Transcript Of Public HearingFriday, March 30, 2001
9:00 A.M. - 12:00 P.M.
Fordham University School of Law
140 West 62nd Street, Room 430
New York, NY 10023-7407
C O N T E N T S
Wayne J. Positan, Chair, Introductory RemarksTestimony:
Evan A. Davis, The Bar Association of the City of New York
Michael L. Corbett, Stewart Title Insurance Co.
Professor Gary Munneke, Pace Law School
Peter L. Costas, Connecticut Bar Association
Professor Elizabeth Reilly, Akron Bar Association
Richard K. Jeydel
Comments by Guests:
Keith Endo, Counsel to NJ Ethics 2000 Commission
Paul Kazaras, Philadelphia Bar Association
Mary Daly, Fordham University School of Law
Kenneth Shear, Philadelphia Bar Association
P R O C E E D I N G S
Friday, March 30, 2001
9:00 a.m. - 12:00 p.m.
MR. POSITAN: I would like to get this meeting started.
First of all, I apologize for being late. I commuted over from New Jersey, as I did when I went to NYU, and I was reminded of all the pleasures of the New York subway and trying to wait for the D train and all that good stuff. Not a pleasant memory on a rainy day, of course, in New York.
First of all, we'd like to welcome everyone who is here. As you know, we have been making a considerable effort at outreach over the last six months of our existence. We were extended for a year by the ABA House of Delegates for the purpose of helping us get input from everyone. That's why we are here from today, and we are very much interested in everyone's comments and positions from the various sections, or personal thoughts, as they may be.
We are trying to still listen, more than anything else, as we begin to weigh all of the tremendous amount of materials that have been submitted to us and the very vigorous debate that we've had at the roundtable in San Diego. We are certainly very happy with the response that we've gotten from around the country and we're looking forward to a lot more of that between now and June 15th, when we have asked for everyone to submit their positions.
I would like to just remind everyone of a few things.
First of all, just like in appellate court, we've read your briefs. We don't mind you summarizing or highlighting positions, but it is not necessary to repeat them or read them into the record. They will be part of the record. We are going to try to let you give us what you have to say, and then we are certainly willing to engage in some dialogue with you in questions and answers or any questions that you may have of us as we move through this process.
There is one change I will make. I know Evan Davis approached me and told me that he broke a tooth this morning and has a 10:00 o'clock dentist appointment; so, if nobody would object, we would like to have him go first so that he can go take care of his immediate problem.
MR. EVAN DAVIS: I'm sure you all know I would rather stay here, even for this kind of issue.
MR. POSITAN: That may be a recitative soliloquitor [phonetic], I think.
MR. EVAN DAVIS: Right, much better.
I am Evan Davis. I am the President of the Association of the Bar of the City of New York.
We submitted a statement, which I will just mention a couple of the highlights.
We favor an approach that, one, brings the law into conformity with practice that exists, with what lawyers actually do. And we are very happy that the ABA in this Commission is pushing this topic forward, because there is now a big gap between the way the law can be perceived and what lawyers actually do, and that is not a healthy situation. So we are very grateful for the ABA to really push in there and face up to this issue and get it dealt with correctly.
In general, the principle that we would urge you to follow is to make the rules as permissive as possible consistent with the protection of the public and the protection of clients. We think that there is a public interest in the mobility of lawyers within this country. We even think that public interest exists internationally, but obviously we're focusing here on the United States. We think there is a public interest in the ability of clients to choose their lawyers from the broadest pool reasonably possible so that they can find a lawyer both that they are comfortable with and whose talent and skill set fits their particular needs.
Obviously, coming from New York City, where we have a large number of lawyers engaged in national practice, we have an interest, as a bar in this city doing this kind of work, in vindicating what we see as the public interest and the client interest in choice and in mobility.
In terms of substance, we start out with two things that we think need to be dealt with immediately, and, from our point of view at least, are sort of obvious.
One is the situation of the in-house counsel. I have worked with a lot of in-house counsel, as I'm sure most everyone in this room has. We know they get assigned from one office to another office. Maybe they want to move, maybe they don't want to move, but they don't really have a choice. They are moving around, they are working their way up, they are working for companies with many offices and have to work in many different places.
We think if you look at the issue of protecting the public and protecting the client, the client is of course one client in that case, the client that hired that particular lawyer. The public is broader, but again, that lawyer is engaged largely in either a litigation supervision practice or a transactional practice, sometimes going to court, but rarely.
We think that those lawyers ? with the exception of going to court, which we would view as different ? those lawyers moving around the country working in-house for corporations should be able to practice wherever they are assigned, provided of course that they are admitted and in good standing in the jurisdiction of one of the fifty states. That is something that, again, we think is consistent with current practice; it is something that is important to the effective functioning of in-house legal departments. And, because the client is one client, sophisticated, who actually has put the lawyer in-house, we don't see a threat to the client or the public that would counterbalance the advantages of making it clear that that is permissible.
The second thing we think needs to be made clear right away is the activities that are incidental to work being done in the jurisdiction where the lawyer is admitted. So, for example, going to another state to interview a witness, going to another state to conduct part of the negotiation, going to another state to meet with company's top management to decide on strategy ? when you're doing all those things in the other state, of course you are practicing law; you are giving legal advice, talking about what the law is. People do it all the time. We need to act quickly, in our view, to make it clear that that is permissible.
For the longer term and the long-run solution, which we think should be done quickly as well, we would ask the Commission to look at something that is as simple as possible.
As you know, in Europe, despite the fact that the legal systems in Europe vary much more country-to-country than our legal systems vary state-to-state, despite the fact that there are big language differences country-to-country that we are blessed not to have, and despite the fact that there are large cultural differences affecting the legal profession, they have adopted a very simple and open rule: you can practice anywhere in Europe if you are admitted in a State, as long as for three years you have to practice under the title of your home State. So you would hold yourself out as an English solicitor, but you could be an English solicitor anywhere in Europe, and after you have done three years, say, being an English solicitor in Rome, you are entitled to practice under the title of the jurisdiction where you have been for three years. I forget what the name for a lawyer is in Italian, but, whatever it is, you can call yourself that. It is a very open, permissive system.
Lawyers in this country, I think, who are involved in international practice are very jealous of the solicitors in London who are able to take advantage of this but we can't.
But for our own country, where the differences between states are not even as marked as they are in Europe, we favor that kind of open approach.
There are basically two proposals that we like a lot and wish you would consider.
One is the so-called "Green Card" proposal, where you register, but it's easy to register ? you may have to pay a fee to help support the client security fund, you may have to show that you have some malpractice insurance - but you register to be able to practice law in the various other states. But it's an easy thing, it's not difficult, and once it is done, you are free to practice.
The step that goes even a little bit further that we would also ask you to consider is the one that is sort of analogous to a driver's license. If you get a driver's license in New York, you can drive anywhere in the country. That is the One License for Life proposal. Again, it would be a very simple approach.
I should say that we do feel strongly that when you go into another jurisdiction, whether you have signed a Green Card or whether you've done anything, you do subject yourself to the rules of that jurisdiction and the authority of the disciplinary bodies there to say, whether you've got a Green Card or One License for Life, if you mess up, they can kick you out. They could take an affirmative step to bar you from practicing there if there has been a disciplinary problem.
And we do think that lawyers have to know the rules of the jurisdiction that they are in. If one has a jurisdiction that has a very strict rule on interviewing witnesses who are represented and the other has a very permissive rule, it's your job to know those rules and comply with them.
So that in broad outline is our approach. You know, we are, I suppose, on the permissive side of the line here, and perhaps that's not surprising given the nature of practice in the City, but we also think that it makes sense for the public, it makes sense for the profession, and it is good policy.
I'd be happy to answer any questions.
MR. HOLTAWAY: I have a question. First of all, on the Green Card Proposal developed by Robert Creamer, that is quite a thing. I thought this was APRL's creation, but we'll give it to Robert Creamer.
I should know the answer to this, and if you don't, maybe Tony does, but on page 4 you say "the lawyer would have to renew registration each year." How many times can you continually renew - ten years, twenty years, thirty years?
MR. EVAN DAVIS: It would be forever. There would be no limit.
MR. HOLTAWAY: So it's kind of permanent?
MR. EVAN DAVIS: Right, although-
MR. HOLTAWAY: Permanent and temporary?
MR. EVAN DAVIS: You would have to sign up. Under the Green Card Proposal, you would have to sign up and pay some fee and show you meet the criteria each year.
MR. HOLTAWAY: But you could do it every year?
MR. EVAN DAVIS: You can do it every year. There is a limitation in the proposal that if your practice really is predominantly -
MR. HOLTAWAY: More than 25 percent?
MR. EVAN DAVIS: Right, exactly - then you do have to sign up. Twenty-five percent, I'm not sure that's the right number. I'd be inclined to make it somewhat higher than 25 percent.
MR. EHRENHAFT: Can you tell us how you would determine what 25 percent means? Is that a fee? Is that the time, and time in and out?
MR. EVAN DAVIS: Well, there are a lot of ways to do it. Anybody who has worked in the area that companies have to work in all the time, of allocating taxes between different jurisdictions - they have to divide up their work how much in this state, how much in that state for purposes of tax allocation. There is the famous three-factor formula. I don't necessarily recommend the three-factor formula that the tax authorities use, but there is obviously a way to do this.
MR. McCALLUM: I'd like to ask this question. If I understand the APRL Proposal properly -
MR. EVAN DAVIS: We amend our statement to give the proposal to APRL.
MR. McCALLUM: If I understand the APRL Proposal properly, it deals with two different circumstances in two different ways. For the occasional presence in a state by a lawyer admitted elsewhere arising out of that lawyer's practice in the other state, there is no registration required. The registration is required where that presence is more persistent or continuing. Is that what you have in mind?
MR. EVAN DAVIS: Yes. That's why I distinguished those two situations at the outset that could be dealt with just right off the bat.
MR. POSITAN: What is the situation in terms of both of your proposals with regard to litigation in pro hac vice systems?
MR. EVAN DAVIS: Our view is that litigation is different because court procedure does vary. We think that if you've associated with a local counsel and the two of you are working on the case together, which is very often what happens - and it is done for effectiveness reasons, as well as whatever other reasons, because local counsel will know their way around, know the vote of the people, know the local jury and how they will respond, the local judges.
But if you're working with local counsel, we think you should consider the possibility that that's enough and you don't have to really get pro hac vice, because we all know there are some judges in jurisdictions where pro hac vice is difficult - you can do it once every ten years; you can maybe get in, maybe not get in. You know, every lawyer in New York has a war story they can tell about - not every, but those who have tried ? about getting admitted in various jurisdictions, including New Jersey.
Where someone is trying to do something without being associated with local counsel, maybe that is not a good idea. But if a court wants to let them do it pro hac vice, that would be the route.
But we would seriously consider if they had local counsel that they could appear in a litigation.
MR. POSITAN: Would that matter if it was a Green Card situation or your driver's license situation? In other words, would there be a difference with your 25 percent rule, just to take that number?
MR. EVAN DAVIS: I don't think it's unreasonable for a state - in the driver's license situation, it wouldn't come up because that's sort of automatic. On the Green Card, the question would be in that situation: could the state say "we'd like you to register?" As long as the registration is not burdensome and is used as a mechanism so that if they do mess up professionally and hurt people in that state and they want to take some action to prevent them from coming back, they are using this registration as the mechanism to keep track of it, that would be fine. That would be fine. That's the essence of the Green Card Proposal, excluding incidental things, and I would also say excluding corporate counsel, which fall in a different situation.
MR. HOLTAWAY: As I understand it, New Jersey has a rule that requires lawyers that are licensed there to do mandatory pro bono work. If I had a Green Card and I was originally licensed in Arizona, how do I come to New Jersey to do my pro bono work?
MR. EVAN DAVIS: Well, let's say New Jersey made it part of the registration process that you are going to do in some rough proportion to the time some pro bono work in New Jersey. That could be done. If you are there 25 percent of your time or 30 percent of your time, you could, I would think, have occasion to help out on some pro bono matters.
MS. YU: Under either proposal, do you have any concerns about what I think in the bar admissions and in Supreme Court quarters is called the "lowest common denominator", the thought that people will flood to the states with the easiest bar exams or highest pass rates and then work their way into, through the Green Card or your other proposal, a way to practice in states which historically, like New York or California, have had much higher standards and tougher bar exams?
MR. EVAN DAVIS: Whether it's 25 percent or some other number and how you calculate it is an issue, but I think states have a right to say after someone's practice becomes predominantly in a state that they should be admitted, again putting aside corporate counsel who are assigned from place to place and I think fall in a different situation. So that would be one way to address that issue.
In terms of beyond that, as I say, in Europe, obviously there are different levels of law schools across Europe, and I have not heard that it has been any problem.
MR. EHRENHAFT: I have a question. Even if you were using the Green Card and you knew that lawyer A in Arizona was coming to New Jersey by that registration, and the New Jersey bar authorities thought that some kind of action was appropriate, but that guy never wants to come back to New Jersey, does the Green Card necessitate having some kind of interstate compact, some kind of agreement about reciprocal enforcement or other kinds of -
MR. EVAN DAVIS: I don't think so at all. I think a state can unilaterally say that if you come into the state and practice law and violate our rules, we have jurisdiction over you for the purposes of saying you're never going to come back again, and if there is a restitution process or something like that, it is a choice of law issue, it is a long-arm jurisdiction issue. But we all know in every state there is long-arm jurisdiction when you come into the state to transact business. You don't even have to be doing business on a consistent and regular basis. So, under well-established principles of choice of law and long-arm jurisdiction, I am sure that a state could act unilaterally and a compact would not be needed.
MR. POSITAN: But how would you create a Green Card system? In other words, would it be created by one state saying "we'll accept a Green Card," or would it be through some type of a national compact?
MR. EVAN DAVIS: It would be state by state. This state would say, "If you come here, apart from doing incidental work and apart from representing one client as an in-house counsel, you must get this Green Card." But we urge that the requirements for it be simple and easy, and disclosure, the kinds of things that we mentioned.
We also would urge that you give serious consideration to going a step further and not even having the card but the right to come in, with the consequences, though, of being subject to disciplinary jurisdiction being the same.
MR. POSITAN: Just following up on what you previously talked about with regard to the question from Diane about the historical difficulty, let's say, of passing the New York bar exam, do you have a thought about how that squares versus what you are talking about in terms of either a Green Card or a driver's license? How do you - and this is a question that I have in my own mind - how do you square the historical - or maybe desired, if you will, by the New York Bar Examiners - toughness of the New York bar exam with what you're talking about in terms of how you change that?
