The Future of Ethics for In-House Counsel - ACC.com
Transcription
The Future of Ethics for In-House Counsel - ACC.com
THE FUTURE OF ETHICS FOR IN-HOUSE COUNSEL An ACC Advocacy Panel Wisconsin Chapter Brookfield, Wisconsin October 2, 2014 ABA Model Rule of Professional Conduct 1.6 and commentary (attorneyclient privilege and confidentiality)………............................................Page 1 ABA Model Rule of Professional Conduct 1.7, Conflict of Interest: Current Clients...................................................................................................Page 10 ABA Model Rule of Professional Conduct 5.5 and commentary (multijurisdictional practice/foreign in-house practice in the U.S.) ………..................................................................................................Page 11 ABA Commission on Ethics 20/20 Proposal 107A Revised and commentary (multijurisdictional practice/foreign in-house practice in the U.S.) ………..................................................................................................Page 19 ACC comments on proposed amendments to ABA Model Rules concerning foreign in-house lawyers who practice in the U.S. (multijurisdictional practice/foreign in-house practice in the U.S.)……….........................Page 39 Association of Corporate Counsel letter to Conference of Chief Justices in support of resolution to reduce obstacles that prevent in-house lawyers from offering pro bono services (July 2012).................................................Page 53 Association of Corporate Counsel amicus brief regarding duty of loyalty, in Crimson Trace Corp. v. Davis Wright Tremaine, No. S061086 (Or.) (filed Aug. 2013)..................................................................................Page 68 Rule 1.6: Confidentiality of Information | The Center for Professional Responsibility 8/29/14 1:55 PM Home > ABA Groups > Center for Professional Responsibility > Publications > Model Rules of Professional Conduct > Rule 1.6: Confidentiality of Information Rule 1.6: Confidentiality of Information Client-Lawyer Relationship Rule 1.6 Confidentiality Of Information (a) A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted by paragraph (b). (b) A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary: (1) to prevent reasonably certain death or substantial bodily harm; (2) to prevent the client from committing a crime or fraud that is reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer's services; (3) to prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from the client's commission of a crime or fraud in furtherance of which the client has used the lawyer's services; (4) to secure legal advice about the lawyer's compliance with these Rules; (5) to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client, to establish a defense to a criminal charge or civil claim against the lawyer based upon conduct in which the client was involved, or to respond to allegations in any proceeding concerning the lawyer's representation of the client; (6) to comply with other law or a court order; or (7) to detect and resolve conflicts of interest arising from the lawyer’s change of employment or from changes in the composition or ownership of a firm, but only if the revealed information would not compromise the attorney-client privilege or otherwise prejudice the client. 2 http://www.americanbar.org/groups/professional_responsibility/publications…ules_of_professional_conduct/rule_1_6_confidentiality_of_information.html 1 Page 1 of 2 Rule 1.6: Confidentiality of Information | The Center for Professional Responsibility 8/29/14 1:55 PM (c) A lawyer shall make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of a client. Comment | Table of Contents | Next Rule 3 http://www.americanbar.org/groups/professional_responsibility/publications…ules_of_professional_conduct/rule_1_6_confidentiality_of_information.html 2 Page 2 of 2 Comment on Rule 1.6 | The Center for Professional Responsibility 8/29/14 1:54 PM Home > ABA Groups > Center for Professional Responsibility > Publications > Model Rules of Professional Conduct > Rule 1.6: Confidentiality of Information > Comment on Rule 1.6 Comment on Rule 1.6 Client-Lawyer Relationship Rule 1.6 Confidentiality Of Information - Comment [1] This Rule governs the disclosure by a lawyer of information relating to the representation of a client during the lawyer's representation of the client. See Rule 1.18 for the lawyer's duties with respect to information provided to the lawyer by a prospective client, Rule 1.9(c)(2) for the lawyer's duty not to reveal information relating to the lawyer's prior representation of a former client and Rules 1.8(b) and 1.9(c)(1) for the lawyer's duties with respect to the use of such information to the disadvantage of clients and former clients. [2] A fundamental principle in the client-lawyer relationship is that, in the absence of the client's informed consent, the lawyer must not reveal information relating to the representation. See Rule 1.0(e) for the definition of informed consent. This contributes to the trust that is the hallmark of the client-lawyer relationship. The client is thereby encouraged to seek legal assistance and to communicate fully and frankly with the lawyer even as to embarrassing or legally damaging subject matter. The lawyer needs this information to represent the client effectively and, if necessary, to advise the client to refrain from wrongful conduct. Almost without exception, clients come to lawyers in order to determine their rights and what is, in the complex of laws and regulations, deemed to be legal and correct. Based upon experience, lawyers know that almost all clients follow the advice given, and the law is upheld. [3] The principle of client-lawyer confidentiality is given effect by related bodies of law: the attorney-client privilege, the work product doctrine and the rule of confidentiality established in professional ethics. The attorney-client privilege and work product doctrine apply in judicial and other proceedings in which a lawyer may be called as a witness or otherwise required to produce evidence concerning a client. The rule of client-lawyer confidentiality applies in situations other than those where evidence is sought from the lawyer through compulsion of law. The confidentiality rule, for example, applies not only to matters communicated in confidence by the client but also to all information relating to the representation, whatever its source. A 4 http://www.americanbar.org/groups/professional_responsibility/publicatio…conduct/rule_1_6_confidentiality_of_information/comment_on_rule_1_6.html 3 Page 1 of 7 Comment on Rule 1.6 | The Center for Professional Responsibility 8/29/14 1:54 PM lawyer may not disclose such information except as authorized or required by the Rules of Professional Conduct or other law. See also Scope. [4] Paragraph (a) prohibits a lawyer from revealing information relating to the representation of a client. This prohibition also applies to disclosures by a lawyer that do not in themselves reveal protected information but could reasonably lead to the discovery of such information by a third person. A lawyer's use of a hypothetical to discuss issues relating to the representation is permissible so long as there is no reasonable likelihood that the listener will be able to ascertain the identity of the client or the situation involved. Authorized Disclosure [5] Except to the extent that the client's instructions or special circumstances limit that authority, a lawyer is impliedly authorized to make disclosures about a client when appropriate in carrying out the representation. In some situations, for example, a lawyer may be impliedly authorized to admit a fact that cannot properly be disputed or to make a disclosure that facilitates a satisfactory conclusion to a matter. Lawyers in a firm may, in the course of the firm's practice, disclose to each other information relating to a client of the firm, unless the client has instructed that particular information be confined to specified lawyers. Disclosure Adverse to Client [6] Although the public interest is usually best served by a strict rule requiring lawyers to preserve the confidentiality of information relating to the representation of their clients, the confidentiality rule is subject to limited exceptions. Paragraph (b) (1) recognizes the overriding value of life and physical integrity and permits disclosure reasonably necessary to prevent reasonably certain death or substantial bodily harm. Such harm is reasonably certain to occur if it will be suffered imminently or if there is a present and substantial threat that a person will suffer such harm at a later date if the lawyer fails to take action necessary to eliminate the threat. Thus, a lawyer who knows that a client has accidentally discharged toxic waste into a town's water supply may reveal this information to the authorities if there is a present and substantial risk that a person who drinks the water will contract a life-threatening or debilitating disease and the lawyer's disclosure is necessary to eliminate the threat or reduce the number of victims. [7] Paragraph (b)(2) is a limited exception to the rule of 5 