Aba Finalizes Work on Multijurisdictional Practice and Strategic Alliances

• Jurisdiction: United States,Federal
• Citation: Vol. 31 No. 10 Pg. 70
• Pages: 70
• Publication year: 2002

31 Colo.Law. 70 Colorado Lawyer 2002.

2002, October, Pg. 70. ABA Finalizes Work on Multijurisdictional Practice and Strategic Alliances

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70

Vol. 31, No. 10, Pg. 70

The Colorado Lawyer
October 2002
Vol. 31, No. 10 [Page 70]

Departments
ABA Delegates' Report
ABA Finalizes Work on Multijurisdictional Practice and Strategic Alliances
by Robert R. Keatinge

Robert R. Keatinge is Of Counsel with Holland & Hart LLP and has been an ABA Delegate for the past six years - (303) 295-8595; rkeatinge@hollandhart.com

At the American Bar Association ("ABA") 2002 Annual Meeting, the House of Delegates ("House") concluded four years of work on ethical issues in which it considered multidisciplinary practice ("MDP"),1 the rules of ethics in general ("Ethics 2000")2 and, finally multijurisdictional practice ("MJP"). The House also adopted a new rule clarifying strategic alliances and referral arrangements between law firms and other professional firms. In other action, the House approved a set of ethical rules in settlement negotiations.3

Multijurisdictional Practice

In 2000, in response to the Birbrower4 case (in which New York lawyers were denied legal fees in a California arbitration because the lawyers were not licensed in California) and other concerns about practice across state lines, ABA President Martha Barnett appointed the ABA Commission on Multijurisdictional Practice ("MJP Commission")5 to do the following

Research, study and report on the application of current ethics and bar admission rules to the multijurisdictional practice of law; analyze the impact of those rules on the practice of in-house counsel, transactional lawyers, litigators and arbitrators and on lawyers and law firms maintaining offices and practicing in multiple state and federal jurisdictions; make policy recommendations to govern the multijurisdictional practice of law that serve the public interest and take any other actions as may be necessary to carry out its jurisdictional mandate; and review international issues related to multijurisdictional practice in the United States.

In 1997, three years before the MJP Commission was formed, the ABA Commission on Evaluation of the Rules of Professional Conduct ("Ethics 2000 Commission")6 had been formed to review all of the Model Rules of Professional Conduct. In 2000, the Ethics 2000 Commission released a report ("Ethics 2000 Report"),7 which included proposed revisions to Model Rules 5.5 ("unauthorized practice of law") and 8.5 ("Disciplinary Authority; Choice of Law"), even though such rules dealt with interstate practice.

Under the Ethics 2000 approach to Model Rule 5.5, the prohibition on unauthorized practice of law would not apply to lawyers licensed in one state ("Home State") who are or anticipate being admitted pro hac vice in the state in which they are not licensed ("Host State"). In addition, a Home State lawyer would not be engaged in the unauthorized practice of law when:

(i) a lawyer who is an employee of a client acts on the client's behalf or, in connection with the client's matters, on behalf of the client's commonly owned organizational affiliates;

(ii) the lawyer acts with respect to a matter that arises out of or otherwise is reasonably related to the lawyer's representation of a client in a jurisdiction in which the lawyer is admitted to practice; or

(iii) the lawyer is associated in the matter with a lawyer admitted to practice in this jurisdiction who actively participates in the representation.8

Similarly, the Ethics 2000 Report proposed a change to Model Rule 8.5(a), expanding the disciplinary authority of the Model Rules to apply to lawyers licensed in the Home State and practicing in the Host State.9 This was done by adding the language: "A lawyer not admitted in this jurisdiction is also subject to the disciplinary authority of this jurisdiction if the lawyer renders or offers to render any legal services in this jurisdiction." The Ethics 2000 Commission ultimately decided to defer consideration of Model Rules 5.5 and 8.5 to the MJP Commission, so those rules were not included in the consideration of the Ethics 2000 Report.

