August 01, 2016

Ball of Confusion: Practicing from Your Second Home in Another State

By Ronald C. Minkoff

If you’re planning to ease out of your practice by working remotely from another state at least some of the time, here’s what you need to know about the ethics of it all.

P racticing law has been very, very good to you. Through lots of hard work over many decades, you’ve built up a stable of good, steady clients and earned enough money to start thinking seriously about retirement.

You’ve always lived and worked in the same state—the only state in which you’re admitted to practice. Nevertheless, you long to spend more time at your second home where the pace is slower and you feel less burdened by the day-to-day grind.

Ah, but you’re not ready to retire completely. In addition, you have little desire to go through the grueling process of getting admitted in the state your second home is located in, including (Heaven forbid!) sitting for the bar exam, unless someone says you must. Your current firm is willing to let you practice remotely from your second home, as long as doing so won’t get you or the firm into trouble.

What are your options? Can you follow your heart and work from your second home? Or are you stuck with the practice in your home state until you’re ready to give up the law entirely?

The problem? That dreaded UPL

The dilemma, of course, is that practicing in the second state—no matter how circumscribed—might constitute the unauthorized practice of law, which we all know as UPL. Every U.S. state and territory has a statute prohibiting UPL, and most, if not all, make it a criminal offense.

When most lawyers think of UPL, they think of a fraudster who’s never been licensed in any jurisdiction taking advantage of innocent people by practicing law without a license. But that’s just one kind of UPL. The other kind is when lawyers who’ve been licensed in one state practice in a state or territory where they haven’t been admitted.

Both types of UPL are treated the same under UPL statutes as well as the ABA Model Rules—they’re both prohibited, though at least in the case of the second kind of UPL, we’ll show that some exceptions apply. This second kind of UPL—let’s call it interstate UPL, though it applies equally to lawyers admitted in other countries—is at issue when practicing from your second home. Interstate UPL didn’t receive much attention until 1997, when the California Supreme Court issued its landmark decision in Birbrower, Montalbano, Condon & Frank P.C. v. Superior Court.

There, the court found that a New York law firm engaged in UPL, and thus couldn’t enforce its fee agreement, because the firm had its New York-admitted lawyers come to California to represent a California client in preparing for a California arbitration based on a contract governed by California law. Most significantly, the court held that lawyers can be found to have engaged in interstate UPL even if they hired local counsel and even if they never set foot in the state, but only made telephone calls or sent faxes or emails into the state.

This led to a great deal of hand-wringing, as lawyers who regularly practiced across state lines —particularly transactional lawyers who can’t obtain pro hac vice admission—worried their actions would result in disciplinary or fee-payment problems. And that caused the ABA to spearhead a series of rules over the past 15 years that have allowed lawyers to practice across state lines more freely.

Got questions? Here are answers

Now that we’ve defined the issue, we can answer the questions you may ask when considering whether you should try to practice from your second home in a jurisdiction where you’re not admitted to practice. Here are the most common:

1. Why don’t I just get admitted? Can’t I just waive in? This may be an option, depending on the state in which your second home is located. In 2012, the ABA adopted a Model Rule on Admission by Motion, which allowed lawyers in good standing in all U.S. jurisdictions (states, territories, or the District of Columbia) in which they’re admitted to practice, and not subject to any pending disciplinary complaints, to be admitted on motion; in other words, without taking the state’s bar exam.

They can do this in another jurisdiction as long as they can show they’ve “engaged in the active practice of law” in one or more U.S. jurisdictions for three of the past five years. (Some states require practice for five of the past seven years; Arizona, one of those states, recently recommended shortening this period to conform to the ABA Model Rule.)

In addition to Arizona, the vast majority of jurisdictions—including Colorado, Illinois, New York, and the District of Columbia—allow some form of admission on motion. But there are still several that don’t, including California and Louisiana. South Carolina and Florida, concerned about competition from “snowbird” lawyers, require anyone seeking admission to the bar to take the state bar exam no matter how many years they’ve practiced.

