CHAPTER 14 ETHICS IN THREE SERVINGS: PRACTICING WITHOUT A LICENSE; ON BOTH SIDES OF THE DEAL; AND LYING ABOUT IT ALL
| Jurisdiction | United States |
(Mar 2008)
ETHICS IN THREE SERVINGS: PRACTICING WITHOUT A LICENSE; ON BOTH SIDES OF THE DEAL; AND LYING ABOUT IT ALL
Liskow & Lewis
Houston, Texas
ROBERT L. THERIOT
Robert L. Theriot is a shareholder with the firm of Liskow & Lewis and heads the Oil and Gas Litigation Section of its Houston office. He received his law degree from Tulane Law School, where he graduated summa cum laude and served as Editor-in-Chief of the Tulane Law Review. Mr. Theriot's practice for the past twenty years has focused on oil and gas litigation and transactions. In addition to his participation in the Rocky Mountain Mineral Law Foundation, he serves on the counsel of the Houston Bar Association Section on Oil, Gas & Mineral Law, the Advisory Board of the Institute for Energy Law, and is the current Planning Committee Chair for the South Texas College of Law Energy Institute. He often speaks on current oil and gas legal issues.
Ethical Issues Arising From Joint Operation Transactions
I. Overview
This paper discusses three ethical issues that often face practitioners engaged in negotiating and preparing oil and gas agreements involving joint operations. Multi-jurisdictional practice issues can arise when counsel and their clients, or the properties involved, are in different states, or cross jurisdictional lines. Joint operational agreements can give rise to multi-party representational issues, especially when the attorney is asked to represent "the deal." The paper will conclude with a discussion of the ethical rules involved in negotiating agreements, and the often blurred line between effective negotiation and impermissible lying.
II. Multi-Jurisdictional Practice
Consider this hypothetical: You are a Texas lawyer, licensed only in Texas. You regularly represent an Oklahoma oil company in connection with its Texas oil and gas operations. One day, the company asks you to review and help negotiate a participation agreement for a Wyoming mineral prospect. You may need to travel to Wyoming to meet with the promoter of the prospect. Your first concern, naturally, is whether you know enough about Wyoming law to ably assist. Your second concern, however, should be - can you handle this "Wyoming" matter, without violating the restrictions on the unauthorized practice of law?
A. ABA Model Rule 5.5
Practicing law in a state in which your are not licensed raises both criminal and ethical issues. All states have Unauthorized Practice of Law statutes, which criminalize the practice of law in those states by those not licensed. These statutes apply both to the non-lawyer, as well as to the lawyer, who may be licensed elsewhere. Unfortunately, these statutes are not very clear as to what constitutes the unauthorized practice of law by an attorney who, though licensed elsewhere, may be engaged in a matter with a nexus to the jurisdiction.
A parallel provision in the ethical rules of all jurisdictions likewise made it an ethical violation to engage in the unauthorized practice of law. The original ABA Model Rule 5.5, provided:
A lawyer shall not practice law in a jurisdiction in violation of the regulation of the legal profession in that jurisdiction or assist another in doing so.
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In 2002, the ABA adopted revised Model Rule 5.5, which attempted to delineate the permissible scope of multi-jurisdictional practice:
Rule 5.5 Unauthorized Practice Of Law; Multijurisdictional Practice Of Law
(a) A lawyer shall not practice law in a jurisdiction in violation of the regulation of the legal profession in that jurisdiction, or assist another in doing so.
(b) A lawyer who is not admitted to practice in this jurisdiction shall not:
(1) except as authorized by these Rules or other law, establish an office or other systematic and continuous presence in this jurisdiction for the practice of law; or
(2) hold out to the public or otherwise represent that the lawyer is admitted to practice law in this jurisdiction.
(c) A lawyer admitted in another United States jurisdiction, and not disbarred or suspended from practice in any jurisdiction, may provide legal services on a temporary basis in this jurisdiction that:
(1) are undertaken in association with a lawyer who is admitted to practice in this jurisdiction and who actively participates in the matter;
(2) are in or reasonably related to a pending or potential proceeding before a tribunal in this or another jurisdiction, if the lawyer, or a person the lawyer is assisting, is authorized by law or order to appear in such proceeding or reasonably expects to be so authorized;
(3) are in or reasonably related to a pending or potential arbitration, mediation, or other alternative dispute resolution proceeding in this or another jurisdiction, if the services arise out of or are reasonably related to the lawyer's practice in a jurisdiction in which the lawyer is admitted to practice and are not services for which the forum requires pro hac vice admission; or
(4) are not within paragraphs (c)(2) or (c)(3) and arise out of or are reasonably related to the lawyer's practice in a jurisdiction in which the lawyer is admitted to practice.
(d) A lawyer admitted in another United States jurisdiction, and not disbarred or suspended from practice in any jurisdiction, may provide legal services in this jurisdiction that:
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(1) are provided to the lawyer's employer or its organizational affiliates and are not services for which the forum requires pro hac vice admission; or
(2) are services that the lawyer is authorized to provide by federal law or other law of this jurisdiction.
Most states have adopted revised Model Rule 5.5, or a similar variation; however consideration of the revisions is still pending in a several states, including the producing states of Texas, West Virginia, Mississippi, Kentucky, and Kansas.
B. Discussion of Revised Model Rule 5.5
The practice of law "across" state lines has always been a problematic issue for the transactional attorney. The litigator typically has a bright-line to follow. He cannot appear in a court in a jurisdiction in which he is not licensed. Conversely, if he is granted permission to appear pro hac vice under the jurisdiction's procedures, he has a safe harbor within which to operate, at least as to the matter for which he has been temporarily admitted. By contrast, the transactional attorney has no pro hac procedure to follow. The line between ethically assisting a client with issues in another state, and the unlawful practice of law, is often hard to discern.
The issue received much publicity after the decision in Birbrower, Montalbano, Condon & Frank, P.C. v. Superior Court of Santa Clara County, 949 P.2d 1 (Cal. 1998), which held that out-of-state lawyers engaged in the unauthorized practice of law when they handled a California arbitration for a California client under California law, and were therefore barred from recovering their fees. This led to several developments, including a special ABA committee to review and propose revisions to the Model Rules on multi-jurisdictional practice of law.
Revised Model Rule 5.5 codifies trends and customs that have developed concerning multi-jurisdictional practices, some of which has been specifically and expressly recognized in some states. The key...
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