Michael Franck Professional Responsibility Award

June 1, 2017—St. Louis, MO

Introduction

For a few minutes today, I invite you all to participate in what the first President Bush, George H. W. Bush (Bush 41), legendarily christened the “vision thing.” For today’s discussion, the “vision thing” has two aspects: first, recognizing the obvious; and second, anticipating the inevitable. Let’s start with the obvious—the current state of ethics rules uniformity.

The Obvious

As we all know, every law student in the United States is required to take “one course of at least two credit hours in professional responsibility that includes substantial instruction in rules of professional conduct….”¹ In virtually every law school, those rules are the American Bar Association Model Rules of Professional Conduct. And everyone seeking admission to the bar in every United States jurisdiction, except Maryland and Wisconsin, is required to pass the Multistate Professional Responsibility Examination (MPRE), which tests the applicant’s knowledge of the ABA Model Rules.² But when new lawyers are admitted, they are confronted with more than 51 different sets of lawyer ethics rules.³

The ABA Model Rules of Professional Conduct have provided some nominal consistency, forming the general basis of the ethics rules now in effect in 49 states and the District of Columbia. But the largest jurisdiction, California, still maintains its own unique set of ethics rules.⁴ Almost every other jurisdiction has “improved” its version of the Model Rules to some extent, even though there appears to be no scholarship suggesting that the lack of uniformity in lawyer ethics rules is desirable. And no one has seriously suggested that the lawyers in any particular state are more ethical, or that the public in that state is better protected, because the state’s lawyer ethics rules are unlike those of any other jurisdiction.

There are, to be sure, many important provisions that are identical, or functionally equivalent, in most states. But there remain numerous critical differences among the states—and not just in the hopelessly inconsistent advertising rules.⁵ Given the proliferation of multi-state transactions and representations, different answers to the same question of a lawyer’s duty are likely to occur frequently. Some more obvious, common, and troubling examples include:

• Variations of Model Rule 1.6(b)(2): the rule on a lawyer’s option, or duty, to disclose a client’s intention to commit a financial crime or fraud using the lawyer’s services, can yield four differing and contradictory answers. Three states require the lawyer to disclose the fraud; 29 jurisdictions permit, but do not require, a lawyer to disclose the fraud; 18 states prohibit disclosure of the fraud; and one state (Tennessee) requires the lawyer to withdraw.⁶
• Variations of Model Rule 1.6(b)(1): the rules on disclosures to prevent reasonably certain death or substantial bodily harm also vary dramatically by state. Seven states require disclosure; 27 jurisdictions permit, but do not require, disclosure; and in 17 jurisdictions, the duty of disclosure depends on whether the relevant conduct may be a crime.⁷
• Variations of Model Rule 1.10(a)(2): the rules, and case law, concerning the screening of lateral lawyers to remove imputation of a lateral lawyer’s conflict of interest from a prior firm also give quite different results. Eighteen states have rules that permit “full” screening [personally disqualified lawyer may be screened regardless of level of involvement in the matter at prior firm] of laterals; and 13 states limit the availability of screening based on the personally disqualified lawyer’s level of involvement in the relevant matter.⁸

Other common instances of inconsistent rules among the states on basic issues include: the definition of protected client information protected (Model Rule 1.6(a)); whether a written fee or engagement agreement is required, or merely “preferred,” for all new clients (Model Rule 1.5(b)); whether consent to a conflict of interest must be confirmed in writing (Model Rule 1.7(b)(4)); permissible financial assistance to clients in connection with litigation (Model Rule 1.8(e)); and permissible communications with persons represented by counsel, especially current and former employees and constituents of entity clients (Model Rule 4.2).

These variations arise from the current American system of the regulation of the legal profession, in which the courts exercise the inherent power to regulate the practice of law.⁹ Although typically patterned on ABA models, only the version of the rules adopted by a court are binding.¹⁰ And as Professor Rotunda has observed, this process results in less, rather than more, uniformity among the states. “As states have adopted the Model Rules, there has been a great tendency to adopt nonuniform amendments. Thus, we may expect choice of law problems to increase.”¹¹

This crazy quilt might not matter if lawyers always lived and worked in one jurisdiction. But we all know that the practice of law is no longer (if it ever was) a purely local matter. In 2002, the ABA formally acknowledged the extent of multijurisdictional practice by amending Model Rule 5.5 to permit temporary practice by out-of-state lawyers in several situations that were not previously allowed. As of May 2016, the latest update by the ABA, at least 47 jurisdictions had adopted some form of amended Model Rule 5.5 that expressly recognize some form of temporary practice by out-of-state lawyers.¹²

