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May 01, 2013

Winds of Change: The Challenges Facing State High Courts in Regulating the Practice of Law

By Chief Justice Myron T. Steele

The long-term trend toward more multijurisdictional and transnational practice creates challenges for state high courts, which have traditionally regulated the legal profession. Rapid changes in the profession have sometimes left regulators scrambling to catch up, as illustrated by the now-infamous Birbrower v. Superior Court decision. Some ongoing movements sponsored by the American Bar Association and state bars attempt to make cross-border practice easier, but regulators must ensure that the regulatory infrastructure catches up to the profession. This article considers the national regulatory implications of the Uniform Bar Examination and the international regulatory implications of increasing multijurisdictional practice.

Regulating a National Practice: Implications of the Uniform Bar Examination

The Uniform Bar Examination

One of the most basic ways that state high courts have regulated lawyers is by limiting bar admission through education, examination, and character requirements. Each state conducted a separate bar exam, and lawyers who wished to move between jurisdictions either waited and sought reciprocal admission or retook the bar. The Uniform Bar Examination (UBE) is up-ending the traditional process by offering a nationwide test and allowing examinees to transfer scores between jurisdictions.

States have increasingly adopted standardized bar testing materials such as the Multistate Performance Test (MPT). The UBE combines several widely used multistate tests into one exam and provides examinees with a score that can be transferred between states. The UBE has quickly gone from idea to reality. Missouri became the first UBE jurisdiction in 2011, and 12 jurisdictions have already followed its lead. Despite the UBE’s growth, however, few Eastern states have adopted it.

The UBE promises to improve consistency in grading, administering, and scoring examinations. In theory, the UBE helps students find jobs by preventing them from being “locked in” to a jurisdiction (though it does not address what may arguably be the real problem of too many students chasing too few jobs). The idea that it is absurd to force students to retake already-uniform elements of bar exams in each jurisdiction in which they seek admission underpins the UBE.

While the UBE’s goals are laudable, the problem with any uniform bar exam is that it attempts to test the law as it is everywhere, and therefore tests local law nowhere. Unlike, say, a medical licensing test, where administrators can safely assume that the circulatory system works similarly in Davenport and Dubai, differing public policy concerns have led to intentional variations between jurisdictions’ laws. Regulators should worry that uniform tests risk certifying attorneys who are ready to practice in the MPT-favorite nonexistent jurisdictions of “Franklin” or the “Fifteenth Circuit.”

Perhaps the ubiquity of online research makes memorizing a specific jurisdiction’s law archaic, but testing distinctions at least force attorneys to recognize that distinctions exist. Certain areas of the law might also be more important to some states than others and therefore merit testing. Despite increasing specialization, lawyers still seek a general law license. Arguments against state-specific test questions on the grounds that many attorneys will never need to know the answers are actually arguments in favor of practice-specific licenses. So long as governments license lawyers, rather than Securities Act of 1933 lawyers, it is important to test applicants on multiple areas of law.

Two problems with the UBE’s national focus are apparent: a lack of local areas of emphasis and “correct” answers that actually contradict the jurisdiction’s law. For example, Texas tests its lawyers on oil and gas law, but states without an oil and gas sector would find these questions to be a waste of time. The UBE alone cannot accommodate jurisdictional differences without supplementation. In topics such as criminal procedure and evidence, uniform examinations can provide answers that contradict state law. Many state evidentiary rules vary from the Federal Rules of Evidence, but the UBE cannot address these variations. For example, a student might be left with a false impression that the expansive federal marital privilege applies in every state. In the criminal procedure field, state constitutions often provide more protection than the U.S. Constitution. These valuable rights are ignored on a national exam. State civil procedure rules also cannot be practically addressed on the UBE.

Keeping a Local Focus Within a National Exam: State-Specific UBE Requirements

Faced with mounting pressure to harmonize state bar examination requirements, how can state high courts address the problems created by the UBE? The Conference of Chief Justices has provided some guidance, noting that local law can be addressed through mandatory education or separate assessments.

Missouri regulators attempted to balance concerns about testing local law with the UBE’s goals by adding a Missouri law component to the admissions process. The Missouri Educational Component Test (MECT) is an online, multiple-choice exam that applicants must pass before being admitted to the Missouri Bar in addition to passing the UBE. After passing, applicants must certify that they personally completed the MECT and return the completion certificate to the Missouri Board of Law Examiners.

Despite the regulators’ noble intentions, it is unclear whether the MECT meaningfully exposes applicants to Missouri law. Currently, applicants may retake the MECT without any restrictions on the number or frequency of attempts. When combined with the exam’s automatic score calculation and highlighting of incorrect answers, the system allows cunning applicants to guess, check, and repeat until they receive passing grades. These features might make it possible to pass the MECT without even reading the questions. When this minimal procedure is contrasted with the safeguards surrounding the UBE, applicants might be forgiven for giving Missouri law little attention in their exam preparation. The MECT, however, at least attempts to ensure that Missouri bar members understand Missouri law.