http://www.americanbar.org/groups/professional_responsibility/publicatio…conduct/rule_1_6_confidentiality_of_information/comment_on_rule_1_6.html 4 Page 2 of 7 Comment on Rule 1.6 | The Center for Professional Responsibility 8/29/14 1:54 PM confidentiality that permits the lawyer to reveal information to the extent necessary to enable affected persons or appropriate authorities to prevent the client from committing a crime or fraud, as defined in Rule 1.0(d), that is reasonably certain to result in substantial injury to the financial or property interests of another and in furtherance of which the client has used or is using the lawyer’s services. Such a serious abuse of the client-lawyer relationship by the client forfeits the protection of this Rule. The client can, of course, prevent such disclosure by refraining from the wrongful conduct. Although paragraph (b)(2) does not require the lawyer to reveal the client’s misconduct, the lawyer may not counsel or assist the client in conduct the lawyer knows is criminal or fraudulent. See Rule 1.2(d). See also Rule 1.16 with respect to the lawyer’s obligation or right to withdraw from the representation of the client in such circumstances, and Rule 1.13(c), which permits the lawyer, where the client is an organization, to reveal information relating to the representation in limited circumstances. [8] Paragraph (b)(3) addresses the situation in which the lawyer does not learn of the client’s crime or fraud until after it has been consummated. Although the client no longer has the option of preventing disclosure by refraining from the wrongful conduct, there will be situations in which the loss suffered by the affected person can be prevented, rectified or mitigated. In such situations, the lawyer may disclose information relating to the representation to the extent necessary to enable the affected persons to prevent or mitigate reasonably certain losses or to attempt to recoup their losses. Paragraph (b)(3) does not apply when a person who has committed a crime or fraud thereafter employs a lawyer for representation concerning that offense. [9] A lawyer's confidentiality obligations do not preclude a lawyer from securing confidential legal advice about the lawyer's personal responsibility to comply with these Rules. In most situations, disclosing information to secure such advice will be impliedly authorized for the lawyer to carry out the representation. Even when the disclosure is not impliedly authorized, paragraph (b)(4) permits such disclosure because of the importance of a lawyer's compliance with the Rules of Professional Conduct. [10] Where a legal claim or disciplinary charge alleges complicity of the lawyer in a client's conduct or other misconduct of the lawyer involving representation of the client, the lawyer may respond to the extent the lawyer reasonably believes necessary to 6 http://www.americanbar.org/groups/professional_responsibility/publicatio…conduct/rule_1_6_confidentiality_of_information/comment_on_rule_1_6.html 5 Page 3 of 7 Comment on Rule 1.6 | The Center for Professional Responsibility 8/29/14 1:54 PM establish a defense. The same is true with respect to a claim involving the conduct or representation of a former client. Such a charge can arise in a civil, criminal, disciplinary or other proceeding and can be based on a wrong allegedly committed by the lawyer against the client or on a wrong alleged by a third person, for example, a person claiming to have been defrauded by the lawyer and client acting together. The lawyer's right to respond arises when an assertion of such complicity has been made. Paragraph (b)(5) does not require the lawyer to await the commencement of an action or proceeding that charges such complicity, so that the defense may be established by responding directly to a third party who has made such an assertion. The right to defend also applies, of course, where a proceeding has been commenced. [11] A lawyer entitled to a fee is permitted by paragraph (b)(5) to prove the services rendered in an action to collect it. This aspect of the rule expresses the principle that the beneficiary of a fiduciary relationship may not exploit it to the detriment of the fiduciary. [12] Other law may require that a lawyer disclose information about a client. Whether such a law supersedes Rule 1.6 is a question of law beyond the scope of these Rules. When disclosure of information relating to the representation appears to be required by other law, the lawyer must discuss the matter with the client to the extent required by Rule 1.4. If, however, the other law supersedes this Rule and requires disclosure, paragraph (b)(6) permits the lawyer to make such disclosures as are necessary to comply with the law. Detection of Conflicts of Interest [13] Paragraph (b)(7) recognizes that lawyers in different firms may need to disclose limited information to each other to detect and resolve conflicts of interest, such as when a lawyer is considering an association with another firm, two or more firms are considering a merger, or a lawyer is considering the purchase of a law practice. See Rule 1.17, Comment [7]. Under these circumstances, lawyers and law firms are permitted to disclose limited information, but only once substantive discussions regarding the new relationship have occurred. Any such disclosure should ordinarily include no more than the identity of the persons and entities involved in a matter, a brief summary of the general issues involved, and information about whether the matter has terminated. Even this limited information, however, should be disclosed only to the extent reasonably necessary to 7 http://www.americanbar.org/groups/professional_responsibility/publicatio…conduct/rule_1_6_confidentiality_of_information/comment_on_rule_1_6.html 6 Page 4 of 7 Comment on Rule 1.6 | The Center for Professional Responsibility 8/29/14 1:54 PM detect and resolve conflicts of interest that might arise from the possible new relationship. Moreover, the disclosure of any information is prohibited if it would compromise the attorneyclient privilege or otherwise prejudice the client (e.g., the fact that a corporate client is seeking advice on a corporate takeover that has not been publicly announced; that a person has consulted a lawyer about the possibility of divorce before the person's intentions are known to the person's spouse; or that a person has consulted a lawyer about a criminal investigation that has not led to a public charge). Under those circumstances, paragraph (a) prohibits disclosure unless the client or former client gives informed consent. A lawyer’s fiduciary duty to the lawyer’s firm may also govern a lawyer’s conduct when exploring an association with another firm and is beyond the scope of these Rules. [14] Any information disclosed pursuant to paragraph (b)(7) may be used or further disclosed only to the extent necessary to detect and resolve conflicts of interest. Paragraph (b)(7) does not restrict the use of information acquired by means independent of any disclosure pursuant to paragraph (b)(7). Paragraph (b)(7) also does not affect the disclosure of information within a law firm when the disclosure is otherwise authorized, see Comment [5], such as when a lawyer in a firm discloses information to another lawyer in the same firm to detect and resolve conflicts of interest that could arise in connection with undertaking a new representation. [15] A lawyer may be ordered to reveal information relating to the representation of a client by a court or by another tribunal or governmental entity claiming authority pursuant to other law to compel the disclosure. Absent informed consent of the client to do otherwise, the lawyer should assert on behalf of the client all nonfrivolous claims that the order is not authorized by other law or that the information sought is protected against disclosure by the attorney-client privilege or other applicable law. In the event of an adverse ruling, the lawyer must consult with the client about the possibility of appeal to the extent required by Rule 1.4. Unless review is sought, however, paragraph (b)(6) permits the lawyer to comply with the court's order. [16] Paragraph (b) permits disclosure only to the extent the lawyer reasonably believes the disclosure is necessary to accomplish one of the purposes specified. Where practicable, the lawyer should first seek to persuade the client to take suitable action to obviate the need for disclosure. In any case, a disclosure 8 http://www.americanbar.org/groups/professional_responsibility/publicatio…conduct/rule_1_6_confidentiality_of_information/comment_on_rule_1_6.html 7 Page 5 of 7 Comment on Rule 1.6 | The Center for Professional Responsibility 8/29/14 1:54 PM adverse to the client's interest should be no greater than the lawyer reasonably believes necessary to accomplish the purpose. If the disclosure will be made in connection with a judicial proceeding, the disclosure should be made in a manner that limits access to the information to the tribunal or other persons having a need to know it and appropriate protective orders or other arrangements should be sought by the lawyer to the fullest extent practicable. [17] Paragraph (b) permits but does