The majority attempts to minimize these concerns by the following: "Employee- attorneys may be subject to pressures from their employer. But it is also unrealistic to suggest that an outside lawyer is immune from the blandishments of a client, particularly a high volume client that may be the source of a significant portion of the firm's revenues." Slip op. at 24 (emphasis added). Here, the majority relies on two suspect practices_pressures placed upon employee-attorneys by employers and blandishments showered upon outside counsel by clients_to justify an even more suspect practice. Certainly, the pressures of employers and blandishments of co-clients, and the resulting erosion of client loyalty and independence of professional judgment represented thereby, are distressing encroachments on professional judgment. We should seek to prevent or minimize these negative influences, rather than embracing and expanding them.
    The majority urges that the parties can continue "to duke this issue out in those marketplaces [of ideas and premium charges] without interference from the judiciary." Slip op. at 23-24. I believe that this Court should not abandon to the marketplace our

duty and responsibility to regulate the practice of law. The laws against the unauthorized practice of law are designed to protect the public by requiring that only licensed, qualified, and regulated professionals will provide legal representation, and the professional rules seek to ensure that these professionals uphold certain standards and values in their practices, including uncompromised loyalty to their clients, regardless of conflicting interests, and uncompromised independence of professional judgment. After all, the practice of law is not a business, but a profession, and participation in this profession is a privilege open only to qualified individuals who abide by prescribed ethical standards.

Court has refrained from addressing issues that may be mooted by procedural or other threshold issues, even if there is no constitutional requirement to do so. See, e.g., Price v. State, 622 N.E.2d 954, 958 (Ind. 1993). However, this case does not involve invalidating an action of another branch of government or otherwise challenging the action of a co-equal branch. Rather it addresses issues that are indisputably within the power of the judiciary and specifically within the power of this Court.

(1984); New York State Bar Ass'n, Prof'l Ethics Comm. Op. 109 (1969); Texas Ethics Op. 167 (1958); Virginia State Bar, Legal Ethics Op. No. 598 (1985).

justice, in any matter depending therein, throughout its various stages, and in conformity with the adopted rules of procedure; but it is not confined to performing services in an action or proceeding pending in courts of justice, and, in a larger sense, it includes legal advice and counsel, and the preparation of legal instruments and contracts by which legal rights are secured, although such matter may or may not be depending in a court. To 'practice law' is to carry on the business of an attorney at law; to do or practice that which an attorney or counselor at law is authorized to do and practice; to exercise the calling or profession of the law, usually for the purpose of gaining a livelihood, or at least for gain; to make it one's business to act for, and by the warrant of, others in legal formalities, negotiations, or proceedings."
Fink, 214 Ind. at 587-88, 17 N.E.2d at 96-97 (quoting 7 C.J.S. 703, § 3(g)) (emphasis omitted).

crime for a corporation to engage in the practice of law, while others merely forbid it for professional purposes.") (citing cases); Right of Corporation to Perform or to Hold Itself out as Ready to Perform Functions in the Nature of Legal Services, 105 A.L.R. 1364, 1365-66 (1936) ("The general rule . . . that a corporation cannot practise law . . . is of course . . . well settled. . . . [S]tatutes have been enacted in some states expressly prohibiting corporations from practising law, or, in some instances, professions generally. For the most part, these statutes seem merely to embody the common-law rule.") (discussing statutes and cases); Right of Corporation to Perform or to Hold Itself out as Ready to Perform Functions in the Nature of Legal Services, 73 A.L.R. 1327, 1328 (1931) ("[T]here is no judicial dissent from the proposition that a corporation cannot practise law.").

administration of justice which is the highest function of an attorney and counselor at law. The corporation might not have a lawyer among its stockholders, directors, or officers. Its members might be without character, learning or standing. There would be no remedy by attachment or disbarment to protect the public from imposition or fraud, no stimulus to good conduct from the traditions of an ancient and honorable profession, and no guide except the sordid purpose to earn money for stockholders. The bar, which is an institution of the highest usefulness and standing, would be degraded if even its humblest member became subject to the orders of a money-making corporation engaged not in conducting litigation for itself, but in the business of conducting litigation for others. The degradation of the bar is an injury to the state.
        A corporation can neither practice law nor hire lawyers to carry on the business of practicing law for it any more than it can practice medicine or dentistry by hiring doctors or dentists to act for it.
In re Co-operative, 92 N.E. at 16 (internal citations omitted).

corporation can simply employ lawyers and hold them out to the public as offering legal services." Slip op. at 10. Thus, while agency law may generally allow entities to employ licensed professionals, corporations are prohibited by law from employing attorneys and using them in this way. Just as we decline to extend principles of general agency law to permit corporate house counsel to represent its paying customers, we should likewise continue to prohibit insurance company house counsel from representing its paying customers (insureds).

against the corporate practice of law has been assumed in Anglo-American law for centuries. The North Carolina statute simply memorialized a doctrine that was already well-established under the law. The majority cites the North Carolina Supreme Court decision for the proposition that "North Carolina case law . . . explicitly held where a corporation's employees perform acts, they are the acts of the corporation." Slip op. at 10 n.6 (citing Pledger, 127 S.E.2d 337).

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