Lawyers may want to take a close look at the ABA Standing Committee on Ethics and Professional Responsibility’s Formal Opinion 504 before hanging a shingle in another state. The opinion provides choice-of-law guidance under ABA Model Rule of Professional Conduct 8.5(b), referred to as “Disciplinary Authority; Choice of Law,” as to which jurisdiction’s ethics rules will apply to lawyers handling matters in multiple jurisdictions.
Choice of Law Rules in Litigation Matters
In answering choice of law questions, Rule 8.5(b) treats litigation matters and non-litigation matters differently. For litigation matters, Rule 8.5(b)(1) provides: “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 matter pending before a tribunal, the rules of the jurisdiction in which the tribunal sits, unless the rules of the tribunal provide otherwise[.]”
A “key question” in this inquiry, the opinion explains, is what the phrase “in connection with a matter pending before a tribunal” means. The opinion suggests that, even if litigation may be anticipated, such as when negotiating a retainer, Rule 8.5(b)(1) does not apply. According to the opinion, if a tribunal is not involved, Rule 8.5(b)(1) is unlikely to apply.
Choice of Law Rules in Non-litigation Matters
For “any other conduct,” Rule 8.5(b)(2) applies. Under that Rule, “any other conduct” includes “all other conduct, including conduct in anticipation of a proceeding not yet pending before a tribunal.” Beyond transactional matters, the opinion explains that “any other conduct” can include fee agreements, the structuring of a law firm, confidentiality duties, and screening for lateral lawyers.
Where Rule 8.5(b)(2) applies, the opinion explains that the ethics rules of the jurisdiction where the lawyer’s conduct occurred will govern unless the “predominant effect” of that conduct is in a different jurisdiction. In that case, the “rules of that [different] jurisdiction shall be applied to the conduct.” Rule 8.5 is silent as to how to determine “predominant effect,” but the opinion provides new guidance about the factors to weigh when determining where the predominant effect of the lawyer’s conduct occurs:
- the client’s location, residence, and/or principal place of business;
- where the transaction may occur;
- which jurisdiction’s substantive law applies to the transaction;
- the location of the lawyer’s principal office;
- where the lawyer is admitted;
- the location of the opposing party and other relevant third parties (residence and/or principal place of business); and
- the jurisdiction with the greatest interest in the lawyer’s conduct.
While the opinion does not explain how these factors should be weighed, Rule 8.5(b)(2) includes a safe harbor for lawyers whose conduct “conforms to the rules of a jurisdiction in which the lawyer reasonably believes the predominant effect of the lawyer’s conduct will occur.” The lawyer’s belief about the jurisdiction of predominant effect must be “reasonable” and the circumstances must suggest that such belief is reasonable.
Opinion’s Guidance Does Not Trump State Rules
While acknowledging that the formal opinion provides helpful analysis, ABA Litigation Section leaders counsel against relying too heavily on it. “If the opinion is read to provide a general ‘safe harbor,’ that is dangerous,” warns David Sesserman, Denver, CO, cochair of the Litigation Section’s Solo & Small Firm Committee. Lawyers must still check the licensing rules that apply in their jurisdiction because “ethical rules are state-by-state, with deference to, if not adoption of, the ABA model rules,” Sesserman continues.
“If there is a challenge by a client in a state, I am not sure that the particular state would accept reasonable compliance with another state’s rules,” agrees Rudy R. Perrino, Los Angeles, CA, cochair of the Section’s Expert Witness Committee. “Do not forget that you are bound by a number of different structures of ethical rules,” Perrino warns. “Because it is more common for lawyers to focus on the laws for the jurisdiction in which a lawyer is practicing, this opinion is a good reminder to review out-of-state provisions and revisit the various ethical rules in those jurisdictions to make sure you are in compliance,” he adds.
Hashtags: #legalethics #modelrules #attorneydiscipline
- Leslie R. Snider, “ABA Approves Lawyers’ Passive Investment in Nonlawyer Owned Firms” Litigation News (Feb. 24, 2022).
- Frances Codd Slusarz, “New Ethics Guidance for Remote Legal Practice” Litigation News (Sept. 21, 2021).
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