In any event, obtaining bar admission, whether by motion or through the more traditional process, can take several months—it generally will require a review of your character and fitness to practice—and thus requires a great deal of planning.

2. If I’m an experienced lawyer, won’t they let me practice in the state while my bar admission is pending? Again, the ABA took the lead on this in 2012, adopting a Model Rule for Practice Pending Admission. This would allow you to practice in a state for up to one year following your submission to state regulators of proof that you’ve applied for admission in that state.

The model rule requires lawyers to show they’re in good standing in their home jurisdiction, they have no pending complaints against them, they’ll be supervised by local counsel, and they’ve applied for bar admission within 45 days of establishing “an office or other systematic and continuous presence for practicing law in the state.” Only eight states have adopted a version of this rule applicable to all lawyers. Eighteen others have limited it to military personnel and their spouses, who often have to move on short notice.

Many states are continuing to study practice pending admission. But some have rejected it outright because of the concern that it doesn’t require a sufficient character and fitness check. Even where practice pending admission is available, it’s just a temporary solution. You must successfully complete the admissions process within the designated time frame or lose your eligibility to practice.

3. Hey, I really don’t want to go to all this trouble of getting admitted. Isn’t there a rule that allows me to practice temporarily where my second home is located? This brings us to the most important result of Birbrower: the ABA’s adoption of the temporary practice rule contained in Model Rule 5.5(c).

With New York’s recent adoption of a court rule on the subject, 47 states now permit temporary practice along the lines suggested in the model rule. That rule continues to prohibit interstate multijurisdictional practice, or MJP.

But it creates four safe harbors that allow lawyers to “provide legal services on a temporary basis” in a jurisdiction where they’re not admitted:

  • When they associate with local counsel who actively participates in the matter
  • When they’re assisting or participating in an actual or potential legal proceeding, generally by obtaining pro hac vice admission
  • When they’re participating in an arbitration or mediation, and
  • Where the legal services in the second state “arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice.”

This fourth safe harbor covers a great deal, allowing transactional lawyers in particular a lot of leeway to practice across state lines. But when considering practice from your second home, you should take care not to treat Model Rule 5.5(c) or its local equivalent too cavalierly.

For example, some states, such as Florida, prohibit you from opening a permanent law office or from offering legal services to local residents you hadn’t previously represented (a bad idea whether the rules specifically prohibit it or not). In Gould v. Harkness, for instance, a federal court held that a New York-licensed lawyer may not advertise in Florida for prospective clients who might need help with New York legal matters or for a federal administrative practice.

Others require you to state on correspondence that you’re not admitted to practice in that state. Still others, like Connecticut, permit temporary practice only if your home jurisdiction does.

No matter which state you’re in, you should avoid hanging a shingle outside your second home, setting up a storefront legal office nearby, or listing yourself in a local telephone book. These are signs you’re looking to go beyond “temporary practice,” and bar prosecutors won’t be amused.

 

4. What if I’m an in-house lawyer? Does that change anything? Yes, it does, especially if you’re locating to a state that has adopted a version of the ABA’s Model Rule for Registration of In-House Counsel.

It allows an in-house lawyer admitted in another jurisdiction—even a foreign country—to register with state authorities and be admitted to practice in the second state on a limited basis. Lawyers admitted under these circumstances may represent only their employer and may not appear in court, except if performing pro bono services.

In short, you’re now permitted a lot more mobility now than when Birbrower was decided. But you still must learn the rules of the jurisdiction where your second home is located to ensure that you don’t engage in interstate UPL.

Close adherence to those rules, and the self-discipline to not establish a permanent law office or solicit local clients, will allow you to work from your second home without resistance from local or home-state disciplinary authorities.

Ronald C. Minkoff

Ronald C. Minkoff is the chair of the professional responsibility group at Frankfurt Kurnit Klein & Selz P.C. in New York. He is a member of the Policy Implementation Committee of the ABA Center for Professional Responsibility and a past president of the Association of Professional Responsibility Lawyers. He’s also co-managing editor of the New York Legal Ethics Reporter.