TRAPPED BETWEEN SOVEREIGNS: WHAT'S AN ETHICAL LAWYER TO DO WHEN FEDERAL, STATE, OR LOCAL CRIMINAL LAWS CONFLICT?

• Author: Morehead, Sander J.

In November 2020, two South Dakota state ballot measures, Initiated Measure 26, legalizing marijuana for medical use, and Constitutional Amendment A, legalizing the cultivation, processing, possession, use, and distribution of recreational marijuana, passed by a majority vote of the electorate. (1) As a result, South Dakota moved into the ranks of more than thirty other states that have legalized the sale of at least some kinds of marijuana. (2) Marijuana cultivation, sale, distribution, and use, however, remain illegal under federal law. (3) Rule 1.2(d) of South Dakota's Rules of Professional Conduct ("Rules") forbids lawyers from assisting their clients with violating criminal laws. Rule 1.2 does not differentiate between state and federal law:

A lawyer shall not counsel a client to engage, or assist a client, in conduct the lawyer knows is criminal or fraudulent, but lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law. (4) Given the obvious difficulty Rule 1.2 created for South Dakota lawyers confronted with contradictory state and federal marijuana laws, it is not surprising that, in late 2020, the South Dakota State Bar's Ethics Committee ("the Committee") was asked to address whether lawyers could assist clients with setting up marijuana-related businesses and providing other direct assistance. (5) The Committee issued two opinions clarifying that lawyers could advise clients about South Dakota marijuana laws but could not assist clients with setting up marijuana businesses because of the continued illegality of marijuana under federal law. (6) The blanket prohibition left both clients and lawyers seeking additional guidance to better understand how Rule 1.2 applies in various contexts. The South Dakota State Bar and South Dakota Supreme Court provided prompt guidance. In the summer of 2021, the State Bar proposed amending Rule 1.2 to permit lawyers to both advise and assist clients in the marijuana business, notwithstanding the continued illegality of marijuana under federal law. The South Dakota Supreme Court adopted the amendment on September 1, 2021. (7)

This article identifies the general approaches states have taken in addressing the ethical dilemma marijuana presents, including a so-called "Rules of Reason" approach based on the principle that the drafters of the Rules did not contemplate conflicting state and federal criminal statutes. The article then discusses South Dakota's approach to the problem, including modifying Rule 1.2(d). Next, the article discusses how marijuana is only one way that state and federal law, state and local law, and federal and local law conflict and create issues under Rule 1.2(d). In apparent anticipation of this issue, some states have amended their versions of Rule 1.2 to clarify that lawyers may provide advice and assistance to clients regarding conduct that is illegal under federal law, as long as the conduct is legal under state law. Although that approach is facially appealing, it could lead to unintended consequences and uncertain and shifting obligations. Instead, if read strictly, but in light of its comments, Rule 1.2(d) as written provides the most useful guidance. It permits lawyers to advise clients with analyzing and, in some cases, to assist in challenging the validity of less-certain laws. In fact, Rule 1.2 appears to permit lawyers to assist clients in determining how to disobey a criminal law to establish the standing needed to mount a good-faith legal challenge to the law's validity.

Finally, the article discusses when a "Rules of Reason" approach to Rule 1.2(d) is essential--when there are conflicting criminal statutes, each enacted by a different sovereign, with no clear answer regarding which, if any, of those statutes are valid and enforceable. In this situation, lawyers should not face discipline for helping their clients navigate a situation where any act necessarily violates at least one criminal law.

1. A SURVEY OF STATE APPROACHES TO RULE 1.2(D) AND LEGALIZED MARIJUANA

   When a state legalizes the cultivation and sale of marijuana, it often jump-starts lucrative new businesses. (8) Legalization often results in a "gold rush" of investors and other business interests seeking to establish themselves at the forefront of opportunity. (9) Clients seeking help with the legal sale of marijuana under state law are still confronted with a violation of federal law. (10) A lawyer representing marijuana clients must comply with Rule 1.2(d), which is not limited to criminal activities under state law. Because the regulation of lawyers is inherently state-based, states have tailored their responses to this dilemma. (11) By 2020, most states had adopted one of three approaches, which provided the South Dakota Ethics Committee and the South Dakota Bar with a range of choices. (12) A discussion of those approaches and South Dakota's eventual choice follows.

