Working Draft Proposed Rule 8.5 - Draft No. 2 - Center for Professional Responsibility

WORKING DRAFT - FOR USE BY ETHICS 2000 COMMISSION ONLY
11/17/99

Proposed Rule 8.5 - Draft No. 2
(for Discussion at December 1999 Commission meeting)

Material added to the current Model Rule is underlined. Deletions from the current Model Rule are struck through. Changes from prior draft are italicized.

RULE 8.5 DISCIPLINARY AUTHORITY; CHOICE OF LAW.

(a) Disciplinary Authority. A lawyer admitted to practice in this jurisdiction is subject to the disciplinary authority of this jurisdiction, regardless of where the lawyer's conduct occurs. A lawyer not admitted in this jurisdiction is also subject to the disciplinary authority of this jurisdiction if the lawyer renders or offers to render any legal services in this jurisdiction. A lawyer may be subject to the disciplinary authority of both this jurisdiction and another jurisdiction where the lawyer is admitted for the same conduct.

(b) Choice of Law. In any exercise of the disciplinary authority of this jurisdiction, the rules of professional conduct to be applied shall be as follows:

(1) for conduct in connection with a proceeding in matter before a court before which a lawyer has been admitted to practice (either generally or for purposes of that proceeding), the rules to be applied shall be the rules of the jurisdiction in which the court sits, unless the rules of the court provide otherwise; and

(2) for any other conduct, the rules of the jurisdiction in which the lawyer's conduct occurred, or if the predominant effect of the conduct is in a different jurisdiction, the rules of that jurisdiction shall be applied to the conduct.

(i) if the lawyer is licensed to practice only in this jurisdiction, the rules to be applied shall be the rules of this jurisdiction, and

(ii) if the lawyer is licensed to practice in this and another jurisdiction, the rules to be applied shall be the rules of the admitting jurisdiction in which the lawyer principally practices; provided, however, that if particular conduct clearly has its predominant effect in another jurisdiction in which the lawyer is licensed to practice, the rules of that jurisdiction shall be applied to that conduct.

Comment

Disciplinary Authority

[1] It is Paragraph (a) restates longstanding law that conduct of a lawyer admitted to practice in this jurisdiction is subject to the disciplinary authority of this jurisdiction. Extension of the disciplinary authority of this jurisdiction to other lawyers who render or offer to render legal services in this jurisdiction is for the protection of the citizens of this jurisdiction.

Choice of Law

[2] A lawyer may be potentially subject to more than one set of rules of professional conduct which impose different obligations. The lawyer may be licensed to practice in more than one jurisdiction with differing rules, or may be admitted to practice before a particular court with rules that differ from those of the jurisdiction or jurisdictions in which the lawyer is licensed to practice. In the past, decisions have not developed clear or consistent guidance as to which rules apply in such circumstances.

[3] Paragraph (b) seeks to resolve such potential conflicts. Its premise is that minimizing conflicts between rules, as well as uncertainty about which rules are applicable, is in the best interest of both clients and the profession (as well as the bodies having authority to regulate the profession). Accordingly, it takes the approach of (i) providing that any particular conduct of an attorney shall be subject to only one set of rules of professional conduct, and (ii) making the determination of which set of rules applies to particular conduct as straightforward as possible, consistent with recognition of appropriate regulatory interests of relevant jurisdictions.

[4] Paragraph (b) provides that as to a lawyer's conduct relating to a proceeding in a court before which the lawyer is admitted to practice (either generally or pro hac vice), the lawyer shall be subject only to the rules of professional conduct of that court. As to all other conduct, paragraph (b) provides that a lawyer shall be subject to the rules of the jurisdiction in which the lawyer's conduct occurred, or if the predominant effect of the conduct is in another jurisdiction, the rules of that jurisdiction shall be applied to the conduct.
licensed to practice only in this jurisdiction shall be subject to the rules of professional conduct of this jurisdiction, and that a lawyer licensed in multiple jurisdictions shall be subject only to the rules of the jurisdiction where he or she (as an individual, not his or her firm) principally practices, but with one exception: if particular conduct clearly has its predominant effect in another admitting jurisdiction, then only the rules of that jurisdiction shall apply. The intention is for the latter exception to be a narrow one. It would be appropriately applied, for example, to a situation in which a lawyer admitted in, and principally practicing in, State A, but also admitted in State B, handled an acquisition by a company whose headquarters and operations were in State B of another, similar such company. The exception would not appropriately be applied, on the other hand, if the lawyer handled an acquisition by a company whose headquarters and operations were in State A of a company whose headquarters and main operations were in State A, but which also had some operations in State B.