not require the disclosure of information relating to a client's representation to accomplish the purposes specified in paragraphs (b)(1) through (b)(6). In exercising the discretion conferred by this Rule, the lawyer may consider such factors as the nature of the lawyer's relationship with the client and with those who might be injured by the client, the lawyer's own involvement in the transaction and factors that may extenuate the conduct in question. A lawyer's decision not to disclose as permitted by paragraph (b) does not violate this Rule. Disclosure may be required, however, by other Rules. Some Rules require disclosure only if such disclosure would be permitted by paragraph (b). See Rules 1.2(d), 4.1(b), 8.1 and 8.3. Rule 3.3, on the other hand, requires disclosure in some circumstances regardless of whether such disclosure is permitted by this Rule. See Rule 3.3(c). Acting Competently to Preserve Confidentiality [18] Paragraph (c) requires a lawyer to act competently to safeguard information relating to the representation of a client against unauthorized access by third parties and against inadvertent or unauthorized disclosure by the lawyer or other persons who are participating in the representation of the client or who are subject to the lawyer’s supervision. See Rules 1.1, 5.1 and 5.3. The unauthorized access to, or the inadvertent or unauthorized disclosure of, information relating to the representation of a client does not constitute a violation of paragraph (c) if the lawyer has made reasonable efforts to prevent the access or disclosure. Factors to be considered in determining the reasonableness of the lawyer’s efforts include, but are not limited to, the sensitivity of the information, the likelihood of disclosure if additional safeguards are not employed, the cost of employing additional safeguards, the difficulty of implementing the safeguards, and the extent to which the safeguards adversely affect the lawyer’s ability to represent clients (e.g., by making a device or important piece of software excessively difficult to use). A client may require the lawyer to 9 http://www.americanbar.org/groups/professional_responsibility/publicatio…conduct/rule_1_6_confidentiality_of_information/comment_on_rule_1_6.html 8 Page 6 of 7 Comment on Rule 1.6 | The Center for Professional Responsibility 8/29/14 1:54 PM implement special security measures not required by this Rule or may give informed consent to forgo security measures that would otherwise be required by this Rule. Whether a lawyer may be required to take additional steps to safeguard a client’s information in order to comply with other law, such as state and federal laws that govern data privacy or that impose notification requirements upon the loss of, or unauthorized access to, electronic information, is beyond the scope of these Rules. For a lawyer’s duties when sharing information with nonlawyers outside the lawyer’s own firm, see Rule 5.3, Comments [3]-[4]. [19] When transmitting a communication that includes information relating to the representation of a client, the lawyer must take reasonable precautions to prevent the information from coming into the hands of unintended recipients. This duty, however, does not require that the lawyer use special security measures if the method of communication affords a reasonable expectation of privacy. Special circumstances, however, may warrant special precautions. Factors to be considered in determining the reasonableness of the lawyer's expectation of confidentiality include the sensitivity of the information and the extent to which the privacy of the communication is protected by law or by a confidentiality agreement. A client may require the lawyer to implement special security measures not required by this Rule or may give informed consent to the use of a means of communication that would otherwise be prohibited by this Rule. Whether a lawyer may be required to take additional steps in order to comply with other law, such as state and federal laws that govern data privacy, is beyond the scope of these Rules. Former Client [20] The duty of confidentiality continues after the client-lawyer relationship has terminated. See Rule 1.9(c)(2). See Rule 1.9(c) (1) for the prohibition against using such information to the disadvantage of the former client. Back to Rule | Table of Contents | Next Comment 10 http://www.americanbar.org/groups/professional_responsibility/publicatio…conduct/rule_1_6_confidentiality_of_information/comment_on_rule_1_6.html 9 Page 7 of 7 Rule 1.7: Conflict of Interest: Current Clients | The Center for Professional Responsibility 8/22/13 1:08 PM 7 Home > ABA Groups > Center for Professional Responsibility > Publications > Model Rules of Professional Conduct Rule 1.7: Conflict of Interest: Current Clients Client-Lawyer Relationship Rule 1.7 Conflict Of Interest: Current Clients (a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if: (1) the representation of one client will be directly adverse to another client; or (2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer. (b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if: (1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client; (2) the representation is not prohibited by law; (3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and (4) each affected client gives informed consent, confirmed in writing. Comment | Table of Contents | Next Rule http://www.americanbar.org/groups/professional_responsibility/publications…of_professional_conduct/rule_1_7_conflict_of_interest_current_clients.html Page 1 of 1 10 Rule 5.5: Unauthorized Practice of Law; Multijurisdictional Practice of Law | The Center for Professional Responsibility 8/29/14 1:47 PM Home > ABA Groups > Center for Professional Responsibility > Publications > Model Rules of Professional Conduct > Rule 5.5: Unauthorized Practice of Law; Multijurisdictional Practice of Law Rule 5.5: Unauthorized Practice of Law; Multijurisdictional Practice of Law Law Firms And Associations Rule 5.5 Unauthorized Practice Of Law; Multijurisdictional Practice Of Law (a) A lawyer shall not practice law in a jurisdiction in violation of the regulation of the legal profession in that jurisdiction, or assist another in doing so. (b) A lawyer who is not admitted to practice in this jurisdiction shall not: (1) except as authorized by these Rules or other law, establish an office or other systematic and continuous presence in this jurisdiction for the practice of law; or (2) hold out to the public or otherwise represent that the lawyer is admitted to practice law in this jurisdiction. (c) A lawyer admitted in another United States jurisdiction, and not disbarred or suspended from practice in any jurisdiction, may provide legal services on a temporary basis in this jurisdiction that: (1) are undertaken in association with a lawyer who is admitted to practice in this jurisdiction and who actively participates in the matter; (2) are in or reasonably related to a pending or potential proceeding before a tribunal in this or another jurisdiction, if the lawyer, or a person the lawyer is assisting, is authorized by law or order to appear in such proceeding or reasonably expects to be so authorized; (3) are in or reasonably related to a pending or potential arbitration, mediation, or other alternative dispute resolution proceeding in this or another jurisdiction, if the services arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice and are not services for which the forum requires pro hac vice admission; or (4) are not within paragraphs (c)(2) or (c)(3) and arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice. 12 A lawyer admitted in another United States jurisdiction or in a (d) http://www.americanbar.org/groups/professional_responsibility/publications…5_5_unauthorized_practice_of_law_multijurisdictional_practice_of_law.html Page 1 of 2 11 Rule 5.5: Unauthorized Practice of Law; Multijurisdictional Practice of Law | The Center for Professional Responsibility 8/29/14 1:47 PM foreign jurisdiction, and not disbarred or suspended from practice in any jurisdiction or the equivalent thereof, may provide legal services through an office or other systematic and continuous presence in this jurisdiction that : (1) are provided to the lawyer’s employer or its organizational affiliates; are not services for which the forum requires pro hac vice admission; and, when performed by a foreign lawyer and requires advice on the law of this or another jurisdiction or of the United States, such advice shall be based upon the advice of a lawyer who is duly licensed and authorized by the jurisdiction to provide such advice; or (2) are services that the lawyer is authorized by federal or other law or rule to provide in this jurisdiction. (e) For purposes of paragraph (d), the foreign lawyer must be a member in good standing of a recognized legal profession in a foreign jurisdiction, the members of which are admitted to practice as lawyers or counselors at law or the equivalent, and are subject to effective regulation and discipline by a duly constituted professional body or a public authority. Comment | Table of Contents | Next Rule 13 