So You Wanna Be a Life Coach?

Sandra feels a sense of pride and accomplishment as she wraps up a telehealth session with Roy, one of her long-term therapy clients who’s finally begun seeing the benefits of two years of weekly psychotherapy. He’s set some boundaries with his emotionally abusive ex, and he recently received a hard-earned promotion at work.

“See you in a week?” Sandra asks, more as a formality than a question.

“Absolutely,” Roy beams. Then, as an afterthought, he adds, “I’ll be in California hosting a networking event, but we can still meet. I’ll just be three hours behind you.”

“That works.” Sandra smiles, imagining Roy traveling around the country in his new leadership role. He’s come a long way from the depressed man who was too anxious to leave the house after his divorce. But the pride she feels in his progress is quickly eclipsed by a prickly insecurity. Is it legal for me to see him as a therapy client when he’s out of state? I’m not licensed in California. Can I still bill his insurance? Another voice pipes up: Just call it a life-coaching session. That’s what half the therapists in your peer-supervision group are doing. 

“See you then,” Sandra says.

“Sounds good. And thank you.” Roy waves goodbye.

After closing the telehealth window, Sandra makes herself tea. The warmth in her chest has returned. It’s gratifying to see clients like Roy do well. What was she supposed to say to him when he mentioned traveling for work—”Oh, sorry, I can’t see you next week”? It’s fine, she reassures herself. I’m a therapist who does life coaching with a few out-of-state clients, just like thousands of other therapists. That’s not a crime. If others are doing it, why shouldn’t I? It’s not my fault the whole state-reciprocity thing is such a mess. What matters is I do good work. I help people.

Making Informed Choices

Sandra’s right. It’s not a crime to do life coaching with out-of-state clients—well, not exactly. And it’s not her fault the whole cross-state thing is complicated. And it absolutely does matter that she’s doing good work with people like Roy. And thousands of therapists across the country are in fact doing precisely what she’s planning to do in a week’s time: providing a nebulous, unregulated service called “life coaching” to out-of-state clients.

But Sandra is also wrong. Even if it’s not necessarily a crime to provide life coaching instead of psychotherapy to Roy when he travels to California, there are a number of legal and ethical complications that many well-intentioned therapists don’t fully understand. And although the majority of seemingly minor ethical and legal violations therapists commit go unnoticed, there are times when these violations balloon into larger problems, even morphing into complicated legal situations that are harmful to clients (and therapists!).

Clients who feel slighted or angry, or who become upset by a firm boundary (like being told they need to pay full fee for a missed session), may come to resent their therapist over time and decide to file a complaint with a licensing board. In some cases, clients have been known to file a malpractice lawsuit if they feel wronged. The consequences can be dire for the therapist—from having their license revoked and livelihood upended to being slapped with hefty fines, or having to pay for damages as a result of a malpractice suit.

For years, I’ve been teaching therapists about ethical, legal, and practice issues, providing those in our field with the information they need to make informed choices and decisions. So when it comes to therapists reflexively dipping their toe into the life-coaching industry or moonlighting as life coaches to hold on to clients who travel or move, it’s my job to shine a light on the potential dangers.

Therapists are usually not licensed in more than two or three states, yet more and more of them are being asked by itinerant clients for teletherapy. In my ethics workshops, therapists are now wondering, Can’t I do life coaching with a psychotherapy client if I tell them that’s what we’re doing? I’m already results-oriented in my practice, and I like giving advice, so can’t I just rebrand my therapy practice as a life-coaching practice? Can’t I bring my expertise as a therapist to life coaching and avoid all the complicated laws, rules, and limitations that come with practicing psychotherapy?

Because coaching as an industry has exploded alongside teletherapy, not too many people have hard-and-fast answers to these questions. In providing them, my goal isn’t to rain on anyone’s parade or be the bearer of bad news: it’s to empower them. Informed therapists make better decisions.

