New Jersey State Bar Association Committee on Multi-Jurisdictional Practice - June 25, 2001
PRELIMINARY REPORT AND RECOMMENDATIONS
June 25, 2001
Allen A. Etish, Chair
Marcia Kuttner Werner, Vice Chair
Ramon de la Cruz
Hon. Marie Garibaldi
John L. Kraft
James H. Landgraf
Cindy Nan Vogelman
The committee was appointed in July 2000 by NJSBA President Barry D. Epstein, following the appointment of a Commission on Multi-Jurisdictional Practice (MJP) by the American Bar Association. The committee was asked to examine the major issues implicated by multi-jurisdictional, or cross-border law practice, and suggest an appropriate course of action to the NJSBA Board of Trustees. The committee was also asked to monitor developments within the ABA and other states, and to suggest ways to educate the bar and the courts about MJP and its impact.
To a large extent the current work of the committee has been dictated by the activity of the ABA's Commission. The Commission has asked that comments and suggestions from bar associations be submitted by July 1 regarding a possible model rule, or other proposal that would define the limits of MJP. For this reason the committee is submitting to the Executive Committee proposed amendments to Model Rule 5.5 of the Rules of Professional Conduct. The current rule simply prohibits a lawyer from engaging in the unauthorized practice of law, or from helping others to do so.
The committee's proposed amendments to Rule 5.5 (attached as Attachment A) are intended to expand the current rule to include "safe harbors" under which a lawyer may engage in certain specified activities which will not be deemed the unauthorized practice of law. The committee has attempted to tailor its amendments to achieve a difficult goal ---- allowing appropriate conduct for lawyers not admitted here while at the same time maintaining traditional bar admission and regulatory standards. A more detailed discussion of the amendments is set forth below. It is important to emphasize that this is a model rule proposed for adoption in all jurisdictions so that New Jersey lawyers would be subject to the same protections and prohibitions in foreign jurisdictions as would out-of-state lawyers coming here.
The committee stresses that this is a preliminary report that will be submitted to the ABA Commission on Multi-Jurisdictional Practice. It will undoubtedly be subject to further review and revision following the publication and evaluation of the Commission's report and the recommendations of other bar associations.
WHAT IS MJP AND WHY IS IT IMPORTANT?
Multi-Jurisdictional practice is, quite simply, practice in jurisdictions other than where you are formally admitted. The topic is particularly important in New Jersey because of our location - lawyers from neighboring states frequently appear here, or handle matters related to New Jersey law, and many New Jersey lawyers do likewise in neighboring states.
The growing ease of interstate travel and communication, coupled with the fact that many law firms and corporations conduct business on a regional or national scale makes it essential that the NJSBA consider rules that better define and regulate cross-border practice. Currently, there is no uniformity in the way states address the activities of out-of-state lawyers. Regulation has developed by court rule, court opinions, statute, and ethics opinions. Lawyers have relied, for the most part, on custom to continue to engage in forms of cross-border practice.
However, concern has developed because some states have erected barriers to out-of-state lawyers and have even resorted to unauthorized practice prosecution. While we usually think of MJP in terms of problems that may be caused by lawyers coming into New Jersey, the issue works both ways. For instance, in 1998 a Burlington County lawyer was indicted in South Carolina for unauthorized practice after traveling there to counsel relatives of New Jersey clients regarding personal injury claims.
The national debate on MJP was touched off a few years ago by a decision of the California Supreme Court. A New York firm entered into a written fee agreement to represent a California corporation in an arbitration in that state. The corporation was a subsidiary of a New York client of the firm. Firm lawyers made three trips to California to advise the client, negotiate with the other party, and interview potential arbitrators. The matter settled, but the firm and the corporation had a falling out. The corporation sued for malpractice and the firm counter-claimed for its fee. The California Supreme Court denied the fee, finding that the firm had engaged in the unauthorized practice of law. Birbrower, Montalbano, Condon & Frank v. Superior Court, 949 P2d 1 (1998). The opinion set off alarm bells in law firms across the nation and became the focus of much attention within the organized bar.
The committee found that the most vexing issues to deal with are those related to the activity of transactional lawyers. Transactional lawyers often face difficult choices because they have no mechanism to obtain permission to practice temporarily in other states, such as pro hac vice admission. Nevertheless, transactional lawyers frequently represent clients in ways that involve contacts in other states. Because New Jersey has developed into a commercial center transactional practice issues are of particular concern.
