Why can't paralegals give legal advice?
It would be considered the unauthorized practice of law.
Attorneys are regulated by the State Bar (Association) of the state in which they practice. For the most part, there is no paralegal association in each state that regulates paralegals (I know California has one).
So, if there ever is a problem with the attorney (doesn't contact you, doesn't refund your money if you fire him, etc.), you have recourse with the State Bar of X State. But if there's a problem with a paralegal, especially one who "practices" on their own (without an attorney supervising him/her, which there should be one, btw), there is no recourse.