Preliminary Position Statement on Multi-Jurisdictional Practice
The Section of Litigation (the "Section") submits this Preliminary Position Statement in response to the request of the ABA Commission on Multi-Jurisdictional Practice ("MJP Commission"). The Commission has solicited our Section members' perceptions and opinions about the problems and potential solutions regarding legal services to be provided by lawyers in jurisdictions where such lawyers are not admitted to practice. Conduct that many lawyers consider routine "cross-border" practice in fact is likely to violate current unauthorized practice of law ("UPL") rules in many states and may engender discipline by local bar associations.
The Section to date has focused only on services relating to dispute resolution both before and after formal litigation is filed. The Section will continue to consider its positions on MJP issues in other settings as necessary.
The Section's positions have been formulated after consideration of the following:
- Materials and analyses developed at the Symposium on the Multi-Jurisdictional Practice of Law held at Fordham University School of Law, March 10-11, 2000.
- Materials supplied by the ABA Commission on Multi-Jurisdictional Practice.
- Reported and unreported judicial, state bar and state ethics commissions' decisions imposing fee forfeitures, disqualification, professional discipline, and even criminal convictions, for "cross-border" practice. See, e.g., Birbrower, Montalbquo, Condon & Frank, P.C. v. Superior Court, 17 Cal. 4th 119, 949 P.2d 1 (1998), cert. denied, 525 U.S. 920 (1998) (no fee to New York law firm that "virtually" represented California subsidiary of New York client in California arbitration); Rawta v. McCarney, 301 N.W.2d 161 (N.D. 1986) (denial of fee to Minnesota attorney providing federal tax advice in North Dakota).
- "Safe Harbors" in the Restatement (3d) of the Law Governing Lawyers, ' 3 (the "Restatement"). The Restatement suggests several safe harbors for attorneys practicing outside the jurisdiction where they are licensed. These include:
- practice within the licensed jurisdiction (Restatement ' 3(1); pro hac vice (' 3(2));
- practice of federal law before federal courts or agencies ( Id. ' 3(2) and comment g);
- investigating facts or consulting with the client, if a lawyer reasonably contemplates pro hac vice admission ( Id. ' 3, comment e);
- in-house counsel for employer ( Id. ' 3 , comment f);
- activities that arise out of or are reasonably related to the lawyer's practice, for example, ancillary or incidental activities to litigation in other states, such as counseling clients, dealing with opposing counsel, depositions, examining documents, interviewing witnesses, or negotiating settlement ( Id. ' 3(3)); transactional practice, including research, advising a client about the application of state law and drafting documents to have legal effect in another state ( Id. ' 3 comment c); and
- association with a lawyer admitted to practice in another jurisdiction ( Id. ' 3, comment e).
- Proposed Model Rules of Professional Conduct (Ethics 2000 Commission): The ABA Commission on the Evaluation of the Model Rules of Professional Conduct ("Ethics 2000 Commission"), after years of study, has proposed two pertinent rules addressing UPL and MJP issues, Proposed Rules 5.5 and 8.5. These are similar but not identical to the Restatement proposals.
- Proposed Rule 5.5 (expressly addressing UPL) recognizes the following safe harbors for litigators:
- practice within an attorney's licensed jurisdiction(s) (' 5.5(a)); pro hac vice admissions (Rule 5.5(b)(2) and comment 4);
- conduct "arising out of or otherwise reasonably related to the lawyer's practice on behalf of a client . . . negotiations with government officers or employees, appearances in administrative or rule making proceedings. . . ." (Rule 5.5(b)(1));
- inside legal counsel (' 5.5(b)(2)(i));
- activities reasonably related to the lawyer's practice (Rule 5.5(b)(2)(ii));
- ancillary or incidental activities for litigation in other states, such as counseling clients, dealing with opposing counsel, depositions, examining documents, interviewing witnesses, or negotiating a settlement (Rule 5.5, comment 5);
- advising a client about the law of another state and drafting legal documents (Rule 5.5, comment 5, negotiations with private parties); and
- association with a lawyer admitted to practice in another jurisdiction (Rule 5.5(b)(2)(iii) and comment 6).
- Proposed Rule 8.5 governs disciplinary authority.
- The new rule would make any out-of-state lawyer "subject to the disciplinary authority" of a jurisdiction "if the lawyer tenders an offer to render any legal services in this jurisdiction" (Rule 8.5(a)).