Lawyers employed by corporations and government also face problems. They may be relocated to offices in states in which they are not admitted and their work will undoubtedly involve activity that falls within the definition of the practice of law. Are they engaged in the unauthorized practice of law? Some states, such as New Jersey, have met this concern by permitting in-house counsel to practice solely for their employers. However, even in New Jersey such requirements have never been codified in a rule, they are set forth only in Opinion 14 of the Supreme Court's Unauthorized Practice of Law Committee.
Finally, even though trial lawyers can rely on a pro hac vice process for some protection, temporary admission is not available until a case if filed. What about pre-filing activity such as investigation, and discussions with clients, carriers, or potential adversaries? Just what can a lawyer do before suit is filed? As at least one New Jersey lawyer has found such activity can have disastrous consequences. Moreover, often there is no official mechanism for admission in an arbitration or mediation forum.
One of the first things the committee did was to survey New Jersey bar associations and sections within the NJSBA in order to gauge the extent of interest in the issue and to solicit comments and recommendations. A good number of responses were received and they are summarized in attachment B to this report.
Many associations and sections favor the development of a rule that would better define the unauthorized practice of law, and provide guidance and safe harbors for certain cross-border activities. There appears to be no support from the organized bar for radical alternatives, such as a national law license, or for the elimination or lowering of bar admission requirements. Only the Bergen County Bar Association favors the status quo; nevertheless, they submitted a detailed proposal for a model rule, part of which is incorporated into the committee's proposed rule.
The committee was impressed by the response to the survey, the level of interest in the MJP issue, and the quality of the comments received.
In addition to the information gleaned from the survey, a number of MJP proposals have been considered by the committee. These alternatives have been submitted to the ABA Commission by bar groups and related organizations:
- Proposed model Rule 5.5 of the Rules of Professional Conduct authored by the ABA's Ethics 2000 Commission. The rule provides four safe harbors for multi-jurisdictional practice:
- where a lawyer is preparing for a proceeding in which pro hac vice admission is expected;
- the so-called "transactional" exception where a lawyer acts on a matter "that arises out of or is otherwise reasonably related to the lawyer's practice on behalf of a client" in the jurisdiction of admission;
- the "in-house" exception where a lawyer is action on behalf of an employer; and,
- where a lawyer is "associated in a particular matter" with a lawyer admitted in the jurisdiction.
- The "driver's license" rule proposed by the American Corporate Counsel Association that would establish a national compact on licensure that would function much like the current system of state driver's licenses. Once obtaining a license to practice in one jurisdiction, a lawyer could practice in other states on a temporary basis, and be able to move permanently and be licensed in another state simply upon passing a character and fitness review.
- A two-tiered approach of the Association of Professional Responsibility Lawyers that would permit a) cross-border practice on a temporary basis on matters related to a lawyer's practice in a state of admission, and b) a so-called "green card" approach to licensure that would permit a lawyer to open an office in a state where he or she is not admitted upon a showing of good standing, sponsorship by two lawyers in the state, and admission in some jurisdiction for at least three years.
- The ABA Real Property Section recommends that transactional activity be permitted so long as the client consents after have been informed of the risks involved, and that a lawyer be permitted to perform any services that could be rendered in the jurisdiction by a non-lawyer.
- The International Association of Defense Lawyers calls for a model pro hac vice rule that among other things permits pre-litigation "investigative or other activities".
- The American Law Institute suggests that lawyers be permitted to provide legal services "within a jurisdiction where the lawyer is not admitted to the extent that the lawyer's activities arise out of or are otherwise reasonably related to the lawyer's practice" in the jurisdiction of admission.
- The ABA Section of Business Law favors the "safe harbor" approach in model Rule 5.5 but suggests the rule clearly state that it applies to occasional forays into other states, and includes a provision permitting activity related to representing clients in ADR proceedings.
THE COMMITTEE'S RECOMMENDATIONS
The committee considers many of the above recommendations to be too radical in purpose and effect and not in the best interests of the New Jersey Bar or the clients it serves. This State has a legitimate interest in closely regulating admission to the bar and the activity of lawyers to ensure that consumers receive services from lawyers who are conversant with the law, rules and procedures of New Jersey practice and are readily available to clients and adversaries. Further, it is vitally important that bar admission policy foster the efficient administration of justice and contribute to the public's confidence in the court system.
Approaches to MJP that eliminate or reduce substantially practice barriers will add to public suspicion about the competence and credibility of the bar and will hasten the profession into little more than a commercial guild devoid of respect for the core values that have long set lawyers apart.