In addition to the obvious growth of multijurisdictional practice, there has been a substantial increase in the number of multiple-admission lawyers, lawyers admitted in more than one jurisdiction. Although exact figures on the extent of multiple admissions nationwide are unavailable, it is apparent that many thousands of lawyers admitted in one jurisdiction are also admitted in one or more other states. Registration information from Illinois from 2002 to 2016 is illustrative. In 2002, more than 9,300 lawyers resident in Illinois also reported another admission outside Illinois, and almost 14,000 non-resident lawyers registered in Illinois reported an admission in another jurisdiction. There were about 75,400 lawyers registered in Illinois in 2002, so at least 30 percent of the lawyers registered in Illinois in 2002 were also admitted in another state. The comparable numbers for 2016 (14,463 resident lawyers reported another admission; 19,606 non-resident lawyers reported another admission; 93,662 total registered) show that the number of lawyers registered in Illinois with multiple admissions grew from 30 percent in 2002 to more than 36 percent in 2016.¹³ If the Illinois statistics are even remotely representative of the profession generally, it seems reasonable to conclude that about a third of all American lawyers are admitted in more than one jurisdiction.

In sum, at least 47 of the 51 American jurisdictions expressly recognize and permit some form of multijurisdictional practice; and it also seems likely that at least a third of all American lawyers are formally admitted in more than one jurisdiction. Yet there are 51 separate and distinct, but of course all “above average,” sets of ethics rules—with each jurisdiction making its own special “improvements” to the ABA Model Rules.

Like most situations that make no sense, the reasons for this disorder are historic. Our current state-centric system of lawyer regulation has its origins in the 18^th Century.¹⁴ Thus, the present system’s underlying concepts predate Samuel Morse, Alexander Graham Bell, and the Wright Brothers, not to mention Al Gore. Such a state-by-state approach, riddled with idiosyncratic variations, is simply incompatible with the integrated and interconnected national economy of the United States in the 21^st Century. That much seems obvious.

The Inevitable

History teaches that systems that outlive their usefulness, or otherwise fail to make sense in their time, will ultimately go away. Sometimes with a bang, sometimes with a whimper; but they go away nevertheless. No one can say just when, or just how, but our current system of unique state ethics rules will ultimately go away. It simply can’t survive in its present form.

Given that reality, the question for this group, the thought leaders of the country’s professional responsibility bar, is whether this change will be something done by us—or something done to us. The prepositions matter. If the process is the former, there will of course be some lively debate along the way, but there will be an eventual consensus that we can all accept. If the process is the latter, it’s not likely that any of us will be happy with the result.

For many years, it seemed that the most probable catalyst for national ethics rules uniformity would be an international trade agreement that included legal services. But at present, however, it appears that any new international trade agreements involving the United States are unlikely to come about in the near future.

It may sound strange to some, but at this point in time, the most likely actor in achieving national ethics rule uniformity is Congress. Although the regulation of the legal profession has traditionally been left to the states, most scholars and commentators seem to agree that Congress has the power to license and regulate lawyers.¹⁵ That is not to argue that Congress should regulate the legal profession, only to remind us that it could do so if it chooses.

It is difficult to predict what might prompt Congress into such action, but there are indeed several concerns that might motivate Congress to think about some level of federal regulation of lawyers.

At least three come to mind, in no particular order:

- Concern for perceived “lawsuit abuse.” The Institute for Legal Reform of the U.S. Chamber of Commerce advises: “America has the world’s costliest legal system. As a percentage of our economy, U.S. legal liability costs are double those of the UK, three times higher than those in France and five times higher than those in Japan.”¹⁶ And there’s an App for that!¹⁷

- Concern that the Affordable Care Act did nothing to address medical malpractice litigation, which former Speaker of the U.S. House of Representatives John Boehner, among other legislative leaders, alleges to be “the biggest cost driver” in the nation’s healthcare expenditures.¹⁸

– Concern that federal legislation may be necessary to achieve meaningful reform of multijurisdictional practice and lawyer mobility.¹⁹

The point is that, as we meet here today, there are serious proposals that Congress “do something” to regulate various aspects of the practice of law on a national level. Action on any of the current proposals would almost certainly impact existing state rules. And once it starts to consider lawyer regulation, Congress might well use the disarray in existing state rules to justify the imposition of uniform national standards where the states have been unable or unwilling to achieve consistency.