http://www.americanbar.org/groups/professional_responsibility/publications…5_5_unauthorized_practice_of_law_multijurisdictional_practice_of_law.html Page 2 of 2 12 Comment on Rule 5.5: Unauthorized Practice of Law; Multijurisdictional Practice of Law | The Center for Professional Responsibility 8/29/14 1:55 PM Home > ABA Groups > Center for Professional Responsibility > Publications > Model Rules of Professional Conduct > Rule 5.5: Unauthorized Practice of Law; Multijurisdictional Practice of Law > Comment on Rule 5.5: Unauthorized Practice of Law; Multijurisdictional Practice of Law Comment on Rule 5.5: Unauthorized Practice of Law; Multijurisdictional Practice of Law Law Firms And Associations Rule 5.5 Unauthorized Practice Of Law; Multijurisdictional Practice Of Law - Comment [1] A lawyer may practice law only in a jurisdiction in which the lawyer is authorized to practice. A lawyer may be admitted to practice law in a jurisdiction on a regular basis or may be authorized by court rule or order or by law to practice for a limited purpose or on a restricted basis. Paragraph (a) applies to unauthorized practice of law by a lawyer, whether through the lawyer’s direct action or by the lawyer assisting another person. For example, a lawyer may not assist a person in practicing law in violation of the rules governing professional conduct in that person’s jurisdiction. [2] The definition of the practice of law is established by law and varies from one jurisdiction to another. Whatever the definition, limiting the practice of law to members of the bar protects the public against rendition of legal services by unqualified persons. This Rule does not prohibit a lawyer from employing the services of paraprofessionals and delegating functions to them, so long as the lawyer supervises the delegated work and retains responsibility for their work. See Rule 5.3. [3] A lawyer may provide professional advice and instruction to nonlawyers whose employment requires knowledge of the law; for example, claims adjusters, employees of financial or commercial institutions, social workers, accountants and persons employed in government agencies. Lawyers also may assist independent nonlawyers, such as paraprofessionals, who are authorized by the law of a jurisdiction to provide particular law-related services. In addition, a lawyer may counsel nonlawyers who wish to proceed pro se. [4] Other than as authorized by law or this Rule, a lawyer who is not admitted to practice generally in this jurisdiction violates paragraph (b)(1) if the lawyer establishes an office or other systematic and continuous presence in this jurisdiction for the practice of law. Presence may be systematic and continuous even if 14the lawyer is not physically present here. Such a lawyer must http://www.americanbar.org/groups/professional_responsibility/publications…5_5_unauthorized_practice_of_law_multijurisdictional_practice_of_law.html Page 1 of 6 13 Comment on Rule 5.5: Unauthorized Practice of Law; Multijurisdictional Practice of Law | The Center for Professional Responsibility 8/29/14 1:55 PM not hold out to the public or otherwise represent that the lawyer is admitted to practice law in this jurisdiction. See also Rules 7.1(a) and 7.5(b). [5] There are occasions in which a lawyer admitted to practice in another United States jurisdiction, and not disbarred or suspended from practice in any jurisdiction, may provide legal services on a temporary basis in this jurisdiction under circumstances that do not create an unreasonable risk to the interests of their clients, the public or the courts. Paragraph (c) identifies four such circumstances. The fact that conduct is not so identified does not imply that the conduct is or is not authorized. With the exception of paragraphs (d)(1) and (d)(2), this Rule does not authorize a U.S. or foreign lawyer to establish an office or other systematic and continuous presence in this jurisdiction without being admitted to practice generally here. [6] There is no single test to determine whether a lawyer’s services are provided on a “temporary basis” in this jurisdiction, and may therefore be permissible under paragraph (c). Services may be “temporary” even though the lawyer provides services in this jurisdiction on a recurring basis, or for an extended period of time, as when the lawyer is representing a client in a single lengthy negotiation or litigation. [7] Paragraphs (c) and (d) apply to lawyers who are admitted to practice law in any United States jurisdiction, which includes the District of Columbia and any state, territory or commonwealth of the United States. Paragraph (d) also applies to lawyers admitted in a foreign jurisdiction. The word “admitted” in paragraphs (c), (d) and (e) contemplates that the lawyer is authorized to practice in the jurisdiction in which the lawyer is admitted and excludes a lawyer who while technically admitted is not authorized to practice, because, for example, the lawyer is on inactive status. [8] Paragraph (c)(1) recognizes that the interests of clients and the public are protected if a lawyer admitted only in another jurisdiction associates with a lawyer licensed to practice in this jurisdiction. For this paragraph to apply, however, the lawyer admitted to practice in this jurisdiction must actively participate in and share responsibility for the representation of the client. [9] Lawyers not admitted to practice generally in a jurisdiction may be authorized by law or order of a tribunal or an administrative agency to appear before the tribunal or agency. This authority may be granted pursuant to formal rules governing admission pro hac vice or pursuant to informal practice of the 15 http://www.americanbar.org/groups/professional_responsibility/publications…5_5_unauthorized_practice_of_law_multijurisdictional_practice_of_law.html Page 2 of 6 14 Comment on Rule 5.5: Unauthorized Practice of Law; Multijurisdictional Practice of Law | The Center for Professional Responsibility 8/29/14 1:55 PM tribunal or agency. Under paragraph (c)(2), a lawyer does not violate this Rule when the lawyer appears before a tribunal or agency pursuant to such authority. To the extent that a court rule or other law of this jurisdiction requires a lawyer who is not admitted to practice in this jurisdiction to obtain admission pro hac vice before appearing before a tribunal or administrative agency, this Rule requires the lawyer to obtain that authority. [10] Paragraph (c)(2) also provides that a lawyer rendering services in this jurisdiction on a temporary basis does not violate this Rule when the lawyer engages in conduct in anticipation of a proceeding or hearing in a jurisdiction in which the lawyer is authorized to practice law or in which the lawyer reasonably expects to be admitted pro hac vice. Examples of such conduct include meetings with the client, interviews of potential witnesses, and the review of documents. Similarly, a lawyer admitted only in another jurisdiction may engage in conduct temporarily in this jurisdiction in connection with pending litigation in another jurisdiction in which the lawyer is or reasonably expects to be authorized to appear, including taking depositions in this jurisdiction. [11] When a lawyer has been or reasonably expects to be admitted to appear before a court or administrative agency, paragraph (c)(2) also permits conduct by lawyers who are associated with that lawyer in the matter, but who do not expect to appear before the court or administrative agency. For example, subordinate lawyers may conduct research, review documents, and attend meetings with witnesses in support of the lawyer responsible for the litigation. [12] Paragraph (c)(3) permits a lawyer admitted to practice law in another jurisdiction to perform services on a temporary basis in this jurisdiction if those services are in or reasonably related to a pending or potential arbitration, mediation, or other alternative dispute resolution proceeding in this or another jurisdiction, if the services arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice. The lawyer, however, must obtain admission pro hac vice in the case of a court-annexed arbitration or mediation or otherwise if court rules or law so require. [13] Paragraph (c)(4) permits a lawyer admitted in another jurisdiction to provide certain legal services on a temporary basis in this jurisdiction that arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted but are not within paragraphs (c)(2) or (c)(3). These 16 http://www.americanbar.org/groups/professional_responsibility/publications…5_5_unauthorized_practice_of_law_multijurisdictional_practice_of_law.html Page 3 of 6 15 Comment on Rule 5.5: Unauthorized Practice of Law; Multijurisdictional Practice of Law | The Center for Professional Responsibility 8/29/14 1:55 PM services include both legal services and services that nonlawyers may perform but that are considered the practice of law when performed by lawyers. [14] Paragraphs (c)(3) and (c)(4) require that the services arise out of or be reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted. A variety of factors evidence such a relationship. The lawyer’s client may have been previously represented by the lawyer, or may be resident in or have substantial contacts with the jurisdiction in which the