   1. THE PLAIN TEXT AND AMENDMENT APPROACH

      The majority approach is the most conservative one. The approach distinguishes between advising clients about marijuana laws, which is permissible, and directly assisting clients with marijuana-related matters, which the plain text of Rule 1.2(d) prohibits. (13) For example, Colorado's Ethics Committee took the position that lawyers could ethically (1) represent a client in proceedings relating to the client's past activities; (2) advise governmental clients regarding the creation of rules and regulations implementing marijuana laws; (3) argue or lobby for specific regulations, rules, or standards; or (4) advise clients regarding the consequences of marijuana use or commerce under Colorado or federal law. (14) However, a lawyer could not assist a client in structuring or implementing marijuana-related transactions that violate federal law. (15) Impermissible assistance would include drafting or negotiating: "(1) contracts to facilitate the purchase and sale of marijuana; or (2) leases for properties or facilities, or contracts for resources or supplies, that clients intend to use to cultivate, manufacture, distribute, or sell marijuana even though such transactions comply with Colorado law." (16) Similarly, Connecticut's Ethics Committee noted that Rule 1.2 "does not make a distinction between crimes which are enforced and those which are not" and advised lawyers to avoid assisting clients with conduct that violates federal law, while acknowledging that providing advice, as opposed to active assistance, would be permissible. (17) Ethics committees in Ohio and Pennsylvania joined this approach. (18) Most of these states have since amended their rules of professional conduct or comments to permit lawyers to provide direct assistance, not just advice, regarding marijuana-related businesses. (19) Others, including Alaska, (20) Montana, (2)' New Hampshire, (22) Oregon, (2)- (5) Rhode Island, (24) Virginia, (25) and West Virginia, (26) do not have ethics opinions on the issue but have amended their Rules of Professional Conduct. (27)

   2. THE IMMUNITY APPROACH

      A few states have issued declarations or statements through disciplinary authorities or legislation that lawyers arc not subject to discipline for advising and assisting clients in conformity with state law, notwithstanding federal law. These states include Florida, (28) Massachusetts, (29) Minnesota, (30) and Missouri. (31) The rationale for this approach is twofold. First, government lawyers would be asked to draft regulations to implement state marijuana laws, and private lawyers would be asked to set up businesses to distribute marijuana under state law. (32) Second, the federal government has essentially stopped prosecuting most marijuana-related crimes. (33)

   3. THE "RULES OF REASON" APPROACH

      The most permissive approach is one summarized in an ABA comment from July 2019:

      [B]ecause the ABA Model Rules of Professional Conduct are rules of reason, it is unreasonable to prohibit a lawyer from providing advice and counsel to clients and to assist clients regarding activities permitted by relevant state or local law, including laws that allow the production, distribution, sale, and use of marijuana for medical or recreational purposes so long as the lawyer also advises the client that some such activities may violate existing federal law. (34) In other words, advocates of this "Rules of Reason" approach maintains that Rule 1.2(d) as written permits and continues to permit lawyers to advise and assist clients regarding marijuana issues, notwithstanding the continued illegality of marijuana use and distribution under federal law. (35) The rationale for this conclusion has usually been based on some or all of four points: (1) the issuance of the "Cole Memorandum" by the Department of Justice under the Obama Administration, which announced the DOJ would not prioritize enforcement of federal marijuana laws in states that had legalized marijuana; (36) (2) the Preamble and Scope to the Model Rules, paragraph [14] stating that the "Rules of Professional Conduct are rules of reason. They should be interpreted with reference to the purposes of legal representation and the law itselff[;]" (37) (3) the clear intent of Rule 1.2(d) is to proscribe assisting clients with direct illegality, rather than the gradually eroding illegality of marijuana nationwide; (38) and (4) the importance of access to competent legal advice for residents and businesses in states that have legalized marijuana. (39)

      Indeed, the fourth point is a crucial animating factor in most opinions. For example, Arizona's ethics committee stated:

      [W]e decline to interpret and apply ER 1.2(d) in a manner that would prevent a lawyer who concludes that the client's proposed conduct is in "clear and unambiguous compliance" with state law from assisting the client in connection with...