Multijurisdictional Practice for a Multijurisdictional Profession

• Publication year: 2021
• Citation: Vol. 81

81 Nebraska L. Rev. 1379. Multijurisdictional Practice for a Multijurisdictional Profession

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Susan Poser(fn*)

Multijurisdictional Practice for a Multijurisdictional Profession

I. INTRODUCTION

The issue of multijurisdictional practice ("MJP") concerns whether, and to what extent, lawyers can practice law in states in which they are not licensed.(fn1) Under current law in Nebraska and almost every other state, it may be a violation of both the ethics rules and state law for a lawyer not licensed in that state to engage in activity that constitutes the practice of law, even on a temporary basis.(fn2) This is law that is no longer practical or necessary and Nebraska should now consider modifying it.

Passing the bar in one state means that one is only licensed to practice law in that state. Disciplinary Rule 3-101(B) of the Nebraska Code of Professional Responsibility states, "A lawyer shall not practice law in a jurisdiction where to do so would be in violation of regulations of the profession in that jurisdiction."(fn3) Former Model Rule of Professional Conduct 5.5 states a similar prohibition.(fn4) Clearly, it is a violation of the regulations of the profession to practice law in Nebraska without passing the bar exam or being admitted on motion.(fn5)

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In addition to being a violation of the ethics rules, it is also a class III misdemeanor to practice law in Nebraska without a license.(fn6) Most states make the unauthorized practice of law ("UPL") a misdemeanor, although some, like South Carolina, make it a felony punishable by a $5,000.00 fine and/or five years in jail.(fn7)

In 2000, the President of the American Bar Association ("ABA") appointed the Commission on Multijurisdictional Practice ("MJP Commission") to study multijurisdictional practice and to make policy recommendations to the ABA. In August 2002, the ABA adopted revised Model Rule 5.5. This revised Model Rule significantly changes the prior version of the Model Rule by explicitly permitting lawyers to practice law on a temporary basis in states in which they are not licensed.

II. CURRENT LAW and REGULATION OF MJP

Under current rules, if you are licensed to practice only in Nebraska, it might be unethical and illegal to meet with a Nebraska client in Denver in order to prepare for a trial there, even if you anticipate pro hac vice admission.(fn8) The cases indicate that an Iowa lawyer might run into trouble if she went to Nebraska to advise a corporate client with businesses in both states on a matter of Nebraska tax law, but might be safe if she only advised that client on federal taxes,(fn9) or discussed Nebraska law only on the phone from her office in Des Moines10.

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The reason that many lawyers do not consider it risky to engage in some or all of this conduct is that the rules prohibiting multijurisdictional practice are not well defined and are almost entirely unenforced. State disciplinary counsel simply have more important things to do than run around trying to catch lawyers taking illicit deposi-tions.(fn11) One commentator referred to this as the "don't ask, don't tell" policy for multijurisdictional practice,(fn12) while another calls it "sneaking around."(fn13) Nevertheless, the threat of enforcement of both the ethical rules and the laws prohibiting the unauthorized practice of law exists.(fn14) More importantly, even if the threat is so small that it can safely be ignored, lawyers must acknowledge the fact that, as the MJP Commission put it, "keeping antiquated laws on the books breeds public disrespect for the law," and that this is "especially so where the laws relate to the conduct of lawyers, for whom there is a professional imperative to uphold the law."(fn15)

Although state disciplinary counsel tend not to be interested in enforcing these rules, clients occasionally find them useful. In 1998, in Birbrower, Montalbano, Condon and Frank, P.C. v. Superior Court,(fn16) lawyers from a New York firm that represented sister corporations in New York and California spent a lot of time in California preparing for a California arbitration. After the case settled, the client sued the attorneys for malpractice. When the lawyers countersued for their fees, which were in excess of one million dollars, the clients argued that the fees should be forfeited because the lawyers violated California's Unauthorized Practice of Law statute by practicing in a state where they were not licensed.(fn17) The clients won, the court forfeited the fees, and it sent shock waves through the legal community. Other courts around the country have reached similar conclusions.(fn18) The concern that these cases raised prompted the ABA in 2000 to form the MJP Commission.