MR. EVAN DAVIS: Well, first of all, there would be this notion, as I said before, that if your practice really is centered in the State of New York, you'd have to pass the bar exam. So it is not an end-run to open up your office in New York, hang up your shingle, do all your practice here, and be admitted only in some state that we may or may not think is not as rigorous as New York. So that would not be an option.
With regard, though, to the other things that we've talked about, I don't see it as a major problem. We think people are proud to be members of the New York Bar because it's a recognized high standard to become a member. We have many people from other jurisdictions and from abroad who become members of the New York Bar because of what they think it means as a credential to be a member of the New York Bar. That will continue, and we think it is not going to be a big problem.
MS. TUCKER: With the simplicity that you're talking about in this registration system under either the Green Card Proposal or the other proposal, how would an examination on just the disciplinary rules of each state that is issuing the Green Card fit with that to make sure that people know the disciplinary requirements?
MR. EVAN DAVIS: When I get admitted pro hac vice in some states, I have to sign a thing that says I've read their disciplinary rules, and of course I always do read them before signing it. It's generally pretty similar to New York. There are not major differences. That seems to work well and satisfy the judges that I sign it.
Now, some don't even require that. Some say they want you to read the rules of procedure of a particular state. That is more difficult because they are likely to be a little more different.
So a statement that you've read the disciplinary rules I think would be fine. I don't really see a need for a test any more than when you get admitted pro hac vice, the court drills you on your knowledge of the disciplinary rules in that state. They don't do that. I don't think there's a need to do that.
MR. POSITAN: Does your situation change in terms of the Green Card/driver's license situation if you were going to hang up your shingle, as you mentioned?
MR. EVAN DAVIS: Yes. If you really are opening up - I don't want to use the phrase "an office," because when you go into another state for a big litigation, you might well take a war room-type office in that state where you'd have a lot of people, you'd have secretaries and copying machines. It would all be related to the one litigation, but you would have an office.
But if you open up an office to attract a general group of people and have people who are resident in that office, you have 25 percent or some number - I think 25 percent is too low - but those are resident and should become members of the bar of that state.
MR. EHRENHAFT: Can I ask? Your Green Card would be available only to people who, as now, are able to wave in based upon certain years of practice in their home state, or would someone who graduated and was admitted to the bar in one state immediately be able to go to another and get a Green Card?
MR. EVAN DAVIS: I hadn't thought about that. That's an interesting question.
MR. EHRENHAFT: Because I think it is, in part, in response to what Ms. Yu was talking about. I think that our wave-in procedures are based on the notion that five years of practice, for example, is a sufficient imprimatur of knowledge of the law to allow examination-free entry.
MR. EVAN DAVIS: If you did a period of time, you'd have to be very careful, though, to be sure to have this incidental practice part that didn't depend on that, because when we go to do a multi-district case in Illinois, we bring lots of first-year and second-year lawyers who work very, very hard in the war room at the hotel. It wouldn't be good if they couldn't get a Green Card or had to get a Green Card and couldn't get one. That would not work, from our point of view.
MR. EHRENHAFT: In the international context, we have found that countries that have requirements of practice of a certain number of years for lawyers who are registered - like in Japan, to get the foreign bengoshi kind of authority - are permitted to bring along associates who are not qualified to do that, but are allowed to work for the registered person.
MR. EVAN DAVIS: Under supervision.
MR. EHRENHAFT: I think that would also address that.
MR. EVAN DAVIS: Right, it would address that.
MR. POSITAN: Would you allow solicitation without an office?
MR. EVAN DAVIS: You mean advertising?
MR. POSITAN: For somebody with a Green Card. Yes, advertising or other efforts at solicitation.
MR. EVAN DAVIS: In suggesting a model rule to decide where someone's presence in a state is so regular, systematic, and continuous as to require them to become a member of the bar, you could have a factor test that could include that as a factor. That would certainly be part of the test under jurisdiction/doing-business analysis sufficient to confer general jurisdiction to sue somebody on anything in the state. That would be - continuously advertising, soliciting, would be a part of doing-business analysis, and you could adopt that kind of approach.
I would leave it to the states to vary the level that they want to extract, but if you're thinking of suggesting a middle ground that had that as one of the factors, I don't think that would be inappropriate.
MR. HOLTAWAY: Tony, just for clarification, does the APRL Proposal require a lawyer to be licensed at least three years before they can register?
MR. ANTHONY DAVIS: I don't recall. I think there may be such a requirement. But what we tried to do was set up a superstructure in particular states and then we're going to do it all exactly the same. We certainly envisage that some states will put such a rule in.
One place, though, if I may, that I differ with Evan is I think the idea is you should be able to set up an office once you've registered. The key distinction between you and the local lawyer is you must not hold yourself out - this is the one difference from the European model - you mustn't hold yourself out as admitted in the state where you have registered. You must always, in your letterhead and your communications to clients and prospective clients, say "only admitted in State A" or "not admitted in this state."
But we certainly felt that your office should be a full-fledged legal office for the practice of law, but you should very clearly denote that limitation.
MR. EVAN DAVIS: I agree that if you're not a member of the New York Bar, you shouldn't hold yourself out as a member of the New York Bar, so that's - or any other state. Whether you have to do it affirmatively is a different question.
I thought the proposal did include -
MR. McCALLUM: It's three years.
MR. EVAN DAVIS: No, no, not the three-year concept, but the concept that if your work in the state got over a certain amount of time, that you then would have to become a member of the bar.
MR. ANTHONY DAVIS: No.
MR. EVAN. DAVIS: No, it doesn't?
MR. ANTHONY DAVIS: Not our version. I mean, it well may have done that in its originality, but not in this version.
MR. POSITAN: New York historically had a five-year requirement to wave in, didn't it?
MR. EVAN DAVIS: New York is very rigid on the wave-in. It's a big number because we don't allow it where there's no reciprocity. But this is another thing that doesn't really work, because - say, you're a California lawyer who wants to come and practice in New York, but California does not give reciprocity; so we wouldn't allow a California lawyer to wave in. So first you become a lawyer in Connecticut, and then we don't say that all of your five years has to be in Connecticut. So you become a lawyer in Connecticut, three months later you apply to become a lawyer in New York, you'll get admitted.
MR. POSITAN: This is for the record, right?
MR. EVAN DAVIS: That's for the record. People do that all the time.
MR. POSITAN: What about the question of - let's use California as an example ? a non-accredited law school graduate from California who wants to come to New York with a Green Card? What would you think about that?
MR. EVAN DAVIS: I haven't thought about that, but I think a state in defining the rules for the Green Card could say "a graduate of an accredited law school." That's my off-the-cuff reaction.
MR. POSITAN: Any further questions of the Commission?
Any liaisons like to ask anything?
MR. EVAN DAVIS: I truly wish I didn't have to leave.
MR. POSITAN: Thanks so much and good luck at the dentist. It's like pulling teeth, as they say sometimes, right?
Next is Michael Corbett. We appreciate your deferring to Evan Davis to take care of his dental problem.
MR. CORBETT: I have great sympathy for teeth problems.
Thank you. I appreciate being invited to speak before you. I am Michael Corbett. I am national counsel for Stewart Title Insurance, which is a nationwide title insurance company.
I am very interested in the topic for today because when I look at what I do in any given day, it's very germane to the area that you are investigating. In my given day, I help package real estate transactions where the closing is in Manhattan at a law firm, and they are usually corporate packages where they have anywhere from, say, three sites to twenty sites, which means a typical situation would be, say, a movie theater chain nationwide wants to raise $300 million or $400 million and the bank wants some collateral. So they say, "Fine, you own movie theaters and you have long-term leases on movie theaters throughout the United States, and we want the movie theaters as collateral for the loan."
I will go to a law firm and we will have documentation for these movie theaters, such as mortgages and accompanying paperwork, and those movie theaters might be located in twenty different states. We are doing these transactions, let's say - I can't estimate how many per day, but they are being done on a daily basis.
So, like many of my colleagues, I lie awake at night and look at the New York State unauthorized practice of law statute, and the section with the real estate reads: "No natural person shall ask for or receive, directly or indirectly, compensation for preparing deeds, mortgages, assignments, discharges, leases, and other instruments affecting real estate unless he has regularly admitted to practice an attorney or counselor in the court of the State."
So when you are dealing with these transactions where your property is located in twenty different states - and I almost never leave Manhattan, so I am generally working with a law firm in Manhattan - naturally, I and my colleagues are concerned are we violating some other state's laws. It's especially easy to pinpoint when you have movie theaters or corporate property in twenty different states. Are we transgressing any of the unauthorized practice of law statutes in any of those states where the movie theaters are located?
So when you're doing what I'm doing and you run into the Birbrower California decision, then that's making you extra nervous.
So what I'm hoping to encourage the Commission to gravitate toward is basically a national exemption for the national real estate transactions that I am involved with.
The Birbrower type of decision, when I look at the work I and my colleagues are doing in nationwide real estate transactions that are closed in Manhattan - I feel the state laws regarding unauthorized practice of law are extremely self-serving and the only purpose is simply to keep as much legal business as possible in California, where the Birbrower decision was held, or any other state.
The fact that you already have an existing situation, which I am involved in, I think demonstrates the need for an exemption for nationwide closings that take place at a certain location, such as Manhattan, where they have the telecommunication and the expertise, wire transfer availability, which is lacking in most of the other states.
MR. POSITAN: Any questions?
MR. McCALLUM: Just a point. As long as we have you here and we have Anthony Davis here, maybe Anthony and you could have a brief dialogue about this point.
In the APRL Proposal, which is essentially the Green Card Proposal, there is an exception for the registered lawyer that would not allow that registered lawyer to do matters involving family law and matters involving or affecting real estate, conveyances of interest in real estate. I'm curious. It sounds like you wouldn't favor that exception, and I'm curious what the source is and why the APRL lawyers thought it should be in there.
MR. ANTHONY DAVIS: Well, the answer is - I would like to tread the high wire - we put it in there because, as we told you when we made the presentation in San Diego, we wanted something that we thought you might find politically palatable and that the bar generally might find politically palatable, and that area has traditionally been one of the areas where the states have very vigorously asserted that their laws, unlike laws - the ethics rules, for instance, are much more dissimilar than other areas - and where there is a great deal of, if I may use the pun, a proprietary sense of ownership of real estate law.
I don't think anybody in APRL would object were any state not to include that restriction. We put it in there because we were trying to tread the PC high wire. And we would not at all object if Mr. Corbett was able to persuade you to take that exception out.
MR. EHRENHAFT: That particular limitation is a reflection of foreign legal consultant rules.
MR. ANTHONY DAVIS: Yes.
MR. EHRENHAFT: But I think that one of the reasons that it was incorporated into foreign legal consultant rules was the problem of language, and there was the thought that perhaps people who didn't know the language sufficiently - because I think that, as we heard from the Real Estate Section of the ABA, they are very much in line with what Mr. Corbett has been saying, and indicating that significant real estate transactions now are likely to be nationwide, international, and that therefore these kind of restrictions are inappropriate. So they were quite opposed to those, and, I think, believe that they are not the kind of distinctions you are suggesting.
But I think that if you were looking at a source, I think it comes from those foreign legal consultant rules, which had kind of a different basis for their exclusion of those particular kinds of transactions.
MR. ANTHONY DAVIS: I will say, just anecdotally, my impression is that there are, not perhaps a large, but a finite, number of malpractice cases where lawyers do real estate transactions across state lines without getting local counsel and without having title insurance.
The one thing I would say is if you are going to remove that limitation, I would just urge, even more strongly than the Report of the APRL Proposal does, then states ought to include for registration the requirement for malpractice insurance. Then I think it becomes incredibly important, because I am actually in that sort of a case now, and I don't think it's an isolated case.
MS. GARVEY: I would like to address another - I'm certainly at a disadvantage here, since we're sitting on the same side of the table. We've had several witnesses appear before us at various hearings so far and ask for special exemptions for limited areas of practice. As I recall, we had federal communications people that come to mind, or people who suggest that federal practice ought to be excluded, and you're suggesting large, multi-state real estate closings, and so on.
Could you comment on two things: (1) the policy implications of going in that particular direction; and (2) the practicalities of trying to identify various segments that might fit into this?
MR. CORBETT: Actually, it's always easier to deal at the conceptual level than working on the implementation of it, because if you take what I consider the wrong direction, I don't have to worry about implementing the plan, so I haven't gotten that far. So I don't have any ideas there.
In terms of the policy, Joanne, what policy? Would it be your policy, when you said what policy?
MS. GARVEY: Well, for example, you suggested that in this particular area there ought to be an exemption. As I said, we had the federal communications bar that came in and said the same thing, we just do one narrow section of the law, we go all over the United States to do it; certain types of criminal law, which may be seen very local in some cases, perhaps aren't in others, and so on. So do you think from a policy standpoint that's a particular route we should look at, or will we essentially end up with something that looks like Swiss cheese?
MR. CORBETT: With different objectives, everyone having their own - my difficulty is this is all I know, so I am very much a one-trip coon. So I don't know whether you can take anyone who has expertise in the field as a lawyer and you're going to come to you for an exemption, so you'd end up with a Swiss cheese situation.
But one thing that I feel is critical is that this is already an existing practice, so this is not something that we are discussing and saying, "Well gee, we're thinking of going in this direction; what are your opinions?" It's on such a large scale already - you know, I and my colleagues live in dread of Birbrower-type decisions, a grievance committee filing a complaint in Iowa because they're mad because we're stealing all their business, it's all moving to Manhattan.
MS. GARVEY: Do you feel that the safe-harbor suggestions that have been made would not solve your problem - in other words, it's so regular and so systematic and so concentrated often in certain states, that you couldn't fit under some sort of incidental?
MR. CORBETT: I would feel more comfortable if the issue were addressed. The problem that I have is you're dealing with fifty different states and each has their own bar association and they all have their own turf to protect. So I don't - I mean, just the cost of defending lawsuits and being faced with grievance complaints by a law firm that feels in some state that all their business is moving to Manhattan and they're not getting their piece of the pie. So I just feel that there's so much vulnerability without having an American Bar Association position that would give comfort to myself and my colleagues.
MR. McCALLUM: What I think Joanne's question was is this: If the states were to adopt something along the lines, let's say, of the APRL Proposal, or some version of Rule 5.5 as is currently before Ethics 2000, does that solve your problem? I think that's what Joanne was asking.
MS. GARVEY: Thank you.
MR. CORBETT: That would basically solve the problem, but aren't you're faced with each of the fifty states would have to adopt it?
MR. McCALLUM: So you're suggesting -that would solve our problem, but not in time to let me do it before I retire, so I'd rather see a national license. Is that what you're trying to say?