Regulators attempting to maintain an emphasis on state law while adopting the UBE may also supplement it with a separate examination or course requirement. Alabama requires applicants to complete Alabama-specific essays in addition to the UBE. Arizona, in contrast, requires applicants to complete a six-hour course on Arizona law before they are admitted. These approaches have drawbacks as well. Alabama’s decision to include a separate, formal exam might cause applicants to give state law greater attention than the MECT incentivizes. This approach, however, reduces the UBE’s portability because students must travel to Alabama and sit for a separate test. Arizona’s course is less onerous, but, like the MECT, it might not incentivize applicants to study Arizona law seriously.

As these examples indicate, state high courts are still trying to strike the proper balance between increasing portability and ensuring applicants establish that they are competent to practice the state’s law. While the UBE’s portability may offer some advantages, widespread adoption challenges regulators’ ability to ensure that licensed attorneys are familiar with state laws. The UBE leaves actual admission decisions in state hands—states may still impose their own character and fitness requirements and set the passing score. There is only an 11-point range in states’ score requirements for the widely adopted Multistate Professional Responsibility Exam, however, so it seems unlikely that UBE score requirements will meaningfully differ between jurisdictions. A state high court that requires a higher UBE score for admittance may also be vulnerable to a lawsuit challenging the restriction as arbitrary. In the future, UBE-adopting states should consider mandating separate exposure to a state’s laws to ensure that applicants recognize state public policy decisions and to ensure applicants are qualified to practice law in their chosen jurisdiction. Eliminating any local testing requirements might leave thoughtful bar applicants wondering why they must obtain separate licenses at all.

Regulating a Transnational Practice: Implications of Multijurisdictional Practice

Rules Allowing Non-U.S. Attorneys to Practice in the United States

Aside from the increasing nationalization heralded by the UBE, state high courts will also be confronted with challenges due to the growth of transnational law practice. State high courts can expect to see more foreign lawyers seeking to provide legal services within their jurisdictions in the future. Currently these foreign lawyers may practice within certain jurisdictions under one of several rules. Foreign lawyers may permanently practice in many states as foreign legal consultants (FLCs), permanently represent organizations and their affiliates in a few states through “in-house counsel” rules, and temporarily practice in a few states under multijurisdictional practice rules. Finally, around half of the states allow foreign law school graduates to seek full bar admission under certain circumstances.

FLC rules generally allow foreign-licensed lawyers to practice in the jurisdiction permanently without having passed the state’s bar exam. These lawyers may become partners in law firms, but generally cannot advise clients on American law. The majority of jurisdictions currently allow FLCs. Despite FLC rules’ prevalence, few lawyers seek admittance as FLCs, perhaps because American bar admission requirements are less restrictive than those of many other countries.

A few states have extended in-house counsel rules to foreign attorneys. In-house counsel rules allow lawyers who are transferred to a new jurisdiction to practice without having to seek admission to the jurisdiction’s bar. In-house counsel rules restrict lawyers’ practices to representing their organizations or entities, but unlike FLCs, they may advise on the host jurisdiction’s law. Lawyers must cease practicing if they leave their jobs, unless they accept a qualifying new job. Theoretically, organizations that are capable of transferring attorneys from foreign countries to the United States can adequately assess their lawyers’ competence, and therefore there is less need to protect the organization.

A few jurisdictions have multijurisdictional practice rules that allow foreign lawyers to temporarily provide legal advice while in a jurisdiction. Foreign lawyers practicing under these “fly-in, fly-out” rules cannot remain in a jurisdiction long term or represent that they are admitted in the host state, but can perform limited services reasonably related to their practice in their home jurisdiction. These rules are distinguished from FLC and in-house rules because of their temporary nature.

Full bar admission is another option for foreign lawyers seeking to practice in the United States. As more foreign-educated applicants seek admission to state bars, state high courts will need to determine to what extent certain foreign law degrees are comparable to American ones. There is a clear trend favoring recognizing educational credentials across borders, as evidenced by free trade agreements, the General Agreement on Trade in Services, and the European Union’s Bologna Process. New York regulators have commented that it takes considerable time and scarce resources to analyze foreign educational records. State high courts with less experience analyzing foreign credentials could be severely strained if the number of foreign applicants in their jurisdictions further increases.

As more lawyers practice across borders, regulators also will find themselves confronting choice of law issues and examining foreign rules more regularly. In many states, a version of ABA Model Rule of Professional Conduct 8.5 governs choice of law decisions for attorney ethics—a rule that can raise more questions than it answers. A state regulator may often have difficulty determining which jurisdiction’s rules govern, which can force attorneys to apply the more stringent rule or make a judgment regarding what rule applies. Rule 8.5 creates a “predominant effect” test to determine the rules governing an attorney not appearing before a tribunal, but the accompanying comments admit that this can often be unclear. A regulator therefore might have to make difficult determinations regarding the “predominant effect” of the conduct and may not have access to, or a translation of, the foreign jurisdiction’s rules. While the Rule states that attorneys’ conduct before tribunals will be governed by the rules of the jurisdiction in which the tribunal sits, even this straightforward principle can lead to surprising results. Perhaps as a result of the complexities in regulating transnational practice, regulators have underenforced the rules.