lawyer is admitted. The matter, although involving other jurisdictions, may have a significant connection with that jurisdiction. In other cases, significant aspects of the lawyer’s work might be conducted in that jurisdiction or a significant aspect of the matter may involve the law of that jurisdiction. The necessary relationship might arise when the client’s activities or the legal issues involve multiple jurisdictions, such as when the officers of a multinational corporation survey potential business sites and seek the services of their lawyer in assessing the relative merits of each. In addition, the services may draw on the lawyer’s recognized expertise developed through the regular practice of law on behalf of clients in matters involving a particular body of federal, nationally-uniform, foreign, or international law. Lawyers desiring to provide pro bono legal services on a temporary basis in a jurisdiction that has been affected by a major disaster, but in which they are not otherwise authorized to practice law, as well as lawyers from the affected jurisdiction who seek to practice law temporarily in another jurisdiction, but in which they are not otherwise authorized to practice law, should consult the [Model Court Rule on Provision of Legal Services Following Determination of Major Disaster]. [15] Paragraph (d) identifies two circumstances in which a lawyer who is admitted to practice in another United States or a foreign jurisdiction, and is not disbarred or suspended from practice in any jurisdiction, or the equivalent thereof, may establish an office or other systematic and continuous presence in this jurisdiction for the practice of law. Pursuant to paragraph (c) of this Rule, a lawyer admitted in any U.S. jurisdiction may also provide legal services in this jurisdiction on a temporary basis. See also Model Rule on Temporary Practice by Foreign Lawyers. Except as provided in paragraphs (d)(1) and (d)(2), a lawyer who is admitted to practice law in another United States or foreign jurisdiction and who establishes an office or other systematic or continuous presence in this jurisdiction must become admitted to 17 http://www.americanbar.org/groups/professional_responsibility/publications…5_5_unauthorized_practice_of_law_multijurisdictional_practice_of_law.html Page 4 of 6 16 Comment on Rule 5.5: Unauthorized Practice of Law; Multijurisdictional Practice of Law | The Center for Professional Responsibility 8/29/14 1:55 PM practice law generally in this jurisdiction. [16] Paragraph (d)(1) applies to a U.S. or foreign lawyer who is employed by a client to provide legal services to the client or its organizational affiliates, i.e., entities that control, are controlled by, or are under common control with the employer. This paragraph does not authorize the provision of personal legal services to the employer’s officers or employees. The paragraph applies to in-house corporate lawyers, government lawyers and others who are employed to render legal services to the employer. The lawyer’s ability to represent the employer outside the jurisdiction in which the lawyer is licensed generally serves the interests of the employer and does not create an unreasonable risk to the client and others because the employer is well situated to assess the lawyer’s qualifications and the quality of the lawyer’s work. To further decrease any risk to the client, when advising on the domestic law of a United States jurisdiction or on the law of the United States, the foreign lawyer authorized to practice under paragraph (d)(1) of this Rule needs to base that advice on the advice of a lawyer licensed and authorized by the jurisdiction to provide it. [17] If an employed lawyer establishes an office or other systematic presence in this jurisdiction for the purpose of rendering legal services to the employer, the lawyer may be subject to registration or other requirements, including assessments for client protection funds and mandatory continuing legal education. See Model Rule for Registration of In-House Counsel. [18] Paragraph (d)(2) recognizes that a U.S. or foreign lawyer may provide legal services in a jurisdiction in which the lawyer is not licensed when authorized to do so by federal or other law, which includes statute, court rule, executive regulation or judicial precedent. See, e.g., Model Rule on Practice Pending Admission. [19] A lawyer who practices law in this jurisdiction pursuant to paragraphs (c) or (d) or otherwise is subject to the disciplinary authority of this jurisdiction. See Rule 8.5(a). [20] In some circumstances, a lawyer who practices law in this jurisdiction pursuant to paragraphs (c) or (d) may have to inform the client that the lawyer is not licensed to practice law in this jurisdiction. For example, that may be required when the representation occurs primarily in this jurisdiction and requires knowledge of the law of this jurisdiction. See Rule 1.4(b). [21] 18 Paragraphs (c) and (d) do not authorize communications http://www.americanbar.org/groups/professional_responsibility/publications…5_5_unauthorized_practice_of_law_multijurisdictional_practice_of_law.html Page 5 of 6 17 Comment on Rule 5.5: Unauthorized Practice of Law; Multijurisdictional Practice of Law | The Center for Professional Responsibility 8/29/14 1:55 PM advertising legal services in this jurisdiction by lawyers who are admitted to practice in other jurisdictions. Whether and how lawyers may communicate the availability of their services in this jurisdiction is governed by Rules 7.1 to 7.5. Back to Rule | Table of Contents | Next Comment 19 http://www.americanbar.org/groups/professional_responsibility/publications…5_5_unauthorized_practice_of_law_multijurisdictional_practice_of_law.html Page 6 of 6 18 The views expressed herein have not been approved by the House of Delegates or the Board of Governors of the American Bar Association and, accordingly, should not be construed as representing the policy of the American Bar Association. REVISED 107A AMERICAN BAR ASSOCIATION COMMISSION ON ETHICS 20/20 SECTION OF BUSINESS LAW SECTION OF INTERNATIONAL LAW TORT TRIAL & INSURANCE PRACTICE SECTION STANDING COMMITTEE ON CLIENT PROTECTION STANDING COMMITTEE ON ETHICS AND PROFESSIONAL RESPONSIBILITY STANDING COMMITTEE ON PROFESSIONAL DISCIPLINE STANDING COMMITTEE ON PROFESSIONALISM STANDING COMMITTEE ON SPECIALIZATION TASK FORCE ON INTERNATIONAL TRADE IN LEGAL SERVICES NEW YORK STATE BAR ASSOCIATION REPORT TO THE HOUSE OF DELEGATES RESOLUTION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 21 RESOLVED, That the American Bar Association amends Rule 5.5 of the ABA Model Rules of Professional Conduct as follows (insertions underlined, deletions struck through): RULE 5.5: UNAUTHORIZED PRACTICE OF LAW; MULTIJURISDICTIONAL PRACTICE OF LAW (a) A lawyer shall not practice law in a jurisdiction in violation of the regulation of the legal profession in that jurisdiction, or assist another in doing so. (b) A lawyer who is not admitted to practice in this jurisdiction shall not: (1) except as authorized by these Rules or other law, establish an office or other systematic and continuous presence in this jurisdiction for the practice of law; or (2) hold out to the public or otherwise represent that the lawyer is admitted to practice law in this jurisdiction. (c) A lawyer admitted in another United States jurisdiction, and not disbarred or suspended from practice in any jurisdiction, may provide legal services on a temporary basis in this jurisdiction that: (1) are undertaken in association with a lawyer who is admitted to practice in this jurisdiction and who actively participates in the matter; 1 19 REVISED 107A 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 22 (2) are in or reasonably related to a pending or potential proceeding before a tribunal in this or another jurisdiction, if the lawyer, or a person the lawyer is assisting, is authorized by law or order to appear in such proceeding or reasonably expects to be so authorized; (3) are in or reasonably related to a pending or potential arbitration, mediation, or other alternative dispute resolution proceeding in this or another jurisdiction, if the services arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice and are not services for which the forum requires pro hac vice admission; or (4) are not within paragraphs (c)(2) or (c)(3) and arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice. (d) A lawyer admitted in another United States jurisdiction or in a foreign jurisdiction, and not disbarred or suspended from practice in any jurisdiction or the equivalent thereof, may provide legal services through an office or other systematic and continuous presence in this jurisdiction that: (1) are provided to the lawyer’s employer or its organizational affiliates; and are not services for which the forum requires pro hac vice admission; and, when performed by a foreign lawyer and requires advice on concern the law of this or another U.S. jurisdiction or of the United States, such advice shall be based upon the advice of a are undertaken in consultation with a U.S. lawyer who is duly licensed and authorized by the jurisdiction to provide such advice; or (2) are services that the lawyer is