Psychotherapy vs. Coaching: What’s the Legal Distinction?

GoodTherapy | Psychotherapy vs. Coaching: What’s the Legal Distinction?

by Connor D. Jackson, JD

Connor D. Jackson is a healthcare attorney based in Chicago who serves independent practices in several states. Visit his firm’s website here.

Psychotherapy vs. Coaching: What’s the Legal Distinction?

Therapists have the education, license, and clinical training required to prepare them for their day-to-day work with clients. But those things also come with restrictions: licenses are usually state-specific, and each state’s laws set forth a therapist’s legal responsibilities (like mandatory reporting). This leaves some therapists eyeing the “coaching” industry and profession with envy and asking, “Why don’t the same rules apply?”

Therapy and coaching are very different things.

Or at least they should be very different things! Therapists are healthcare providers, while coaches are not. While every state requires therapists to be licensed, no state regulates or licenses coaches. Due to the lack of license requirements, coaches do not necessarily have 

  • Appropriate training or education
  • Oversight by a regulatory body
  • Obligation to comply with HIPAA
  • Mandatory reporting requirements
  • Clinical experience

A coach is not a healthcare professional and cannot do work that infringes on a therapist’s legal scope of practice.  Under the law, coaches cannot do any of the following:

  • Bill their services to health insurance companies.
  • Offer the breadth of care and services provided by therapists.
  • Diagnose or treat mental health conditions.
  • Describe their services using any of the terms that the law protects for licensed professionals.

Any coach who delivers services that mirror the scope of practice of a licensed psychotherapist risks felony charges

In Illinois, for example, regulatory authorities have sanctioned unlicensed persons who step into the realm of licensed mental health care. The following examples are from disciplinary reports from IDFPF (Illinois Department of Financial and Professional Regulation):

  • An unlicensed person was penalized for practicing medicine without a license because she owned a business that offered psychiatry services — even though she performed only administrative duties.
  • An unlicensed person practiced licensed clinical social work for a decade and billed his services to insurance under a licensed provider’s credentials. 
  • An unlicensed person who used the term “social worker” was fined and sanctioned for engaging in the unlicensed practice of social work.
  • A therapist who billed an unlicensed person’s services to insurance was sanctioned for aiding and abetting the unlicensed practice of social work.

Other states have been similarly strict. For instance, Oregon found that a woman’s “coaching” services were professional counseling services and sanctioned her.

Protected Language

In many states, licensed providers have protected language. In other words, people who do not hold that same license are not legally allowed to use certain words to promote or describe their services. 

In California, for example, LMFTs’ practice act says:

“No person may engage in the practice of marriage and family therapy… unless he or she holds a valid license as a marriage and family therapist… nor may any person advertise himself or herself as performing the services of a marriage, family, child, domestic, or marital consultant, or in any way use these or any similar titles, including the letters “L.M.F.T.” “M.F.T,” or “M.F.C.C,” or other name, word initial, or symbol in connection with or following his or her name to imply that he or she performs these services without a license as provided by this chapter.” (BPC § 4980(b))

Coaches who use protected words or abbreviations can be penalized for practicing the licensed profession without a license. So even if she’s never seen a single client, “Carrie Coach, MFT” is illegally holding herself out to the public as a marriage and family therapist.

Licenses vs. Certificates

For patients, a string of letters after a professional’s name can signal credentials and qualifications. But in healthcare, letters mean something specific. 

As an example, consider a life coach who works with couples, Jane Jones, CPC, CSC, CHLC. Jane’s credentials? She’s a Certified Professional Coach, Certified Sex Coach, and a Certified Health & Life Coach. She obtained all of these certificates from nonaccredited, for-profit businesses, and some of them were non-interactive, online-only programs. 

In healthcare, some of the acronyms that Jane is using also mean other things. A CSC may be a licensed nurse who has completed additional training to earn a cardiac surgery certification. And a healthcare practice may require that their administrator be a CPC—or a certified professional coder trained in medical billing.

Imagine that a couple experiencing marital strain rooted in a traumatic event is searching for help. They find a listing for Jane, who has glowing online reviews from those who claim she saved their marriage. 

The couple compares Jane’s online profile with that of Tara Thomas, LCP. Tara is a licensed clinical psychologist with no reviews, as soliciting them from patients violates her practice act. Tara holds a Ph.D. in psychology from an accredited university, and she has significant clinical experience. She has completed all of the requirements to obtain her state license, and she bills her services to insurance. She can also diagnose one partner’s PTSD, and she protects her records per HIPAA.