- "A lawyer is not 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" (Rule 8.5(b)(2)).
- For conduct in anticipation of a proceeding not yet pending before a tribunal "the lawyer is subject to the discipline of the jurisdiction where the lawyer's conduct occurred or in the jurisdiction of the predominant effect of the conduct" ( Id. comment 4).
- If the lawyer's conduct involves significant contacts with multiple jurisdictions, the location of the predominant effect of the lawyer's conduct may be unclear. The lawyer is not subject to discipline if the lawyer conforms to the rules of the jurisdiction the lawyer reasonably believes is the place where the predominant effect occurs. (Rule 8.5, comment 5).
- Concerns expressed by the ABA Ad-Hoc Section Officers Conference on MJP issues.
- Consideration of the views of other ABA Sections (Administrative Law & Regulatory Practice, Antitrust, Business Law, International Law and Practice, Legal Education and Admissions to the Bar, Real Property Probate and Trusts; and State and Local Government), as well as submissions from non-ABA entities such as the Association of the Bar of the City of New York, Akron (Ohio) Bar Association, Association of Professional Responsibility Lawyers ("APRL"), Connecticut Bar Association, the International Association of Defense Counsel ("IADC"), and the Law Society of Alberta, Canada.
- Survey Responses from members of the Section leadership: Using the survey designed by the MJP Commission with the addition of information about the respondents' practice settings (in-house, government, or firm) and firm size, the Section identified (1) the frequency with which practicing litigators performed work outside their licensed states and (2) reactions as to what is or should be permissible out-of-state practice. There were 63 responses to the Survey. The results were largely consistent regardless of work setting and firm size. The responses are summarized in Attachment A.
II. EXECUTIVE SUMMARY OF SECTION'S POSITIONS
- The Litigation Section does not endorse a national license to practice law.
- Lawyers should be permitted to represent pre-existing clients nationally in alternative dispute resolution ("ADR") proceedings and in preparation for them. The Section would not oppose a more limited approach in court-annexed ADR proceedings whereby courts required their pro hac vice requirements to be met.
- In-house counsel should be able to advise their employers nationwide in connection with all ADR proceedings, all aspects of pending litigation, and pre- and post-litigation functions.
- Litigators are and should be authorized to engage in MJP in pending litigation through pro hac vice admissions by court order. A more uniform pro hac vice procedure, such as that suggested in the draft model rule by the International Association of Defense Counsel ("IADC"), proposing admission standards comparable to admission standards before the U.S. Supreme Court, would be strongly preferable to the disparate requirements now in place.
- In any event, all litigators and in-house attorneys need clarification on the scope of permissible pre- and post-suit activity. Specific safe harbors from UPL discipline should be available for pre-litigation, or extra-litigation matters such as investigations, compliance reviews, witness interviews, document examination, claims assessment, defense and damage analysis, and alternative dispute resolution procedures such as direct negotiation, settlements, mediation and arbitration.
- The Section endorses the UPL safe harbors of the Restatement ' 3, and the proposed Model Rules of Professional Conduct 5.5 and 8.5 promulgated by the Ethics 2000 Commission.
III. DISCUSSION OF SPECIFIC SECTION POSITIONS
A. Scope of Licensure: Reject National Licensure Proposals
The Section does not endorse a national license to practice law.
State bar associations, their discipline organizations, and state supreme courts have a unique responsibility of protecting their citizens by regulating the admissions of attorneys. Despite innovations, like multi-state bar examinations, states have carefully retained their independence concerning admission, board certification, special qualifications for trial practice, and reciprocity regarding the admissions from other states. Any move to national admission to practice would require the detailed input and approval of state representatives and their regulators. The Section believes that there is no consensus among the states on the wisdom of national licensure, and this extreme step is not necessary, feasible or appropriate.
B. Alternative Dispute Resolution
Alternative dispute resolution ("ADR") encompasses both voluntary ADR proceedings, court-ordered and court-annexed ADR proceedings (typically referring to mediation and arbitration), contractual arbitration, all of which are expanding arenas for disposition of civil disputes. For the purposes of this Preliminary Position Statement, the Section assumes that "court-ordered ADR proceedings" are ADR proceedings in which the litigants have been ordered to participate, which proceedings are conducted outside the auspices of the court and the results of which are entirely confidential from the court. "Court-annexed proceedings" are those handled by court-paid personnel.