[5] If two admitting jurisdictions were to proceed against a lawyer for the same conduct, they should, applying this rule, identify the same governing ethics rules. They should take all appropriate steps to see that they do apply the same rule to the same conduct, and in all events should avoid proceeding against a lawyer on the basis of two inconsistent rules.

[6] The choice of law provision is not intended to apply to transnational practice. Choice of law in this context should be the subject of agreements between jurisdictions or of appropriate international law.

 

Proposed Rule 8.5 - Draft No. 2
Reporter's Observations

You last saw this proposal in August. At that time, there was a general discussion but no formal votes. It was recognized that this Rule must function in light of whatever is proposed for Rule 5.5. Many of the following observations were also made in the August draft.

The present form of Rule 8.5 was adopted by the ABA in 1993. By that time, it was clear that 'model' rules were not going to lead to uniformity among the jurisdictions. Further, it was clear that multi-jurisdictional practice was common for many lawyers and their firms as clients' businesses showed no regard for state lines. Thus, it appeared that something should be said about which among conflicting standards governed a lawyer's conduct in a given situation.

Rule 8.5 has been criticized almost from the day it was promulgated. Some believe it is vacuous and doesn't decide hard cases. Others answer that the choice of law problem ultimately has no good answers but that Rule 8.5 provides about as much helpful guidance as rules can give.

All seem to agree the two part division of the rule is correct. The first or jurisdictional question is who may bring disciplinary proceedings against a lawyer? The second or choice of law question is what law should be applied no matter which jurisdiction brings the disciplinary action? Ideally, if there is agreement on what law properly applies and the lawyer can know that ahead of time, the lawyer can conform her behavior to the proper disciplinary standard.

Drafting a rule that all will agree gives the right answers is the hard part. As in the case of some other rules, I think it will be helpful both in evaluating this draft and providing direction for future drafts if we focus our attention on four fundamental policy questions.

1. Should jurisdiction to discipline be limited to states in which the lawyer is licensed?

Notice that the main point of Rule 8.5 (a) is that a lawyer may be disciplined by any jurisdiction in which she is licensed, regardless of where the conduct occurs. Critics point out, however, that nowadays the jurisdiction with the most incentive to discipline may be one in which the lawyer is not licensed at all.

Suppose a lawyer licensed in Illinois has a client with a big negotiation in Texas. The lawyer flies to Dallas to help with the negotiation and engages in fraud or some other conduct that would violate the Texas rules. Texas wants to discipline him, but Illinois has lots of other cases it considers more important. Should Texas have no option other than to plead with Illinois?

Rule 6 of the ABA Model Rules for Lawyer Disciplinary Enforcement has a bracketed provision adopted by we believe six states that provides disciplinary jurisdiction over "any lawyer not admitted in this state who practices law or renders or offers to render any legal services in this state." Would that be a good provision to add to Rule 8.5(a)? The current draft includes it so that you can see how it would look in context.

An obvious question is what sanction Texas could impose in our example even if it had jurisdiction. After all, how do you disbar someone who has never been admitted to practice? Proponents of the new language say that Texas could at least make the disciplinary record, send it to Illinois, and have Illinois impose reciprocal discipline with teeth. Alternatively, if discipline authorities are ever given a broader range of sanctions, e.g., fines, fee forfeiture or an award of damages, Texas could act on the lawyer directly.

The next logical question is whether someone who is not licensed in any U.S. jurisdiction but who acts in a matter in Texas could likewise be subject to Texas jurisdiction. In principle, it seems the answer would have to be yes, although Texas might more likely prosecute the person for unauthorized practice.

2. In matters pending before a court, should the choice of law be the rules applicable in that court? Should the rule be different for pre-trial proceedings conducted by lawyers not admitted in the jurisdiction?

Rule 8.5(b)(1) has been the least controversial part of this rule. If all the lawyers in a matter are subject to the procedural rules of a given tribunal, it is reasonable to say that the ethical standards applicable there should govern all the lawyers as well. The present draft makes the time at which the case is filed the time when (b)(1) becomes controlling. Work done prior to that time is subject to (b)(2).

This solution may be a little more ambiguous when the case is in a federal court and the ethical standards applicable there may not be as clear as in a state court, but in any event, the same rules should apply to everyone and be respected in each lawyer's home state.

A second question has arisen with respect to depositions conducted in other states or other pre-trial actions that might be taken by a lawyer not admitted pro hac vice in the matter. This draft assumes that all lawyers taking part in the proceeding should be governed by the same rules, the ones applicable in the proceeding.

A different question could also arise as to cases filed in several courts that are likely to be consolidated later. What rules should apply? The present draft intends that each case should be governed by the rules of the jurisdiction in which the case is pending pre-consolidation.

3. If a lawyer is admitted in only one jurisdiction, should the only ethical provisions applicable to her conduct be those of the admitting jurisdiction?