MR. CORBETT: Well, that's a good idea. But it would also help myself and my colleagues sleep at night and it would legitimize an existing situation.
MR. PERA: Could I ask a quick question? I may not understand completely your hypothetical, but ? you are with a title insurance company, right?
MR. CORBETT: That's right.
MR. PERA: And I may not understand the title insurance process either completely, but you all have lawyers. Do you have lawyers certify title?
MR. CORBETT: We have lawyers throughout the United States.
MR. PERA: I know. But you do have lawyers certify title, right? I mean, you don't have non-lawyers doing that job?
MR. CORBETT: It varies state to state.
MR. PERA: Well, I guess my question is, it's not quite a client-lawyer relationship, but it is a relationship where you all are getting the services of lawyers. I guess my question is: do you all have lawyers outside of the state where the real estate is certify title? I mean, for example, do you certify title in Utah or Tennessee or do you get your Utah or Tennessee firms to do that?
MR. CORBETT: I would certify it, but I would be coordinating with a local office.
MR. PERA: Meaning a lawyer there?
MR. CORBETT: There would be a lawyer there. My major concern is not so much with - there are four nationwide title insurance. My real concern is with the law firms that we're servicing.
MR. PERA: Well, I guess, the reason I ask my question is I'm just curious to know, as in essence a consumer of legal services, whether you all are comfortable not having a local person, usually a lawyer well versed in local real estate law, advising you on title issues? That's my question. Because my sense is that's not the case. My sense is that most title companies I know about are very demanding about insisting that it be a Mississippi lawyer that certifies title on Mississippi property, and not a New Jersey lawyer.
MR. CORBETT: It does vary state to state. Some states have what they call "lawyer certification." In other states, they have non-lawyers. Different bar codes have exemptions for non-lawyers to do certain aspects of the title business. I'm not so much worried about my personal vulnerability as all the law firms that I deal with.
MR. PERA: And I'm not really going to vulnerability. I'm going to sort of Anthony's point, which is my sense is the marketplace out there is still in a place with real estate where folks do in fact look to local lawyers, or in your case very sophisticated non-lawyers who do title certifications all day long, but they look to local folks for that expertise. Now, I understand that may only be part of the closing process, but that's what I'm getting at. I think that's right.
MR. CORBETT: Well, I think you're right there, but I think it is drifting away, whereas real estate is obviously - you can't move it, so there's a movie theater in your own, actually you have to do the different title examinations there, and you do want some local lawyer involved to some degree.
But when you're talking about preparation of the documentation, I'm thinking in terms of where the money is basically. The money is drifting into the Manhattan law firms, obviously at the expense of a law firm in the city where the movie theater is.
MR. PERA: The other thing I would suggest - and somebody mentioned it earlier ? this is something when we get to the Ethics 2000 Rule this afternoon, I'd be very interested in running your hypothetical through it and see how much of it that solves. I'm not sure, but I think it solves a bunch of it.
MR. POSITAN: Do you think there's any split that can be developed as to a difference between residential real estate versus commercial real estate transactions or complex commercial transactions? Should there be some format there that maybe makes a difference in terms of how you view that?
MR. CORBETT: My particular area would be considered very sophisticated, large commercial transactions. I also feel there is an argument that there is a fairly limited, numerically limited, expertise. You know, people tend to frequently being in Manhattan. That is one argument I would have and my friends have, that we're not really taking business, because they are very different areas where people often do not have the expertise or the technology. More and more documentation is being drafted in Manhattan, as opposed to the local counsel, and the role of the local counsel is, in my opinion, diminishing. And then, of course, there is less money for firm X out in Iowa City and there are more of the fees that end up in Manhattan.
MR. POSITAN: Would you think that would have an impact on the consumer, in terms of the availability to get qualified counsel at a local level ultimately, if your whole scenario plays out and everything gets centralized into large centers?
MR. CORBETT: The deals I deal in are really - there are only so many of them nationwide, and the numbers are so large - $100 million, $200 million. I mean, I look at anything of $100 million as a fairly small deal. When I started law as a real estate lawyer, if I had a $1 million deal, I was out buying champagne and celebrating the big fee and all the excitement. But the deals are just becoming bigger and bigger.
And then, I assume that from nationwide, then they will go into international, where some international corporation does all their real estate throughout the world with one firm, and I assume that we will be at that stage - if we are not there already, we'll be there soon.
So I don't think it would hinder the ability for an individual buyer to sell a house or a condo in another state, because the type of level of real estate that I deal in is almost inapplicable to the smaller transactions.
MR. POSITAN: Any other questions?
Next is Professor Gary Munneke.
MR. MUNNEKE: Thank you for the time.
My name is Gary Munneke. I am a Professor at Pace Law School in White Plains, New York. I am the delegate from the Law Practice Management Section of the ABA to the House of Delegates. My views today are those of myself alone and don't represent either the Law School or the Section or any other entity in the ABA.
It seems like yesterday that we were here at Fordham Law School for the conference to discuss multijurisdictional practice that launched all of this, and many of the issues that are being discussed today were talked about then. Bruce Green's white paper was an enormous help in getting the process started.
But, aside from the fact that the issues are now on the table, I think there are some other things that we need to think about as we enter this discussion.
I'm not going to present any proposals or suggestions as to how to handle multijurisdictional practice. I want to talk about two things specifically: one is the future of the legal profession itself, the larger context within which we are working; and secondly, the politics of the ABA that you have to live with in moving forward.
In a 1956 song by Doris Day, she sings, "When I was just a little girl, I asked my mother what will I be?" Mother says, " Que sera, sera; what will be will be." I suggest that lawyers can ill afford " que sera, sera" thinking in this decade, that the philosophy of the 1950s will leave us in a situation where others outside the profession will choose our future, rather than lawyers themselves.
In 1999, the Law Practice Management Section sponsored a national conference called "Seize the Future: Forecasting and Influencing the Future of the Legal Profession." Many of the speakers came from outside the profession, from the business school world, from the public sector, and talked about things that were happening in the rest of the world that would transform the practice of law.
It was clear to everyone who attended that conference that the legal profession is changing, that the past twenty years of change in the profession represent the beginning, and not the end, of this transformation. Speaker Tom Peters, who is a popular author, made the comment that "we are in the midst of a 10,000-year sea change in human existence," and posed the question, "If I were correct in saying that, would you be sitting here today?" I think everyone in the room looked around and thought about what they were doing.
What does this brave new world bring? My comments reflect some thoughts that I communicated in the conference report, which was a book by the same name that is distributed by the Law Practice Management Section, and I'd be glad to get a copy of that book to anyone on the Commission who wants it.
MR. McCALLUM: What's the title, " Que Sera, Sera?"
MR. MUNNEKE: These were the major trends that I think we as a profession have to deal with, and that you have to think about in terms of multijurisdictional practice, because many of these trends affect that issue.
Certainly globalization and interconnected economies, the fact that, particularly with the Internet, there are no borders between states, countries, jurisdictions. I think in an earlier day, the practice of law was defined by the county, and I look back to the times of Abraham Lincoln in the 1840s and 1850s, where he was riding circuit from country to county in Illinois, and that was probably a very radical practice in that day and age where most lawyers just practiced in one small area.
There are demographic shifts. As populations are moving from one country to another, from one part of this country to another, we are becoming a mosaic society that has many different points of view and values, and we have to somehow incorporate that into our representation of clients.
The values of people in this world are changing, and one of the major changes that I see is the continuing onslaught of autonomy, people wanting to be in charge of their own lives, their own destinies, their own doctors and their own lawyers.
Competition in the marketplace. Inefficient delivery systems fail, whether that is the demise of the old Soviet bloc or a legal system that just doesn't work. Can we as a society continue to prop up aging state monopolies that don't work in the face of new, innovative, more-efficient systems? I think one of the things you have to think about is what other providers in this marketplace will be able to step into the roles that lawyers now perform and provide those services if you shackle layers' hands in being able to deliver services across state lines.
Technology and communication. The Internet and e-commerce are here today, and I think that that world has brought a couple of considerations. First, the tendency of many practice areas to become commoditized. As they are widely accessible across state lines and on the Internet, people can make choices and will tend to choose the lower-priced, rather than the quality, service. Lawyers are challenged to find ways to provide value to clients, to become, as what one speaker at the conference said, "infomediaries," able to identify and manage the information that seems to swallow people.
Legacy and solutions, the concept that those institutions and organizations that have the business simply because they have been there for the last fifty or a hundred years will have less value as people who are able to come up with modern solutions that get the job done will take prominence.
And disintermediation, which is simply a term to describe cutting out the middle person. Do we need lawyers to interpret the law when the law is easily accessible on the Internet and other places?
These tend to drive the choices that consumers make away from the traditional practice service firms and into newer organization. There is clearly, as we speak today, no real line between the provision of information and the provision of services.
In the area of dispute resolution, high transaction costs are undermining the litigation process itself. Cultural differences in this mosaic society mean that many groups reject litigation in favor of other forms of dispute resolution. There are alternative models that people are turning to, including mediation, arbitration, and settlement rooms on the Internet. These practices are inherently interjurisdictional, they are inherently interdisciplinary, and they are often electronic.
Lawyers simply have to recognize that this is an evolving marketplace within which we must survive. In this marketplace the client rules. In this marketplace deregulation is king. In this marketplace competence has to be redefined. We have to examine the skills that it takes to be a practicing lawyer, recognize those that cross state lines, and communicate this to clients.
We need to recognize that specialization is going to drive the practice of law more and more. I suggest to you that a real estate lawyer in New York knows more about real estate in New Jersey than someone who is a domestic relations lawyer in New Jersey and doesn't practice any real estate. The truth is that we have the substantive orientation.
Innovation trumps incrementalism, which simply says that there are a lot of people out there being very creative and we as lawyers have to find a way to do that. This new world is here today.
The politics of the ABA. I only just want to say a couple of words about where did the MDP Commission go wrong, and maybe you can learn from their mistakes.
I think the first thing they did was they listened to themselves and their experts, rather than the people who came to them and talked to them. The states really run the ABA, and it was the states that revolted essentially against the direction that the Commission was taking.
Secondly, they failed to demonstrate the benefits of the proposals that they were advocating for the average lawyer on the street. They were perceived as siding with the competition rather than siding with the lawyers. They clearly lost the core values debate. Those who opposed MDP in the House really took the high ground in terms of professional values, and the proponents never really tried to answer them. I think you have to be able to say, if we're going to change the rules on jurisdictional practice, that there is an ethical and professional benefit and high ground to take.
Finally, I think in terms of pure politics, they just didn't know how to manage the votes and didn't play that game, and it's certainly something that you encounter in the House. I would encourage you to maybe follow the approach of the Ethics 2000 Commission, which I think has been much more ecumenical in the way that they have tried to court support from the many entities in the state jurisdictions.
I am not going to presume to tell you how to come out on this, but I can warn you that the realities of the world and the realities of the ABA will affect anything you do. If you don't deal with these realities, then all of this is for naught. And if you don't manage the process in the ABA, the same is true. And then, que sera, sera.
MR. POSITAN: We appreciate your remarks. Mama Positan didn't raise no fool, I can assure you, when it comes to politics.
I'm also pleased to see that Robert MacCrate is here from New York, who had a lot to say about that core values debate, and one of which I was an eager proponent, because I think he hit the nail on the head in defining those issues.
We've gone a long way to say that MJP is not MDP, because it is different. There may be some areas where it overlaps, but core values is what this whole process is all about as well, some of the things you alluded to.
I was very interested in your discussion about specialization and how that impacts. We got a letter recently from the ABA Standing Committee on Specialization in which they basically indicate to us that they are very interested in assisting and interacting with us on the questions of how that would impact on the various specialization aspects that are allowed by certain states. For example, in New Jersey we have a trial certification for civil trial lawyers, for criminal trial lawyers.
Some of the things you said about specialization I'd be interested in coming back to, in terms of how would you handle that situation. When you have somebody who's a certified civil trial lawyer, let's say in New Jersey, would they be able to go over to New York and say, "Well, I'm a certified civil trial lawyer?" Do they have to say "in New Jersey?" What if you have achieved some level of certification in states that permit it; how would you deal with that issue? I'm interested in your reaction to this letter that I just received.
MR. MUNNEKE: I'd love to see us move in the direction of certification of some, if not all, specialties. I think the sophistication of practice today means that we've become a profession of de facto specialists, and to the extent that there is certification in certain jurisdictions, that's a trend that I support.
I think you could probably handle the specialization issue in the same way that you would general admission under a Green Card Proposal, that each state could recognize those who had been certified in other jurisdictions and could decide who could get a Green Card for litigation or a Green Card for domestic relations. I think that makes it a much more complicated matter.
But I'd really like to see us move in that direction. I have a friend who is an orthopedic surgeon who started practicing medicine in Tennessee and moved to Maryland and now he's thinking about going to California. His boards are national. While he has to do a certain amount of registration and background check when he changes jurisdiction, the orthopedic surgeon boards allow you to make a jurisdictional move. I think that's the direction we ought to be moving.
MR. McCALLUM: This is not really a question, but I thought your presentation on trends was very interesting. If you get it into typed form so that we wouldn't have to decipher your handwritten notes, even if it's a pre-publication draft of something you intend to publish, I wonder if you would share it with us?
MR. MUNNEKE: A lot of the things I said I talk about in more detail in the book.
MR. McCALLUM: Okay.
MR. MUNNEKE: To the extent that I can get these comments in written form, I'll do that.
MR. EHRENHAFT: As long as we have Bob MacCrate here, I would like to hear your and his views about the intersection between what are called ethical rules and rules that are really perhaps more prudential, if you will – "we want to try to protect the public from people who are not qualified," and so on. But I am troubled by the clothing of what are prudential rules in ethical clothing, because I am not sure that they are really "ethical" issues. I wonder whether this is a hang-up that we're having in this discussion, of elevating, if you will, sort of prudential rules as though they were ethical principles that gives them an authority and importance that they don't deserve.
MR. MUNNEKE: I will defer to Bob to start.
MR. MACCRATE: I'm not sure that I understand the question.
MR. EHRENHAFT: Well, I think that the question about whether you can practice in another jurisdiction is treated in ethical rules as though it is unethical to practice in another jurisdiction, even though you know very well the substantive law that might be applicable and can serve a client very well. There are rules that are designed to prevent incompetent lawyers from practicing which could be sufficient without saying that "this is an ethical principle." I view ethical principles more as the protection of privacy questions, protection of client funds, those kinds of things. I'm not sure that these other rules really merit ethical principles.