The MJP Commission considered the regulatory structure and, on November 30, 2001, released a report ("Interim Report"),10 setting forth a proposed revision to Model Rule 5.5 under which a person practicing on a temporary basis would not be engaged in the unauthorized practice of law, provided that the lawyer's services do not constitute an unreasonable risk to the interests of a lawyer's client, the public, or the courts.11 Specifically, the Interim Report recommended that Model Rule 5.5 be amended to:

identify "safe harbors" that embody specific applications of the general principle [that temporary practice does not constitute unauthorized practice so long as it does not create an unreasonable risk]; to identify other appropriate "safe harbors"; and to make clear that, except where authorized by law or rule, a lawyer may not establish an office, maintain a continuous presence, or hold himself or herself out as authorized to practice law in a jurisdiction where the lawyer is not licensed to practice law.12

The amendment of Model Rule 5.5 proposed by the Interim Report listed seven "safe harbors," including:

1) services undertaken in association with a lawyer admitted in the Host State;

2) services that would not constitute the practice of law if performed by a nonlawyer;

3) services in or related to a pending or potential proceeding before a tribunal or administrative agency held or to be held in the Host State or another jurisdiction, if the lawyer is authorized or expects to be authorized to appear in such proceeding;

4) services in or reasonably related to a pending or potential arbitration, mediation, or other alternate dispute resolution proceeding held or to be held in the Home State or another jurisdiction;

5) services performed for a client who resides or has an office in the Home State;

6) services that arise out of or are reasonably related to a matter that has a substantial connection to the Home State; or

7) services that are governed primarily by federal law, international law, the law of a foreign nation, or the law of the home jurisdiction.

In addition, the Interim Report provided two clear exceptions to unauthorized practice: service by an in-house attorney and services in the Host State pursuant to other authority granted by federal law or the law or a court rule of the Host State.13

A coalition of the American Corporate Counsel Association, National Organization of Bar Counsel, and Association of Professional Liability Lawyers developed an alternative approach under the name of the "Common Sense Proposal for Multijurisdictional Practice" ("Common Sense Proposal").14 The Common Sense Proposal was based in large part on the proposal developed in Colorado (the principal drafter of the Colorado proposal was Bruce Black).15 Both Nancy Cohen, a member of the National Organization of Bar Counsel,16 and Anthony Davis, now president of the Association of Professional Responsibility Lawyers, were on the committee that developed the Colorado proposal and were active in development of the Common Sense Proposal. Rather than set forth a series of safe harbors with respect to temporary practice, the Common Sense Proposal simply provided that a lawyer licensed and in good standing in the Home State will not be guilty of unauthorized practice in the Host State if:

the lawyer performs services for a client in this jurisdiction on a temporary basis, does not establish a systematic and continuous presence in this jurisdiction for the practice of law, and does not hold out to the public that the lawyer is licensed to practice law in this jurisdiction.17

The Common Sense Proposal made a clear statement as to what would not constitute the unauthorized practice of law. Like the Interim Report, the Common Sense Proposal provided for Host State discipline of all lawyers practicing in the Host State regardless of whether they were licensed there. The Common Sense Proposal was intended to be "a more straightforward rule authorizing MJP, under which lawyers and clients can flourish, and by which the public will be protected from unprofessional behavior. Any such rule should be simple to understand, easy to define, hard to amend, and capable of enforcement from state to state."18

In May 2002, after discussions between the sponsors of the Common Sense Proposal and others, the MJP Commission released its report to the House of Delegates, dated August 2002 ("MJP Report").19 The MJP Report, consisting of nine parts denominated as Reports 201A through 201J, included the following:

1) an acknowledgment of the courts' authority to regulate the practice of law;20

2) a revision of Model Rule 5.5, dealing with the unauthorized practice of law;21

3) a revision to Model Rule 8.5, dealing with disciplinary authority and choice of law;22

4) a revision to the ABA Model Rules of Lawyer Disciplinary Enforcement, dealing with reciprocal enforcement;23

5) encouragement of the use of the National Lawyer Regulatory Data Bank to promote disciplinary enforcement;24

6) adoption of the proposed Model Rule on Pro Hac Vice Admission, dated August 2002;25

7) adoption of the proposed...