Except for matters pending before a court, that is what Rule 8.5(b)(2)(i) currently says. Thus, if our Illinois lawyer who went to Texas would not have violated the Illinois Rules of Professional Conduct, the fact that no Texas lawyer could do whatever we say she did would not let either Illinois or Texas hold her to the Texas standards (even if as discussed above, Texas were given jurisdiction to impose discipline).

This has been probably the most controversial provision of the current rule. It has seemed to many that if all the events relevant to an incident occurred in Texas and all the Texas lawyers in the room were governed by a given set of standards, the Illinois lawyer visiting in Texas should not be able to ignore those standards, no matter who has jurisdiction to impose the discipline.

The theory underlying the present rule is obviously that discipline is the flip side of bar admission, i.e., it is a proceeding to take away the license the state granted because of a violation of that state's rules. Critics point out, however, that such a perspective ignores the realities of interstate practice and the context in which lawyer conduct occurs. The proposed draft deletes (b)(2)(i) and concentrates on determining what ethical rules should apply no matter where the lawyer is licensed.

4. Should proposed Rule 8.5 seek a single criterion of which jurisdiction's ethical standards apply or should it specify a number of relevant criteria? In either case, what should the criteri(on)a be?

At the outset, we note that present Rule 8.5(b)(2)(ii) poses the issue just discussed in that the only jurisdictions whose rules might apply are those in which the lawyer is licensed. Thus, if our Illinois lawyer acting in Texas also happened to be admitted in Virginia, under the current rule only the disciplinary law of Illinois and Virginia would be candidates for application. In our example, Illinois law would apply because that is where the lawyer "principally practices," and the "predominant effect" of the conduct is clearly not in Virginia. We assume whatever you decide under question 3 above will affect how we deal with the corresponding issue here.

The issues posed in this question 4 go to the controversy in the literature about how important it is to have a clear and simple rule. The value of simplicity and clarity are obvious. If lawyers are trying to conform their conduct to relevant standards and cannot know which standards apply, they will be completely at sea. Thus, one writer suggests the applicable law be that of the lawyer's law firm's home office unless the engagement letter specifies otherwise. Another says it should be the law of the client's home office. Others propose various forms of the "predominant effects" test now in Rule 8.5(b)(2)(ii). Yet others say that conflict of laws is a problem in lots of fields and that a multi-factor test has not seemed as great a problem as advocates of simplicity suggest.

The criterion proposed in this draft is the "jurisdiction where the lawyer's conduct occurred." Because in this era of electronic magic, conduct may "occur" at 30,000 feet over heaven only knows where, or even in several places simultaneously, an alternative of the "jurisdiction in which the lawyer's conduct had its predominant effect" is also used. We are not enamored of either solution but use these formulations to raise the basic issues that are inherent in this question 4.

TEXT:

1. Extension of disciplinary authority to jurisdiction in which lawyer renders services

As discussed above, this is the first substantive question the Commission should resolve. The proposed language is based on Rule 6 of the ABA Model Rules for Lawyer Disciplinary Enforcement.

2. Deletion of "where the lawyer is admitted" in (a)

This is another manifestation of the same point. If discipline may be exercised by any jurisdiction in which the lawyer engages in practice, it is no longer correct to say discipline is limited to a jurisdiction in which the lawyer is admitted.

3. Deletion of "before which the lawyer has been admitted," etc. in (b)(1)

This deletion is to pick up the lawyer who has not bothered to become admitted pro hac vice but who is conducting depositions or other pre-trial discovery or is simply back home destroying evidence. The point is that anyone working on the case would be covered by the rule.

4. Substitution of "matter before" for "proceeding in" a court in (b)(1)

This proposed change is to try to clarify that the rules of the tribunal become controlling when the matter can be said to be "before" that tribunal, usually the date the case is filed. In August, some comments suggested confusion about the use of the term "proceeding."

5. Substitution of new language in (b)(2)

These changes are discussed under questions 3 & 4 above. The language limiting the applicable rules to states in which the lawyer is licensed has been proposed for deletion, as has the "principally practices" test in (b)(2)(ii). The remaining standards are largely to get the discussion going. Coming up with clear standards for choice of law may prove difficult.

COMMENT:

[1] New language explaining extension of disciplinary authority to additional lawyers

Something new was needed because the Comment no longer "restates longstanding law." The proposed explanation is vacuous, but trying to go into all the reasoning did not seem necessary.

[2] Deletion of the last sentence

The last sentence is probably harmless, but it is also gratuitous and inaccurately implies that the proposed formulation of the rule will bring certainty.

[4] Changes in explanation of paragraph (b)

As discussed above, several changes are proposed in paragraph (b) that the comment as proposed largely tracks. The important point was to delete the material seeking to explain the standards previously established by the rule.

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