TO ABA Commission on Multijurisdictional Practice
FROM International Association of Defense Counsel
DATE February 5, 2000
RE Interstate Practice Issues
The International Association of Defense Counsel commends the American Bar Association and the Commission for addressing the issues raised in the Commission’s November 1, 2000 memoranda to bar leaders. The IADC is pleased to comment as follows on those issues.
Interest of the IADC
The IADC is the oldest international association of attorneys representing corporations and insurers. Its membership includes approximately 2400 leading attorneys engaged in defense, prosecution and resolution of claims affecting the interests of corporations and insurers. They are partners in large and small firms, senior counsel in corporate law departments, and corporate and insurance executives. IADC members regularly represent and counsel clients with multi-state and interstate problems. In this age of globalization, such problems are more and more likely to have an international dimension, and many IADC members practice in other countries. The IADC takes an active role in legal reform, especially regarding the civil justice system.
Summary of Position
The ABA symposium on the multijurisdictional practice of law ("MJP Symposium") identified three broad goals for reforming the law on the jurisdictional scope of lawyers work:
First, there is a need to promote greater uniformity in how states address the work of out-of-state lawyers. Second, there is a need for greater clarity, so that lawyers have more guidance about what they may or may not do in relation to a state where they are not licensed. Third, restrictions on the work of out-of-state lawyers should be liberalized so as to serve the relevant state regulatory interests in a manner that is not simply exclusionary and that, recognizing the changing nature of clients’ legal needs, accommodates the legitimate interests of clients in retaining counsel of choice and in obtaining effective and economical legal assistance. 1
We strongly support all of those goals, and seek to move as rapidly as possible to achieve them. But we recognize that full achievement of those goals will require reform of existing state admission and disciplinary mechanisms to cope with the additional challenges and burdens created by increasingly mobile lawyer activities. If reform of the law moved too rapidly, without corresponding strengthening of the regulatory mechanisms, the effort could endanger the protection and confidence of the public and the acceptance of the reform by the bar. We believe the necessary institutional changes will require more than the few remaining months of this Commission’s life to design. We recommend that this Commission undertake to start the necessary process rather than try to propose a complete solution in a single year. We recommend that either this Commission or a successor Commission be directed to continue the study of these issues and to propose both substantial reforms and institutional adjustments necessary to handle those reforms.
The twelve options identified by this Commission run the gamut from maintaining the status quo to nationalizing lawyer regulation. The status quo is unacceptable and nationalization is unrealistic, unnecessary, and undesirable. We do not think it is necessary to decide now how far the professional should move. What is necessary is to start moving in the right direction and begin substituting policy analysis for the accidents of history that have produced the existing system.
We suggest that the process begin with small steps utilizing existing regulatory mechanisms. As an example, we offer a proposed Model Pro Hac Vice Rule, which we urge the Commission to propose to the House of Delegates. Another example would be support for the sort of organizational lawyer rule referenced in the Commission’s second option. Additionally, lawyer mobility (both for organizational lawyers and private practitioners) might be facilitated by procedures for provisional admission during the pendency of an application for admission on foreign license.
We also urge the Commission to support the Ethics 2000 Commission’s draft revisions to Model Rules 5.5 and 8.5. These are thoughtful and moderate proposals, and any necessary regulatory adjustments can easily be developed in the time it will take for those proposals to be considered by the House of Delegates and adopted by the states.
Actions such as these would point the way and begin the journey, without requiring the time necessary to decide finally on the ultimate destination and the precise route for getting to that destination.
It is a commonplace that business and the economy are increasingly becoming global in structure, with little respect for national boundaries, let alone those of individual states. 2 Yet licensure to practice law is almost exclusively the province of individual states. Litigators can avoid the most serious limits this regulatory scheme imposes on practice involving multiple states by obtaining admission pro hac vice by the various courts in which clients wish to have their representation. Transactional lawyers have no similar mechanism to obtain authorization to practice in states where they are not admitted generally. Even litigators frequently provide out-of-court services, either in ADR proceedings or in counseling clients on avoiding litigation or strengthening potential defenses. Nonetheless, transactional lawyers frequently represent clients in ways that include providing some portion of their legal services with contacts in states where the lawyers are not admitted. The "foreign" state’s law may apply, some or all of the subject matter may be in that state, one or more parties (possibly including the client) may be domiciled there, and some of the work (e.g. interviews or negotiating sessions) may occur there.
While such representations are common, there is no explicit authorization for most of them in the governing rules or statutes and the relevant case law is both extremely fragmentary and often hostile (mildly or severely) to the practices addressed by the particular court. To some extent, lawyers who engage in multistate practice have relied on a combination of custom and the infrequency of challenges to permit continuation of their practices. The leading commentator on the subject has aptly characterized this approach as "sneaking around." 3
While these problems affect lawyers from other countries, such lawyers are less likely to be affected on a day-to-day basis, especially where the clients they serve are themselves from outside the United States. So, while we commend the ABA for examining international aspects of the problem, we have focused our attention on provision of legal services by United States lawyers, where the problems are qualitatively and quantitively most substantial. (We also began our work before this Commission’s mandate was expanded to include international issues and did not have the resources to focus on the latter issues after we learned of that expansion.)