Your opposition to MDP was described as being based on a championing of the ethical core values of the profession that might not have been embraced had the MDP Commission's proposals been adopted. So is there a difference here?
MR. MACCRATE: I think fundamental to the profession is the embracing of values, and it's a question of what those values are. Through the development of the profession in the United States over the last two-hundred-some-odd years, you have had a growing consensus as to what are the core values of the profession. What we focused upon and what we brought consensus upon was the idea that those are something that should be preserved.
Our report that we produced here in New York, the title of it was "Preserving Core Values of the American Legal Profession," subtitled "The Place of Multidisciplinary Practice." What we were calling for was coming back to those fundamentals of the profession. They exist only because there is a profession that created them and aspires to them.
It all goes back to our study of legal education that Bruce Green was a consultant to, where we attempted, in addition to identifying the skills that lawyers should acquire, to suggest that there were four central values.
I am going to attend a session this afternoon of clinical teachers that is focusing on how you teach the value of justice and morality and its relation to the legal profession.
MR. EHRENHAFT: I guess my question was whether the core values that you identified are dependent in any way upon the jurisdictional boundaries that now exist in our legal system in the United States under which each bar defines these various rules, whether those ethical principles are quite apart from whatever jurisdictional boundaries may exist?
MR. MACCRATE: I think that within the United States there is general consensus on this, that they don't differ that much from state to state.
MR. MUNNEKE: I agree with Bob basically on the definition of what those core values are. I tend to think that some of the rules of professional conduct don't speak to those values, but are really raw economic protectionism for lawyers. I think Rule 5.4 falls into that category, and possibly parts of Rule 5.5.
That is, I think, an issue you need to grapple with: Can you get to protection of the core values that we agree upon with the rules on confidentiality, the rules on conflicts of interest, the rule on competence? I mean, Rule 1.1 says that lawyers don't take cases that they're not competent to handle, and a professional lawyer would not go into another jurisdiction and undertake a matter that she doesn't possess the skill or the knowledge to handle. That's a clear rule.
MR. MACCRATE: One of the problems with the Model Rules is that they are solely disciplinary rules, and to get to the aspirational aspects and to the core value aspects, you have to go to the commentary. It is why, up to this time, New York State has adhered to the old model of the Code of Professional Responsibility with the DRs and the ECs.
MR. POSITAN: Well, let's not forget that there is another aspect to this. It is not sheer protectionism when a state says "we have rules." It started because it wanted to protect its citizens, and there are legitimate state interests certainly in a state doing that.
Now, where those lines are drawn is certainly what this debate is all about to a large degree, but I don't think you can just look at state systems and say, "Well, they're there just to protect lawyers." They were put there because they wanted to protect the public interest, to make sure that the public had a level of confidence in who they were retaining to perform their legal services.
We can't forget in this process as we approach all these very difficult issues that we're not only talking about the people who do large international or national transactions, and we're not talking about all the people who are handling all the biggest cases. We're also talking about the average citizen who looks for legal services, those who can't afford legal services, the people who are on the other end of that spectrum, who also have very serious legal needs in a variety of kinds of ways. What we fashion has to be directed just as much to them as it is to the trends in technology and international and national business. So that is something that is always on my mind as I go through this process as well.
MR. MUNNEKE: I think one of the realities - and I suggested this in my comments on demographic change - is that in this world people are mobile as they never have been before. I mean, I was born in Iowa, grew up in Texas, and lived in Delaware, now Maryland, and I work in New York, and I am licensed in Texas and Pennsylvania. My wife practices in a small town in Maryland and her clients are almost always from somewhere else with economic and business interests in other states and their relatives are in California or Minnesota.
I don't see that changing. I don't think everybody is going to go back to the place they came from and build moats and we'll have all the people who started in Iowa in Iowa. So it's not just something for the large-firm lawyers and the multinational corporations, but every single lawyer in the smallest town in the country will have clients with interstate, and even international, interests and have to deal with those issues.
MR. POSITAN: That's true, but there's no shortage, when you read the Law Journal every week, of all the disciplinary procedures that you see and read about and that local ethics boards and state ethics boards have to deal with. So we must be mindful, as I have been told by various chief justices across the country, of the importance of discipline as well.
MS. TUCKER: Gary, I was particularly interested in your description of the trends, and I think it was a wonderful education on the future. But all of those trends are couched in business language. There is nothing there that is value-laden, even though you use the word "values." You are saying people want more control over their lives.
What I am trying to do is take this totally business, futuristic approach that you're talking about and find out - I'm not sure whether we call it the core values of the profession, because when I got interested in this, I used to divide - I was troubled to see the profession changing to a pure business. That's what we were worried about. And it was professionalism versus being a profession versus being a business. Maybe now the words are "core values."
But where do you see the professionalism, the non-business part, what distinguishes us as lawyers, in these future trends? How do we deal with that?
MR. MUNNEKE: I think that business and professionalism are not inconsistent concepts, because lawyers who practice in a business-like way usually practice professionally. Professionalism ought to bolster lawyers as business people. What lawyers are likely to be tempted to invade their trust accounts? Those who can't run their businesses.
But I think, in another sense - and I am going to couch this in terms of the business theme - I believe lawyers need to be able to communicate to clients, to the public, what unique values they bring. One of the things that makes lawyers special is their professionalism, the specific ideas they have about competence and confidentiality and conflicts of interest and why a lawyer would be a benefit to a transaction. I mean, in a deregulated marketplace, there are a lot of people who do the same things that we lawyers do, and I think that professionalism is critical in showing people that we're not just used-car salespeople.
But I think, again, the core values that Bob has talked about for the last decade and a half really are the things that lawyers need to be communicating to the public in the business setting today.
MR. GREEN: I guess, just following up on the core values discussion, this is what I understand is emerging from this - and if I'm wrong, I'd be interested. I understand that it's not a core value of the legal profession that a lawyer practice only in the state where the lawyer is licensed. The core values are morality, justice, confidentiality, confidence, and so forth. However, there are core values - such as lawyers only do what they're competent to do, lawyers comply with the law and with the ethics rules - which are traditionally thought of as being promoted by the UPL laws. The UPL laws are traditionally thought of as a regulatory mechanism to ensure that.
A lot of the debate here has been about whether there are other ways to protect and promote lawyer confidence and lawyers' compliance with ethical rules and so forth that are more consistent with the way lawyers practice, whether you have to do it by way of fairly stringent UPL laws. And so, what we're really talking about is not restrictions which themselves reflect core values, but which are protecting core values which might be protected in other ways.
Just sort of leaping ahead, we have two reports from different bar associations that we haven't heard yet, one from the Connecticut Bar and one from the Akron Bar. One takes the view, I think, that MJP restrictions or UPL restrictions are very important to protect confidence. Another one takes the view that they are not that important to protect confidence because you can do it other ways. That is to some degree what the debate is about. We're not really debating about the core values, but we're debating about how to protect them.
I've talked too long, but is that pretty much what your understanding is?
MR. MUNNEKE: I would agree with everything you said. I think you can really protect the core values by, number one, making sure that in whatever proposal is enacted that lawyers going into another state are subjected to the disciplinary processes of that state; and secondly, that their home states have to give some kind of full faith and credit to the discipline that might be imposed in those other states. I don't argue that we should eliminate disciplinary enforcement.
MR. POSITAN: Tony, did you still want to say something?
MR. ANTHONY DAVIS: I just want to address Peter's point because I think it is important to say. Many states have rules like New York's. New York has a provision in its Codes that it is a violation, it is a disciplinable offense, to practice law in a state where you do not have a license to practice. It goes to exactly what you are saying. Is that the way we need to go about protecting the core values? I don't think so. I think that's the point that is being made. But, as you said, there may be other ways to do that.
But to elevate to an ethical principle this idea that practicing across state lines is a violation of ethics seems to put it on a level with core values that it simply doesn't have. I just wanted to rub that point home.
MR. POSITAN: I'll give Bob MacCrate the last word if he likes one, and then we're going to move on. Okay.
Peter Costas from the Connecticut Bar Association.
MR. COSTAS: First of all, I won't give all of the disclaimers, but to give you a little background, I am past President of the Association, I'm the Chair of a Task Force on Multijurisdictional Practice which our Association thinks is important, I'm also the Chair of the New England Bar Association Committee on Multijurisdictional Practice.
To the extent that nobody has adopted our report, the report is the report of the Task Force, and that's where it presently stands, but I'll give you some background of where and why we got to where we are.
Very candidly, I think we have to recognize that the bulk of the bar is somewhat protectionist with respect to who they want practicing next door and soliciting their clients.
We looked at the fact that there was a need to deal very early with the question of house counsel. We have a separate house counsel rule that is quite liberal, which was rejected unanimously by our Committee on Admissions. But we didn't stop there. We took the rule to the Rules Committee of the Superior Court of the State of Connecticut, and we're optimistic that it will be adopted. Now, the Committee on Enrollment obviously is very protectionist, in turn. So we recognize those realities.
Now, when I get into the New England Bar Association, I can find a friendly approach to the issue of multijurisdictional practice when I get to the eastern part called Boston, a little bit around Worcester, very little in Springfield, I can get a little bit of concern when I get to Providence; but when I go up to New Hampshire, Vermont, and Maine – "Are you crazy?"
So, I mean, you know, this is what we have to recognize, that there are more states which do not have this great concept that lawyers need to practice on a national basis to take care of clients. That's the message that is not getting through: because the clients are the ones that are demanding that we practice across state lines because they want efficient legal services by somebody they know and respect as being competent.
When my clients moved from Connecticut to the south to avoid environmental protection laws or high taxes or high utility costs, they didn't hire somebody down there. They like me. Why, I don't know. Maybe I charge too little. But I continue to represent clients who move out of state. They want me to do so for some reason - either they're comfortable with what I do, I understand their business, et cetera.
Same thing with the clients who have offices and facilities all across the country. They don't want to have to come up with a new set of rules for every one of their plants because they've got different lawyers who have a different perspective on how to do business.
So the thing that drives multijurisdictional practice is this issue of mobility, this issue of clients wanting the best, most-competent service from people that they're comfortable doing business with.
Now, that doesn't say that I have a right to avoid the practice of law that complies with 1.1. I've got to know what the hell I'm doing when I'm providing services across state lines.
Now let's come back to our Commission. We recognize that there are many points of view. The Task Force that we set up purposely included geographic cross-sections. We had small-, medium-, and large-sized firms. We had people who were purely in general practice, we had people who were specialists, we even had two carpetbagger firms join in. And so we started out with a group that was pretty much a political microcosm, if you want, to deal with it.
The first thing we did was the Connecticut Bar Foundation put on a program on multijurisdictional practice in New England. Most of the members of that Task Force attended, so that when we had our first meeting at the beginning of December, we already had a pretty good idea of what it was all about and what was out. We concluded that the odds of your getting a broad-scale exemption for multijurisdictional practice was probably pretty poor because, very candidly, when you get to the northern part of New England, the Midwest, the South, there's not a lot of interest in worrying about lawyers who practice on a national basis.
New York - yes, New York City. How about upstate New York? I'm not sure how much you will find there. But you get the same thing.
So we looked at what is doable within the foreseeable future, and, very candidly, we reached out immediately to the proposals to work with 5.5 of the Ethics 2000 Commission report. We have worked within that and recognize that it's unlikely, Despite the fact that I think Ethics 2000 is working very well to try to solicit broad-based support, we suspect that many of its provisions will not be adopted in some of the states which are probably a little bit more parochial and concerned.
Therefore, we have taken 5.5 and our recommendation of the Connecticut Bar Association will be that we have a slightly revised version of 5.5 and do it on a reciprocity basis. So we'll give attorneys from other states the right to do what we permit if they'll do the same thing for us.
Now, where do we stand with that in New England, which is looking at that proposal? I just had a report from the Chair of the Ad Hoc Committee on MJP in Rhode Island, and they are going to recommend the adoption of 5.5 as one way of dealing with MJP. So I suspect that we will see two states using 5.5, slightly modified, as the basis for dealing with what we think is politically doable at the present time.
Now, even in Connecticut, we don't think we could just print out that report and ask for a vote and get it passed. What we're doing right now is we're soliciting the active support of each of the principal sections which have a real business interest to endorse our report so that when we have a meeting of the House of Delegates at our Annual Meeting, we will come there with a bunch of sections already supporting the proposal, and we think that that will carry the day.
And then, our next step obviously, once we accomplish that, is to run to our Rules Committee of the Superior Court and try to convince judges that this is something that they ought to do.
So it's not something that is going to easily happen.
Now, if I can switch to my own personal views, let me tell you I am a firm which is, depending upon where you are, a large firm or a medium-sized firm. We're approximately eighty-three lawyers. We have an office in Boston as well as in Hartford and another in Southport, so we're in two states.
A part of the practice is construction law and two of our partners are acknowledged leaders nationally on construction law. We tend to represent some of the international contractors, and we're out there literally representing this particular client or that particular client in the states where they have construction projects that have gotten into trouble and there is a litigation.
Now, to the extent that we get to litigation, we theoretically have pro hac vice, and if you look at 5.5 this afternoon, you will see the February draft drops out of (b)(1) the preparation for, where you reasonably believe that the work that you are doing within a state will lead to ultimately an ad hoc admission.
Well, hopefully, some of the things that we do in preparation for litigation lead to resolution without getting into court. Does that mean we become naked because we didn't get a pro hac vice admission?
The other thing I will tell you, since I do practice in the courts all around the country, is you are now beginning to see, more often than not, a limitation on how many pro hac vice admissions you may have - one a year or one at a given time. So that is going to create some problems for those of us who are active in litigation.
The other thing I didn't tell you, one of my other credentials is that I'm admitted to practice before the Patent Office, so I'm one of those people whom Sperry v. Florida allegedly protects. I don't know that you can decide what is practice before a federal agency and therefore you're exempt from regulation by the local bar. Take a look at the unauthorized practice cases that are out there and you're in peril in some of the states, because some of them do take a very narrow-minded view as to what is "federal practice," what you can do and what you cannot.
So I think that when we look at this we should be somewhat careful to make sure that we're protecting people and not leaving land mines out there. And, very candidly, when I look at 5.5 as we propose to adopt it, I see little land mines out there for me, and I'm sure that there are some for other people. But at least it is a significant step forward. It provides a significant amount of safe harbors, which we presently do not have, and it will accommodate most of the concerns of in-house counsel and it will counter most of the concerns, I think, for most transactional lawyers. But it is not all the answers.