Specifically, the committee recommends that the NJSBA oppose the "drivers license" proposal offered by the American Corporate Counsel Association, and the "green card" approach favored by the Association of Professional Responsibility Lawyers. Adoption of either on a national basis might enhance the short-term financial prospects of some lawyers but in the long term would have a devastating impact on the profession. The core activities of the bar - client protection funds, pro bono service, IOLTA, continuing education, the disciplinary and fee dispute system, referral services - would be weakened by a bar admission system that favors mobility over commitment and accountability. Moreover, how would clients be assured that malpractice insurance requirements are observed? The ideal of a "profession" would be lost amidst a scramble to chase clients across jurisdictional borders. Traditional notions of service to the courts and community would be an afterthought, as would participation in the organized bar. The bar, as an institution, would face the chilling prospect of withering away. And, what about the public we serve? Clients have come to expect stability and responsiveness from lawyers, attributes that may be lost during a move towards what would in effect be a national licensure system.
The committee therefore advocates the enactment of limited "safe harbors" within Rule 5.5. However, our rule is much more detailed, and stricter in application, than the rule proposed by the Ethics 2000 Commission, or the rule suggested by the ALI. In particular, the committee's rule provides more detailed guidance in the area of transactional practice.
The committee is convinced that some rule is essential, so lawyers will be able to ascertain what cross-border activity may be permissible, and what may be questionable. The committee's proposed rule is summarized as follows:
1. Pre- Litigation Activity (R. 5.5 (b)(1)
The committee agrees with the Ethics 2000 Commission proposal that no UPL violation would occur if a lawyer is admitted pro hac vice or "is preparing for a proceeding in which the lawyer reasonably expects to be authorized." However, the committee further suggests that lawyers engaged in such pre-litigation activity be required to associate with local counsel. Because pro hac vice admission cannot be obtained until litigation commences, it is important that non-licensed lawyers are "connected" to the jurisdiction through local counsel.
This rule amendment would provide a needed pre-litigation safe harbor for trial lawyers while at the same time providing protection of the interests of clients and the judiciary. It is essential that out-of-state counsel be able to take the steps necessary to prepare for litigation. It is also essential that they be accountable to clients, potential adversaries, and the courts. This would be facilitated through association with local counsel.
2. In-House Counsel (R. 5.5 (b)(2)(i)
The committee's amendment strengthens the Ethics 2000 Commission's proposed rule by making it clear that the lawyer/employee's entire compensation must come from the employer and that the lawyer/employee cannot provide legal services to others. The committee's amendments are intended to codify Opinion 14 of the New Jersey Supreme Court's Unauthorized Practice of Law Committee. The NJ Corporate Counsel Association's representative on the committee has endorsed the amendments.
3. Transactional Matters (R. 5.5(b)(2)(ii through v)
The committee's proposed rule is more detailed than that proposed by the Ethics 2000 Commission. That rule states that a lawyer does not engage in the unauthorized practice of law when "the lawyer acts with respect to a matter that arises out of or is otherwise reasonably related to the lawyer's practice on behalf of a client in a jurisdiction in which the lawyer is admitted to practice."
The committee believes the proposed rule is too open ended, and would permit a lawyer unlimited opportunity to practice in another jurisdiction. The term "reasonably related" is capable of many interpretations and may potentially be used by creative lawyers to justify inappropriate regular cross-border practice. Further, the rule does not provide enough guidance for lawyers in transactional practice.
The committee recommends that what is covered in one sentence by the Ethics 2000 Commission be broken down into four separate subparagraphs, as follows:
- Rule 5.5 (b)(2)(ii) would permit transactional negotiation, but would require that it be in furtherance of a lawyer's representation of an existing client and that the transaction originates in or is related to the jurisdiction where the lawyer is admitted. Thus, a Wisconsin lawyer could come into New Jersey to negotiate the terms of the purchase of goods for a Wisconsin distributor.
- Rule 5.5(b)(2)(iii) would create a safe harbor for the representation of clients in ADR and other forms of non-judicial dispute resolution. The representation would have to be in furtherance of the lawyer's representation of an existing client in a jurisdiction where the lawyer is admitted to practice. Further, the dispute would have to originate in or be related to the jurisdiction where the lawyer is admitted. For instance, a Wisconsin lawyer could participate in an arbitration in Atlantic City, where Wisconsin clients are parties to Wisconsin related contracts that specify a New Jersey venue.