A Risky Mix

Let’s return to Sandra. She’s made herself a cup of tea, and the nagging insecurity about turning Roy into a coaching client for a session kicks back in. Luckily, this is all happening in a futuristic time—maybe even a week from now, given the rapid pace in which technology moves—and I’m able to appear in her office as an AI 3-D hologram, beamed in because an app on her phone has somehow overheard her silent inner musings.

“Hi, Sandra,” I say. “Listen, I’m going to cut right to the chase here. This is a very common dilemma you’re in, and there are some important things you need to know.”

Sandra sits back in her chair and appears open to listening.

“Life coach and psychotherapist aren’t the same thing,” I tell her. “The most important difference is that psychotherapy is a regulated health care service whereas life coaching isn’t regulated or even defined by the state. Also, let’s make the distinction between providing life coaching, possibly as a licensed mental health provider, and identifying as a life coach. Someone who calls themselves a life coach might have more freedom than a psychotherapist, but it also means anyone can call themselves that. There’s no required training or licensing: no rules, laws, or regulations to govern it. Life coaches can’t diagnose or treat mental health disorders. Although the International Coaching Federation has in fact outlined a code of ethics for coaches, whether or not coaches follow it is optional. Therapists, on the other hand, can face serious legal consequences if they don’t follow ethical codes as required by their licensing rules.”

“I get all that,” Sandra says. “But I’d just be providing life coaching to this client occasionally, when he travels. Things are going so well for him. I don’t want to interrupt our work. I could do life coaching when he’s out of state, and psychotherapy when he’s back.”

I shake my head sadly. I’ve heard many therapists say things like this. “There are quite a few problems with that,” I reply.

“Like what?” Sandra says, a little defensively.

“First, it confuses clients. As a licensed psychotherapist, you’re ethically and legally bound to avoid misleading the public. You need to properly inform your clients about the benefits and risks of your services before you begin working with them, and to continue informing them of changes you make to the treatment you provide throughout the therapy process. Which means you’d need to inform Roy about the benefits and risks of life-coaching before offering it. You can read up on this under the advertising or public statements sections in most codes of ethics and licensing rules for mental health professionals.”

Sandra waves her hand in front of her face, as if she’s trying to swat away a fly. This is a lot for her to take in, but I decide to continue. I’d be doing her a disservice if I withheld what I know.

“If you’re providing services associated with your license or clinical practice, including life coaching, the service must be provided in keeping with the laws, licensing rules, and code of ethics in your state. When providing mental health treatment, like psychotherapy, across state lines you must be even more careful. It’s legally essential that you be licensed, or another legal provision of some type exists, both in the state where you’re located and in the state where your client is located when the psychotherapy session occurs. After all, you are in fact practicing in another state—a separate jurisdiction that gets to determine what’s legal there.

“Whenever you claim to be providing life coaching but are actually providing some type of psychotherapy, you’re relabeling a regulated mental health treatment as something it’s not. A rose by any other name is still a rose! Doing so is not in keeping with codes of ethics, state laws, or licensing rules, or consistent with the standard of care.”

“This is more complicated than I thought,” Sandra says.

I have a lot of compassion for therapists trying to figure out what to do in situations like the one Sandra is facing with her client. Like many of them, she’s struggling to accept a difficult truth: her I’ll-do-coaching-for-just-one-session workaround isn’t as convenient or failsafe as she’d hoped. I know she’ll need a little time to wrap her mind around this new information. Even though I’m an AI hologram, I walk over to her kettle and pour myself a cup of tea.

Have Your Cake and Eat It, Too?

Then, something I wasn’t expecting happens. Sandra’s face lights up.

“Wait!? What if I created a separate service on my website that’s just ‘life coaching?’”