To give you an idea - and I am going to hand this in to Mr. Holtaway - Robinson & Cole is one of the Connecticut firms and they have a nationally recognized land use regulation group which gets called in to consult with communities all around the country. They went to Florida. They were retained by county counsel to help them develop land use regulations. The next thing they knew, they were being grieved in Florida, they were having to defend a grievance proceeding in Connecticut, they were accused of malpractice, they were being sued to return all the fees that they were paid, et cetera. Now, here they were being retained by the county lawyer to advise the county, and yet local lawyers decided that that was nasty activity. They finally got out of it. I'm not sure that they had a profit on the fees from the transaction when they got done paying the lawyers.
But these time bombs are out there, and the more we do to try and keep them down - I personally like the Green Card. I mean, I would love to have the Green Card. I mean, I have no excuse, even under 5.5 as we propose to do, when I go down to represent my clients that have moved to Georgia or to Florida or to California, et cetera.
I will give you another kind of idiotic situation that we have. Those of you who are familiar with Birbrower must be aware that the legislature overruled or trumped Birbrower by adopting a provision that said arbitration was not covered. So then, the State Supreme Court said, "Ah, we'll let you come in now because the state legislature says it's okay, but you're going to have to register and pay a $50 fee." So, wonderful.
Right after they adopted that rule, the AAA asked me to be the single arbitrator in an arbitration to be conducted in L.A., so I write a nice letter to the counsel for the AAA and I said, "Will this rule apply to me since I'm the arbitrator and not an attorney participating in the arbitration?" I never had a response. I still don't have one from the state.
So now, in helping solve the problem of a conflict between parties, did I expose myself to unauthorized practice in California? I don't know, but I certainly worried about it.
You know, this is the thing that we have. We've got land mines out there all the time.
Our local legal rag, The Connecticut Law Tribune, did a study right after we appointed this Task Force, and I spent close to an hour with the reporter explaining all the issues that were involved, et cetera. He looks at me and he says, "Well, do you engage in the unauthorized practice of law?" I said, "You know, there's the Fifth Amendment that I take at this point." Because I do - knowingly, I am out there in a number of occasions doing what I know is wrong according to our protectionist concept. We do have that in the Code of Professional Conduct and our State unauthorized practice statutes.
But we also have a higher ethical obligation, and that is to provide the clients the services that they want reasonably, economically. What are we going to say – "Oh, I stop at the border; you're going to have to get two other lawyers if you want them to give you advice over here and over here?" "But we don't want different advice. We want some advice that's uniform in all of our facilities." So we have to recognize that this is a real need.
But I will say that I think 5.5, if you focus on it this afternoon, does at least begin to give you probably a reasonable safe harbor for at least a reasonable amount of transactional activity. But watch the proposed change to (b)(1) in that February draft because I don't like putting it over into the commentary. It really ought to be up front because too many times we're not going to get into court because we're out there, hopefully, to make the problem go away, find out what the facts are and make it go away.
I've made my speech. Do you have any questions?
MR. POSITAN: Charlie?
MR. McCALLUM: Before you get into substantive discussion with Peter, could I, with stung pride, just make a brief comment? We're well aware in Michigan that to Northeastern eyes we're considered somewhat parochial - you mentioned the "parochial Midwest" -but Michigan actually has a very enlightened statute, as you may be aware of, so we think maybe it's a bum rap.
MR. COSTAS: I should have taken out Illinois and Michigan. I apologize to the great Midwest.
MR. EHRENHAFT: I just have a question about the reciprocity aspect of your proposals. I wondered the extent to which that was really vetted and thought through. You know, the United States, in its international trade arrangements and others, has decided that reciprocity is as likely to shoot yourself in the foot as it is to achieve the desired goal, and that being the leader in proposing a good idea and serving your own people in your own jurisdiction and elsewhere by that example is going to be better than waiting for others to actually adopt something, and reciprocity tends to prevent the rapid adoption of liberalizing kinds of rules.
MR. COSTAS: I think, again, perhaps our group was people who are very politic in their orientation and beliefs. We felt that it was more likely that it was saleable if in fact it was something where we knew that the same conditions and courtesies would be accorded to our people when they went out of state. I hear you, and I also suggest that politically it's a good move.
MS. YU: I sort of smiled when you talked in the Birbrower discussion about the legislature trumping the Supreme Court, because actually that's not quite true. The Supreme Court in the opinion invited the legislature to change the law so that some of these arbitration proceedings would not be within the ambit of UPL, and the legislature accommodated the Supreme Court and did that. So it's not exactly trumping. They said ?we are bound by the law as it is written now to interpret it and come out in Birbrower the way we did, but if the legislature changes that particular aspect of the law, that would be a different story. I think that's one thing that's important to keep in mind throughout all of this.
I mean, I've heard a number of people talk about protectionism and parochial interests and states' rights, but in fact that's a fundamental part of our governmental system, and the independence of the bar and the independence of the judiciary are also very fundamental. I don't think it's going to win us any friends with those particular entities and agencies by not recognizing how valuable it is sometimes to have those very same agencies and governmental entities and courts provide the protection to the independence of the bar that they do.
I think that is something we shouldn't lose sight of as we're talking about breaking down all these barriers, because in fact we have a United States of America, and those fifty states and jurisdictions feel very strongly that, under the Constitution and Bill of Rights, that they have states' rights that are important. So just a thought that it's helpful to understand and appreciate that tension and importance.
MR. COSTAS: Well, the principle of states' rights was pretty well articulated until the Florida election fiasco.
John Holtaway asked me to take a look at the statement that we have, and that's the problem of 5.5(a). Actually, in Massachusetts, John, there are two cases where lawyers have been found to be engaged in unauthorized conduct and penalized by the Massachusetts Board of Overseers where in fact they had engaged in activity in another state. I have tried to get the full factual information on both of those cases, and I still don't have it. But literally, if you read the decision, they were found to have engaged in the unauthorized practice of law in another state where they were not admitted and they were penalized.
If you look at 5.5 as it reads, it would pick you up. You are yourself exposing yourself to violation of 5.5(a) by knowingly doing something in another jurisdiction. That's why I say we're full of mine fields.
MR. HOLTAWAY: Well, the sense that I was pointing out - I thought your statement was a lawyer is going to engage in some type of conduct in another state that would be permitted in his home state and it's not permitted in the out of state so he's going to get disciplined for something. I thought that is what that -
MR. COSTAS: Well, that was the anomaly that we saw.
MR. HOLTAWAY: And what's an example of that? I always hear that.
MR. COSTAS: Well, all right, let's start out with the certification situation. Some states are talking about certification. Some states will certify and some people ? we have situations where the only ones who can do certain things are those who have been certified for such and such. So, to the extent that you would go into a state and practice within this area where a state has required certification and you're not certified in that particular state, yet that's what you do all the time in your home state, you could become -
MR. HOLTAWAY: That's a regulatory thing.
Lucian, maybe you have a better example. I'm talking something that's a core value, an ethical thing, that one state, you say in your sentence, is going to prohibit but the home state will allow.
MR. PERA: Are you talking just flat differences in, for example, ethics rules?
MR. HOLTAWAY: Yes.
MR. PERA: Well, I mean, there are differences on the context of represented parties rules, for example, how they're interpreted as to former employees, how they're interpreted as to how far up the chain of command you can go. That would be a good instance where, as far as I'm concerned, that rule is for the protection of largely the public.
MR. HOLTAWAY: Okay.
MR. PERA: So, I mean, if I am in Tennessee and Peter has got a case in Connecticut or whatever and he -
MR. COSTAS: I had one in Tennessee where we had to do some things under the Tennessee rules.
MR. PERA: It seems to me that there's an argument about which rules apply, but I know what side of that argument I am on.
MR. HOLTAWAY: But it seems, Peter, in your sentence there, you are saying it would be wrong for the Tennessee authorities to punish a lawyer for doing something in Tennessee that they wouldn't be punished for in Connecticut.
MR. PERA: That's not what you're saying, is it?
MR. COSTAS: No, that's not what that says. It says that technically I would have now violated our state's provision of 5.5(a) because what I did in the other state was contrary to their law.
MR. PERA: But that's not by virtue of violating the ethics rules; that's by virtue of violating the unauthorized practice rules, right?
MR. COSTAS: Well, here's the problem we get into. You've got a little bit of both that sort of wash over each other. It's very confusing. I think that's why I keep saying there are so many land mines out there, because how you interpret where you are represents a problem.
It's a little easier when we're in litigation, to the extent that we've got a matter that we can take the time to study the local rules, et cetera, and become familiar, and take our little troupe of first- and second-years that we're going to bill out at a few hundred dollars per hour to Tennessee and we're okay.
But, you know, literally, for the transactional lawyers there's a serious problem. They're not going to be paid by some client for forty or fifty hours of preparatory work before they do a two-hour job that would affect them in another state. So, I mean, these are the issues that are out there.
MR. POSITAN: Any further questions?
MR. COSTAS: Thank you.
MR. POSITAN: Next we have Professor Elizabeth Reilly from the Akron Bar Association.
MS. REILLY: I'm the resident parochial protectionist.
MR. POSITAN: You're in the Midwest too, I guess, right?
MS. REILLY: Hi. I'm Elizabeth Reilly, and I do thank you for inviting me on behalf of the Akron Bar Association. Although I am a professor, I am speaking on their behalf, from their points of view as practitioners. I'm a member of their Board of Trustees.
I guess I would like to do two things in what I am going to do today. The first is to place some perspective on the position of the Bar by telling you that this is a bar association and a practicing bar that really sees as one of the greatest sources of strength and professionalism the fact that the attorneys have close ties to each other and to their community, and that that is one of the most important factors which allows for and enforces the respectful professionalism which is both expected and practiced in our area. And so, we don't want to have that aspect of how we enforce core values lost through multijurisdictional practice.
And so, I come with the perspective of somewhat of a cautionary note, that it's important for us to tread carefully as we do this to assess the impact of the steps that we take to make sure that the results of the steps we take are not going to be things that imperil the profession, the public, and even our clients.
With that being said, there is no question that not only is multijurisdictional practice a pragmatic necessity, but it is a positive good. The Akron Bar recognizes that too and think it's very important that multijurisdictional practice in certain aspects be recognized. It is a cost-effective, consistent ability to provide client services and to provide those services from an attorney of choice, and those are great things.
But we live in a world where there is even such a thing as too much chocolate, so maybe there's such a thing as too much MJP and we shouldn't be quite so permissive to start with. I think that might kind of encapsulate the position of the Akron Bar.
To go back to the core value discussion, there is a great deal of what has been said today with which the Bar and I agree, but I think that, as we talk about enforcing ethics and professionalism, that it's not enough to think of the disciplinary process as the process by which we do that. It's an important thing, and I think that we definitely need to have attorneys who practice in jurisdictions outside of their admission, subject to the disciplinary rules and processes of those jurisdictions. But let's face it, that is probably the least important and least effective method of enforcing professional responsibility and ethics. The most important method is we have to rely on individuals' integrity and wisdom, and we know that most of the time that is reliable.
But one of the things when you go outside of jurisdiction and you're trying to assess your own competency is you may not be quite all that aware of the limits of your own competency because you may not be all that aware of the idiosyncrasies of another jurisdiction. So we have to keep that in mind when we craft rules about multijurisdictional practice, that we make sure that attorneys really have the basis for assessing their own competency, because that is primarily what we need to rely on, is our own ability to assess it.
Secondly, and a topic that I haven't heard discussed today, is that I think one of the most important parts of the enforcement of core values is the bonds of the community within which we practice. It's that peer expectations and peer enforcement ? not on a formal basis, but in many ways on an informal basis.
So caution isn't just simply a matter of parochial professionalism. I think caution is a matter of making sure that the kind of commitment and involvement and activity in the professional community is something that we don't lose when we start engaging in multijurisdictional practice, and particularly when we start engaging in it through virtual, as opposed to physical, presence.
The practice of law, I entered it because it was a people profession. I think the further that we get away from our concern with and our ties to people and to our clients, perhaps the more dangerous the waters that we are treading in.
I really think that we shouldn't lose the enforcement potential of being a part of a professional community. Now, do I think that that means that - it's not that the professional community is irreplaceable as a method of enforcing and generating core values of the profession, but I do think that something similar to it is indispensable.
And so, as you craft the position of the American Bar on how we should do multijurisdictional practice, one of the things that I think that our Bar is most interested in your doing is making sure that you have thought about and have some methods to ensure those intangibles that come from being a member of a professional community, with ties to and commitment to the people of the community as well as to your individual clients and to the other practitioners in that community.
It may be a much wider community, as Professor Munneke was saying earlier. We probably belong to much wider communities now than we did before, but let's make sure those communities exist and that we enable them to be one of the functioning parts of a real ethical process.
Ohio also is an old Code state, as opposed to a Model Rule state, and perhaps that's part of where I come from. There is a lot aspirational, I think, about professional ethics that we don't want to lose.
I think there is also some concern about the driving-out possibly - and I don't mean this to sound like economic protectionist - but if we look at what has happened with businesses sometimes, the large national business comes in some ways, doesn't act predatory in any way that would be considered illegal; but effectively, through a combination of economies of scale and cost-cutting, at least initially, can drive out local businesses; and then, when the local businesses are out, the level of quality and the pricing and services are no longer the same as they were when they effectively drove those local businesses out.
If we treat law simply in that way, I think there is some concern in the Akron Bar that when you lose the potential for local provision of committed services to clients, that's when you start losing your low-cost services to clients and the availability of services. So we have to make sure, again, that multijurisdictional practice doesn't mean that all practice becomes national and doesn't mean that it becomes even more difficult to provide the kind of community-based local and affordable services that many of our clients need, because we have clients - as Ms. Yu had said earlier, many of our clients are not multinational or multi-state clients, and they shouldn't be lost in this process of trying to craft ways of protecting what it is important to protect in both directions.
I think Professor Green said it. That's my position. The problem is figuring out where to draw the line - not that there isn't, it's just where do you draw it.
I'm here to testify on behalf of being careful to start with, as well as being widely permissive to start with, and moving the line as we prove as a profession that we are capable of maintaining our core values and discipline and the enforcement of professionalism at the same time as we are experimenting with and experiencing multijurisdictional practice.
One thing, too, we came up with the idea that some sort of registration system might be a very viable thing. One of the problems is that a registration system for people who are not engaged in relatively wide-ranging, broad-based multijurisdictional practice might in fact, or could in fact, jeopardize some sorts of client confidentiality. Perhaps a client doesn't really want people to be able to know at this point if you're exploring things. We were a little concerned that we think about that, at least when we're looking at a registration rule, to make sure that it doesn't jeopardize confidentiality.