- Rule 5.5(b)(2)(iv) permits movement across jurisdictional lines with respect to investigation, interviewing and deposing of witnesses in furtherance of a proceeding in the jurisdiction where the lawyer is admitted to practice. For instance, a Wisconsin lawyer could travel to New Jersey to interview potential witnesses for a trial scheduled in Milwaukee.
- Rule 5.5(b)(2)(v) intended as a "catch-all" safe harbor to cover circumstances that might arise apart from those covered in paragraphs (i) through (iv). This rule would create a safe harbor, again for the representation of an existing client and, most importantly, provided that the representation "is occasional and is undertaken only when the lawyer's disengagement would result in substantial inefficiency, impracticality or detriment to the client".
The rule proposed by the committee is much more restrictive than the safe harbor proposed by the Ethics 2000 Commission. It requires that there be a client in the jurisdiction of admission, contains the "occasional" standard (see above), and permits practicality and client interests to help determine whether local counsel need be retained.
Thus, a Wisconsin lawyer, with particular expertise in cheese processing technology, may occasionally travel to New Jersey to negotiate or arbitrate a dispute between a New Jersey cheese processor and the New Jersey subsidiary of the Wisconsin client, provided that engaging New Jersey counsel would be impractical and to the detriment of the client.
The committee believes that the rule creates reasonable safe harbors that should be welcomed by the bar, and ensures against abuses that may result from the Ethics 2000 Commission's more broadly worded rule.
4. Association with Local Counsel in Non-Litigated Matters (R. 5.5(b)(2)(vi)
Lawyers may often associate with out-of-state counsel in order to strengthen the representation provided in a local matter. Conversely, lawyers coming into a state often associate with local counsel to avoid unauthorized practice of law problems. The committee recognizes the need to protect such relationships. However, such relationships should not be pro forma. Therefore, the committee suggests a rule that permits association, but only on an occasional basis. Further, the committee's rule requires specifically that local counsel assume overall responsibility for the representation.
5. Additional Factors (R. 5.5(c)
The committee also suggests that Rule 5.5 include additional provisions, as set forth in paragraph (c) of the proposed rule, designed to provide protection for clients and ensure the lawyer's obligations to the state Supreme Court. For instance, a lawyer could not act in another jurisdiction unless he or she is in good standing in all jurisdictions of admission; agrees to be subject to the RPC's and disciplinary authority of the highest court of the jurisdiction; consents to the appointment to the Clerk of the Court as agent for service of process; and does not hold himself or herself out as having been formally admitted in the jurisdiction.
The committee debated vigorously a suggestion that out-of-state lawyers be subject to some type of registration requirement, either with a court, or via a certification filed with all adversaries. Those in favor of registration argue that it would facilitate access to the lawyer if problems arose. The opposition contends that registration would be a meaningless exercise and would burden the courts and lawyers. The consensus view of the committee is that registration or certification is not an appropriate requirement at this time.
7. Related Issues: Full Faith and Credit, Pro Hac Vice Rule
The ABA Commission on MJP has indicated that it is considering issues beyond a safe harbor rule. One issue on the table is whether there should be a uniform requirement that states give full faith and credit to disciplinary decisions reached in other states. The committee favors instead a reciprocal discipline rule, such as is already in place in New Jersey and some other jurisdictions. Where a New Jersey lawyer has been subject to discipline in another state, the rule requires generally the imposition of identical discipline, but permits the lawyer to respond to the charges and leaves the final determination to the Supreme Court (See R. 1:20-14). We believe it appropriate that a state's high court be the final arbiter, and not have it's discretion eliminated.
The other issue taken up by the committee is the need for a uniform national pro hac vice rule. The committee does not believe that any change is necessary. Although pro hac vice requirements may differ slightly in neighboring jurisdictions, there appears to be no overriding need to replace the current system.
The committee recommends that this preliminary report be adopted by the Executive Committee and submitted by the NJSBA to the ABA's Commission on MJP. The committee asks that it be permitted to continue to study MJP, monitor developments within the ABA, and stand ready to assist the Board in its further exploration of MJP and its impact on lawyers and citizens of New Jersey.
DRAFT - NJSBA Committee on Multi-Jurisdictional Practice
RULE 5.5 UNAUTHORIZED PRACTICE OF LAW
(a) A lawyer shall not practice law in a jurisdiction where doing so violates the regulation of the legal profession in that jurisdiction.
