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.

  • Dave

    February 6th, 2024 at 2:05 PM

    I appreciate your comment and explanation of the issue
    As a practicing Therapist of 20 years with licensure in two states-I am being recruited by many small tech start up companies to do “coaching groups”, of 10 people on a zoom call-I was taken aback at first as to how they are planning to do this effectively or legally with college age students in different states-and they specifically stated that they “skirt the state laws for licensure by just calling it coaching support groups”. These clinical tech companies can be a bit myopic and ignorant of the potential harm that can be done-and are more than happy to use you as a contractor and let you hold the clinical liability bag-without any support. After 15K hours of direct face to face now-I feel comfortable treating most clients-and I know when to refer and what the proper assessment path entails-Something big clinical tech pretends to do for show-so they can sign large contracts on the back of our hard work. Coaching itself does need to be regulated in some manner and that way it will take this game offline and specifically bring them in check-as in most cases there is always an element of counseling involved-as the relationship deepens and core beliefs and trauma surfaces.
    Now I have done this for a while, and I know that this does not smell right in terms of ethics and I will pass-As they don’t’ want to make the investment in proper counseling licenses for each state and reported that they won’t do notes post session- A few tech guys quit their job and think they know better-Medical Care is broken but this is not the fix for access-
    I think that up to 10 people in a group Zoom is outrageous for real work or true coaching to be done anyways and they offered $100 per meeting-I must say that certain start-ups do not get that you have to pay people for their time and expertise-
    So Coaching is the big grey area to be exploited by these greedy techs companies-with the VC money to do it-they know that we don’t get paid for the off hours and calls and notes-and it suits their needs as we are disposable to them as 1099’s.
    That said, I grew weary and they knew I was hesitant to move forward at all-given what they are proposing-and none of them are licensed or have degrees in the field-calling themselves Coaches who have already done college presentations with 40-50.
    I wondered how they had the basics to do this as they are not Sport Psychologists and do not have degrees in the fields at all.
    I guess it takes a real narcissist to think he can do therapy under a different name and skirt the law-and ask others to do the same-As I would not be licensed in that state-That said, it’s real shame that I cannot practice with a federal license as it would cost me close 7-10K a year to be licensed in all the states-that would be real access for all.
    I call it “Will Hunting Syndrome”-They read some books and went to one Therapist back in college when they were grieving and thought-“Now I can do Therapy, I can run a mental health company”. They call it coaching-but all the literature speaks to depression and anxiety and how they will help students deal with these presenting issues.
    Someone needs to tell them that you cannot replace the experience and training over a 20 yr period-for a few contacts in college that made you feel better-all to make money off of those who are hurting and need real assistance.
    I’m not sure where this is going-states over-charge for licensure as a money grab and they really don’t protect the Licensure and practices as I have observed it-yet we pay and “coaches” do not-it’s time for them to have the accountability, and that would stop these other organization from working around it with language and credentialing games-and it would protect CT’s too-Seems harsh, I’m sure there are many coaches who are ethical and do not go down the counseling route-but in my experience-I would find it hard to believe it would not go that direction as the relationship deepens-then what do Coaches do, refer on? I doubt most would as the appeal of that type of work and deepening is there for the taking.

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