Statement of Evan A. Davis, President,
The Association of the Bar of the City of New York
Before the ABA Commission on Multi-jurisdictional Practice
March 30, 2001
Lawyers are licensed to practice in a particular state. Lawyers who :practice law" in another state without a license from that state violate the unauthorized practice statutes, which generally make unauthorized practice a misdemeanor or contempt of court, and thereby subject themselves to possible forfeiture of earned legal fees.
The stated reason for such rigid control of lawyers is to ensure that only persons who have demonstrated suitable skill and character, and are subject to a state's control over delivery of legal services, should be permitted to practice law in a particular state. An unstated (and sometimes stated) reason for such control is to protect local lawyers from competition by out-of-state lawyers. Accordingly, the entire scheme for licensing and regulating lawyers in the U.S. including the creation of unauthorized practice of law ("UPL") statutes and rules "rests on the notion that law is a local enterprise requiring local knowledge and should only be practiced by a person qualified to practice in the local jurisdiction.
The facts of law practice, however, simply do not conform to this underlying regulatory premise. Lawyers today, whether their practice is litigation, other kinds of adversary practice ( e.g., arbitration or mediation), transactional or advisory, whether they practice in large or small firms, solo, or as employees of a corporation, inevitably, necessarily and frequently find themselves acting in jurisdictions other than the one (or more) in which they are formally licensed to practice. Clients and their legal needs are neither confined to nor affect only one jurisdiction. Although this has probably been the case ever since there were lawyers, modern high-speed travel, and, particularly, modern electronic means of communication, have made "multi-jurisdictional practice" an unavoidable and pervasive fact of the lawyer's life. And certainly, the emergence of the Internet further undercuts the rationale for states imposing high barriers to the practice of law by out-of-state lawyers.
The unauthorized practice laws do a disservice not only to clients who cannot use their lawyers of choice or whose matters are made more difficult to handle. They put lawyers at a competitive disadvantage with respect to accountants and other competing professions. For example, accountants can lawfully render tax advice and practice before the IRS in any jurisdiction. In addition, Canadian and Mexican lawyers can render advice on their countries laws in the US under the North American Free Trade Agreement, and other nations lawyers may soon be able to do so under GATT, while US lawyers still cannot cross state lines to practice without being admitted. The realities of modern legal practice have prompted the European Community to virtually eliminate barriers to practice among countries. Yet we are far from doing that even within our own country.
The tension between states and local lawyers interests and the reality of client needs and expectations in the modern world has been resolved "on the ground" by the practicing bar in favor of multi-jurisdictional practice. Clients whose activities spread over or involve many jurisdictions have established relationships with "their" lawyer and neither want nor need additional layers of local counsel just to satisfy practice restrictions that they view as outmoded. The "unauthorized practice" laws are routinely ignored and, on the rare occasions when they are enforced -- either by a disciplinary authority, a court denying pro hac vice admission, or a client wishing to defeat an otherwise legitimate fee claim "rarely address any legitimate need of a licensing jurisdiction.
It is never good policy to have laws on the books that do not reflect the good-faith behavior of those subject to those laws and which are only sporadically or randomly enforced. Ethical and competent lawyers should not be subject to prosecution, professional discipline or fee forfeiture for serving their clients. The licensing laws and rules of the fifty states and the District of Columbia can and should be modified to permit lawyers to serve their clients wherever the client's needs may take them and to reinforce the overriding policy of allowing clients full access to lawyers of their choosing, while at the same time protecting states legitimate need to control the quality of law practice in their jurisdictions. In a nutshell, the rules governing multi- jurisdictional practice should be as permissive as possible, consistent with a reasonable level of protection for clients and the public.
And the key to providing this protection is to subject the out-of-state lawyer to the jurisdiction of local disciplinary authorities and/or (in some cases) requiring him or her to associate with local counsel -- a requirement that can easily be codified in any proposed statute or rule. In particular, we urge the Commission to focus on the scope of necessary protections. We suggest to the Commission that when a lawyer from another state engages in an aspect of legal practice in New York, the substantive law and ethical rules of New York should apply to that conduct. For example, if New York decides to require a written retainer in all cases, the lawyer would have to comply with that rule if the retention occurred in New York, but not if the lawyer simply came to New York to take a deposition. On the other hand, if New York has a strict rule about interviewing represented parties, that rule should be followed if the person being interviewed is located in New York even if the interview is done by telephone from another state. With regard to substantive law, the Commission may want to consider whether normal choice of law rules should govern.
We recognize the concern of state jurisdictions with permitting lawyers not admitted in that state to practice in the courts of that state. Each state has court rules and customs which are generally known only by persons who practice in that state. This concern can be addressed by requiring out-of-state lawyers to be associated with local counsel. The pro hac vice admission process would be an alternate route, but should not be required of out-of-state lawyers who appear with local counsel.