(b) A lawyer admitted to practice in another jurisdiction, but not in this jurisdiction, does not engage in the unauthorized practice of law in this jurisdiction when the lawyer acts within one of the following "safeharbors":
- (1) the lawyer is authorized to appear before a tribunal in this jurisdiction by law or order of the tribunal or is preparing for a proceeding in which the lawyer reasonably expects to be so authorized and is associated in that preparation with a lawyer admitted to practice in this jurisdiction; or
- (2) other than making appearances before a tribunal with authority to admit the lawyer to practice pro hac vice:
(i) a lawyer who is an employee of the client acts on the client's behalf or, in connection with the client's matters, on behalf of the client's other employees or its commonly owned organizational affiliates, provided the lawyer's entire compensation comes from the employer and the lawyer does not provide to others, including other employees of the employer, legal services not directly related to the legal matters of the employer; (ii) a lawyer engages in the negotiation of the terms of a transaction in furtherance of the lawyer's representation on behalf of an existing client in a jurisdiction in which the lawyer is admitted to practice and the transaction originates in or is otherwise related to a jurisdiction in which the lawyer is admitted to practice; (iii) a lawyer engages in representation of a party to a dispute by participating in an arbitration, mediation, or other alternative non-judicial dispute resolution proceeding, in furtherance of the lawyer's representation on behalf of an existing client in a jurisdiction in which the lawyer is admitted to practice and the dispute originates in or is otherwise related to a jurisdiction in which the lawyer is admitted to practice; (iv) a lawyer investigates, interviews witnesses or deposes witnesses in this jurisdiction for a proceeding pending or anticipated to be instituted in a jurisdiction in which the lawyer is admitted to practice; (v) a lawyer practices in circumstances other than (i) through (iv) above, with respect to a matter where the practice activity arises directly out of the lawyer's representation on behalf of an existing client in a jurisdiction in which the lawyer is admitted to practice, provided that such practice in this jurisdiction is occasional and is undertaken only when the lawyer's disengagement would result in substantial inefficiency, impracticality or detriment to the client; or (vi) a lawyer is associated on an occasional basis with a lawyer admitted to practice in this jurisdiction who is in compliance with court rules governing the practice of law and who assumes overall responsibility for representation of the client in this jurisdiction.
(c) A lawyer admitted to practice in another jurisdiction who acts in this jurisdiction pursuant to sub-paragraph (b)(2) above shall:
(1) be licensed and in good standing in the jurisdiction in which the lawyer permanently practices law or is domiciled, and not be subject to a current or pending license suspension or disbarment in any jurisdiction; (2) be subject to the Rules of Professional Conduct and the disciplinary authority of the Supreme Court of this jurisdiction; (3) consent to the appointment of the Clerk of the Supreme Court as agent upon whom service of process may be made for all actions against the lawyer or the lawyer's firm that may arise out of the lawyer's participation in legal matters in this jurisdiction; and (4) not hold himself or herself out as being admitted to practice in this jurisdiction.
(d) A lawyer shall not assist another person in the unauthorized practice of law.
NJSBA MJP Committee ----- Comments Received
The Multi-Jurisdictional Practice Committee received comments from county bar associations, and sections and committees within the NJSBA, summarized as follows:
1. NJSBA Professional Responsibility Committee (Letter from Ellen O'Connell) -
The committee believes many lawyers are uncertain of the boundaries of acceptable conduct when their practice involves activities in states where they are not admitted. The committee believes a "national law license" overstates the problem and is not feasible. Instead, the committee favors a model rule that provides clear guidance, but it does not believe the amendments proposed to RPC 5.5 by the Ethics 2000 Commission are definitive enough. The committee points out particular areas of concern: out-of-state depositions; interviews of clients whose employees and agents are out- of-state; reviewing and construing the law in other states, and participation in corporate transactions. The committee believes RPC 5.5 will be useful only if expanded to address a wider range of practice situations. The committee supports, in concept, proposed R.P.C. 8.5 by which lawyers are subject to the ethics rules of the jurisdiction where they perform legal services.
2. NJSBA Unlawful Practice Committee (Memo from Eric Landman) -
The committee believes that it will not be in the best interests of the bar if the NJSBA adopts a restrictive or protectionist MJP position. Proposed R.P.C. 5.5 is seen as a good start toward clarifying MJP issues. In particular, the committee endorses the "safe harbor" concept used in proposed RPC 5.5. The committee noted no particular areas of concern, nor any potential rule language.
