CHAPTER 9 ETHICS IN LEASING IN THE MARCELLUS SHALE
| Jurisdiction | United States |
(Dec 2010)
ETHICS IN LEASING IN THE MARCELLUS SHALE
Thorp Reed & Armstrong, LLP
Pittsburgh, Pennsylvania
DAVID G. RIES is a partner with Thorp, Reed & Armstrong in Pittsburgh. He focuses his practice in the areas of environmental, commercial and technology litigation. He has used computers in his practice since the early 1980s and chairs the firm's E-Discovery and Records Management Group. Mr. Ries has more than 35 years of experience in these areas and has frequently lectured and written concerning them for legal, educational, and professional groups. He has recently addressed in his practice and teaching such current issues as information security and privacy, environmental site remediation, challenges to penalties, admissibility of expert opinions, e-discovery and environmental forensics. He received his J.D. from Boston College, 1974 (Cum Laude) and was a Member of the Boston College Industrial and Commercial Law Review. He received his B.A. from Boston College in 1971, Magna Cum Laude. His memberships include: Past President and Trustee, Energy and Mineral Law Foundation; Marcellus Shale Coalition; International Society of Environmental Forensics; Editorial Board, Environmental Forensics (a peer reviewed journal); ASTM Committee E5O (Environmental Assessment, Risk Management and Collective Action); Air and Waste Management Association; Board of Directors, InfraGard, Pittsburgh Chapter; Member, Information Systems Security Association; and Hearing Committee Chair and Member, Disciplinary Board of the Supreme Court of Pennsylvania (1997-2003).
This paper reviews selected legal ethics issues that may arise in providing legal services to clients in connection with leasing in the Marcellus Shale and related development and production. There do not appear to be novel or unique legal ethics issues in this area, but instead the application of recurring ethics considerations to new fact situations. Because the Marcellus is a multistate play and this program will have a multistate audience, it will focus on the American Bar Association (ABA) Model Rules of Professional Conduct rather than individual states' rules. The analysis will start with a review of current ethics developments at the ABA. It will then explore multijurisdictional practice, doing business with clients, special fee arrangements, and joint representation.
American Bar Association Developments and Resources
As their name suggests, ABA Model Rules of Professional Conduct are models for adoption by state ethics authorities. The current edition of the Model Rules is the 2010 edition.1 The Model Rules are amended periodically by the ABA and it takes time after amendment for the various states to consider them and to adopt, partially adopt, or reject amendments. Forty-nine states (all except California2 ) have adopted ethics rules based on the ABA Model Rules. There are, however, numerous variations from the Model Rules in state rules. State ethics rules may differ from the models in both significant and subtle ways. It is important for attorneys to consult the applicable ethics rules from the involved jurisdiction or jurisdictions.
The last comprehensive revisions to the Model Rules were made in 2002, based primarily on the recommendations of the ABA Ethics 2000 Commission3 and the ABA Commission on Multijurisdictional Practice.4 The Ethics 2000 Commission was appointed in 1997 to perform a comprehensive review of the Model Rules. The Commission on Multijurisdictional Practice was appointed in July 2000 to analyze current rules on multijurisdictional practice of law and to make policy recommendations concerning it.
[Page 9-2]
The Model Rules are currently undergoing another comprehensive review. Last year, the ABA President appointed the ABA Commission on Ethics 20/20 to "perform a thorough review of the Model Rules of Professional Conduct and the U.S. system of lawyer regulation in the context of advances in technology and global legal practice developments."5
The ABA Center for Professional Responsibility provides a wealth of information on legal ethics and professional responsibility.6 The Center was created in 1978 to develop and interpret standards and to provide scholarly resources in legal and judicial ethics, professional regulation, professionalism and client protection. While some of its materials are available only to members of the Center, much of it is available to all ABA members. Its website includes an online version of the current Model Rules and Comments, the full text of current ABA ethics opinions, headnotes to older ABA ethics opinions, links to state ethics resources, and additional materials.