The Section recommends that the MJP and UPL rules permit attorneys to represent their existing clients nationally in all ADR proceedings, regardless of why and under what auspices the ADR proceedings take place. Nevertheless, the Section recognizes that court-annexed ADR proceedings may require a more limited approach, and the Section would not oppose subjecting attorneys who participate in court-annexed ADR proceedings to meet the pro hac vice requirements of the forum court. The Section's views for different ADR circumstances are set forth more specifically below.
For voluntary ADR proceedings, whether in the context of pending litigation or not, clients should be free to select their counsel regardless of the jurisdiction in which the ADR proceeding takes place, or where the attorneys are licensed. Clients have important considerations in ADR, which include confidentiality, consistency, uniformity, costs, and convenience. After all, non-binding ADR procedures usually require client "buy in" to succeed. Denying a client her preferred counsel could hamper early ADR efforts and impede prompt resolution of disputes.
Both the Restatement ' 3(3) (negotiating settlement) and the draft proposed ABA Model Rule 5.5, and its comment 5 (negotiating settlement), endorse the objectives of existing counsel negotiating settlements, and implicitly include ADR procedures. The Section would go further and explicitly recognize a safe harbor for attorneys who arbitrate or handle other ADR proceedings in non-admitted jurisdictions.
The Section believes that the client confidence and confidentiality considerations that pertain to voluntary ADR proceedings similarly apply in court-annexed ADR proceedings. ADR processes, even when court-annexed, are designed to be completely separate from the traditional court proceedings and to provide parties with the opportunity to reach a voluntary settlement of the case. The Section nevertheless recognizes that forum courts typically take responsibility for defining attorney admission standards to practice before those courts, and that courts understandably may conclude that court-annexed ADR is within the judicial bailiwick. The Section thus recognizes that courts' pro hac vice procedures may be appropriate to govern admission requirements for the court-annexed ADR proceeding.
C. Pro Hac Vice Admissions in Pending Litigation
The Section believes that generally the pro hac vice procedure is an adequate method for oversight of attorneys who appear and render legal services in pending litigation outside the states where licensed. Generally, pro hac vice procedures permit out-of-state counsel to participate on behalf of clients in litigation for a reasonable number of cases. Most courts require that the attorney attest to knowledge of and compliance with local ethics and practice rules. A sponsoring or local counsel ordinarily assures compliance by the pro hac vice counsel.
The Section endorses the expansion of less formal pro hac vice concepts to other litigation-related legal tasks. In pre- or post-suit contexts, a litigator often must (and should) consult with an existing client about a dispute, investigation, or compliance in jurisdictions in which the litigator is not licensed. This consultation is especially necessary when the client or counsel consider litigation or other proceedings, but have not filed suit and thus no pro hac vice is available. Pre-litigation activities often appropriately include out-of-state factual investigations to assess potential claims, defenses, risks, damages, settlement potential and third parties' involvement. Counsel for an existing client should be able to participate in out-of-state aspects of these services. Also, existing counsel for a client should be able to render services in administrative hearings or proceedings on behalf of clients when no formal pro hac vice mechanism exists. These fora could include ADR proceedings administered by the American Arbitration Association, the Federal Mediation and Consultation Service, state, federal and local mediation/arbitration boards, NASD, federal, state and local administrative bodies, or other dispute resolution bodies.
The Section endorses the concept suggested by the IADC for a model pro hac vice rule permitting formal litigation practice out-of-state. In ADR proceedings and activities in preparation for litigation or ADR, pro hac vice may be unnecessary and cumbersome. Any model rule should enable clients to select their counsel of choice even before litigation or ADR with a safe harbor for ADR or pro hac vice practice. The Section has drafted its own proposed Model Rule on Pro Hac Vice Admission, a copy of which is attached.
The Restatement ' 3(2), provides an appropriate safe harbor from UPL discipline when the lawyer has attained admission pro hac vice. Likewise, proposed ABA Model Rule 5.5(b)(2) properly includes a pro hac vice safe harbor. Association with counsel admitted in the jurisdiction, which is commonly required for pro hac vice admissions, is another safe harbor. Restatement, comment e; draft Model Rule 5.5(b)(2)(iii). (As described above, ADR should proceed with a safe harbor, without formal pro hac vice, at the request of clients.)