The pro hac vice we felt works pretty well. We have a fairly liberal application of that, at least in our local area, for lawyers coming from the outside. But it seems to me that part of the reason pro hac vice has worked so well is that it is public, it is visible, and there is a presiding officer of some sort there. Those three aspects of that kind of multijurisdictional practice help enforce exactly the sort of underlying professional expectations that I spoke about earlier. And so, again, perhaps we want to draw from that in trying to craft ways of establishing rules for multijurisdictional practice in more transactional type situations.
I think, finally - and this comes from our point of view that caution is probably the best way of approaching things at this point - sometimes boundaries are really well policed when people are at risk because you police yourself. So one of the members of our local Commission said that, except when we've got relative consensus about what types of multijurisdictional practice are good - when we don't know where to set the boundaries, the good thing to do is to put the lawyer at risk for those boundaries, because that then makes the lawyer think, makes the lawyer assess things, perhaps affiliate with local counsel if necessary. But it's a good way of self-policing so that you know, just a pragmatic way of making sure the boundaries don't get stretched too far without our knowing where they are going.
So we actually have become, in some ways, from an anti-protectionist point of view there, which is a little bit of risk - or even a lot of risk - on some lawyers might be a good thing, rather than removing all of the risk when we aren't really sure about the ultimate impact or implications of certain types of inter-jurisdictional practice.
MR. POSITAN: You raise an interesting point about the concept of deregulation and what it means to the public, because if you look at the deregulation of the banking industry, which was done for many of the same reasons that have been expressed by those who would knock down all the barriers in our profession, you experience - for example, in New Jersey, which I am well aware of, where we had four or five very strong state banks that had the interest of state businesses very much in hand, you had a lot of hands-on interrelationship with loan officers and account representatives; and what you see now is that they're all gone, they're all now headquartered in Boston and North Carolina and Philadelphia. Certainly what the small-business community or moderate New-Jersey-closely-held-corporation community has seen, as well as the consumer, is while they're allegedly getting all the benefits from the cheaper transactions, and two cents to do an electronic transfer as opposed to twenty-four cents for a check, what you are seeing is a vacuum that has been created, because you can't talk to your loan officer anymore, you get a different one every six months, and they don't really have the same communication level that the public had with the people who they have, in effect, taken the place of, all for the efficiency for the industry, for the demands of the international and national and regional marketplace, for the benefit of the shareholders.
But I have seen many situations where my clients have been adversely impacted by virtue of that deregulation. And you can argue it on both sides, I'm sure.
But I still have the same concern that you touched upon, about making sure that the same kinds of consumers of our services do not end up in the same place.
MR. EHRENHAFT: I was just going to say that as long as you don't have barriers to entry, if people are willing to pay to have the loan officer on a local level or the small businessman or the lawyer who charges less, there is nothing to prevent them from offering their services - if they don't get business, it's because the consumer doesn't want it. We shouldn't romanticize in a free economy the benefits that were allegedly provided by the small business.
I mean, this is a standard antitrust issue that is booted about all the time. There are antitrust laws, sort of like the European ones, that ensure the value of the small businessman in the face of the efficiencies of large service and goods providers.
I think if we believe that in a free economy, if there are no barriers to entry, if anyone who wants to provide the service is not prevented from doing so, but it just happens that without regulation the customers won't come because they don't want to pay the extra amount, is it the purpose and role of the state to provide that protection to the small businessman? In part, that is a value judgment, but I think that our economy and our antitrust laws and competition laws have moved in that direction. That is the answer to the small banks and the shoemakers and the small grocers and so on.
MS. REILLY: Well, I think that, first of all, we do need to be somewhat careful about taking just pure economic theory and applying it to virtually anything, but also to the practice of law.
But I think that there are also intangible barriers to entry that we're talking about. One of them is, quite obviously to me, the information overload that exists out there. The barriers to entry don't have to be solely to hanging out your own shingle. They can also be if that shingle is seen. In some ways that creates a barrier. So I think we have to think a little more globally than simply in a dollars-and-cents way about the provision of services.
Practically speaking as well, a lot of times the way that local - not needy so much, but less able to pay perhaps - clients get taken care of is not by paying the same rate as the other clients pay. And who is willing to do that? I mean, who are the people who have differential pay scales for different kinds of clients? I guess it strikes me that, from what I have seen, and it is purely anecdotal, is it tends to be the people who live in that community, who care about it, and who find a greater intangible benefit. I'd rather only charge half my going rate because I can provide something of value. I don't know that some national law firm or business in general would think in that same way.
That is one of the concerns that we have, is that there are so many intangibles beyond the bottom line and pure dollars and cents that drive the way that lawyers provide their services to potential clients.
MR. GREEN: Obviously, there is a lot of common ground among the people who have testified today in terms of recognizing a disconnect between the existing restrictions as they might be read and the realities of practice and what we would like. I think almost everybody today has at least supported the idea of recognizing some safe harbors along the lines of those in 5.5.
But there is also, I think, a divide between those who - for example, the Association of the Bar of the City of New York - have urged something like the Green Card or One License for Life now; and the Akron Bar saying "no, go slow, because there are at least potential problems in terms of the effect on local practice and the question of whether lawyers will practice competently outside their own home states, and we don't know what the impact would be of the Green Card or the One License for Life, and therefore let's take it incrementally."
It seems to me that underlying that divide is sort of an empirical question about what would happen, in fact, if we had the simpler solution, like the Green Card. Evan Davis might say, "Well, we have some empirical information because we have looked at what they did in the European Union; it doesn't seem to be a problem." Somebody else, maybe Professor Munneke, might say "we can't take the incremental solution because the world is changing too quickly."
I guess my question is what you would say to those on the other side and whether there might be some other way to get some information without the sort of "go slow" solution.
MS. REILLY: I wish I could think of another way to get information other than to go slow, because I think you are right, that a lot of it is a desire to have an empirical basis for what we are doing and to move on the basis of knowledge as opposed to guesstimate.
If I look at the European Union idea, one of the things that struck me about that is it sounds like what you do is you go there and you be there, and so you are actually a functioning member of that community, which is somewhat similar to the position that we have, is that really perhaps you - and it may be similar to the way that our Bar treats it - wherever you go to law school, it's whatever bar you pass. You can take the bar in any state if it's an ABA accredited law school.
It struck me as somewhat more similar to that, with kind of an internship and certainly the idea of the ties to the community. It didn't sound - and perhaps I am wrong, because I am not aware of it, and I'm sorry Anthony is not here because he might be - but it didn't sound like it was just this non-jurisdictional practice. It was a jurisdictional practice; it just didn't happen to be jurisdictional from the initial admitting State.
And so, that might be something to consider: Is there a critical mass of familiarity that you might have? There are also a lot fewer countries in the European Union than there are states in the United States. So if it is a critical mass question, that perhaps you can function competently in ten states and keep abreast of idiosyncrasies, but it's very difficult if you are, say, past thirty. I think that is something I'd be interested in learning more about.
It's one of the reasons why our Bar came down on the side of what appear to be truly uniform practices, very federalized practices, like intellectual property, that don't have individual state idiosyncrasies very likely, and that the tribunals in which you're likely to appear are federalized or uniform. Those seem to be just crying for allowing people to go anywhere and do anything. They really shouldn't have boundaries.
So maybe it picks up on what Professor Munneke was saying. We really are substantive people, but sometimes that substance does differ a little too much. When the substance doesn't, I think we should have it broader.
With respect to registration, I think we like the idea because, first of all, it is somewhat public, it certainly gives visibility; and the absolute submission to state disciplinary authority to have registration, that is a really good thing about it. But I think we would prefer seeing it in line with safe harbors, as opposed to in line with just flat-out permissiveness, that once you have registered, you can basically do anything unless the state decides that you are using it as a pretext for avoiding meeting their standards for admission.
We kind of like a bit more conservative use of registration, but through that with registration you could probably venture out a little further than mere safe harbors, that you could with that make that your source of experimenting with what works effectively in multijurisdictional practice.
MR. EHRENHAFT: I would just like to comment on your remarks about the European situation. I think that you are quite right, that it focuses much more on the setting up of permanent residence in another jurisdiction. It doesn't focus on the transient practice issue, which we I think here have been talking about as the main issue. So from that point of view it doesn't address it.
On the other hand, I think that it is a very important fact that the differences between the fifteen Members of the European Union in language, culture, and everything else are much, much greater than between any states - even Louisiana and the rest of us, as we heard about. So I think from that point of view there is much more uniformity within the United States.
But I don't know that the European model addresses the transient issue that I think is the main focus of our discussion. Maybe I'm wrong. I don't know.
MS. TERRY: If I can answer that, I'm Laurel Terry, and I have some expertise on the European Union stuff. They've actually got two different sets of laws.
They have one that was adopted in 1998 that deals with the more permanent situation that you've been talking about, and that's the one that has been discussed a lot here. In fact, it doesn't really have a history of implementation yet. It was a two-year period after the '98 adoption. There is not yet a lot of empirical evidence.
But since 1977, there has been a different Directive dealing with the transient lawyer situation. There is no registration requirement for that one, and that seems to have operated just fine.
And again, I would echo the fact that I think the differences within the fifteen Member States of the EU are much more striking than the differences among the fifty U.S. states. Language is an obvious one, but also legal systems. You've got common law and civil law systems there and there are significant differences between them.
MR. EHRENHAFT: I think that one reason, though, is that in some of the European countries it is not necessary to be a member of the bar to provide legal advice. Legal advice is not regarded as - the lawyers are regulated only to the extent that they appear in court. Now, most people become members of the bar because clients want them to be, but it is not necessary to be a member of the bar to give legal advice. They don't have unauthorized practice rules as such, the way that we do, so that facilitates transient transactional practice where you just give advice.
And as far as the courts are concerned, if you don't speak the language, you're not going to go to court anyway, so that's a very practical reason why Frenchmen don't got into the German courts.
MR. POSITAN: I guess what troubles me about all that is that we have a legal system that has functioned as a beacon to the rest of the world for 225 years and we're now relying upon a European system that has been going on for about five years and using that as our new model. So I'm a little skeptical. I want to see a little more track record.
Any further questions?
Richard Jeydel from the New Jersey Corporate Counsel Association.
MR. JEYDEL: Well, they've all disclaimed me, so I'm not speaking on behalf of NJCCA.
MR. POSITAN: I did share a panel with you last year over in New Jersey.
MR. JEYDEL: Yes, sir. I remember that. I had a little bit more imprimatur at that point.
But I am basically here as a twenty-plus-year in-house practitioner in a very small legal department. I was an associate at a large firm in New Jersey before that. I currently do quite a lot of arbitration and mediation work, both as counsel representing various clients and as a neutral, and it is from that perspective that I want to just touch upon a few topics.
I hate to do this with adult supervision, in the form of Susan Hackett here from ACCA, but I did want to depart a little bit from the party line.
I am somewhat concerned, as an in-house practitioner, about the special treatment being considered or being accorded in some existing state statutes for in-house counsel. My concern is that special treatment, in effect, is, as I think we discussed last March, a sort of Plessy v. Ferguson type of situation where other things are going to be attenuated. We may be treated specially for purposes of being allowed in the state, but then lose attorney-client privilege. So my view is that there ought not to be in the long term a distinction between in-house attorneys and outside counsel. I think we ought to be treated the same.
But let me speak a little bit about my perspective, which is one with very little collegiality. We're a department of two people. As I think I joked in New Jersey, if there were wanted posters for UPL, my face would be plastered all over every jurisdiction in the United States and in quite a few countries where I have either argued cases before tribunals not requiring a pro hac vice type approach, or mediations which by nature you really can approach. I have also served as a neutral in quite a few places where I'm sure, had those locals known about it, a torchlight parade would have begun.
The fact of the matter is that for many of us - and I don't know what the empirical data are - both in firms large and small, and law departments large and small, we are doing this because we have no choice. From, I guess, what to me at least seems like a higher moral plain, I don't see a problem. I guess a lot of sins hide behind zealous representation of a client, but I don't see any real difficulty in doing that which is most efficient, most appropriate for my clients. I certainly can make a judgment as to when I need outside counsel. I certainly am in a position to tell my clients that I ought not to be doing this, as I do frequently even in states where I'm admitted and in disciplines in those states where I don't feel I'm competent.
But on something like mediation or arbitration, which I do all day long every day, both as an advocate and as a neutral, I'm going to go up and represent my clients. I guess I've been under the radar for the most part for quite awhile, and that bothers me. I'd much rather be doing this - and I have no choice but to do it if I'm going to maintain my current employment - with some meaningful ethical guidance. There really isn't any right now. We are all off on our own doing what our clients require. It makes economic and efficiency sense for them.
We are not in any way constrained by a lack of knowledge, as one would be where local rules apply. As was mentioned by Professor Reilly, there are a lot of subject areas in which we practice in which there really, even if it isn't a federal area of practice - and ADR comes instantly, at least to my mind - where there really are no essential local differences, and those that exist are rapidly pointed out to you by either the neutral before whom you are appearing or by your adversary.
There is really no way of escaping the fact that if core values are to be maintained - and that seems, I think appropriately, to be very much of a focus here - the rules are going to have to reflect current reality, and there's no turning that back.
I know people talk about local communities, but there are other communities in which we all function. I know that the group of us who do international ADR is a pretty small one. We don't happen to run into each other in court every day, the way I used to when I practiced in Newark, but we certainly do see one another quite constantly. We have standards to which we adhere.
It would be nice to know that in representing our clients, however, we're not committing some cardinal sin, and right now it's pretty unclear. I think even in our state, New Jersey, now there is a very interesting disparity, which I found quite puzzling. One can be a lay person and serve as a neutral; but if one is a lawyer serving as a neutral, one is engaged in the practice of law. So I'm not sure which is the worst offense, when I'm arguing a case or presenting a mediation in some jurisdiction in which I'm not admitted, or if I have been told to go off and be an arbitrator or a mediator in some jurisdiction in which I am not admitted. Perhaps they are of equal import.
But it's a shame that for transactional lawyers, basically for everyone, as you've heard a million times - I think in California's it's "three strikes your out" within a certain period of time. So I have two strikes remaining in California right now. I don't want to burn them up every time someone calls me about a lease in California. I certainly do not want to do that when I am preparing to take care of, for example, an employment mediation in California.
What are we to do here? Are we to tell our clients, "Look, fire all of us and make sure you have 7,000 layers or attorneys for every single little problem." It just doesn't make sense.
I think part of the difficulty with what I have to term as sort of "turf protectionism" is that people assume that there is somehow going to be interference, that there is somehow a win/lose matrix here. I don't think that is the case. I think that which most of us do on a multijurisdictional basis really has no impact whatsoever on local practice, and generally it's not the sort of thing that is going to create a problem, if that is a problem.