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III. POLICY CONSIDERATIONS

In order to decide what should be the parameters of ethical practice in a state where a lawyer is not licensed, we have to consider some very basic issues about the nature of law practice in the twenty-first century.

Historically, the state supreme courts have regulated the lawyers in their states.(fn19) This was originally a function of local courts needing to ensure the competence of lawyers who practice before them.(fn20) Yet, these rules apply to all lawyers, including transactional lawyers who never appear in court. Many states also write their own portion of the bar exam, thereby determining what lawyers should know in that state. For these lawyers, state regulation is valuable insofar as it tends to promote familiarity with state law. Membership in a state bar also encourages participation in local bar organizations, which in turn fosters attention to law reform and pro bono activity.(fn21)

States not only regulate their own lawyers, they also set the criteria for admission to the bar, which most states take very seriously.(fn22) The MJP Commission found that "[i]n general, states have greater confidence in their own admissions processes than in that of sister states.(fn23)" In New Jersey, passing the bar is not even enough there is also the "bona fide office rule." In order to practice law in New Jersey, the lawyer has to maintain what is called a "bona fide office" in the state.(fn24)

As part of the admissions process, state supreme courts have the final say in the character and fitness aspect of bar admission, and the standards for character and fitness vary somewhat from case to case and from state to state. In Texas, scrutiny of future bar applicants begins in the first year of law school, when students are required to

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give the Board of Law Examiners access to all of the records deemed relevant to their moral character and fitness.(fn25) Yet, despite the state-by-state determination of character and fitness to practice law, states tend to evaluate the character and fitness of bar applicants in similar ways. For example, the types of conduct that the Nebraska Supreme Court has viewed as indicating inadequate character and fitness for law practice is fairly typical and reflected in cases from other states. In its most recent cases, the Nebraska Supreme Court upheld a denial of admission to applicants who exhibited behavior ranging from "inap-propriate"(fn26) to criminal(fn27) while in law school. Failure to disclose information on a bar application is also grounds for denial of admission in Nebraska.(fn28) Other states have cited similar grounds for denying admission on the basis of the applicant's character and fitness.(fn29) Thus, there is no reason to think that if Nebraska allowed out-of-state lawyers to practice temporarily in Nebraska, the people of Nebraska would be put at risk of falling victim to lawyers of lesser moral character.

In contrast to the way in which lawyers are regulated, the reality now is that most lawyers do not limit their practices to one state and to the laws of one state. Advances in communication and mobility have made interstate, and even global, practice much more common and necessary. If a client's business spans more than one state, then it is obvious that the advice that client will need will involve the laws of more than one state.(fn30) It is expensive, time-consuming, impractical, and inefficient to hire local counsel every time a client needs services out of state.(fn31) Although lawyers routinely hire local counsel, it is a waste of resources if the out-of-state lawyer is competently doing all of the work. If the local counsel is required to supervise out-of-state lawyers and participate in the legal matter, there is substantial time and effort involved in bringing a local lawyer up to speed on an ongoing matter. If, on the contrary, hiring local counsel is a mere formality, then the expense is not justifiable as being in the client's best interest. Moreover, because the current rules are ill-defined, lawyers

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do not know when it is necessary to hire local counsel, as the Birbrower case demonstrates.(fn32) Thus, even if the bench and bar of Nebraska believe that local counsel should be hired for certain types of legal tasks performed by attorneys licensed out of state, such as litigation, those tasks must be more clearly defined so that lawyers and clients have notice of when local counsel is required.

Not only is it increasingly necessary to advise clients on the laws of many states, it is also easier to do so than it has ever been. One can look up the laws and cases of every state and many countries just by sitting in front of a computer. Federal law has expanded to the point that many lawyers specialize in one federal statutory scheme, like bankruptcy or ERISA, and their knowledge is equally useful and applicable in every state.(fn33) Even lawyers who only serve in-state clients are often required to become experts in the federal and administrative law aspects of their practices.(fn34) This specialized knowledge in turn offers the opportunity to expand one's law practice, and it...