D. In-House Counsel
The Section endorses in-house counsel's role in representing her employer as a client in all legal matters involving the employer, regardless of jurisdiction. In-house counsel should be allowed to advise and investigate matters for her client in all jurisdictions in connection with possible claims and defenses in all informal or potential disputes, in pending litigation, in ADR, in the client's dispute-related transactions, and in drafting litigation or dispute related documents, including settlement agreements.
In-house counsel also should be permitted to appear pro hac vice in court, where qualified, on behalf of her client.
Both the Restatement ' 3, comment f, and the proposed Model Rule 5.5(b)(2)(i) properly provide safe harbors from UPL discipline for all these activities by in-house counsel.
E. Permanent Residence in Unlicensed Jurisdiction and Solicitation of New Clients
The Section believes that an attorney in private practice (not an in-house lawyer) who holds herself out to the public in a state as a licensed attorney to represent clients must be and remain fully licensed in that jurisdiction. Thus, an attorney with a law firm who relocates to a new state but remains with her prior law firm must apply for admission to the bar in the state of relocation. The only exception may be for an attorney who practices solely in federal court, if that federal court permits repeated pro hac vice admissions by local attorneys. The Section's position is that admission to the bar in new state is necessary whether the private practice attorney handles work for her law firm on a regular basis for a single client or multiple clients.
The Section is of the view that an attorney who expressly solicits business in a jurisdiction through advertising in local publications or through other local media should be licensed by the bar of that jurisdiction. This requirement should not apply to an attorney's advertising in national publications. The Section also is of the view that a law firm may advertise in a state in which it has one or more attorneys licensed in the state.
Neither the Restatement nor the proposed (or existing) Model Rules contain a safe harbor for unlicensed practice in a state where an attorney resides permanently. The Section does not believe that such safe harbor is appropriate. Respondents to the Section's survey opined that practice in a jurisdiction of permanent residence without a license was very objectionable.
F. Disciplinary Procedures
After admission pro hac vice, an attorney submits to the disciplinary procedures of the admitting jurisdiction. Discipline in one jurisdiction can result in further review and discipline in an attorney's home jurisdiction or jurisdictions. Nevertheless, counsel should enjoy a safe harbor from discipline, if counsel reasonably believes that the predominant jurisdiction permits and counsel complies with certain behavior. Draft Model Rule 8.5 properly allows such a safe harbor.
When counsel obtains pro hac vice admission for court-annexed alternative dispute resolution, the counsel is subject to the admitting jurisdiction's disciplinary rules. Some courts have specified rules and procedures for court annexed arbitration and other alternative dispute resolution. Counsel remain answerable to discipline of those courts, and where appropriate, those jurisdictions, if counsel participates in those proceedings or procedures. Likewise, counsel may remain subject to the discipline of her home state for any out-of-state practice.
The Section of Litigation advocates that attorneys licensed to practice law in one jurisdiction be permitted actively to represent their existing clients in jurisdictions in which the attorneys are not licensed, so long as the clients specifically request the representation, the attorneys do not live permanently in the unlicensed jurisdiction, and the attorneys do not solicit the clients or the new matters while the attorneys live in the unlicensed jurisdiction.
Section of Litigation MJP Survey Responses
- Respondents largely had no objections to out-of-state attorneys interviewing witnesses and examining documents for threatened litigation without admission pro hac vice (62-1).
- Respondents approved out-of-state attorneys negotiating a resolution of a dispute out-of-state, including demanding arbitration, and actually arbitrating (60-3).
- Respondents opined that a lawyer should be able to travel out-of-state to negotiate the acquisition of a business, conduct due diligence, and participate in the closing (60-3).
- Respondents opined that in-house counsel should be permitted to travel to out-of-state subsidiaries and provide general business advice, negotiate, and draft contracts. (63-0).
- A majority of respondents approved of a lawyer relocating to a new state where her law firm had an office on a potentially temporary although multi-year basis, [while her husband attended medical school] and providing environmental advice (41-22).
- Respondents generally believed it should be permissible for out-of-state attorneys to handle federal securities law work for a public offering and advising compliance with another state's securities laws (47-16).
Overall, Section leadership respondents almost unanimously endorsed:
- out-of-state pre-litigation services, including interviewing witnesses and reviewing documents, without pro hac vice admission;
- resolving out-of-state disputes, demanding arbitration, and arbitrating (and presumably engaging in other ADR); and
- negotiating out-of-state business acquisition, engaging in due diligence, and completing the closing on a business deal.