3. NJSBA Ethics Diversionary Program Committee (Letter from David Dugan)-
The committee believes that although pro hac vice admission and opinions of the Unauthorized Practice of Law Committee address many New Jersey MJP issues, some modification of the RPC's is necessary. However, they reject the proposed R.P.C. 5.5 as too broad. The committee instead favors Section 3 of the American Law Institute's Restatement of the Law Governing Lawyers. Section 3 reads as follows:
"A lawyer currently admitted to practice in a jurisdiction may provide legal services to a client:(1) at any place within the admitting jurisdiction; (2) before a tribunal or administrative agency of another jurisdiction or the federal government in compliance with requirements for temporary or regular admission to practice before that tribunal or agency; (3) at a place within a jurisdiction in which the lawyer is not admitted to the extent that the lawyer's activities arise out of or are otherwise reasonably related to the lawyers practice under Subsection (1) or (2)."
The committee believes that R.P.C. 5.5 proposed by the Ethics 2000 Commission goes too far in liberalizing the unauthorized practice rule. For instance, the amended rule includes a subjective standard that would expand the pro hac vice exception to include work in preparing for a proceeding in which the lawyer "reasonably expects" to obtain pro hac vice admission. Further, the amended rule would allow virtually any activity by a lawyer who is "an employee of the client." (i.e. in-house counsel), in contravention of Opinion 14 of the New Jersey Supreme Court's Unauthorized Practice of Law Committee.
4. NJSBA Construction and Public Contract Law Section (Letter from Richard Steen)-
The Section is attuned to MJP issues because practitioners in the construction and public contract bars are often involved in matters in other states, as well as other countries. For instance, counsel may be asked to prepare, review, and negotiate bid documents, agreements, and related contract documents involving projects in states where they are not admitted. Negotiation will routinely involve the choice of state law to be applied. During the course of a building project, a New Jersey lawyer may frequently have to visit an out-of-state site and work our contract revisions. Because the construction industry relies heavily on ADR to settle disputes, New Jersey lawyers often are involved in mediation and other forms of dispute resolution.
The Section believes that states must retain reasonable controls on law practice by out-of-state practitioners coupled with some uniform standards that define appropriate conduct and protect lawyers from unauthorized practice complaints. The Section is primarily interested in a rule that accommodates a full range of ADR proceedings and techniques and the wide range of contract and business services performed by the construction bar. They offered no specific rule proposal, however.
5. NJSBA Environmental Law Section (Memo from Daniel Sheridan)-
The Section favors a liberalization of unauthorized practice rules related to transactional work, such as proposed RPC 5.5 or similar model rule that recognizes a lawyer's ability to go to other states to assist existing clients. But, such a model rule should provide examples of various types of conduct that illustrate the intent of the rule. Further, the Section suggests that a "caution" be included in the rule as a reminder to lawyers that just because they are able to offer legal services in another jurisdiction perhaps they should not do so unless they are certain of the applicable laws and procedures in that jurisdiction.
6. NJSBA Real Property, Probate & Trust Law Section ( Memo from Section)-
The Section's comments are focused on estate planning. Because other professionals are now offering estate planning services some unique MJP issues have arisen. Specifically, certain areas of estate planning may no longer be considered exclusively the practice of law because other professionals have entered the field. As a result, the section suggests that New Jersey lawyers may face lower MJP hurdles than colleagues in other practice areas. For example, if a New Jersey lawyer goes to Maryland to provide estate planning advice would questions of unauthorized practice arise if non-lawyer Maryland professionals could legally offer the same advice?
A particular area of concern among estate lawyers involves the relocation of clients to other states. If a long-standing client moves to Florida can New Jersey counsel continue to prepare documents such as Wills, Powers of Attorney and Medical Directives? Should clients be forced to obtain new counsel after they move, even though they may have a comfortable relationship with their New Jersey lawyer? A related problem occurs when a client who has moved to another state suggests to his neighbors that they seek the advice of their NJ lawyer. Because most estate work deals with federal law, and often involves long-standing clients would it be permissible to undertake such representation? The Section sees no problem in such representation.
The section suggests that an estate planning lawyer should be permitted to offer legal services anywhere, and the only real issue is competence. Therefore, an estate planning lawyer should be "licensed" in some manner for the purpose of ensuring that a client can make a claim or serve process on the lawyer in the state of admission.