Jane Jones and Tara Thomas have starkly different experience and qualifications, yet they’re sometimes “competing” for the same clientele. However, it’s crucial to note that a coach whose work too closely mirrors Tara’s is likely practicing psychology without a license — a criminal offense in many states! 

Psychotherapists Who Practice as “Coaches”

Licensed psychotherapists may view the grass as greener in the coaching industry. However, while it may be tempting for therapists to call themselves coaches to avoid regulatory oversight, doing so can create more (not fewer) headaches. 

Coaches are subject to the same legal regulations as therapists — they just have a much harder time satisfying them! Therapists have the credentials, practice acts, and legally articulated role in population health. Meanwhile, coaches’ conduct isn’t regulated by any state’s law, but if they step into any of the areas within the scope of therapists’ practice, they, too, will face legal consequences. 

In the end, there are no shortcuts to becoming a healthcare provider.

This article is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between Jackson LLP Healthcare Attorneys and the reader. It should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction. 

One key benefit of psychotherapy regulation is fundamentally protective. Both mental health providers and the public benefit from a clear definition of roles and responsibilities in the practice of psychotherapy. A regulatory body can to step in and discipline a therapist who is acting outside their scope of practice; nothing like that exists in the world of coaching. Check out our classic article “50 Warning Signs of Questionable Therapy and Counseling” to learn more about behaviors to avoid as a therapist, both regulated and unregulated.

© Copyright 2021 All rights reserved. Permission to publish granted by Connor D. Jackson, JD

  • Leave a Comment
  • Corinne

    August 21st, 2021 at 12:20 PM

    I really appreciate this article. Psychotherapist and Social Workers are very much like a “Life Coach” but are highly trained and practiced specialists in human behavior, human development, social and emotional growth or dysfunction, human dynamics, mental health care, modalities in treatment, and the knowledge to guide people towards a psychiatry if needed. I appreciate the idea of “Life Coaching” similar to a guidance counselor, one who can support adults in maybe career changes or dealing with an issue stemming from something pertaining to a life transition but what worries me, as a licensed mental health professional, is that those who could benefit from or need proper mental health care, go to a “Life Coach” due to the socially excepted, stylish, and say maybe “cool” persona it gives. I’m a big advocate in people supporting people and think in theory Life Coaching is a good idea but, in a nutshell, people should not be afraid to embrace psychotherapy from a licensed professional and view it as a way of achieve success, personal health, inner peace and even greatness in their life and relationships!

  • Selma

    August 22nd, 2021 at 5:02 AM

    Very educational

  • Aaron

    February 1st, 2022 at 4:07 PM

    Are there any additional restrictions for coaches? I am looking to become one, and want to make sure that I am not crossing any lines. Do you have any additional resources I can consult, and would you recommend I consult with an attorney before beginning my coaching practice?

    “A coach is not a healthcare professional and cannot do work that infringes on a therapist’s legal scope of practice. Under the law, coaches cannot do any of the following:

    • Bill their services to health insurance companies.
    • Offer the breadth of care and services provided by therapists.
    • Diagnose or treat mental health conditions.
    • Describe their services using any of the terms that the law protects for licensed professionals.
    Any coach who delivers services that mirror the scope of practice of a licensed psychotherapist risks felony charges. “

  • Carolyn

    February 21st, 2022 at 3:13 AM

    I am a Social worker and a certified and licensed Life Coach from an accreditedschool. To me Life Coach is an extension of social work, of counseling, teachinh and therapy work. Patrick Williams and Deborah C. Davis wrote a book called Therapist as Life Coach Transforming Your Practice”. Life Coaching is the second biggest consulting industry after management consulting. We as Williams and Davis put it are the best to move into this rapidly growing field. The problem is that many agencies are just giving the name to people who have no more skills than a nurse aide or housekeeper in a group home. Other people online want the people to pay them $400 or $500 and say they are certified. It took me almost 2 years to get mine and I had to test out to become licensed and there are special areas of concentration. I personally am tired of people who only have or don’t have a high school education claiming they are Life Coaches. I am pushing for regulations because I feel that first you must have some people skills and psychology training to help people. Life Coaching is different in that the client is made to take an active part in their well-being. To figure out what the problem is and possible steps to solve it. In others words in Illinois where my internship was at Aunt Martha’s, we asked the client what they saw the problem to be. The same as doctors. These Life Coaches who are not going to an accredited school don’t know what questions to ask and are giving the wring answers. This must be stopped; but to devalue all Life Coaches is also wrong. Each state and federal government needs regulations so we that have gone the right way can advance and the other eliminated. Those are my thoughts on the subject.

