The ABA issued Formal Opinion 504 (americanbar.org) this spring. The opinion is thrilling to ethics nerds who love to look at more than one state’s ethics rules just for fun. All joking aside, it is a pivotal opinion, because lawyers are often barred or authorized to practice in more than one jurisdiction (or not, as the case may be) and must understand which set of ethics rules governs their behavior, because the ethics rules are not as harmonious as one may think. Frequently rules will conflict, so choice of laws determines what set of rules is the “winner”—the one the lawyer must follow.
Opinion 504 walks through the analysis of which state’s ethics rules apply in progressively more complicated scenarios. But first it lays out the analysis of Rule of Professional Conduct 8.5:
Easy peasy, right? Not really. The opinion notes there is room for interpretation (or confusion) in defining “in connection with a matter pending before a tribunal” found at (b)(1) and “any other conduct” of (b)(2). It notes Comment 4 defines any other conduct to be “all” conduct, “including conduct in anticipation of a proceeding not yet pending before a tribunal [,]” narrowing what is pending before a tribunal to be those things after filing something with a court or adjudicative body.
Also, up for some debate is what constitutes a “predominant effect.” The opinion outlines the following factors to look at in making this determination:
This is a helpful list. It would have been more helpful if the opinion had indicated the importance of each of these bullets. It’s my opinion that these are in the order of most important to least important, though it depends on what the issue is arising from.
You may notice there is no “choice of laws clause in the fee agreement” bullet. Such clauses are not always successful in court, though the opinion notes Comment 5 does state “a written agreement between the lawyer and client that reasonably specifies a particular jurisdiction as within the scope of that paragraph may be considered if the agreement was obtained with the client’s informed consent confirmed in the agreement.”
This is a high bar, as “informed consent” is defined in the ABA Model Rule 1.0, Terminology, as “the agreement…to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct.” This is not insurmountable in an engagement agreement, but somewhat frustrating from the risk averse multijurisdictional practitioner’s perspective since it’s one of the only ways to limit one’s liability. So, make any choice of laws clause in the agreement reasonable and thoroughly explain it to the client.
Opinion 504, analyzes five scenarios for what jurisdiction will govern, addressing fee agreements, law firm ownership, reporting professional misconduct, confidentiality duties, and screening lawyers who leave one firm to join another firm.
The opinion chose the quite simple analysis of a client and lawyer in one state (A), signing an agreement about litigation in another state (B). Here, the predominant effect analysis applies, because it’s pre-litigation, and its clear state A applies. The opinion is clear in footnotes that choice of laws clauses doesn’t work, but they almost nod to them by saying “To avoid ambiguity, a lawyer may want to identify in the fee agreement the lawyer’s belief as to
which jurisdiction’s rules of professional conduct will apply to the fee agreement. [Including a] list the factors considered by the lawyer in reasonably concluding where the lawyer’s conduct will occur and where the predominant effect of the fee agreement will occur.” [emphasis added]. Close enough. Let’s do it.
Make sure there is a reasonableness in this newly fashioned choice of laws clause. In other words, pick the jurisdiction that makes the most sense under an RPC 8.5 analysis. The secondary purpose of all those reasons for that jurisdiction is to try and take advantage of the one safe-harbor in Rule 8.5: “A lawyer shall not be subject to discipline if the lawyer’s conduct conforms to the rules of a jurisdiction in which the lawyer reasonably believes the predominant effect of the lawyer’s conduct will occur.”
On first glance, the second scenario on law firm ownership looks meaty and enthralling. I thought, “Oh goodie, we can finally talk about and get guidance on client trust account difficulties and resolving differing rules across jurisdictions.” (There are real issues with IOLTAs and advertising in multijurisdictional practice.) But no. Instead, it appears to be a response to the Arizona-New York showdown around Arizona’s changes to Rule 5.4, permitting nonlawyer ownership of law firms, which New York wrote a sternly worded ethics opinion about. The ABA opinion determined another state cannot find an ethics violation for a firm in another state where the lawyer was admitted only on a pro hac vice basis, through those rules and Rule 8.5(b)(1) (before a tribunal prong). Nor does the opinion find a predominant effect analysis gives the stricter state a leg up, because the scenario has been placed squarely in the nonlawyer ownership state.