Conclusion

The current system of individualized and inconsistent state ethics rules makes no sense in our integrated and interconnected economy. Uniform standards are inevitable. It’s not possible to predict when that will happen or what the precipitating factors will be. But it will surely happen. As mentioned above, the question for this group is how to respond to that reality: whether to get ahead of the situation, participate in the process, and help shape the outcome; or to sit back and become bystanders—or perhaps collateral damage.

Thank you for listening.

Endnotes

1 ABA Standards of Approval of Law Schools Standard 303(a)(1) (Feb. 2017).

2 86 The Bar Examiner, vol. 1, Mar. 2017, at 43.

3 Each state and the District of Columbia has its own unique set of rules. “Although uniformity is desirable for many purposes, lawyer codes in fact differ markedly in certain respects from one jurisdiction to another, and no state follows any nationally promulgated bar-association model in all respects.” Restatement Third, The Law Governing Lawyers § 1, Comment b (2000) [hereinafter Restatement Third]. In the federal system, the district courts typically incorporate by reference the state rules of the jurisdiction where the court sits, see Charles W. Wolfram, Modern Legal Ethics § 2.6.3 (1986); but some federal appellate courts have declined to follow the state rules in favor of “national standards” in particular situations, see, e.g., In re Dresser Industries, Inc., 972 F.2d 540 (5th Cir. 1992), so the exact number of different sets of ethics rules is difficult to determine.

4 A special commission of the California State Bar submitted proposed new rules, in a format similar to the Model Rules, to the California Supreme Court in March 2017. See 33 Law. Man. Prof. Conduct 178 (Apr. 5, 2017).

5 See 2015 Report of the Regulation of Lawyer Advertising Committee, Association of Professional Responsibility Lawyers, 5 (June 22, 2015), https://aprl.net/2015-report-aprl-regulation-lawyer-advertising-committee/.

6 See Chart on Disclosure of Client Misconduct, in Thomas D. Morgan & Ronald D. Rotunda, 2017 Selected Standards on Professional Responsibility 134 (2017) [hereinafter Selected Standards].

7 Id.

8 See Chart on Lateral Screening, Selected Standards, supra note 6, at 157. Many federal courts, as well as a few state courts, recognize lateral screening on a case-by-case basis, which makes it difficult to predict whether a screen will be effective to prevent the disqualification of the lateral lawyer’s new firm in any particular situation. The situation in California is a good example of the random results rendered by the case-by-case approach to screening. See, e.g., Kirk v. First American Title Ins. Co., 183 Cal. App. 4th 776 (2010) (lateral screening recognized); Beltran v. Avon Products, Inc., 867 F. Supp. 2d 1068 (C.D. Cal. 2012) (lateral screening rejected).

9 See Wolfram, supra note 3, at § 2.2.1.

10 See Restatement Third, supra note 3.

11 Ronald D. Rotunda & Thomas D. Morgan, Professional Responsibility Problems and Materials 45 (9th ed. 2011).

12 See ABA Policy Implementation Committee Chart on State Adoption of Rule 5.5, https://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/quick_guide_5_5.authcheckdam.pdf (last visited July 27, 2017).

13 Information provided by James J. Grogan, Deputy Administrator & Chief Counsel, Attorney Registration and Disciplinary Commission of the Supreme Court of Illinois.

14 “Each colony had its own standards for admission to the bar.” Lawrence M. Friedman, A History of American Law 57 (3d ed. 2005).

15 See, e.g., Wolfram, supra note 3, at § 2.2.5.

16 Lawsuit Abuse Impact, U.S. Chamber Institute for Legal Reform, http://www.instituteforlegalreform.com/issues/lawsuit-abuse-impact (last visited May 26, 2017).

17 Faces of Lawsuit Abuse, available at Apple App Store for iOS devices. http://www.facesoflawsuitabuse.org/.

18 The Medical Malpractice Scapegoat: Claims That Litigation Is Responsible for Rising Healthcare Costs Crumble Under Scrutiny, Public Citizen 5 (Feb. 28, 2017), http://www.citizen.org.

19 See, e.g., James W. Jones, Anthony E. Davis, Simon Chester & Caroline Hart, Reforming Lawyer Mobility—Protecting Turf or Serving Clients?, 30 Geo. J. Legal Ethics 125, 189-193 (2017) (proposing Congress adopt legislation to recognize rights of practice of all American lawyers engaged in federal or interstate matters in all American jurisdictions).