  • Susanne

    September 18th, 2022 at 11:13 PM

    Very good info. Can anyone provide what skills, actions, or other things a life coach could not do that mirror the practice of a licensed therapist? What if a life coach also took classes in energy psychology, or emdr, or vagus nerve work (anxiety reduction) and applied those to a life coach client who wanted them? I find it hard to see where the line is but maybe because I am just now investigating. I do understand that it should be more about life goals in life coaching. Thank you!

  • Rachel

    July 21st, 2023 at 8:57 AM

    Regardless of the classes taken by a life coach, if utilizing them with a client moves into treating a mental health issue it would be considered practicing psychotherapy without a license. It can get a little fuzzy in some instances, such as anxiety. My personal guess would be that if someone comes to a coach with the desire to work on certain life goals and a few skills to cope with or some education about the nature of anxiety would be helpful to meet those goals it might not cross the line. However if one of the client goals is to address anxiety/reduce anxiety/learn to live more freely with less anxiety and worry then the anxiety is really the focus and is the realm of psychotherapy. Sharing a few vagus nerve stimulation exercises with a client as part of a session might be okay. Coming back to and working on that for multiple sessions begins to look a lot like psychotherapy (without the training to hold consideration for the bigger picture and other issues that might be at play regarding this one symptom) and a conscientious coach should consider referring out to a psychotherapist to address the anxiety. If it suits the client’s goals the coach may continue working with that client on other goals, agree that the client sees the therapist to work on the anxiety and root causes then consider returning, or discontinue coaching. EMDR is a psychotherapeutic modality. Reputable trainings are only offered to those individuals currently participating in masters level or beyond psychotherapy programs, or those who already hold a masters level or beyond degree (at least in the U.S., other countries with differing standards may not comply). And for good reason as seemingly benign situations can devolve quickly at times and psychotherapists are trained to support clients through decompensation. For this reason using EMDR with a coaching client would very likely be considered practicing without a license. I use EMDR with my counseling clients and could theoretically see how aspects might translate into a coaching scenario. However, again, the water gets murky and often there’s trauma or other therapeutic issues that also need addressing. Individuals can experience profound healing and growth with coaching sessions, yoga, reiki, etc. Psychotherapy isn’t the only modality for bringing about healing. But it is the only one that is legally allowed to go directly and explicitly after wounding and trauma because those with the training know (or should know) how to navigate and support those potentially difficult and destabilizing experiences with clients. I think coaches play a wonderful role in supporting individual’s self-evaluation and growth and have the potential for doing harm with not knowing what they don’t know. I’m especially concerned about so many coaches who now call themselves trauma-informed. If they’re truly trauma – informed then that’s great because it will help them be aware of and not work directly with the trauma-related issues that might show up. Like with the anxiety example above they might be able to offer a little education and a few tools to help their client stay on track with their future-oriented goals. And they might be more attuned to when a client would benefit from a referral to a counselor. But I think many coaches are using trauma – informed to indicate that they work with trauma (i.e. address and heal from past trauma so the client can move forward). Which is the realm of trained psychotherapists.

  • Jason

    December 15th, 2022 at 5:13 PM

    Hello and thank you for this informative writing. I am curious about merging roles in a non profit company. I am curious about providing coaching for students in our program and if mental health issues are identified, I can provide those students with psychotherapy services (separate consent forms). I am curious of any ethical factors to consider.? Especially, in a rare case where a student moves from coaching to psychotherapy and then decides against psychotherapy. Could they return to coaching? I ask because providing support for all participants would be a function of the merged position. I hope that makes sense.

  • George

    January 25th, 2023 at 3:08 PM

    This is critical information as I am in the process of investigating a move into a career into mental health work and am looking at various “entrees” into the field.

  • Deborah

    April 10th, 2023 at 3:52 PM

    What’s most disturbing is how do you know what you don’t know? It’s inexplicable to me how a life coach could screen people adequately. Since it takes at least 6 years of college, 3000 hrs of clinical supervision and passing a licensing exam to become a psychotherapist, I don’t see how anyone could acquire the skills that wouldn’t put the unsuspecting public at risk. The fact that it’s done without oversight or accountability is what’s most troubling.

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