The dichotomy between standards and rules: a new way of understanding the differences in perceptions of lawyer codes of conduct by U.S. and foreign lawyers.

• Author: Daly, Mary C.
• Position: Symposium: The International Trust, part 2

1. INTRODUCTION

   The dichotomy between standards and rules has generated an impressive body of scholarship in areas as diverse as constitutional,(1) contract(2) labor,(3) property,(4) tort,(5) and criminal(6) law. This article argues that the dichotomy--in a somewhat modified form--helps to explain a fundamental difference in the way that U.S. and foreign lawyers, especially those educated in the civil law tradition,(7) perceive codes of lawyer conduct.(8)

   This difference in perception is more than simply a matter of academic interest or curiosity. In December 1998, the Services Council of the World Trade Organization (WTO) adopted the Disciplines on Domestic Regulation in the Accountancy Sector,(9) the purpose of which was to remove illegitimate regulatory barriers to trade in accountancy services. The Disciplines were the result of three years of intense study by the Working Party on Professional Services (WPPS), which was established by the General Agreement on Trade in Services (GATS) to which the United States is a signatory. The WPPS is charged with the task of examining qualification requirements, procedures, technical standards, and licensing requirements in the professional services sector to insure that they are no more trade-restrictive than necessary.(10) The WPPS is now turning its attention to the legal profession. As a first step in its review, the WPPS has issued a background paper and posed questions to the member states of the Organization for Economic Cooperation and Development (OECD) designed to identify barriers to trade in legal services rooted in the countries' regulatory and ethical regimes.(11)

   Fearful that the WPPS will place too great an emphasis on the economic barriers created by professional licensing schemes and lawyer codes of conduct and too little on ethical values such as the independence of the bar, conflict-free representation, and client confidentiality, the American Bar Association (ABA), the Council of the Bars and Law Societies of the European Union (CCBE),(12) and the Japan Federation of Bar Associations (JFBA) sponsored a Forum on Transnational Legal Practice in November 1998.(13) The sponsors invited the participation of the organized bars of the OECD member states, Asia, Africa, and South America. Bar leaders from twenty-five different countries attended the Forum, as did delegates from three of the major international bar associations. The attendees represented over sixty percent of the world's lawyers.(14) The two days of the Forum were almost exclusively devoted to regulatory issues. The discussions and submissions addressed the right of a lawyer occasionally to deliver legal services in a country in which the lawyer is not licensed to practice law, the right of a lawyer to establish the lawyer's practice in a country in which the lawyer is not licensed to practice law, and the advisability of countries adopting a foreign legal consultant regime.(15)

   Interesting as these discussions and debates were, what were even more interesting were the occasions when the Forum's participants formally and informally turned their attention to lawyer codes of conduct. It was obvious that U.S. and foreign lawyers perceive their respective lawyer codes of conduct very differently.(16) To U.S. trained lawyers, the codes of conduct are law or at least lawlike, primarily because of their enforceability.(17) They are the yardsticks by which grievance committees measure a lawyer's behavior, judges grant or deny motions, and juries accept or reject allegations of malpractice or breach of fiduciary duty.(18) To non-U.S. trained lawyers, the codes of conduct are general norms of professional behavior.(19) The popular understanding is that the codes of conduct are less legalistic and less formal than their U.S. counterparts.(20) Professor Hazard has captured the spirit of this difference: "The English barristers thought it quaint that American lawyers felt in need of legal rules for their governance, but they recalled that Americans seemed to need rules for everything."(21) His comment has even greater force for lawyers trained in the civil law tradition.

   This article will briefly identify some of the reasons for this difference in perception and speculate about its possible impact on the regulation of cross-border legal practice. Part II traces the transformation from standards to rules in the United States. Part III explores the historical, structural, and economic reasons why a similar transformation has not occurred in most foreign countries. Finally, Part IV examines how an appreciation for the standards/rules dichotomy can contribute to a better understanding of the ethical obligations of lawyers in different legal systems and ultimately to the adoption of a code of conduct to govern the conduct of lawyers in cross-border transactions.