The Regulatory Issues
Lawyer regulation today is closely tied to local licensure. If out-of-state lawyers practice in a state, the regulators typically will have no notice of this, and no ability to address any issues of competence or character. With no local license that can be suspended or revoked, the ability to exercise any disciplinary authority is, at best, doubtful. Even if discipline is theoretically possible, it will have little practical effect unless the out-of-state lawyers’ home states give reciprocal effect to that discipline, and there may not be adequate assurances that this will occur. Finally, lawyer regulators are generally supported by fees paid for local licenses (or to apply for such licenses), and unlicensed lawyers pay no fees. So there are no resources to support regulation of such lawyers, even if there were clearly effective mechanisms.
We do not know (and lack the time and resources to find out) how serious these problems are or how readily they could be remedied. So far as we can tell, there is no literature on them and regulators have been sparsely represented in the discussions of interstate practice issues. Until the regulatory problems can be better assessed (and solutions developed), it will be difficult to obtain consensus in the bar or among other constituents for far-reaching reforms.
Pro Hac Vice Practice as a Pilot Project
Pro hac vice practice is an attractive context for any effort to begin rationalizing the rules on the geographic scope of lawyer practice. The admitting court already functions as a regulatory agency of unquestioned authority. Pro hac vice practice is an established tradition and has worked with almost no reported problems. Yet there are issues to address.
The MJP symposium discussed some of these issues:
"[a]lthough the availability of pro hac vice representation makes multi-jurisdictional issues easier for litigators in some ways, litigators and their clients still encounter difficulties with state-level practice limitations." These difficulties include that (1) the discretionary nature of pro hac vice admission in some jurisdictions "can lead to unpredictable and potentially inappropriate results," (2) the requirement in most jurisdictions that local counsel be involved in the representation may increase costs unnecessarily in some cases, such as where the law in issue is not unique to the state, (3) the pro hac vice process may not accommodate lawyers who have valuable advice or assistance to provide behind the scenes, (4) it is unclear how UPL restrictions apply to arbitration, mediation and other alternative dispute resolution processes, and (5) it is also unclear how these restrictions apply to litigators who engage in conduct outside the state where the litigation is taking place (e.g., by taking or defending out-of-state depositions). 4
We support addressing such issues through the attached draft Model Pro Hac Vice Rule. The proposed rule, like Model Rules of Professional Conduct, includes both the operative rule and official comments explaining its rationale and intended application. It is also accompanied by Drafters’ notes, referencing authorities from which the proposal has been formulated or which support the proposal. When the operative language is read together with the comments, we believe the proposed rule is largely self-explanatory.
Utility of the Proposed Rule
The most obvious purpose of the rule is to rationalize and regularize pro hac vice practice, to extend such practice modestly to nonjudical dispute resolution forums (while maintaining judicial/administrative control of such practice), and to clarify certain doubtful questions to confirm the propriety of practices now common, valuable, and unproblematic. It also sets forth a coherent framework of principles that could be a basis for authorizing practice outside the dispute resolution area, once the regulatory issues regarding such practice are resolved. The persuasive force of those principles may have an impact of judicial development of the common law, as may the marshalling of supporting authorities.
By taking a small step and providing policy direction, the proposed Rule could contribute significantly to addressing the underlying problem without committing the ABA to move farther in areas other than dispute resolution. The broader issues then could be addressed together with regulatory reform.
1. BRUCE A. GREEN, ASSISTING CLIENTS WITH MULTI-STATE AND INTERSTATE PROBLEMS: THE NEED TO BRING THE PROFESSIONAL REGULATION OF LAWYERS INTO THE 21ST CENTURY ("A Report Summarizing the Proceedings of the Symposium on the Multijurisdictional Practice of Law, March 10-11, 2000"), 22 (ABA 2000).
2. The effect of this on law practice has been described in Charles W. Wolfram, Sneaking Around in the Legal Profession: Interjurisdictional Unauthorized Practice by Transactional Lawyers, 36 S. Tex. L. Rev. 665, 669 (1995) (footnotes omitted):
Even manufacturing clients, who are rooted at a particular geographical place with a large physical presence and a local payroll, have always had multistate legal problems with distant suppliers, banks, customers and regulators. Increasingly, in recent decades, manufacturing has been dispersed to regional centers. From the beginning, the presently booming service industry has shown itself as much less confined to a single place than have traditional manufacturing clients. As a result, lawyers find themselves today with clients who are only blocks away or as far as a continent away. Innovations in telecommunications and transportation have made keeping in touch with distant clients almost as effectively as communication with clients in the same community. For their own part, lawyers' reputations, at least in some specialties, have also spread beyond regional reputation are as likely to receive calls for legal services from prospective clients from distant states as from the lawyer's own jurisdiction. This series of changes has manifested itself in such structural alterations as the proliferation of out-of-state offices (we are not supposed to call them "branch" offices) of national law firms. For a growing percentage of practitioners, this means that law practice has become a career consisting of collecting frequent-travelers awards as lawyers criss-cross the country and globe to serve their clients' legal needs.
3. Id. at 665, 685.
4. BRUCE A. GREEN, supra, at 16, summarizing Peter R. Jarvis, Where You Stand Depends on Where You Sit: One Litigator's View of Multijurisdictional Practice Issues and Related Policy Questions (prepared for and distributed at the MJP Symposium).