7. NJSBA Corporate & Business Law Section (Letter from Lois Shafir)-
The Board of Directors of the Section submitted a position paper Putting Lawyer Conduct on the Radar Screen. They have attempted to reconcile the interest of states to regulate appropriately the practice of law with the reality of twenty-first century law practice. The Section attempts to define conduct that constitutes the practice of law. First, it is asserted that counseling an out-of-state client in a manner that affects property rights, or other rights and obligations in that state, constitutes the practice of law whether done personally, or electronically. But, if a lawyer travels to a state where the lawyer is not admitted for the purpose of representing a client who is not a resident, in order to prepare for a matter that will not be tried or transacted in that state, the conduct of the lawyer does not constitute the practice of law.
With these fundamentals in mind the Section's areas of concern are as follows:
- pre-litigation conduct (depositions, other discovery. document review and other trial prep) when there is a reasonable expectation of pro hac vice admission.
- representing a client in ADR proceeding
- transactional practice, particularly where it may be impractical to obtain local counsel. Examples provided include the corporate client who wishes to be represented by its general counsel, a client involved in a securities transaction needing compliance with the laws of 50 states, a regional shopping center owner who is continuously leasing properties and selling others, etc.
- federal government lawyers who may be called upon to pursue civil matters in states where they are not admitted
- in-house counsel who supervise lawyers doing work in states where the counsel is not admitted
The Section suggests an expansive model rule that would permit the following conduct in a state where a lawyer is not admitted:
- Pre-litigation conduct with the reasonable expectation of pro hac vice application and admission;
- ADR representation for an existing client or affiliate, or a new client and affiliates, for whom a continuing retention is reasonably expected;
- Transactional legal services for an existing client or affiliate, or a new client and affiliates from whom a continuing retention is reasonably expected; provided that the lawyer:
- is licensed and in good standing in all states of admission
- is subject to the ethics rules and professionalism code of the visited state
- has "furnished for public access" biographical information equivalent to meeting the pro hac vice criteria of the visited state, through filing with a designated state agency or placement on an appropriate internet site
- has adequate professional liability insurance
8. Burlington County Bar Association (Letter from James Landgraf)-
The association supports proposed RPC 5.5 and further recommend that instances of permissible conduct be provided "in broad, clear and non-inclusive language." The bar favors a rule (that would be narrower that the Corporate & Business proposal) that has "safe harbors" including:
- discovery and pre-trial activity related to a New Jersey matter, or where pro hac vice admission has already been granted
- communications with persons in other jurisdictions which arise out of, or are reasonably related to, the lawyer's practice on behalf of a client in a jurisdiction where the lawyer is admitted to practice
- appearances in non-judicial tribunals relating to matters arising out of the lawyer's practice on behalf of a client in a jurisdiction where the lawyer is admitted to practice
9. Bergen County Bar Association (Letter from Charles Ryan)-
The association is not convinced that a model rule is necessary, even though they have drafted a version of RPC 5.5. The BCBA believes that attempts at uniform rules may, in the end, do more harm than good by preventing local bar associations from meeting the particular needs of the public they serve. Further, the association suggests that a standardization of MJP rules may serve the interests of a minority of the bar, particularly transactional practitioners and "may be one more insidious step towards nationalization, and perhaps the globalization of the practice of law".
The BCBA favors a traditional ad hoc approach to addressing unauthorized practice questions. In this regard, the association's memo recounts the significant New Jersey opinions and rules that define unauthorized practice, including the pro hac vice rule, the major unauthorized practice opinions of the New Jersey Supreme Court, and related opinions of the Unauthorized Practice of Law Committee, and Advisory Committee on Professional Ethics, including:
- Appel v. Reiner , 43 N.J. 313 (1964) wherein the Court held that a New York lawyer had not engaged in the unauthorized practice of law even though, during the course of concluding complex financial transactions, he furnished legal services to New Jersey residents. The Court (in an opinion that may have been one of the first to discuss multi-jurisdictional practice) said unauthorized practice prohibitions should not be rigidly applied, and "….recognition must be given to the numerous multi-state transactions arising in modern times. This is particularly true of our state, situated as it is in the midst of the financial manufacturing center of the nation. An inflexible result may well occasion a result detrimental to the public interest…."
- In re Estate of Waring, 47 N.J. 367 (1966) involved a New York firm that did estate work for a New Jersey family, a long standing client. The Court again found no unauthorized practice due to the nature of the attorney-client relationship and noted that clients freedom of choice should not be burdened by "technical restrictions".