“Not a bad idea,” I say, careful to keep my voice measured. I don’t want to invalidate her or overwhelm her, and she’s actually heading in the right direction, ethically and legally speaking. “Keep in mind, however, that if a clinician did what you’re suggesting and then claimed that the life-coaching services they offer are in no way associated with their therapy practice—and that therefore, the same laws don’t apply—a host of other issues would arise. For example, you’d need to keep your coaching records someplace entirely separate from your clinical records. And you couldn’t bill through your clinical practice. Oh, and also remember not to confuse or mislead your client.”

“So what you’re saying is my good idea is a bad idea,” Sandra laments.

“My job is to make sure you’re aware of the hazards and pitfalls,” I say. “It’s up to you to assess the risks and decide which ideas are good or bad. One concern I’d have with a therapist who provides life coaching through a separate life-coaching business is that the life-coaching clients’ privacy would be affected. Within the context of a life-coaching business, federal privacy laws and state privilege laws wouldn’t protect the client anymore, which might put them at risk.”

“Really?” Sandra looks horrified. The last thing most therapists want to do is risk their client’s confidential information getting into the wrong hands or being subject to random subpoenas. Most therapists would never intentionally want to mislead clients into believing sessions with them are HIPAA-protected when in fact they’re not.

“In other words,” I say, “and this is super important to remember: you can’t simultaneously avoid regulatory requirements and still maintain the benefits of federal and state privacy laws.”

Sandra has started pacing. She walks back and forth through my hologram several times. Though technically, I don’t feel anything when she does this, I find it a bit unsettling.

“Sounds like you’re saying I can’t have my cake and eat it, too,” Sandra sighs.

She’s starting to get it, and I’m glad. She seems like a lovely person and a gifted clinician. I’d hate to see things go wrong for her simply because she was uninformed. “Well, you might be able to have your cake and eat it too if you want,” I say. “But there are risks, some of which may not be covered by your professional liability insurance.”

Sandra returns to her chair, raises her cup of tea, and takes a long, slow sip. “What do you mean by that exactly?” she asks.

“Liability insurance policies designed for licensed mental health professionals often don’t cover services—like life coaching—that aren’t considered part of professional practice for your license type and the policy is even less likely to cover a separate life coaching business. Either way, you’ll need to check with your insurance company before you make any big decisions.’’

Sandra stands and opens the door, gesturing me through. “Don’t mean to cut you short, but I need to say goodbye now. I can hear my next client in the waiting room. Thanks for sharing all this with me.”

“Happy to help,” I say. Feeling like Sandra needs a sense of closure to our conversation, I oblige by walking out the door—although dissipating into the air would’ve been a bit simpler.

Sandra’s Options

What Sandra decides to do from here is up to her, but her choice will depend on many factors, both personal and professional. I’ll present three scenarios, each accompanied by different risks.

High-Risk Scenario. Sandra decides to sit with our conversation for a day or two. But life gets busy, and she soon forgets the details of what I’d said. Two weeks later, it’s time for her to send Roy the HIPAA-protected teletherapy link to join their meeting the following day. Oh, it’s fine. Nothing’s going to happen. It’ll just be this once, she thinks. When Roy appears on screen, she lets him know that today, they’ll be doing a life-coaching session rather than a therapy session, for technical reasons. “It’s similar,” she says.

“Will you still bill my insurance?” Roy asks. “Because I can’t really afford to pay out of pocket right now with all the legal bills from my divorce.” Sandra responds that she’ll simply use the same procedure code for psychotherapy, but if he continues traveling in the future, they may need to figure out a different plan. As innocuous as this may seem, this is insurance fraud. Psychotherapy is healthcare treatment; life coaching is not.

Even if Sandra more accurately tells him, “I can’t bill your insurance because this will be a life-coaching session, which is a different kind of service than psychotherapy,” negative consequences could unfold. Roy may choose to forgo the session—after all, why would he want to pay out of pocket for life-coaching sessions when he has insurance that covers therapy—but as a result, he might feel confused, even disgruntled, which could have a negative impact on the therapeutic relationship.

