Ethics Tip of the Month - April 2014

Corporate Counsel, Multijurisdictional Practice, and Licensing Requirements

 

You are licensed in one state and later are offered a desirable job in a different state working as in-house counsel for a corporation.  You decide to move your family and accept the position, relying on your admission in the state where you first passed the bar.  Your work is engaging and you help steer the business to profitability. 

You have been busy and although notices of continuing legal education requirements and invoices for bar dues arrive at your office from your home state, you don’t think they apply to you, as you believe that you are not really practicing law, but acting more in a business capacity despite your job title of corporate counsel.  Eventually you are administratively suspended from the bar of your home state. 

Over the past few years there have been cases in which corporate counsel have been charged with the unauthorized practice of law when their licenses lapse after having become inattentive to the licensing requirements that apply to them.    Fines, payments of back bar dues with penalties, and suspensions have ensued.  Discipline has been imposed for the implicit misrepresentation of holding oneself out as licensed to practice when it was not the case, as well as conduct reflecting poorly on fitness to practice.  In several cases the lawyers lost their corporate positions.   See, e.g.  Disciplinary Counsel v. Troller, Ohio,  --- N.E.2d ----, 2014 WL 169765 (Ohio), 2014 -Ohio- 60 (1/14/14); In re Gustafson, Mass., 986 N.E.2d 377, (2013);  Hipwell v. Kentucky Bar Ass'n, Ky.,  267 S.W.3d 682 (2008).

Sometimes, corporate counsel can be unclear as to what their obligations are to keep their law license in good standing.   Part of the reason for this is that there can be ambiguity about whether some of the activities they participate in would be considered to be the practice of law.   An exact definition of “the practice of law” has remained elusive despite the best efforts of an ABA Committee tasked with reaching such a definition in 2003. Nonetheless, lawyers should be wary of insisting that activities such as for example “business management” or “HR consulting” never involves the practice of law. Additionally, lawyers should not fall back on the idea that since some of their duties could be performed by a nonlawyer who would not be subject to the bar’s jurisdiction, they are therefore not engaged in the practice of law when they engage in similar activities. 

Failure to be properly licensed is gambling with the status quo every day.   In April of 2007, the online magazine Corporate Counsel did an expose on Fortune 500 lawyers who had failed to maintain their licenses.  An abstract of the article is available here. The facts of a license or lack of one are easily found by contacting the state bar.   

In 2008, the ABA  adopted a Model Rule for Registration on In-House Counsel in 2008 which was subsequently amended by the ABA Ethics 20/20 Commission in 2013. This Model Rule provides a process for the registration of lawyers who are not licensed to practice in the state where they are employed as in-house counsel.

In recent years, the ever increasing multijurisdictional nature of the practice of  law has led to amendments to Rule  5.5  Unauthorized Practice of Law; Multijurisdictional Practice of Law of the ABA Model Rules of Professional Conduct by both the ABA Multijurisdictional Practice Commission and the ABA Ethics 20/20 Commission .  Rule 5.5 contains some clear avenues to out-of state practice in specific circumstances.   An excerpt from Subpart (d) of the Rule states:

(d) A lawyer admitted in another United States jurisdiction or in a foreign jurisdiction, and not disbarred or suspended from practice in any jurisdiction or the equivalent thereof, may provide legal services through an office or other systematic and continuous presence in this jurisdiction that :

(1) are provided to the lawyer’s employer or its organizational affiliates; are not services for which the forum requires pro hac vice admission…

Bear in mind that all states have not adopted the ABA model standards verbatim and the complexity and sheer number of variations can result in confusion about what a lawyer may do outside of a state in which he or she is licensed to practice.  To date, 36 states have adopted a rule or procedure for an in-house counsel to register to practice in their jurisdiction .  However, just because the process can be complicated is no reason for the failure to comply with licensing requirements.  In an interview with the Bureau of National Affairs, Fordham Law Professor Bruce Green who served as the reporter to the ABA's Commission on Multijurisdictional Practice stated: 

“If corporate lawyers are competent enough to guide their clients through the complex regulations those entities must meet,” Green remarked, “they should be competent enough to comply with their own professional regulations.”  

***************

It is much easier to keep up with the requirements that apply to your situation, rather than to rectify matters once they have led to an administrative disbarment. 

Advertisement