Presumably, there could be a lawyer barred in both states, so actually subject to both states; or practicing a federal practice area exclusively in the strict state while barred in the nonlawyer owner state. That would be a different analysis, and I’m not so sure there would be a way for the traditional, no-nonlawyer ownership state to object under those facts. Opinion 504 is silent on these extended facts, however.
Scenario 3 discusses the obligation to report misconduct under Rule 8.3, where a lawyer is barred in both states, and state A (where stuff went down and client lives) requires reporting even if it’s about representation and client doesn’t agree, but state B (where lawyer is) requires reporting only if the client agrees after informed consent. The deciding factor here is if the lawyer filed something in state A, making the tribunal the boss of this case (remember Rule 8.5(b)(1)), and therefore state A’s Rule 8.3 applies. What the lawyer tells and the client wishes don’t matter. The opinion found that even if client was a resident of state B, the tribunal trump card wins.
What the decision doesn’t get to is the tougher question of what jurisdiction would be applicable here if nothing was filed with a court. If you needed to apply the predominant effect in this case, the facts would govern, and with many factors come many facts, you could end up with a mix of possible controlling jurisdictions. Remember that the Rules of Professional Conduct are a baseline—the minimum to comply—and that you can seek informed consent from your client even if it is not required. Sit the client down and work through informed consent before you report. In most cases your client will consent, and then you’ve covered your bases in both jurisdictions.
In the progressively more difficult scenarios, the next is a situation about disclosing information about a client representation to avoid a substantial threat of bodily harm, with one state being a “may disclose” (A) and another state being a “must disclose” (B) jurisdiction under the Model Rules. No court is involved so we are in (b)(2) territory. The predominant effect bullets are flying everywhere here, but the opinion concludes that the threatened action would probably happen in state B, so state B applies, therefore the lawyer must disclose.
Note that this becomes very fact-specific. It could easily turn the other way, depending on the incident and wording. Also, the lawyer may disclose in state A, so there is no actual rule violation with disclosure, even if they get the state wrong.
It’s so much tougher when the rules actually conflict. Try analyzing a Rule 3.3, Duty of Candor case where one state says the duty to disclose to the court supersedes the Rule 1.6 duty of confidentiality and persists until “remedial legal measures are no longer reasonably possible” with another potential applicable jurisdiction where the duty of confidentiality supersedes the duty of candor. Yes, I’m looking at you Texas and California. Don’t think because Opinion 504 had an answer in a few paragraphs, you case will too.
The final scenario involves a firm wanting to hire a lawyer who has a client with a conflict. This scenario turns on the state structures for screening to avoid the imputation of conflict of interest found in Rule 1.10: some allowing screening from the case without client notice, some allowing screening only with client informed consent, and some not allowing screening. It turns on all the factors discussed before. Is there a tribunal? If so, what does it say? If not, what are the facts?
Opinion 504 does an admirable job of analyzing this on both prongs. Litigation is easy because it makes the tribunal boss again, but predominant effect is naturally complicated. The opinion concludes “In non-litigated matters with significant contacts to more than one state, it may be unclear where the predominant effect of Lawyer’s B representation will occur.” In a global world, it’s easy to see how that would be not a real answer, so choosing the most restrictive rule would be the best bet. Add to this scenario not just one client, but a whole list of clients, and you have a real jumble.
The opinion presumes that all tribunals will say their laws govern. They don’t all say that. New York’s Rule 8.5 is particularly ambiguous.
This opinion didn’t address when there are two states involved, you need to look at both states’ Rule 8.5, and sometimes they don’t match. I have analyzed some situations where it seems there is no applicable jurisdiction at the end of the scenario.
This also does not take into account where there are federal ethics rules, such as in immigration cases. Those laws will have supremacy, but they are often silent on things such as client trust accounts, for example, so you have a patchwork of rules applying to a lawyer’s actions. It also does not take into account Indian law choice of laws, which, by the way, is the area you should go into if this article really sparked your fancy. Talk about complicated.
But all in all, it’s a wonderful decision, and I for one, am elated to see one of the least analyzed and most important Rules of Professional Conduct got center stage. It deserves it.