With some clients, this confusion can increase the likelihood that they’ll file a complaint with licensing boards or even pursue a civil suit. I know of several cases where a provider’s actions were judged as not being consistent with the standard of care and resulted in their license being put on probation, as well as the provider paying thousands of dollars for damages to the plaintiff in a civil suit.

Medium-Risk Scenario. Sandra sees her next—and last—client of the day after our chat. Then, she sits down at her desk and writes Roy an email explaining that due to out-of-state regulations related to her license and other issues connected to insurance reimbursement and confidentiality, they’ll need to wait till he’s back in the state where she’s licensed to have their session.

Over the next few weeks, Sandra communicates with colleagues who suggest the best way to provide life coaching is to separate it from one’s private practice entirely. One colleague even tells her that he’s retired his clinical license and closed his practice, and now provides only life coaching: it’s simply easier and more lucrative for him, he’d explained. Sandra doesn’t want to go this route, but she does see the utility of having the freedom and flexibility to see clients out-of-state. She also starts to like the idea of not having to worry about continuing education requirements, diagnosing, and insurance claims—at least on the coaching side.

She begins making a plan to have both a life-coaching business and a therapy practice. I’ll open a second LLC, she thinks. She also makes plans to take a life-coaching course, so she’s better informed about the differences between providing life coaching and psychotherapy. I’ll provide life coaching only to out-of-state clients, she decides.

Although these are all smart moves, an old saying comes to mind when I think of the ethical risks that still linger: once a therapist, always a therapist. Here’s what I mean by that. Not long ago, a participant in one of my ethics seminars made a comment that he conducted life coaching sessions through his life coaching business in the same way he conducted psychotherapy sessions in his clinical practice. He saw nothing problematic about this. He had the therapeutic skills—why not use them? But we wouldn’t provide dental or medical services through our life coaching businesses, even if we had the skills—so why do we do this with psychotherapy services?

If Sandra opened a life-coaching business and used therapy techniques as a coach, would she be breaking the law? Maybe. State laws and licensing rules define mental health services provided by social workers, psychologists, professional counselors, and marriage and family therapists. To provide these services, an individual must be licensed by the state (or be under clinical supervision). If an individual, including a life coach, provides these kinds of services, they could be viewed as providing regulated mental health services illegally. Simply being capable of providing a service doesn’t make it legal to do so if the service is supposed to be offered within certain parameters, or in a particular context.

Although Sandra is capable of providing the regulated clinical services that fall within the scope of practice of her license, she wouldn’t be able to legally provide these services through her life-coaching business. And although there’s no legally required code of ethics for life coaches, it would still be in her best interest to maintain appropriate boundaries with her clients and document her efforts to do so. Again, the possibility of client confusion would exist and need to be managed. And if a litigious client or disgruntled employee realized that Sandra was doing something potentially illegal, unethical, or outside the standard of care, they might exploit the situation by threatening to sue Sandra or file a complaint with her licensing board. I’ve run into this kind of scenario many times, and the provider always exclaims, “I never saw this coming!”

Lower-Risk Scenario. Sandra emails Roy that she needs to do a little research before seeing him next week when he’s out of state. She checks her professional liability insurance policy to see if she’d be covered in the event of a complaint to her licensing board or a civil suit if she provided life coaching to a psychotherapy client, and discovers she wouldn’t be. She also learns that in some states, there are licensing rules or licensing board policies that limit and even prohibit license holders from providing life coaching (because the primary mission of licensing boards is to protect the public.) It turns out that the licensing board for Sandra’s license type has a policy on its website stating that any licensee who publicly presents themselves as a life coach must comply with the relevant rules for the profession regulated by the board, as well as all ethical obligations.

Sandra lets Roy know that she’ll need to see him in two weeks, when he returns from his trip and is back in state. At that time, she’ll discuss with him the limits of providing psychotherapy across state lines, and they’ll brainstorm alternatives for future sessions when he travels.