authorized by federal or other law or rule to provide in this jurisdiction. (e) For purposes of paragraph (d), the foreign lawyer must be a member in good standing of a recognized legal profession in a foreign jurisdiction, the members of which are admitted to practice as lawyers or counselors at law or the equivalent, and are subject to effective regulation and discipline by a duly constituted professional body or a public authority. COMMENT [1] A lawyer may practice law only in a jurisdiction in which the lawyer is authorized to practice. A lawyer may be admitted to practice law in a jurisdiction on a regular basis or may be authorized by court rule or order or by law to practice for a limited purpose or on a restricted basis. Paragraph (a) applies to unauthorized practice of law by a lawyer, whether through the lawyer’s direct action or by the lawyer assisting another person. For example, a lawyer may not assist a person in practicing law in violation of the rules governing professional conduct in that person’s jurisdiction. [2] The definition of the practice of law is established by law and varies from one jurisdiction to another. Whatever the definition, limiting the practice of law to members of the bar protects the public against rendition of legal services by unqualified persons. This Rule does not prohibit a lawyer from employing the services of paraprofessionals and delegating functions to them, so long as the lawyer supervises the delegated work and retains responsibility for their work. See Rule 5.3. [3] A lawyer may provide professional advice and instruction to nonlawyers whose employment requires knowledge of the law; for example, claims adjusters, employees of financial or commercial institutions, social workers, accountants and persons employed in 2 20 The views expressed herein have not been approved by the House of Delegates or the Board of Governors of the American Bar Association and, accordingly, should not be construed as representing the policy of the American Bar Association. 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 23 REVISED 107A government agencies. Lawyers also may assist independent nonlawyers, such as paraprofessionals, who are authorized by the law of a jurisdiction to provide particular lawrelated services. In addition, a lawyer may counsel nonlawyers who wish to proceed pro se. [4] Other than as authorized by law or this Rule, a lawyer who is not admitted to practice generally in this jurisdiction violates paragraph (b)(1) if the lawyer establishes an office or other systematic and continuous presence in this jurisdiction for the practice of law. Presence may be systematic and continuous even if the lawyer is not physically present here. Such a lawyer must not hold out to the public or otherwise represent that the lawyer is admitted to practice law in this jurisdiction. See also Rules 7.1(a) and 7.5(b). [5] There are occasions in which a lawyer admitted to practice in another United States jurisdiction, and not disbarred or suspended from practice in any jurisdiction, may provide legal services on a temporary basis in this jurisdiction under circumstances that do not create an unreasonable risk to the interests of their clients, the public or the courts. Paragraph (c) identifies four such circumstances. The fact that conduct is not so identified does not imply that the conduct is or is not authorized. With the exception of paragraphs (d)(1) and (d)(2), this Rule does not authorize a U.S. or foreign lawyer to establish an office or other systematic and continuous presence in this jurisdiction without being admitted to practice generally here. [6] There is no single test to determine whether a lawyer’s services are provided on a “temporary basis” in this jurisdiction, and may therefore be permissible under paragraph (c). Services may be “temporary” even though the lawyer provides services in this jurisdiction on a recurring basis, or for an extended period of time, as when the lawyer is representing a client in a single lengthy negotiation or litigation. [7] Paragraphs (c) and (d) apply to lawyers who are admitted to practice law in any United States jurisdiction, which includes the District of Columbia and any state, territory or commonwealth of the United States. Paragraph (d) also applies to lawyers admitted in a foreign jurisdiction. The word “admitted” in paragraphs (c), (d) and (e) contemplates that the lawyer is authorized to practice in the jurisdiction in which the lawyer is admitted and excludes a lawyer who while technically admitted is not authorized to practice, because, for example, the lawyer is on inactive status. [8] Paragraph (c)(1) recognizes that the interests of clients and the public are protected if a lawyer admitted only in another jurisdiction associates with a lawyer licensed to practice in this jurisdiction. For this paragraph to apply, however, the lawyer admitted to practice in this jurisdiction must actively participate in and share responsibility for the representation of the client. [9] Lawyers not admitted to practice generally in a jurisdiction may be authorized by law or order of a tribunal or an administrative agency to appear before the tribunal or agency. This authority may be granted pursuant to formal rules governing admission pro hac vice or pursuant to informal practice of the tribunal or agency. Under paragraph (c)(2), a lawyer does not violate this Rule when the lawyer appears before a tribunal or agency pursuant to such authority. To the extent that a court rule or other law of this jurisdiction requires a lawyer who is not admitted to practice in this jurisdiction to obtain admission pro hac vice before appearing before a tribunal or administrative agency, this Rule requires the lawyer to obtain that authority. [10] Paragraph (c)(2) also provides that a lawyer rendering services in this jurisdiction on a temporary basis does not violate this Rule when the lawyer engages in conduct in anticipation of a proceeding or hearing in a jurisdiction in which the lawyer is authorized to practice law or in which the lawyer reasonably expects to be admitted pro hac vice. Examples of 3 21 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 24 REVISED 107A such conduct include meetings with the client, interviews of potential witnesses, and the review of documents. Similarly, a lawyer admitted only in another jurisdiction may engage in conduct temporarily in this jurisdiction in connection with pending litigation in another jurisdiction in which the lawyer is or reasonably expects to be authorized to appear, including taking depositions in this jurisdiction. [11] When a lawyer has been or reasonably expects to be admitted to appear before a court or administrative agency, paragraph (c)(2) also permits conduct by lawyers who are associated with that lawyer in the matter, but who do not expect to appear before the court or administrative agency. For example, subordinate lawyers may conduct research, review documents, and attend meetings with witnesses in support of the lawyer responsible for the litigation. [12] Paragraph (c)(3) permits a lawyer admitted to practice law in another jurisdiction to perform services on a temporary basis in this jurisdiction if those services are in or reasonably related to a pending or potential arbitration, mediation, or other alternative dispute resolution proceeding in this or another jurisdiction, if the services arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice. The lawyer, however, must obtain admission pro hac vice in the case of a court-annexed arbitration or mediation or otherwise if court rules or law so require. [13] Paragraph (c)(4) permits a lawyer admitted in another jurisdiction to provide certain legal services on a temporary basis in this jurisdiction that arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted but are not within paragraphs (c)(2) or (c)(3). These services include both legal services and services that nonlawyers may perform but that are considered the practice of law when performed by lawyers. [14] Paragraphs (c)(3) and (c)(4) require that the services arise out of or be reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted. A variety of factors evidence such a relationship. The lawyer’s client may have been previously represented by the lawyer, or may be resident in or have substantial contacts with the jurisdiction in which the lawyer is admitted. The matter, although involving other jurisdictions, may have a significant connection with that jurisdiction. In other cases, significant aspects of the lawyer’s work might be conducted in that jurisdiction or a significant aspect of the matter may involve the law of that jurisdiction. The necessary relationship might arise when the client’s activities or the legal issues involve multiple jurisdictions, such as when the officers of a multinational corporation survey potential business sites and seek the services of their lawyer in assessing the relative merits of each. In addition, the services may draw on the lawyer’s recognized expertise developed through the regular practice of law on behalf of clients in matters involving a particular body of federal, nationally-uniform, foreign, or international law. Lawyers desiring to provide pro bono legal services on a temporary basis in a jurisdiction that has been affected by a major disaster, but in which they are not otherwise authorized to practice law, as well as lawyers from the affected jurisdiction who seek to practice law temporarily in another jurisdiction, but in which they are not otherwise authorized to practice law, should consult the [Model Court Rule on Provision of Legal Services Following Determination of Major Disaster]. [15] Paragraph (d) identifies two circumstances in which a lawyer who is admitted to practice in another United States or a foreign jurisdiction, and is not disbarred or suspended from practice in any jurisdiction, or the equivalent thereof, may establish an office or other systematic and continuous presence in this jurisdiction for the practice of law. as well as Pursuant to paragraph (c) of this Rule, a lawyer admitted in any U.S. jurisdiction may also provide legal services in this jurisdiction on a temporary basis. See also Model Rule on Temporary Practice by Foreign Lawyers. Except as provided in paragraphs (d)(1) and (d)(2), a lawyer who is 4 22 The views expressed herein have not been approved by the House of Delegates or the Board of Governors of the American Bar Association and, accordingly, should not be construed as representing the policy of the American Bar Association. 