I really do think it would be great if you could come up with something. I wish I had more specific guidance in that regard - easy to say, but not so easy to do - that would allow us to do what so many of us are now doing, even if it's just an occasional call to a witness out of state, which I think is a problem for people who maybe don't realize it at some of the smaller firms, to tell us that what we're doing is okay as long as we're not soliciting clients or otherwise engaged in unauthorized practice of law in a meaningful way.
My hope is that you will be able to pull that rabbit out of some hat and come up with something that allows those of us - and I think there are many of us - who are engaged in a practice that, by necessity, crosses state lines to feel that we're still acting within the canons that should apply to our profession.
MR. POSITAN: As a follow-up to one of your thoughts, when a lawyer does something that a non-lawyer also does - let's take employment counseling, dear to my heart - is a lawyer always a lawyer when a lawyer does something that even a non-lawyer can do? We got into a discussion out in San Diego about the concept of when does privilege attach, when do some of these core values spring into existence. Do you have any thoughts on that?
MR. JEYDEL: Sometimes it's rather difficult to cleanly separate that which is legal in, for example, a termination consideration, as you know, from that which is purely business. But to the extent that it's not unalloyed legal advice, I think you have lost whatever sword and shield you may have laid claim to. I think it is a shame to see business people or lawyers functioning as business people attempting to hide behind the privilege in a way that really is an abuse.
MR. POSITAN: Well, let's take it a step outside the corporation now. Let's say I go out to Nebraska - without regard to whether Nebraska has any particular rule or not, just to separate me from where I presently am - and I engage in employment counseling, let's say. It's not an internal corporate matter, and you're getting into the whole issue of when is somebody acting as an attorney within their employment with a corporation, but to do an activity which would be something that is done frequently by one of the Big Five, let's say, or Andersen Consulting, or whatever they're called now. Would that be practicing law when I go out and do that?
MR. JEYDEL: I think it's a function of how the Nebraska statute applying to the unauthorized practice reads. To the extent that -
MR. POSITAN: What do you think should be the case?
MR. JEYDEL: I think to the extent that you are not giving legal advice, not performing a legal function, you are not acting as a lawyer, I suspect that you are not within the ambit of any of the laws that govern lawyers either in your home jurisdiction or in the jurisdiction in which you find yourself.
MR. POSITAN: But I think when I do a handbook - I mean a corporation comes to me and says, "Review our handbooks and give us some thoughts" - I think I'm practicing law.
MR. JEYDEL: I think you are, too.
MR. POSITAN: Whether I do it in New Jersey or in Nebraska.
MS. YU: Especially if they have hired you to do it because they know you have this legal expertise, experience, and knowledge, then most courts would probably say you are practicing law, even if a non-lawyer or an HR professional could have done it too, because the reason you got hired to do it is because you are a lawyer.
MR. POSITAN: Wouldn't the client want me to be, though?
MR. POSITAN: Isn't the advantage that they then have privilege? Let's say I get hired to do a harassment investigation.
MS. YU: You don't get privilege if you are not a member of the bar in that state.
MR. POSITAN: Well, that's only if I want to use that as a defense, isn't it?
MR. GREEN: I assume that, even aside from the privilege - you might not be engaged in the practice of law for attorney-client privilege purposes, but you may be for purposes of the ethics rules - then the question is whether you are or not for purposes of unauthorized practice of law rules. That may be another thing.
MR. JEYDEL: The reach of each is different?
MR. GREEN: Yes.
MR. POSITAN: Maybe it's a justification as to why you would still want to use a lawyer, as opposed to a non-lawyer, for those that are concerned about competition.
MR. JEYDEL: I think you will find that most corporations do precisely what you say, they send their handbook to someone like you to be vetted, and that is a legal function. We want to make sure that we're taking advantage of the proper disclaimers for at-will employment, et cetera, et cetera. So I think that is the practice of law.
The question is, are you engaged in the unauthorized practice of law? I certainly would hope I'm not when I review or draft the handbook and then send it out to each of our branch offices all over the United States. According to you, I think I am.
MR. POSITAN: I used that example because I wanted to distinguish it from federal law, because I think if I go and negotiate a collective bargaining agreement in Nebraska, I can do that.
MS. YU: Just because you do doesn't mean you can.
MR. ANTHONY DAVIS: Wayne, the issue of privilege is almost irrelevant. It may not be relevant to that client when they realize what has happened. But for the lawyer providing non-legal services or services that a non-lawyer can provide, there is a provision ? I think I it is 5.7; my academic colleagues will correct me - about ancillary services, and even New York is looking at one now.
It makes it very clear. It follows the common law. If the client thinks they have hired a lawyer, then you are their lawyer, even if a non-lawyer could do it. I mean, that is the test.
The important thing about that is it ties into a discussion we had earlier ? that is, the value we bring to the client, that we bring the core values. But that's a separate issue about whether it should be UPL if we do it across a state line.
MR. POSITAN: Well, that's where you get into the whole conundrum.
MR. ANTHONY DAVIS: That's right, but there is no question.
MR. POSITAN: But it may be a reason to be taken into account by those who think that what we're going to do is to, in effect, affect them in a negative way about competition. If you're a lawyer and you're always a lawyer even when you're practicing as you just posed, then why wouldn't the client want to hire a lawyer as opposed to a non-lawyer, because they then have the core value attachments, right?
I'm sorry. I did say Charlie was next.
MR. McCALLUM: All I want to say is that there were different views expressed on this. Lest we leave a misimpression, I think there are some of us who don't believe for a minute that if you go to Nebraska and counsel a client on an employee handbook, that that client would be deprived of the benefits of privilege. There are some people apparently who feel it would. I don't think I'd give that ground up for a minute, and I think you'd be right to insist that you do have the privilege. So there are different views on that, I think.
MR. POSITAN: Laurel was next.
MS. TERRY: I was just going to say to the extent you are looking at the part of it that deals with the lawyer's obligations to the client - which I agree is a very different question than the privilege and the UPL - I would commend to you the Pennsylvania rule on this. Pennsylvania was one of the first to adopt a provision. It explicitly ties the obligations of the lawyer to the client with respect to things that a non-lawyer can do to the client's expectations. It basically says that the lawyer has all the duties of a lawyer - confidentiality, et cetera - unless the lawyer makes crystal clear to the client that the lawyer is now acting with a non-legal services hat on.
MR. ANTHONY DAVIS: That's right. It's a very good rule.
MS. NEEDHAM: Just a very brief comment. To the extent that you would not be treated as a lawyer in a jurisdiction in which you were coming in to give federal law advice, that to me is one of the key problems that precipitates this whole Commission. You ought to continue to maintain the privilege, and the fact that some states would not currently under the current regime permit that I think is one of the things we should improve.
MR. EHRENHAFT: If Peter Moser has a comment on this point, maybe he should make it, because mine is on a slightly different thing, about ADR and these rules.
MR. POSITAN: You're deferring to the senior statesman.
MR. MOSER: No, believe me not, but on 5.7 I can't let your comments go unchallenged. I think there are really some defects in the Pennsylvania rule. It was a very hard rule to draft. The Ethics Committee looked at that and has sent some changes that we think are needed, minor changes in 5.7 in the Model Rules, to Ethics 2000. I don't know what they're going to do with them, but that is what we did.
The problem with the Pennsylvania rule is that, as I read it, it is possible for a lawyer to tell a client "I'm not a lawyer" and then go ahead and perform what would be legal services in commonly accepted practice. You could simply talk your way out of it and get absolution. I don't think that is a very good way to work.
I guess you were - were you in the in-house counsel session with me at the symposium?
MR. JEYDEL: Here in March.
MR. MOSER: There was someone there who told us that when he goes to Florida to - I don't know whether it was labor relations counseling or what; it may have been; I don't think he disclosed what it was - but the client wanted him to go down there. I won't name him. You can look him up. He has an agreement that he is a consultant, not a lawyer, and so the client knows this. The rules don't apply, there is no privilege and so on, and there is full disclosure, and the client sends him.
MR. POSITAN: Or his malpractice coverage, I assume.
MR. MOSER: I think he's got a problem with that. I don't know how he handles it.
But that is the point. This sort of leads into the reason why it is important, I think, to take this one issue of allowing lawyers to do what is not unauthorized practice if it is done by non-lawyers and let them do it, because my view of it is that when a lawyer does that, he is in essence practicing law, if it is a law-related activity, and it's not completely separated, as this gentleman or lady said that he or she did in that case.
So I think you gain something. The client has the protection of the Model Rule and it is the practice of law, but you make it not the unauthorized practice of law, you encourage this. I think that probably is a response to some of the comments you heard in San Diego. I think Larry Fox was the major critic of that particular suggestion.
MR. POSITAN: Peter, how do you get beyond the narrowing of that to say what would be the practice of law then - to strictly barrister-type litigation work or the filing of instruments - because, once you say you're going to start interpreting what law means and things like that, that's really not the practice of law? Where do you draw that line?
MR. MOSER: I don't think we could define the practice of law. We tried in connection with lawyers who have been disbarred or suspended. We came up with a statute now in Maryland that says that that person cannot in essence act as a paralegal. But you couldn't define it, and we don't.
But I think what a lawyer does when a lawyer does it is practicing law. That is a relatively easy definition to apply. But what comes with it - it's a corollary, it seems to me - is some type of practical application of the unauthorized practice rule.
One of the core values of a lawyer is don't violate the law, and we're all doing it, and we're all encouraging it, I suppose.
I was an arbitrator this past week in a matter in Baltimore in my office with lawyers from - I never thought of it until I sat down here, what I was up to - but a lawyer from Alabama and a lawyer from Boston representing a couple of people from those two areas. They had chosen a Baltimore arbitrator because Southwest Airlines is so inexpensive. They were engaged in presumably unauthorized practice, unless there is an unwritten exception in Maryland.
MR. ANTHONY DAVIS: And you were aiding it.
MR. MOSER: That's right.
MR. POSITAN: Peter, we'll go back to you on your deferral here.
MR. EHRENHAFT: Well, it follows up really on the last point that Peter was making, which was about arbitration. I think that in the United States it was for a long time presumed that arbitration was an alternative to the courts, and therefore the courts had a lot to say about whether arbitration could be conducted, how it would be conducted, and whether arbitration awards would be enforced by the courts.
I think we have moved away from that idea and that the basic idea of arbitration today is that it is an aspect of freedom of contract. If you are permitted to enter into a contract between two parties for your relationships between you, you can similarly enter into a contract and say that "if I have a dispute, I'm going to ask Joe Blow" - whoever that person is – "to resolve it." It is not a derogation of the judicial power of courts in order to enforce the arbitration system. The arbitration system is essential a part of contracts.
If you believe that idea, which I believe is the guiding principle now in both domestic and international arbitrations in most countries, that it is simply a feature of contract, I think that one can take the position that acting as an arbitrator certainly would not be the practice of law. Maybe representing parties before an arbitration may be more likely, but I don't think that the arbitrators as such would be "practicing law."
MR. MOSER: Just to follow up, the other approach is to - and I think perhaps one that might gain better favor among the states - is to say that you could be admitted pro hac vice to be a lawyer in an arbitration. If these folks had shown up in a few months, Maryland would have had that type of rule, and presumably these folks would have been told, by the arbitrator maybe, to go through that process.
MR. EHRENHAFT: Who would, however, run that? Some court?
MR. MOSER: The circuit court for, in my case, Baldwin County, because that's where the arbitration took place.
MR. EHRENHAFT: But the whole point of ADR is to get away from the courts. I think that the AAA, if they had a spokesman here, would say, "We don't want that kind of rule because it cuts away from the whole purpose of arbitration and mediation as being an alternative to the court system. We don't want to get involved and we needn't be involved."
MR. MOSER: I really think not. I think that AAA would probably applaud it. But I will ask them.
MR. JEYDEL: I did ask them yesterday. I got some small guidance yesterday in New Orleans from the AAA's General Counsel, Florence Peterson. Interestingly enough, the feeling is - and I don't think they've thought it through, and I certainly can't speak for them - but the feeling I got was that they really don't want to get involved in anything that violates state law. And if it requires that both neutrals, or simply just the adversaries, end up having to do a pro hac vice registration, while they wouldn't like that and they certainly wouldn't appreciate the administrative burden, I got the feeling that they have already talked about this with quite a few county assignment judges and clerks, et cetera, and were told in no uncertain terms the counties didn't want to be bothered with that.
I mean, what if you come in for a transaction? Are you going to register under some system as well? I mean, where are you going to draw the line on that?
MR. POSITAN: Well, in pro hac vice, for example, in New Jersey, you register with the state.
MR. JEYDEL: Right.
MR. POSITAN: You pay your fee and you have to do it once a year.
MR. JEYDEL: But are you going to do that if you come in for one - we talked about this and you said the same thing before.
MR. POSITAN: What I'm saying is there are probably larger entities where you can get out of the morass of dealing with various counties and things like that. If the proper machinery were set up, I assume it could be a relatively streamlined procedure.
MR. JEYDEL: But if you come in, say, for a one-day multi-state negotiation on a contract that does have somebody who is physically located in New Jersey - I mean, I just had Kansas counsel in my New Jersey office the other day. I just happened to mention it to him at lunch. He said, "Don't worry about it. I do it all the time."
MR. POSITAN: There are also administrative fora. For example, I was involved in a proceeding recently pro hac vice where the hearing lasted forty-five hearing days. So there are two ends of the spectrum.
MR. JEYDEL: Well, on a hearing, I think you're getting closer. I guess all of our guts would tell us you're getting closer. The problem is I think it's going to be very difficult definitionally for you to deal with, because if someone is coming in for a transaction, presumably they are there and they are practicing law, and then how does one deal with it?
MR. POSITAN: Or a construction arbitration or mediation. I mean, our office has been involved in some that have gone on for months, two hearing days a week, and things like that, too. So there are a lot of steps along the way on that and I don't know where you draw those lines.
MR. PERA: I'd like to get back to Richard as well on his first point, which is sort of the overall notion that he doesn't feel like a law-breaker and doesn't feel like he should be, and I'm sympathetic. This afternoon, the Commission is going to hear from the group that I'm here to represent that they feel that way too, largely.
But my question for you, I guess - and I'm not talking about Ethics 2000's proposal or asking you to comment on it - but I guess my question is, there surely must be some areas of practice that you feel representing your employer are so arcane or are so local or are so whatever, that you don't get into and you don't think you ought to be able to get into. My question is, it's all fine to say, "Well, let's legalize the law-breaking because there's no good policy supporting the crime," but where is the line then for corporate counsel? Where is the line that says "you can't do real estate transactions, or you can't do estate work, or you can't do" - or is it not topical? Where do you feel the line ought to be?