- In re Opinion 33, 160 N.J. 63 (1999) wherein the Court held it was permissible in certain contexts, under the Court's "public interest" approach to UPL questions, for an out-of-state lawyer to perform legal services in connection with bond issues by New Jersey public entities. The opinion is instructive because it traces the development of the Court's treatment of unauthorized practice. Justice Stein's opinion notes the "simple and pragmatic" terms of In re Opinion 26, 139 N.J. 323 (1995) which stated that a determination of whether actions constitute the unauthorized practice of law "is governed not by attempting to apply some definition of what constitutes that practice, but rather by asking whether the public is disserved by such conduct."
- Opinion 14 of the Committee on Unauthorized Practice of Law which places restrictions on the activities of corporate in-house counsel.
Despite the fact that it is suspicious of any standard UPL or MJP rule, the BCBA offers amendments to proposed R.P.C. 5.5 that reflect some of the opinions discussed above:
- R.P.C. 5.5 (b)(2) should include the in-house counsel restrictions contained in Opinion 14. This would add to the rule a requirement that a) the lawyer's entire compensation come from the employer, b) the lawyer may appear in a NJ court or tribunal only as permitted by R. 1:21-2, and c) the lawyer may not provide legal services to others, including other employees of the employer (I assume this means legal services outside of anything related to the services performed for an employer).
- R.P.C.5.5 (b)(2) should also reflect the Appel holding and permit legal work to be done in a jurisdiction where one is not admitted, if that work is "interwoven with a transaction or transactions" arising out of the representation of a client in the jurisdiction of admission, and it would be "grossly impractical and inefficient" to secure separate counsel.
- The rule should require a certification to be filed by an out-of-state lawyer including, among other things, a statement of reasons for appearing in the jurisdiction, that disciplinary jurisdiction is accepted, and that consent is given to the appointment of the clerk of the court as agent upon whom service of process may be made.
10. Monmouth Bar Association -
The association did not take a position but forwarded a number of individual comments from some of its committee chairs. Almost all of those who responded support a uniform rule such as RPC 5.5, and many had no comment beyond that. However, there were some detailed (and contradictory) comments, as follows:
- a rule with a "safe harbor" approach may be the fairest and most practical alternative
- ABA proposed RPC 5.5 is too vaguely worded because terms such "matters arising out of", or "expecting to be authorized" create subjective standards that are difficult to apply and enforce. Very certain criteria should be included in the rule so that lawyers can act without fear of an unauthorized practice complaint or prosecution.
- to ensure even handed application of a "safe harbor rule" lawyers should be permitted to work for a specific number of hours (e.g. 100 hours in a calendar year) in the "visiting state", and no fee could be collected for more than the permitted number of hours. Further, a lawyer practicing in a state where he or she is not admitted would have to fulfill CLE requirements, and not solicit new clients. Finally, the state where the lawyer is admitted and the state being visited would have to have substantially similar safe harbor rules.
- New Jersey needs to maintain regulatory control over the practice of law within its borders, including the right to discipline any lawyer who performs legal services here. Most importantly, if a uniform MJP rule is adopted, it must prohibit the solicitation of new clients.
- activity in another jurisdiction that is related to a New Jersey case should be permitted by rule. However, handling a matter in another state, unrelated to a New Jersey matter, should be permitted only by way of pro hac vice admission or association with local counsel.
- the ABA and NJSBA should consider a global approach to the practice of law, and proposed R.P.C. 5.5 deals appropriately with the issues.
11. Middlesex County Bar Association (Letter from Dennis Estis)--
The association favors a rule that clearly defines what lawyers can do in jurisdictions where they are not admitted and prevents claims of unauthorized practice for such activity. No further detail or suggestions were provided.
12. Letter from Stephen Richman (Former Chair NJSBA International Law Section) A letter was received from Steve Richman that was actually in response to a question posed by another NJSBA committee about foreign legal consultants in New Jersey (see R. 1:21-9). But, he also raises questions about MJP. Steve practices international law and he asks whether a "safe harbor" rule is needed to protect multi-national firms. For instance:
Lawyer A is admitted in New Jersey and is part of a firm that has offices in NJ, New York and London. Is the firm engaged in unlawful practice if one of the firm's London barristers is making phone calls into New Jersey, and sending letters and memos into New Jersey and is otherwise involved on a case pending here? What if the barrister comes to the New Jersey office to work on the case? What if the barrister uses the New Jersey office to work on matters pending in other states and countries?
Steve suggests that a rule needs to address the activities of lawyers in multi-national firms.