A resource of the Center for Professional Responsibility that is often overlooked by ABA members is ETHICSearch,7 a service that performs basic research for attorneys on ethics questions submitted to it, often without charge. It does not provide conclusions on the submitted questions, but provides copies of research materials such as Model Rules and Comments, ethics opinions, articles, and materials from the ABA/BNA Lawyer's Manual on Professional Conduct.
Multijurisdictional Practice8
The practice of law for most attorneys in the United States today is truly multijurisdictional, with both legal services and their impacts in multiple states. The term "multijurisdictional practice" ("MJP") is used to describe legal services by a lawyer across state lines or in a jurisdiction in which he or she is not admitted to practice. It includes services performed in the other jurisdiction through physical presence or through virtual presence (phone, teleconference, email, Internet, etc.) The state in which the lawyer is admitted is called "the home state." The state in which the services are performed is called "the host state." MJP raises issues of potential unauthorized practice of law, potential violation of ethics rules, and choice of law for ethics rules and disciplinary proceedings.9
It is likely that there have been ongoing MJP issues relating to development of the Marcellus Shale and they are likely to continue. For example, an attorney admitted in Pennsylvania may be asked by a Pennsylvania client to perform services that lead to physical or virtual presence in
[Page 9-3]
surrounding states; or a Pennsylvania attorney may be asked to perform services for an out of state client that leads to services with physical or virtual presence in the client's state where the attorney is not admitted; or an attorney admitted in Texas or Oklahoma may be asked by a client in his or her home state to perform services that lead to physical or virtual presence in a Marcellus state where the attorney is not admitted. The legality of these kinds of services will be governed by the practice laws and rules of the host state, including MJP rules.
The general practice of law in the United States is regulated by the states and each state has its own requirements for admission to practice. States have laws prohibiting the unauthorized practice of law that generally apply to nonlawyers and to lawyers not admitted to practice in the state. For example, Pennsylvania's unauthorized practice law provides:
Penalty for unauthorized practice of law
(a) GENERAL RULE.-- Except as provided in subsection (b), any person, including, but not limited to, a paralegal or legal assistant, who within this Commonwealth shall practice law, or who shall hold himself out to the public as being entitled to practice law, or use or advertise the title of lawyer, attorney at law, attorney and counselor at law, counselor, or the equivalent in any language, in such a manner as to convey the impression that he is a practitioner of the law of any jurisdiction, without being an attorney at law or a corporation complying with 15 Pa.C.S. Ch. 29 (relating to professional corporations), commits a misdemeanor of the third degree upon a first violation. A second or subsequent violation of this subsection constitutes a misdemeanor of the first degree.10
This law, like many states' laws, provides for criminal penalties for violation.
MJP started to receive growing attention during the 1990s as some states started to take action against out of state attorneys who were not licensed to practice in the state.11
A high profile example of this kind of enforcement is Birdbrower, Montalbano, Condon & Frank, P.C. v. Superior Court,12 a case in which the court held that a New York law firm engaged in unauthorized practice of law when it performed substantial work in California for a California client, including meetings with client's accountants, participating in strategy discussions, meeting with the opposing party, making a settlement demand, and filing a demand for arbitration. The court found that physical presence is one factor to be considered in unauthorized practice, but is not exclusive and that one may engage in unauthorized practice without being physically present. It held that the law firm could not recover fees for services while present in California, physically or "virtually."
[Page 9-4]
Another example is a Colorado case, Koscove v. Bolte, Colo.13 The court held that a lawyer licensed in Wisconsin but not Colorado must refund to his client fees he received for performing pre-litigation legal services in Colorado. The lawyer's later pro hac vice admission in federal court, where the client's matter ultimately was brought, did not correct the problem because the lawyer was hired initially to provide legal advice and services on the client's Colorado state law claims.
As noted above, the Commission on Multijurisdictional Practice was appointed in July 2000 to study and report on the application of current ethics and bar admission rules to the multijurisdictional practice of law, to analyze their impact, and to make policy recommendations. During 2002, the Commission issued its final report, which...
To continue reading
Request your trial