MR. JEYDEL: Leaving aside my personal predilection for committing malpractice in a wide variety of areas, it seems to me that the question as you phrased it is perhaps the wrong question. If it's corporate counsel and their corporate clients, these are highly sophisticated entities making a choice.
MR. PERA: But is that true? Are all the corporate counsel you know representing Monsanto and other very highly sophisticated folks?
The other problem I have with that, what I'm concerned about with that, is the very line we heard some people going down, which is to me quite disturbing, which is consent takes care of everything. I mean, I understand the issue. Let's assume all corporations are sophisticated, fine. Let's assume that, therefore, the client understands all the risks of UPL and malpractice and everything else - again a little dubious, but granted.
You all don't only have interaction with your clients, and the ethics rules and the UPL rules are not only designed to protect those clients. They are designed to protect the parties you oppose, who may or may not be represented, and parties who, while you don't oppose, you deal with, maybe even customers of your business. I guess that's where I have some concerns.
If you're really suggesting that consent ought to take care of everything, okay, philosophically I understand that position. But I just have a hard time believing that's really going to get you all the way there. And, failing that, then there has to be some line-drawing; and, if there is some line-drawing, I'm concerned about where that line-drawing ought to be. I don't know if that makes sense.
MR. JEYDEL: It does, but I guess I had viewed it as knowledgeable consent by a sophisticated client. I am disturbed at the thought of someone coming into a state where they ? a plaintiff's lawyer maybe is not a good example coming from me - but if someone comes in, solicits a client, and says, "I'm going to represent you even though I'm not admitted here," I'm deeply disturbed by that.
MR. PERA: Well, let me take you one step further, which is I have a lot of sophisticated clients, a whole lot of them. In fact, if my firm decided tomorrow that we were going to limit our practice to sophisticated clients, could I get under the same rule you want to be under?
MR. JEYDEL: I think so.
MR. PERA: There we're getting into really radical territory.
MR. MOSER: What about a statute that would say that in-house counsel may in state X represent their employer or affiliates of their employer and that when they do so ? and they could be resident in the state as counsel - when they do so, number one, they are subject to all the rules of professional conduct; number two, they might be charged with a client security trust company grievance; and number three, they are not allowed to appear in court except on regular pro hac vice admission? If that is the authorization, I would think it might be by a separate rule.
MR. PERA: That's working on a model rule.
MR. MOSER: I think it goes beyond that. But would that be an acceptable arrangement?
MR. JEYDEL: Not to me, because I don't want to see in-house counsel excepted in any way because of my fear of the effect of attenuation on attorney-client privilege. And, what has been pointed out here, I don't want to see us carved out with some kind of special treatment, because that to me is a source of concern. But Susan, I think ?
MS. HACKETT: Actually I want to jump in and agree with Rick. Rick, very humbly, at the beginning of this testimony, started off by saying that he wasn't representing their views, but everything that he articulates is exactly consistent with the views of the American Corporate Counsel Association on this issue, and Rick sits on the Board.
There are two reasons why we've said the in-house bar should not be separated from the outside bar. If what ends up happening at the end of the day is that there's an in-house counsel safe harbor under 5.5, Ethics 2000, or whatever, we'll declare a victory and we'll continue our fight for the larger bar reform on another day.
But ACCA's position. on behalf of the in-house community for everything that we can do to represent it. is that the in-house bar should not be separated from the outside bar for two reasons, the first that Rick has articulated. The entire history of the organization of ACCA was based on the premise that there was often disparate treatment at the courts, in the public, at the professional bar, wherever it might be, between in-house counsel who were viewed as somehow "mini-lawyers," and outside counsel who were the "real" counsel. I don't want to call it "second-class citizenship" because it infers somehow that that was justified by the in-house counsel not being as professional or as smart as the outside counsel, which isn't the case. But, because of their employment status, they were treated differently in professional situations.
So we are very loath, because it is entirely inconsistent with the history of the organization, to ever take a public policy stance that says in-house counsel should have separate treatment from the rest of the bar, because our experience has been eventually that will be used against you, even if in this case it might be considered a plus.
But the second reason we have gone into this saying that the whole bar should come along is equally important and should be brought out here. If one of the reasons why in-house counsel should have this privilege is because it is better service to the client and it is potentially of no danger to the public, for all kinds of reasons that have been articulated here, what purpose do we serve by only serving half of the clients' needs when the other half of the clients' needs is outside counsel representation?
And, indeed, for most clients out there in the universe of the corporate world certainly, the outside counsel portion of their budget, if you will, is much larger than what they pay for the in-house counsel. So to only bring in-house counsel under this provision but still require then to have fifty lawyers in fifty states for their outside counsel purposes is only half a solution.
So I completely agree with everything that Rick has said, but for reasons even beyond what he said. And think that, going back to Lucian's point, it really, I hope, starts to answer some of your questions, because there are just as many situations when outside counsel have exactly the same issues as in-house counsel.
MR. MOSER: I agree with you, there is no question. I said that because I wanted to give you an opportunity -
MS. HACKETT: Thank you. He pushed the button.
MR. MOSER: I know. I think that there is a real problem here, because I think that there is a difference with outside counsel. It certainly doesn't render them second-class citizens at all, but you can't have outside counsel who are going to be moved to state to state by a company taking a bar examination in each state, which is basically what the states are going to require if you are going to be there permanently and you are not in-house counsel.
I know there are a number of people, a number of in-house counsel or general counsel of corporations in Maryland, who are delighted - in fact, they're the ones who lobbied the legislature to get this law through. It is a law and there are some rules that back it up, too.
I'm called on occasion by our corporate clients asking, "We're bringing somebody down from Pennsylvania. What can that person do?" So, you know, we tell them, and they are delighted.
So I think it's a step forward, and I think, as a practical matter, there is no way that a state is going to give up the power to regulate an in-house counsel from the standpoint of discipline, in-house counsel who is resident in a state. Now, the fact is most of them, if they are going to be there for awhile, become members of the bar. We have this -
MS. HACKETT: That's not sufficiently true.
MR. JEYDEL: That's not true.
MR. MOSER: Well, in Maryland it's true, if they are going to be permanently there, at least for the corporations that happen to be based there. They do take a short-form bar exam. There is a state interest that has to be recognized in this area beyond, as Lucian said, the client interest.
MR. HACKETT: I could take you into the ACCA database and show you members practicing in any number of states, and part of the application for ACCA asks them to fill out the bars in which they are admitted. So I could go in and show you Maryland counsel after Maryland counsel, in the sense of where they are employed and look at where their bars are, and Maryland is not on the list of bars that they include. And that's true of every state in the Union.
I can't use that as a statistical indicator for the entire profession, but I can tell you that within ACCA generally, when we do surveys, those statisticians who have worked with us have said that our membership is representative of the profession as a whole for statistically meaningful purposes.
So if you want to play it on those lines, I can tell you that an extremely large portion of our membership is not licensed in the state in which they are working.
MR. HOLTAWAY: So can Mel Hirshman from Maryland serve a subpoena on you directly?
MR. POSITAN: We're going to try to wrap it up. I'm going to let Tony Davis make one more comment on this issue, and then I'm going to ask any of the observers who have not spoken, give them a few minutes to make any comments or observations they might want to make.
MR. ANTHONY DAVIS: You've never heard me do it, but one sentence.
I, and I know APRL, absolutely agree with the principle that Mr. Jeydel stated, there should be one rule for lawyers and we should not create separate rules. Part of the way the APRL Proposal was structured was specifically designed so that we would not create separate rules.
MR. POSITAN: Does Bob Creamer agree with that?
MS. GARVEY: Yes, he does.
MR. POSITAN: At this point, I know there are some guests who have come but did not ask for speaking time. If they would like to make any comments - Keith, I know you are here from New Jersey Ethics 2000 Commission, if you would like to say anything at all - don't feel obligated, but if you would like to, you are welcome to.
MR. ENDO: I would like to say this is all very informative. I'm very glad that I came.
MR. POSITAN: You avoided the hardball, right?
Paul Kazaras from the Philadelphia Bar Association?
MR. KAZARAS: Again, very interesting.
The only thing that I would like to echo, which is what I have heard, is that you've got a roomful of distinguished people, many of whom have admitted to not knowing whether what they are doing is legal or ethical. I would hate to see a situation where, as what happened with MDP, something gets totally destroyed because of - I don't want to use the term "parochialism" - I will use the term "polarization," the various states vying for their own position, where this issue gets lost within that political process.
I think it is extraordinarily important to recognize that, as with MDP, if MJP is not addressed in a way that recognizes where our society is going and recognizes that five years ago, yes, people liked to go do business at the corner drug store, and now if they can get their prescriptions on the Internet, they will.
In a very large sense, in terms of regulating ourselves as a profession, which is something that the ABA echoed starting in 1980 with its first report on professionalism, we're going to become superfluous. As attorneys, as regulatory bodies, we've got to address this in some way. If the issue, and if recognizing what the trend is - and I fully support the concept of allowing MJP, fully support it. I'm not saying that's the Philadelphia Bar Association's position; that's my own personal position as an attorney.
I think if people get too stuck in, "Well, we have to worry about this," and "this is being changed too fast" - the law is a dynamic thing. If the rule is changed, if it doesn't work, people can go back and change it. If a decision is made and it doesn't go far enough, people can go back and it can be expanded. But to simply get mired in "what should we do," "will this work, will this not work," "do we need more empirical data" -
MDP, just because the ABA said it, took a hard line and said, "Here are our core values, whatever they may be." MDPs are still here. Arthur Andersen or PriceWaterhouseCoopers did not dissolve once the House of Delegates said "No." They are still there. Arthur Andersen is still the largest single employer of attorneys in the United States - rather, in the world.
It is not going to go away. Richard is not going to stop going to other states and doing his job just because there is no solution to this problem.
I think, if we are to self-regulate and retain the ability to self-regulate, rather than lose that ability and have it taken over by legislatures, many of whom are run, controlled, and populated with people who are not attorneys, there must be a dynamic process and we must be forward-looking and must address it. Otherwise, we are going to become superfluous and it is still going to happen. Digging in, saying, "we've got to fight on this point, we've got to fight on that point," it's going to hurt everybody and it's going to hurt the profession the most.
MR. POSITAN: Elliot Grysen is not here.
Laura Ludd [phonetic], would you like to add anything?
MS. NEEDHAM: Actually two brief things.
One is, I really applaud the focus on the client-centered approach. I think if we keep the focus on what the clients need and how best to serve the clients, that is the right aspect of this debate to come in on.
I am working on some empirical research and I am going to ask the Commission if I could have time in Miami to present further remarks.
But I do have a suggestion. I don't know if it's too late in the day. I really would like it if this could be the MJLP, Multijurisdictional Legal Practice, or something to keep from flipping between "D" and "J." I was talking with a Supreme Court Justice last week, and as we were talking, we were using the term "MJP," and he kept looking back into the MDP debate. I suspect, for those people who are not as focused - I'm making this as a somewhat lighthearted suggestion because we're probably too far down the road to distinguish ourselves by title.
But I do think that it is important to separate this as much as possible from that earlier discussion because it is completely different, and I don't want people to bring baggage to the extent that they're not as informed as the people in this room.
MR. POSITAN: Well, we can't change our name now, but I think our message is out in the street. The train is too far out of the station on that one, but we'll make sure everybody understands it.
MS. DALY: I have no comments to say, except I would like to say Amen and Hallelujah to the statement with respect to the Commission of Multidisciplinary Practice. I think you have it right.
MR. POSITAN: I will once again defer to Bob MacCrate, if he has any closing remarks as we close.
MR. MACCRATE: I have spoken already too much. Thank you very much for asking me, Wayne.
MR. POSITAN: We appreciate your presence.
We appreciate everyone who came here. This is all about outreach and making sure that everyone is heard from the grassroots level, and we've ask the state bar association sections and other constituent groups of the ABA to comment by June 15th, and we want to make sure that everybody has that opportunity, so that we don't get into any analogies with prior matters. That's what we're really seeking to do.
MS. GARVEY: Wayne, there are some other people in the room that haven't been introduced. I'm just curious. Maybe they'd like to say something.
MR. POSITAN: Sure. First of all, I'd like to thank Lance Rogers for the great coverage he gave us in the Professional Reporter last time with the San Diego hearing, which I think really educated a lot of people on what went on out there.
MR. ROGERS: I hope I didn't set the standard too high.
MR. POSITAN: No good deed goes unpunished. Now we've asked you to continue to do that.
MR. ROGERS: Thank you.
MR. POSITAN: Would anyone else like to add anything?
MR. SHEAR: My name is Ken Shear. I'm the Executive Director of the Philadelphia Bar Association. It was a pleasure to be here today this morning to hear these remarks.
The Philadelphia Bar Association was in the forefront with regard to the MDP issue. We have had the issue of MJP under discussion. We are moving as rapidly as we can with regard to formulating a formal position of the Association. You could probably guess that it will be consistent with our position as it related to the MDP issue.
We do hope - and it was said before - that whatever action is taken by this Commission is taken with regard to the interests, not so much of the lawyers, but the interests of the client. The client is the essence as to why the profession exists, and that is to provide that client with the best possible advice, no matter where that client is, no matter where that lawyer may be.
So again, it was a pleasure to be here today to listen to these remarks.
MR. POSITAN: Anyone else who hasn't spoken?
MR. McCALLUM: Wayne, could I just say something while we have our two Philadelphia lawyers here?
MR. POSITAN: Sure.
MR. McCALLUM: It has nothing to do with the topic of this debate.
MR. POSITAN: You don't use that as a term of art, do you?
MR. McCALLUM: The Section of Business Law just had its Spring Meeting in Philadelphia, and I just want to say publicly that the Philadelphia Bar Association was a wonderful host, and if any other Section is thinking of having a meeting place, Philadelphia would be an awfully good choice.
MR. SHEAR: I'm delighted that you said that, because, indeed, the American Bar Association will be having its Midyear Meeting in Philadelphia in February of next year. We guarantee you wonderful weather.
MR. POSITAN: I won't even make any comments about the Philadelphia Flyer.
That being the whole thing, we'd like to thank you again for coming and appreciate very much your continued input.
If at any point in time you would like to get some further information from us, we would encourage you to get onto our Web site, which we try to keep updated as much as possible. We'd also be happy to furnish any resource materials that you might be looking for.
If your position changes or you want some clarifications or supplement your testimony in any way, we would certainly encourage you to continue to do that as this process moves forward.