While we have stated some general principles, these need to be translated into systems that work effectively for lawyers, clients, and the public. States must provide for out-of-state lawyers performing particular tasks in connection with matters they are handling in their home state such as taking a deposition, negotiating a business deal, or advising an elderly client on an estate planning matter. In each instance, the lawyer is acting in a most efficient manner for her clients and presents no danger to the public. Surely, attorneys admitted in another state should be permitted to serve as in-house counsel for New York corporations and in the New York office of out-of-state corporations without being admitted to the New York Bar, as long as they are subject to having that right terminated by New York authorities for professional misconduct related to New York. In this case, the lawyer does not pose a risk to an unsuspecting client or the general public, and thus the public policy reasons for barring such a practice fade away.
But addressing these situations, while necessary, is not enough. What about a lawyer admitted in State A who conducts a three- week arbitration in State B? Or who negotiates a deal in State B that is governed by State B's law? Or who is asked by a corporate client with a factory in State B to make a submission to the U.S. Environmental Protection Agency office located in State B concerning a factory operating in that state? These are the situations where practitioners most often need guidance, and where changes must be made so the legal profession can keep up with the increasingly globalized needs of clients.
For this reason, we urge the Commission to give serious consideration to two broad solutions that have been proposed to address the multi-jurisdictional practice problem: the Green Card Proposal and the One License for Life proposal. We do not necessarily endorse either proposal: we have not had sufficient time, in the three months since the ABA Commission issued its request for submissions, to fully evaluate them. Nevertheless, we believe that the uncertainty created by the Birbrower decision and similar cases, as well as the ongoing changes in modern practice, demand a global solution to the UPL issue. Thus, the Commission should fully examine these comprehensive proposals, as we will continue to do, and determine if they are appropriate for implementation.
The Green Card Proposal
This proposal, developed by Robert Creamer of the Attorney's Liability Assurance Society, would permit attorneys admitted in one jurisdiction to register to practice in another under certain conditions, a notion akin to an immigrant's Green Card. To be eligible, a lawyer must have been admitted in another U.S. jurisdiction for three years, must present a certificate of good standing, must file statements of two sponsors attesting to the lawyer's character and fitness, and must pay an admissions fee. By obtaining this registration, the lawyer consents to be subject to the local court and disciplinary rules, and to obtain a set amount of professional liability insurance coverage.
Once admitted, the lawyer would be able to practice in the state subject to certain restrictions The lawyer would have to provide individual (but not corporate) clients with written notice of the lawyer's status as a registered, but not fully admitted lawyer. The lawyer would be prohibited from undertaking certain particularly local matters ( e.g., real estate and family law), and from appearing in court without local counsel unless formally admitted pro hac vice. The lawyer would have to renew registration each year, by paying a new fee and by representing in writing that he or she remains in good standing in their home jurisdiction.
This proposal establishes a formal process, including an annual renewal, for out-of-state lawyers to obtain the right to practice in a particular state. Furthermore, it provides a new level of certainty as to the scope of local disciplinary authority over out-of-state lawyers.
The One License For Life Proposal
The principal disadvantage of the Green Card Proposal is that it will continue the Balkanized local registration system we currently have, and result in 50 different standards for temporary registration. This will create an administrative quagmire for lawyers whose practices are truly national in scope, especially if they have to pay fees and comply with different annual renewal requirements in many different states.
A proposal that avoids these problems is One License For Life. Under this proposal, a lawyer who has been admitted to practice in one state for three years can then practice in other states automatically, much as someone with a driver's license in one state can drive in other states without having to re-qualify. The governing rule would make clear that the lawyer subjects himself or herself to the jurisdiction of the disciplinary authorities of any state in which he or she practices, and that the lawyer would have to be formally admitted to the Bar of any state to which he or she devotes more than 25% of his or her practice.
Although this proposal is in some ways much simpler for the lawyers and the states, it presents problems of its own. For example, it leaves unclear which state the home state, the state in which the attorney practices, or both would prosecute a lawyer for misconduct committed outside the home state (though, as we stated earlier, any state in which a lawyer performs an act of misconduct should have the ability to take action against the lawyer). It requires all, or mostly all, of the states to agree to a uniform system, either by interstate compact or a uniform statute a difficult and time consuming process. We recognize that under both proposals states would lose substantial control over who practices within their borders. However, both proposals would permit states to require lawyers who spend a significant amount of time practicing in those states to abide by CLE and pro bono requirements. And, as noted above, each states laws and ethical codes govern lawyers activities within that state.
Whether the Commission adopts one of these approaches, a variant of these approaches, or some other system, we urge you to keep your focus on the removal of barriers imposed on out-of-state lawyers, which are increasingly anachronistic, do a disservice to clients, and are more economic protectionism than public service. We recognize your task is difficult. We look forward to working with you in seeking a permanent solution to the problems posed by multi-jurisdictional practice.