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 196 25 REVISED 107A admitted to practice law in another United States or foreign jurisdiction and who establishes an office or other systematic or continuous presence in this jurisdiction must become admitted to practice law generally in this jurisdiction. [16] Paragraph (d)(1) applies to a U.S. or foreign lawyer who is employed by a client to provide legal services to the client or its organizational affiliates, i.e., entities that control, are controlled by, or are under common control with the employer. This paragraph does not authorize the provision of personal legal services to the employer’s officers or employees. The paragraph applies to in-house corporate lawyers, government lawyers and others who are employed to render legal services to the employer. The lawyer’s ability to represent the employer outside the jurisdiction in which the lawyer is licensed generally serves the interests of the employer and does not create an unreasonable risk to the client and others because the employer is well situated to assess the lawyer’s qualifications and the quality of the lawyer’s work. To further decrease any risk to the client, when advising on the domestic law of a United States jurisdiction or on the law of the United States, the foreign lawyer authorized to practice under paragraph (d)(1) of this Rule needs to base that advice on the advice of a lawyer licensed and authorized by the jurisdiction consult with a U.S. lawyer authorized to provide it that advice. [17] If an employed lawyer establishes an office or other systematic presence in this jurisdiction for the purpose of rendering legal services to the employer, the lawyer may be subject to registration or other requirements, including assessments for client protection funds and mandatory continuing legal education. See Model Rule for Registration of In-House Counsel. [18] Paragraph (d)(2) recognizes that a U.S. or foreign lawyer may provide legal services in a jurisdiction in which the lawyer is not licensed when authorized to do so by federal or other law, which includes statute, court rule, executive regulation or judicial precedent. See, e.g., Model Rule on Practice Pending Admission. [19] A lawyer who practices law in this jurisdiction pursuant to paragraphs (c) or (d) or otherwise is subject to the disciplinary authority of this jurisdiction. See Rule 8.5(a). [20] In some circumstances, a lawyer who practices law in this jurisdiction pursuant to paragraphs (c) or (d) may have to inform the client that the lawyer is not licensed to practice law in this jurisdiction. For example, that may be required when the representation occurs primarily in this jurisdiction and requires knowledge of the law of this jurisdiction. See Rule 1.4(b). [21] Paragraphs (c) and (d) do not authorize communications advertising legal services in this jurisdiction by lawyers who are admitted to practice in other jurisdictions. Whether and how lawyers may communicate the availability of their services in this jurisdiction is governed by Rules 7.1 to 7.5. 5 23 The views expressed herein have not been approved by the House of Delegates or the Board of Governors of the American Bar Association and, accordingly, should not be construed as representing the policy of the American Bar Association. AMERICAN BAR ASSOCIATION COMMISSION ON ETHICS 20/20 STANDING COMMITTEE ON CLIENT PROTECTION STANDING COMMITTEE ON ETHICS AND PROFESSIONAL RESPONSIBILITY STANDING COMMITTEE ON PROFESSIONALISM STANDING COMMITTEE ON SPECIALIZATION TASK FORCE ON INTERNATIONAL TRADE IN LEGAL SERVICES REPORT TO THE HOUSE OF DELEGATES RESOLUTION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 26 RESOLVED: That the American Bar Association amends the ABA Model Rule for Registration of In-House Counsel as follows (insertions underlined, deletions struck through): Model Rule for Registration of In-House Counsel GENERAL PROVISIONS: A. A lawyer who is admitted to the practice of law in another United States jurisdiction or is a foreign lawyer, who is employed as a lawyer and has a continuous presence in this jurisdiction by an organization, the business of which is lawful and consists of activities other than the practice of law or the provision of legal services, and who has a systematic and continuous presence in this jurisdiction as permitted pursuant to Rule 5.5(d)(1) of the Model Rules of Professional Conduct, the business of which is lawful and consists of activities other than the practice of law or the provision of legal services, shall register as in-house counsel within [180 days] of the commencement of employment as a lawyer or if currently so employed then within [180 days] of the effective date of this rRule, by submitting to the [registration authority] the following: 1) A completed application in the form prescribed by the [registration authority]; 2) A fee in the amount determined by the [registration authority]; 3) Documents proving admission to practice law and current good standing in all jurisdictions, U.S. and foreign, in which the lawyer is admitted to practice law.; If the jurisdiction is foreign and the documents are not in English, the lawyer shall submit an English translation and satisfactory proof of the accuracy of the translation; and 4) An affidavit from an officer, director, or general counsel of the employing entity attesting to the lawyer’s employment by the entity and the capacity in which the lawyer is so employed, and stating that the employment conforms to the requirements of this rRule. 1 24 The views expressed herein have not been approved by the House of Delegates or the Board of Governors of the American Bar Association and, accordingly, should not be construed as representing the policy of the American Bar Association. 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 27 For purposes of this Rule, a “foreign lawyer” is a member in good standing of a recognized legal profession in a foreign jurisdiction, the members of which are admitted to practice as lawyers or counselors at law or the equivalent and subject to effective regulation and discipline by a duly constituted professional body or a public authority. SCOPE OF AUTHORITY OF REGISTERED LAWYER: B. A lawyer registered under this section Rule shall have the rights and privileges otherwise applicable to members of the bar of this jurisdiction with the following restrictions: 1. The registered lawyer is authorized to provide legal services to the entity client or its organizational affiliates, including entities that control, are controlled by, or are under common control with the employer, and for employees, officers and directors of such entities, but only on matters directly related to their work for the entity and only to the extent consistent with Rule 1.7 of the Model Rules of Professional Conduct [or jurisdictional equivalent provision in the jurisdiction]; and 2. The registered lawyer shall not: a. Except as otherwise permitted by the rules of this jurisdiction, appear before a court or any other tribunal as defined in Rule 1.0(m) of the Model Rules of Professional Conduct [or jurisdictional equivalent],; or b. Offer or provide legal services or advice to any person other than as described in paragraph B.1., or hold himself or herself out as being authorized to practice law in this jurisdiction other than as described in paragraph B.1;. and c. If a foreign lawyer, provide advice on the law of this or another U.S. jurisdiction except in consultation with a U.S. lawyer authorized to provide such advice. PRO BONO PRACTICE: C. Notwithstanding the provisions of paragraph B above, a lawyer registered under this section Rule is authorized to provide pro bono legal services through an established notfor-profit bar association, pro bono program or legal services program or through such organization(s) specifically authorized in this jurisdiction. OBLIGATIONS: D. A lawyer registered under this section Rule shall: 1. Pay an annual fee in the amount of $_____________; 2. Pay any annual client protection fund assessment; 23. Fulfill the continuing legal education requirements that are required of active members of the bar in this jurisdiction; 34. Report within [___] days to the jurisdiction the following: a. Termination of the lawyer’s employment as described in paragraph BA.4.; b. Whether or not public, any change in the lawyer’s license status in another jurisdiction, whether U.S. or foreign, including by the lawyer's resignation; 2 25 The views expressed herein have not been approved by the House of Delegates or the Board of Governors of the American Bar Association and, accordingly, should not be construed as representing the policy of the American Bar Association. 