COMMISSION ON EVALUATION OF THE RULES OF PROFESSIONAL CONDUCT
"ETHICS 2000"
Executive
Summary, Testimony of Daniel B. Magraw, Chair
Section of International Law and Practice
February 1, 2001
Impact of Domestic Rules of Professional Conduct on Transnational Legal Practice
In August 1993, the House of Delegates of the American Bar Association approved a Model Rule for the Licensing of Legal Consultants (Model Rule). This action was motivated by a recognition, as stated in the Report of this Section, that the "explosive growth of international economic activity, and more particularly in the transnational flow of goods, services, labor and investment" resulted in the "need for more effective means of delivering legal services across national boundaries and for better means of integrating lawyers trained in different legal systems into the same law firms." The Report noted as well the complaint of foreign lawyers that "while American lawyers enjoyed broad rights of practice in their respective countries, the reverse is not true. Even after the decision of the United States Supreme Court in In re Griffiths [413 U. S. 717 (1973)], the only way in which a foreign lawyers could engage in the practice of law in the United States, even if limited to advice on the law of his or her own country, was, with certain limited exceptions, to attend an accredited American law school, sit for the bar examination and become a full member of the bar."
The problems identified in 1993 exist in aggravated form in 2001. This Section, principally through its Transnational Legal Practice Committee, is engaged in a continuing effort to facilitate the ability of American lawyers to offer their services to both domestic and foreign clients outside the territory of the United States. In recent years, these efforts have concentrated on enabling U.S. lawyers to establish offices in Japan, India and other Asian nations, Latin American countries, the emerging democracies in Central and Eastern Europe and, in particular, France and other nations comprising the European Union. Time and again, we are confronted with the contention that we advocate freedom of access for American lawyers abroad that is far more comprehensive than that accorded foreign lawyers in the United States. American representatives in General Agreement on Trade in Services (GATS) negotiations will be presented with comparable arguments. We call the Commission’s attention to these realities to emphasize the impact its recommendations will have on the transnational practice of American lawyers and law firms. However, we also know that, while rights of establishment are important to our clients (and lawyers), the delivery of legal services abroad is much greater through transit visits or through written or electronic advice from outside. Therefore, the domestic rules of professional conduct have an important impact on the members of our Section who are engaged in transnational legal practice.
Unauthorized Practice of Law
The growth of the global economy and clients who serve it has increased the demand for legal services on a global scale. It is believed by the Section of International Law and Practice that the large demand for legal services provided by U.S. lawyers and their firms can only be met through liberalized market access regimes worldwide. U.S. lawyers have been at the forefront of developing styles of counseling, forms of agreement and the thoroughness of due diligence in both investigation and documentation that have become the world’s standard. These commonly followed practices raise questions of the unauthorized practice of law under the current regulatory regime in the United States. It is the view of the Section of International Law and Practice, that in the modern world, in which the services of American lawyers are sought by clients around the globe, rules must be fashioned that enable lawyers to provide those services without concerns about the inappropriate imposition of barriers based on the geographic concept of the unauthorized practice of law. If U.S. lawyers are to obtain access to foreign markets in which they provide services, it is necessary for the U.S. market to permit similar access to foreign lawyers. In considering appropriate ethical rules, the ABA can and should consider the development within the European Union (EU) of rules that are clearly more liberal with respect to the rights of lawyers from one Member State to engage in transnational practice throughout the EU than the current situation within the United States or those rules proposed by the Commission. This is true despite the EU’s lack of common language and less consistency in legal traditions and court procedures between the Member States than exist among the states of the United States. In the EU, lawyers are able to carry on freely modern international legal practice. This is in sharp contrast to the limiting regulatory regime in the United States.
Proposed Rule 5.5 dealing with the unauthorized practice of law represents an improvement over the existing rule. In particular, the safe harbor set forth in Rule 5.5(b)(2) will apply to most activities of foreign lawyers with a transnational practice. This partial liberalization should be helpful in addressing concerns from foreign governments and bar associations about access to the United States market. However, the Section respectfully urges the Commission to reconsider the "safe harbor" approach chosen for proposed Rule 5.5 in light of the globalization of legal practice and the fact that governments have put legal services on the liberalization agenda. Rather than setting forth a regulatory approach that prohibits activities by lawyers unless specifically authorized under the "safe harbors," the Commission should consider a regulatory approach that permits such activities unless specifically prohibited. Such an approach would be conducive to the transparency being proposed under the GATS and would facilitate the practice of law on a transnational basis.
In this respect, the Commission should carefully consider the 1998 European Union Directive to Facilitate Practice of the Profession of Lawyer on a Permanent Basis in a Member State Other than that in which Qualification was Obtained. The Directive sets forth rules that facilitate the practice of the profession of lawyer by permitting lawyer qualified in the home nation to register with the regulating body in a host nation and practice law in the host nation. A lawyer is subject to certain informational disclosure requirements, as well as the same rules of professional conduct as lawyers practicing in the host nation in respect of all activities pursued in the host nation. The Directive also provides a mechanism for a lawyer who has effectively and regularly pursued the practice of law for a period of at least three years to gain admission to the profession of lawyer in the host nation, as well as a provision addressing joint practice between lawyers admitted in different countries. The text of the Directive is attached as Exhibit A to this submission.
With the Commission’s leave, we will elaborate these and comparable considerations in our formal submission and testimony.
Respectfully submitted,
Daniel B. Magraw
Chair, Section of International Law and Practice
of the American Bar Association