GPSolo Magazine - March 2006
Avoiding the Unauthorized Practice of Law
For many years, you have represented a Missouri client on environmental matters related to production plants throughout the country. The client calls you. It is urgent. The client has been served with a notice of violation (NOV) by the New Jersey Department of Environmental Protection. There is an informal hearing to discuss a resolution of the NOV for $175,000 in penalties tomorrow. “Can you get from St. Louis to Trenton?” If you are not licensed to practice law in New Jersey, may you appear without engaging in the unauthorized practice of law (UPL)?
Before answering that question, let me give you a quick history lesson. It was the American Bar Association’s Committee on Unauthorized Practice, founded in 1930, that urged “states to prohibit the practice of law except by duly licensed practitioners,” and states did just that without consideration for the out-of-state lawyer.
Despite the ban on UPL, lawyers routinely crossed state lines to practice law without much consequence. There was the occasional decision triggered by a disgruntled client who did not want to pay a fee, a state bar association that sued to seek to prevent non-admitted lawyers from practicing law in the state, private parties who tried to prevent an opponent from having the lawyer of his or her choice, or a losing party who tried to upset an arbitration award.
These decisions had local impacts with only muted responses. What galvanized the legal world into action was the 1998 California Supreme Court decision in Birbrower et al. v. the Superior Court, holding that a New York law firm had engaged in the unauthorized practice of law by representing a California company in a dispute subject to arbitration under a contract in which California law governed.
The American Bar Association immediately swung back into action, forming a commission on the multi-jurisdictional practice of law (MJP), which in its final report adopted on April 12, 2002, strongly endorsed the primacy of state bar associations in regulating the practice of law and recommended changes to Rules 5.5 and 8.5 of the Model Rules of Professional Conduct to permit the MJP under a number of circumstances.
Model Rule 5.5 was amended in August 2002 to provide that a lawyer who is not admitted to practice in a jurisdiction shall not: “(1) except as authorized by these Rules or other law, establish an office or other systematic and continuous presence in this jurisdiction for the practice of law; or (2) hold out to the public or otherwise represent that the lawyer is admitted to practice law in this jurisdiction.”
Model Rule 5.5(c) contains the exceptions to the rule that permits a non-admitted lawyer “on a temporary basis” to provide legal services that:
(1) are undertaken in association with a lawyer who is admitted to practice in this jurisdiction and who actively participates in the matter;
(2) are in or reasonably related to a pending or potential proceeding before a tribunal in this or another jurisdiction, if the lawyer, or a person the lawyer is assisting, is authorized by law or order to appear in such proceeding or reasonably expects to be so authorized;
(3) are in or reasonably related to a pending or potential arbitration, mediation, or other alternative dispute resolution proceeding in this or another jurisdiction, if the services arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice and are not services for which the forum requires pro hac vice admission; or
(4) are not within paragraphs (c)(2) or (c)(3) and arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice.
To protect in-house counsel from having to be admitted in multiple states, and in recognition of the right of lawyers to practice federal law, Model Rule 5.5(d) contains two important provisions. First, it allows a lawyer to provide legal services in the jurisdiction where the lawyer is not admitted where the services “(1) are provided to the lawyer’s employer or its organizational affiliates and are not services for which the forum requires pro hac vice admission.” It then permits the lawyer to offer services “that the lawyer is authorized to provide by federal law or other law of this jurisdiction.”
Model Rule 8.5 was amended to establish the quid pro quo for the right to practice in another jurisdiction: The non-admitted lawyer is subject to the disciplinary rules of that jurisdiction.
As of December 27, 2005, eight states had adopted Rule 5.5 verbatim: Arkansas, Delaware, Indiana, Iowa, Maryland, Nebraska, Oregon, and Utah. One state— Connecticut—had rejected Model Rule 5.5. Returning to my hypothetical, had the NOV been issued by the environmental regulatory agency in any of the eight states that adopted Model Rule 5.5, the lawyer could invoke Model Rule 5.5(c)(4) if the lawyer elected not to associate local counsel.
Seventeen more states have adopted Rule 5.5 in modified form: Arizona, California, Colorado, Florida, Georgia, Idaho, Louisiana, Minnesota, Missouri, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Pennsylvania, South Carolina, and South Dakota.
Returning to my hypothetical, New Jersey elected not to adopt Model Rule 5.5(c)(4). Instead it adopted this language:
(iv) the lawyer practices . . . with respect to a matter where the practice activity arises directly out of the lawyer’s representation on behalf of an existing client in a jurisdiction in which the lawyer is admitted to practice, provided that such practice in this jurisdiction is occasional and is undertaken only when the lawyer’s disengagement would result in substantial inefficiency, impracticality or detriment to the client.
The Missouri-licensed lawyer should be able to represent the Missouri-based client in New Jersey because the matter arises out of the lawyer’s representation of the client in Missouri, the work in New Jersey is “occasional,” and given the lawyer’s familiarity with the client and the urgency of the situation, it should be safe to conclude that the lawyer’s disengagement would result in “substantial inefficiency, impracticality or detriment to the client.”
One can see, however, that a slight change in the facts might raise questions about the lawyer’s compliance with New Jersey’s rule. Suppose the client is new and not long-standing with the lawyer? Or the client is from a different jurisdiction than the one in which the lawyer is admitted? Or suppose the informal hearing was a month away, not a day away?
Worried now? A healthy concern has value; there is no substitute for appropriate sensitivity to the requirements of the rules of ethics of each state in which a lawyer offers legal services. In practice, however, as long as you get along with your client—the person most likely to make a UPL claim to avoid payment of a fee—it is unlikely you ever will be accused of the UPL. And, of course, you can always associate with local counsel and eliminate any UPL concerns.
A final word on in-house counsel: They have not been as fortunate in the MJP arena. Many states have enacted “limited” admission rules for in-house counsel, instead of adopting Model Rule 5.5(d)(1). Generally speaking, the major consequence of this approach is the requirement to pay a healthy admission fee that may have to be renewed annually.
John Barkett is a partner at Shook, Hardy & Bacon L.L.P. in its Miami office. He can be reached at firstname.lastname@example.org.
|For More Information about the Section of Environment, Energy, And Resources|
- This article is an abridged and edited version of one that originally appeared on page 61 of Natural Resources & Environment, Fall 2005 (20:2).
- For more information or to obtain a copy of the periodical in which the full article appears, please call the ABA Service Center at 800/285-2221.
- Website: www.abanet.org/environ.
- Periodicals: Natural Resources & Environment, quarterly magazine; Trends, bimonthly newsletter; The Year in Review, annual summary of legal developments; committee newsletters.
- Books and Other Recent Publications: The Federal Information Manual; Wetlands Law and Policy; Environmental Aspects of Real Estate and Commercial Transactions, 3d ed.; Clean Air Act Handbook, 2d ed.; RCRA Practice Manual, 2d ed.; and the Basic Practice Series with titles including FERC, RCRA, CERCLA, EPCRA, Clean Air Act, ESA, FIFRA, and TSCA.