Even if the regulator can identify what rules govern, enforcing foreign rules of conduct can be problematic. Not all jurisdictions have written codes of conduct, and in others there are “unwritten rules” in addition to the written codes. Expert testimony often guides American courts’ application of foreign law, and conflicting testimony in an ethics case could lead to confusion and unfairness. If the rule itself is clear, state regulators may have difficulty applying it in accordance with the foreign jurisdiction’s practice. Applying foreign rules without accounting for how they are practically enforced could drastically alter outcomes.

A final issue that will confront disciplinary authorities is the growth in multinational law firms. Chinese firm King & Wood’s merger with the Australian firm Mallesons illustrates some of the problems. Because Chinese law firms must provide client information to the Chinese government upon request, the firm decided not to connect the Chinese partnership to the firm’s Hong Kong–Australia network. While the effectiveness of this internal barrier is open to question, the merger illustrates how regulators will need to consider the ethical issues created when law firms venture outside the traditional foreign destinations to countries with vastly different views on client confidentiality, attorney ethics, and even the rule of law itself.

Building Institutions Capable of Regulating Transnational Practice

Although states must accommodate transnational practice, state high courts should be careful to avoid creating a regulatory vacuum. As more foreign lawyers seek to practice in the United States, prudence demands that state high courts develop protocols for transnational cooperation on attorney discipline. While state high courts can require registration of and monitor semipermanent foreign in-house counsel and foreign legal consultants, the transient nature of fly-in, fly-out practice makes it difficult to enforce rules of conduct. States do not evaluate “even basic competence or trustworthiness” of fly-in, fly-out lawyers. State high courts also need to ensure that liberalizing bar admission requirements does not lead to lower standards.

State regulators currently share information among themselves and impose reciprocal discipline, but there is not a functional international clearinghouse for American and foreign jurisdictions to share information about lawyer misconduct and little incentive for lawyers to self-report. State high courts should encourage the development of a model international reciprocal discipline protocol to ensure that lawyers are adequately penalized for misconduct. Regulators should also work to implement the Conference of Chief Justices’ resolutions regarding improving communication with foreign regulators and expand any initiatives to more jurisdictions.

There is precedent for cooperation between different countries’ regulatory authorities. European Union regulators have cooperated for several years in disciplining lawyers. European lawyers practicing in foreign countries may be disciplined by their hosts, but the host country must keep the home country informed, exchange information, and allow the home country an opportunity to intervene. The lawyer’s home country must provide similar opportunities to the host country when disciplining an attorney. An increasingly transnational practice requires state high courts to develop similar procedures with their foreign counterparts. Regulators will need to invest in building institutional networks to make transnational discipline practical. Many issues must be addressed, such as language barriers between jurisdictions, different data privacy rules that might impede information sharing, and variations in the data collected. Regulators are beginning to address these challenges. Legal regulators held their first international conference in 2012, though foreign regulators have attended and spoken at American regulatory conferences for several years. Further interaction should be encouraged.

State high courts should also collaborate or encourage a national organization (such as the ABA) to begin evaluating certain foreign law schools to determine whether a foreign institution grants comparable degrees and what additional requirements should be imposed before applicants can take state bar examinations. This process does not need to involve full accreditation, which the ABA recently rejected, but could involve a multiple-tier system, with different requirements imposed on applicants depending on the similarity of their education with a standard American law degree. Collaboration could prevent wasteful duplication of effort in assessing applicants. As pressure increases for state high courts to recognize foreign academic credentials, a more formal system needs to be put in place.

The nationalization and internationalization of the legal profession continues, and state high courts need to balance the need for cooperation among jurisdictions with the need to maintain standards and effectively discipline attorneys. State high courts’ adoption of the UBE is an example of the balancing process. Some jurisdictions have adopted the UBE to remove barriers and increase portability, while including state-specific material to help ensure that attorneys are equipped to practice within that jurisdiction. Cooperation cannot stop at the U.S. border, however.

The future is global, and state regulatory authorities cannot sit back and ignore the changes transforming the legal profession. States must recognize the realities of the modern profession by accommodating transnational practice. Increased flexibility cannot mean willful blindness, however, so courts should work with foreign regulators to ensure that the public remains protected. As state high courts accommodate multijurisdictional practice and reduce their role in the admissions process by adopting the UBE, they should carefully consider the issues this article raises. Above all, state high courts cannot be complacent. Respect for the rule of law is not furthered when clients perceive that the legal profession itself is lawless.