Uni-state lawyers and multinational practice: dealing with international, transnational, and foreign law.

• Author: Brand, Ronald A.

ABSTRACT

This Article addresses how a lawyer may ethically engage in a transnational practice given the current structure of state-by-state bar admission. Part H examines the ethical pitfalls of a transnational practice, including an examination of applicable APA Model Rules of Professional Conduct. This section also addresses different tests for determining whether a lawyer has committed the unauthorized practice of law. Part III makes use of examples to illustrate the legal framework for determining whether a lawyer has committed the unauthorized practice of law. In Part IV, the author concludes by making suggestions for how to better address the ethical dilemma of transnational lawyers.

1. INTRODUCTION

   At the beginning of the twentieth century, U.S. law schools realized that the practice of law had moved beyond local, state-focused rules, and that the teaching of law required attention to developments on a national scale. At the beginning of the twenty-first century, law schools issue glossy brochures and magazines touting themselves as "global law schools" able to train the "global lawyer." These developments in legal education parallel developments in the practice of law in the United States. With greater emphasis on federal legislation in many areas of the law and harmonization of state law through "uniform" laws promulgated by the National Conference of Commissioners on Uniform State Law, as well as case law that relies heavily on the Restatements of the American Law Institute, lawyers regularly must look beyond the law of their own state to provide competent legal counsel in both transactional and litigation matters. As private international law experiences the development of conventions and model laws designed to harmonize rules world-wide, this process is repeating itself on a global scale.

   While the practice of law has moved from being local to national to international in scope, the regulation of the profession in the United States remains largely localized. Admission to the bar is governed by the state of admission, and a lawyer admitted in one state is a non-lawyer in another state for purposes of the application of rules dealing with the unauthorized practice of law. Even competent legal advice regarding federal law matters that are uniformly interpreted throughout the United States may be the unauthorized practice of law if rendered from a location outside the state of admission to a client from another state.

   Dynamic changes in the practice of law, combined with the static system of regulation of that practice, produce significant problems for lawyers concerned with reconciling a transnational practice with local admission. Recent cases raise further questions about the relationship between the duty of competence and rules prohibiting the unauthorized practice of law. It may be unauthorized practice to advise a client in a state where the lawyer is not admitted, even if the advice is rendered competently, while the same advice given to a client from the lawyer's state of admission would not constitute unauthorized practice. While cases focus on the location of the lawyer and the client, it is also important to consider the law being applied. If we do so, however, what then is the result of the application of foreign country law by a lawyer admitted in a U.S. state? Lawyers with a transnational practice often must deal with rules of private international law found in treaties or with rules created by non-governmental organizations operating on a global basis. This practice raises the added question of whether existing ethical rules and case law provide guidance for the transnational lawyer representing multinational clients engaged in transactions throughout the world, and applying rules that require reference to documents and decisions from sources in multiple jurisdictions. These events further complicate the application of standards dealing with lawyer competence and with the unauthorized practice of law.

   This Article will not attempt to catalogue or address all the ethical rules that may apply to the transnational practice of law. It will rather focus on the transactional lawyer and some of the issues faced in common contractual relationships that cross national borders. To some extent these issues are mitigated by the fact that other countries apply a more limited definition of the practice of law, and may be less likely to sanction a U.S. lawyer applying their law or representing their nationals as clients. As with other issues of transnational practice, however, a U.S. lawyer often is required to find guidance, and compelled to recognize limitations, from cases dealing with interstate practice within our federal system. The ultimate goal of this article is to consider whether the realities of the practice of law today can be reconciled with the structure and rules governing those engaged in that practice.

2. MOVING INTO THE WORLD OF TRANSNATIONAL PRACTICE

   Businesses in today's markets both want and fear transnational involvement. On the one hand, they want the extra profits and economies of scale that can come from global markets. At the same time they seek to avoid the increased uncertainty and risk resulting from the additional sets of rules that may apply to their conduct in those markets. Competent legal counsel is thus even more important in a cross-border transaction than in its domestic counterpart. This raises two fundamental questions regarding the lawyer's role in such a transaction: what is the benchmark by which we measure lawyer competence in such representation, and what is the threshold beyond which even the most competent lawyer should not pass in engaging in the practice of law outside his or her state of admission? The related question, by which we necessarily must judge our answers to the first two, is: what is the profession's obligation to a client involved in transnational transactions in terms of encouraging, allowing, and regulating competent provision of legal services?

   1. The Competent Transnational Lawyer

      1. Model Rule 1.1

         The ABA Model Rules of Professional Conduct begin with the duty of competent representation:

         Rule 1.1 Competence A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation. (1) The placement of this Rule at the beginning of the Model Rules emphasizes the importance of the duty owed to the client. The focus of this duty indicates the fundamental importance of the interests of the client in the application of all of the Model Rules. The further fact that this duty can rarely be waived by the client (2) underscores its significance to the attorney-client relationship. Thus, by its very nature, this Rule provides the fundamental test in the interpretation of every other Model Rule. No other Rule should be interpreted in a manner that would result in devaluation of the duty of competence or of its goal of proper representation of the client, nor should any rule be interpreted in a manner that accepts any other goal (e.g., protection of the profession) over this one.

         The duty of competent representation does not require that the lawyer know all the answers to a client's legal questions at the time representation is undertaken. "A lawyer can provide adequate representation in a wholly novel field through necessary study. Competent representation can also be provided through the association of a lawyer of established competence in the field in question." (3) Thus, it is wholly appropriate to develop new areas of competence through continued study and to associate with other lawyers to provide legal services on multiple issues. This process should allow satisfaction of the duty of competence through increased understanding of foreign law, as well as through association with a foreign lawyer when advice on foreign law is necessary. (4) The more difficult question is when a lawyer may rely on his or her own knowledge of foreign law in providing competent representation.

      2. Knowledge of Foreign Law

         In the case of In re Roel, the New York Court of Appeals stated that "[w]hen counsel who are admitted to the Bar of this State are retained in a matter involving foreign law, they are responsible to the client for the proper conduct of the matter, and may not claim that they are not required to know the law of the foreign State." (5) It is generally recognized that giving legal advice regarding foreign law does constitute the practice of law. (6) Thus, it would be possible to conclude that one who gives such advice must be admitted to practice, or be offering that advice through someone who is admitted in the jurisdiction in which the practice takes place. (7) This conclusion, however, is not always borne out in practice.

         In Degen v. Steinbrink, chattel mortgages prepared by a New York law firm for property in New York, Connecticut, and New Jersey, were later found to be invalid for improper preparation and maintenance, thus leaving the client unprotected. (8) Noting that the firm had in fact practiced law in three states in one set of transactions, the court stated:

         When a lawyer undertakes to prepare papers to be filed in a state foreign to his place of practice, it is his duty, if he has not knowledge of the statutes, to inform himself, for, like any artisan, by undertaking the work, he represents that he is capable of performing it in a skillful manner. Not to do so, and to prepare documents that have no legal potency, by reason of their lack of compliance with simple statutory requirements, is such a negligent discharge of his duty to his client as should render him liable for loss sustained by reason of such negligence. (9) In Rekeweg v. Federal Mut. Ins. Co., an Indiana lawyer filed an action in Indiana based on Ohio law, but failed to draft a complaint that stated a proper claim for relief under Ohio law...