Ethical Cheat Sheet

Given that I haven’t been able to make myself into an AI hologram who can appear in therapist’s offices at the drop of a hat (yet!), I’ve created the next best thing: an ethical cheatsheet. (I get that putting ethical and cheat together is a bit of an oxymoron, but even ethical therapists need cheat sheets). If you do decide to combine psychotherapy and life coaching, my biggest piece of advice is to familiarize yourself with the risks and proceed with caution. Here are 10 guiding principles you can refer to if you ever find yourself in a situation like Sandra’s.

Provide clients with informed consent. Have an informed consent process for the life coaching business that highlights the fact that life coaching is not psychotherapy, professional counseling, or any other regulated mental health service. And keep in mind that since there’s no legal definition of life coaching, no legal standards regarding training for life coaching, and no yardstick for competence or standard of care, you may have a tough time offering evidence that you’re competent to provide this particular service.

Client privacy. In the informed-consent process for a life-coaching business, be sure to emphasize that the privacy laws that apply to health care providers and their clients/patients do not apply to clients of a life coach. Without these protections, clients’ records and communications with the life coach are more vulnerable to access by others.

Communicate clear boundaries. On your website, in your informed consent documents, and in your interactions with potential clients, make sure they know what services you offer and their risks and benefits. Establish policies that prevent clients from switching back and forth between your clinical practice and your life-coaching business.

Keep your psychotherapy and life coaching services separate. The more separation the better. Avoid mixing life coaching and mental health services with the same client. Maintain separate websites and social media accounts. Develop a clear understanding of the differences between these two approaches—not an easy thing to do when life coaching remains a service for which no legal or recognized definition exists. Life coaching client records shouldn’t be kept in the same electronic health record or practice management system with clients’ clinical records.

Check your state licensing rules and board policies. Keep in mind that as a licensed professional you may still be expected to follow the laws and standards of your profession even when you’re providing life coaching. Also, never associate your license with life coaching (e.g., on your life coaching website) or imply in any other way that you’re using your license in conjunction with your life coaching business.

Communicate with your professional liability insurance. Determine if your professional liability insurance covers the life coaching services that you yourself want to provide to your clients, whether as part of a clinical practice or through a separate life coaching business.

Never provide life coaching in lieu of mental health treatment. If you’re providing life coaching through a life coaching business—even if you’re a licensed therapist—you need to refer life coaching clients who need a higher level of care to an appropriate licensed mental health provider.

Avoid confusing your clients. Remember, if all this is confusing to us it is even more likely to be confusing to the public. At all times be aware of the possibilities of your clinical clients being confused. It is your responsibility to take steps to mitigate these risks.

Avoid getting complacent. As a therapist, continuously ask yourself, Are my actions consistent with the standard of care that would be applied to a professional with similar education, training, and experience? If your professional actions are not consistent with laws, licensing rules, or your code of ethics then you will not be meeting the standard of care. This makes you vulnerable both ethically and legally.

Document your decision-making process. When clinicians encounter complex or otherwise challenging situations, I encourage them to use a decision-making model like my Multiple Perspective Model. Decision-making models provide a structured approach to decision-making. By documenting your decision-making process, you’re showing your thoughtfulness and care in the choices you make. This will be helpful if you ever need to explain your actions to a licensing board or in court.

A Note on Interstate Compacts. Calling psychotherapy life coaching as a workaround for cross-state practice is not in keeping with laws, licensing rules, or codes of ethics and should not be done. Fortunately, with the advent of interstate compacts like PSYPACT, the Counseling Compact, and the Social Work Licensure Compact, cross-state practice is likely to become less difficult. These multi-state agreements will facilitate therapists practicing across state lines, but there will still be compact rules to abide by.

Ultimately, therapists who want to avoid laws and regulations may continue to see life coaching as an appealing workaround. It’ll be up to individual therapists to determine the path they forge.