   Contemporary interest in the rules/standards dichotomy springs principally from the writings of Duncan Kennedy(22) and other Critical Legal Studies scholars.(23) "Dichotomy" is really a misnomer. It is more accurate to speak of a continuum of discretion. At one end of the continuum are "rules," commands that constrict a decisionmaker's discretion.(24) They reflect a choice among competing values by a policy-maker who has the authority to cabin a decisionmaker's choices.(25) At the other end are "standards," general principles that allow the decisionmaker greater discretion in applying the designated values.(26) In his seminal law review article, Kennedy associated rules with Holmes' Bad Man, who is always looking to the limits of the law to determine precisely how far he can go in any endeavor without risking civil or criminal liability.(27) The virtues of rules--predictability and stability--are thus transformed into vices--excessive autonomy and alienated individualism.(28) Standards are less determinative than rules because they serve to promote the advancement of abstract ideals such as goodness and fairness. From the decisionmaker's perspective, standards are both a blessing and a burden; a blessing because they encourage and legitimize nuanced resolutions, a burden because they demand careful and honest reflection.(29) From the actor's perspective, rules are usually perceived as more conduct-specific than standards. In general, they are easier to enforce than standards, but they are also easier to defend against.(30) Building on Kennedy's work, Professor Rose has argued that the choice between rules and standards is a matter of metaphor or rhetoric, suggesting the different ways that individuals deal with members of their own immediate community and with strangers.(31)

   While neither Kennedy's nor Rose's analysis of the standards/rules dichotomy is entirely satisfactory in explaining the core differences in perception between U.S. and foreign lawyers with respect to lawyer codes of conduct, their work identifies a new vocabulary for discussing those differences and a new paradigm for their analysis. Understanding the standards/rules dichotomy is an important first step in the creation of a cross-border code of lawyer conduct.

2. FROM STANDARDS TO RULES: THE TRANSFORMATION OF THE LAWYER CODES OF CONDUCT, THE LAWYER DISCIPLINARY SYSTEM, AND LEGAL EDUCATION IN THE UNITED STATES

   "Rules" as employed in this essay encompass phenomena as diverse as the lawyer codes of conduct, the decisions of courts, the opinions of state bar association ethics committees interpreting the codes' provisions, the professionalization of the lawyer disciplinary system, and even legal education.(32) "Rules" is a shorthand for the synergistic forces unleashed by the three overseers of the U.S. legal profession: the organized bar, the courts, and the law schools. The organized bar drafts lawyer codes of conduct, establishes committees that interpret them, and sponsors conferences, programs, and publications that debate, analyze, and apply them.(33) The courts, as regulators of the legal profession, formally adopt codes of conduct, require a separate bar examination in legal ethics for admission to the bar, demand continuing legal education in legal ethics throughout a lawyer's career, and enforce the codes' provisions through the disciplinary system.(34) The courts, as adjudicators, interpret lawyer codes of conduct in resolving cases and controversies.(35) The law schools, to satisfy accrediting standards, instruct their students in professional responsibility through required courses or a pervasive methodology.(36) They also sponsor conferences, programs, and publications that debate and analyze lawyer codes of conduct.

   1. From Canons to Code to Rules

      This article can only sketch the broad outlines of how and why the format, substance, and spirit of the codes of conduct that govern the conduct of lawyers changed so radically in this century, a transformation poignantly captured by the metamorphosis of their titles--from Canons to Code to Rules.(37)

      1. The 1908 Canons of Ethics

      The ABA's adoption of the Canons of Professional Ethics in 1908 (1908 Canons) was the result of the natural progression of the institutionalization of the legal profession in the United States that began in the 1870s.(38) The most knowledgeable academics entertain no doubt as to where to place the Canons on the divide between standards and rules. Professor Wolfram states that they rest on the assumption that "all lawyers are sufficiently homogenous to conform to common standards."(39) He has characterized them as "statements of professional solidarity ... intended primarily to celebrate the ancient lineage of the bar's professional stature," and not to serve as templates for disciplinary actions.(40) The historian James Willard Hurst has commented upon the Canons' emphasis on "honorable relationships between individuals."(41) Professor Pearce has demonstrated that they are firmly rooted in Republican ideology.(42) The drafters of the 1908 Canons lauded vagueness and feared specificity...