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 28 c. Whether or not public, any disciplinary charge, finding, or sanction concerning the lawyer by any disciplinary authority, court, or other tribunal in any jurisdiction, U.S. or foreign. LOCAL DISCIPLINE: E. A registered lawyer under this section Rule shall be subject to the [jurisdiction’s Rules of Professional Conduct], [jurisdiction’s Rules of Lawyer Disciplinary Enforcement], and all other laws and rules governing lawyers admitted to the active practice of law in this jurisdiction. The [jurisdiction’s disciplinary counsel] has and shall retain jurisdiction over the registered lawyer with respect to the conduct of the lawyer in this or another jurisdiction to the same extent as it has over lawyers generally admitted in this jurisdiction. AUTOMATIC TERMINATION: F. A registered lawyer’s rights and privileges under this Rule section automatically terminate when: 1. The lawyer’s employment terminates; 2. The lawyer is suspended or disbarred from practice in any jurisdiction or any court or agency before which the lawyer is admitted, U.S. or foreign; or 3. The lawyer fails to maintain active status in at least one jurisdiction, U.S. or foreign. REINSTATEMENT: G. A registered lawyer whose registration is terminated under paragraph F.1. above, may be reinstated within [xx ] months of termination upon submission to the [registration authority] of the following: 1. An application for reinstatement in a form prescribed by the [registration authority]; 2. A reinstatement fee in the amount of $_____________; 3. An affidavit from the current employing entity as prescribed in paragraph A.4. SANCTIONS: H. A lawyer under this rRule who fails to register shall be: 1. Subject to professional discipline in this jurisdiction; 2. Ineligible for admission on motion in this jurisdiction; 3. Referred by the [registration authority] to the this [jurisdiction’s bar admissions authority]; and 4. Referred by the [registration authority] to the disciplinary authority of the jurisdictions of licensure, U.S. and/or foreign. 3 26 The views expressed herein have not been approved by the House of Delegates or the Board of Governors of the American Bar Association and, accordingly, should not be construed as representing the policy of the American Bar Association. REPORT Introduction and Executive Summary The Resolution accompanying this Report proposes to amend the 2008 ABA Model Rule for Registration of In-House Counsel so that foreign lawyers are permitted to serve as in-house counsel, but with the added requirement that the foreign lawyer may not advise on U.S. law except in consultation with a U.S.-licensed lawyer. This Resolution complements the Commission’s proposal to amend Model Rule 5.5(d) of the ABA Model Rules of Professional Conduct (Unauthorized Practice of Law; Multijurisdictional Practice), which makes a corresponding change to that Model Rule. These proposed amendments respond to the increasing number of multinational companies with substantial operations in the U.S. – often recruited by states encouraging investment.1 These companies, like U.S.-based multinational companies, want to have among their ranks of in-house counsel lawyers from other countries in which they operate. Seven states – Arizona, Connecticut, Delaware, Georgia, Virginia, Washington and Wisconsin – have already changed their rules to permit companies to bring non-U.S. lawyers to the state to work for them. Additional jurisdictions are likely to follow given the substantial growth of multinational companies within the United States. The Commission concluded that clients and lawyers would benefit from consistency across jurisdictions on this issue, including requirements that such lawyers register, contribute to client protection funds, and consult with U.S. counsel before advising their employer on issues involving U.S. law. These lawyers would have a limited authority to practice: only for their employer and, with respect to questions of U.S. law, only after consultation with a U.S. lawyer. The requirement that the foreign lawyer consult with a qualified U.S. lawyer on questions of U.S. law is consistent with that set forth in Section 3(e) of the ABA Model Rule for the Licensing and Practice of Foreign Legal Consultants. They would be subject to discipline under the professional conduct rules in the jurisdiction where they are employed, contribute to the client protection fund, and comply with the jurisdiction’s continuing legal education requirements. Their employers would have to attest to their compliance with these requirements. The definition of who would qualify under the Rule as a foreign lawyer is substantively the same as what is found in longstanding ABA policy, including the ABA Model Rule for the Licensing and Practice of Foreign Legal Consultants, which state supreme courts have adopted, with no adverse consequences. 1 See, e.g., ABA Task Force on International Trade in Legal Services, International Trade in Legal Services and Professional Regulation: A Framework for State Bars Based on the Georgia Experience (Feb. 4, 2012), available at http://arbitrateatlanta.org/wp-content/uploads/2011/08/FINAL-ITILS-toolkit-2-4-12.pdf (noting that “[o]ver 3600 foreign businesses from more than 60 countries have established operations in Georgia [alone]”); Texas Office of the Governor, Foreign Investment in Texas: The Industries and Countries Leading Current Growth, www.governor.state.tx.us/files/ecodev/Foreign_Investment.pdf (last viewed Nov. 12, 2012) (finding that more than 2,000 foreign multinationals have established locations in Texas). 29 1 27 The views expressed herein have not been approved by the House of Delegates or the Board of Governors of the American Bar Association and, accordingly, should not be construed as representing the policy of the American Bar Association. If adopted by the House of Delegates, the changes proposed in these Resolutions would not provide foreign in-house counsel with full practice rights or admission status. The Commission suggests only a limited practice authorization for qualified foreign lawyers. Clients and lawyers would benefit from consistency across jurisdictions. The proposed amendments to the Model In-House Registration Rule, with the proposed changes to Model Rule 5.5, would provide state supreme courts with a comprehensive regulatory approach that is protective of clients while meeting the needs of global organizational clients to have the in-house counsel of their choice work in their U.S. offices. Relevant History In August 2002, the ABA House of Delegates adopted recommendations proposed by the Commission on Multijurisdictional Practice (MJP Commission) to amend Rule 5.5 of the ABA Model Rules of Professional Conduct. These amendments enhanced opportunities for U.S. lawyers to engage in cross-border practice by permitting temporary practice of law by U.S. lawyers in jurisdictions where they are not licensed. Model Rule 5.5(d) authorized lawyers to provide legal services to the lawyer’s organizational client and its affiliates even if not admitted in the state in which the company was employing him. The Commission on Ethics 20/20 has studied how globalization has changed the legal landscape in the United States. At the outset of its work, it asked in its Preliminary Issues Outline whether Model Rule 5.5(d) should be amended to include foreign lawyers within its practice authorization for in-house counsel.2 Over the ensuing three years, the Commission took testimony and received many comments that have informed its consideration of this issue. The Commission’s Inbound Foreign Lawyers Working Group included active participants from the ABA Standing Committee on Ethics and Professional Responsibility, the ABA Standing Committee on Professional Discipline, the Section of International Law, the Real Property, Trust and Estate Law Section, the Task Force on International Trade in Legal Services, and the Section of Legal Education and Admissions to the Bar. These representatives contributed significantly to the Commission’s deliberations and the Resolution that accompanies this Report. The Commission is grateful for their contributions to its work. The Commission also received helpful input from many elements of the bar. During its meetings and public hearings, the Commission considered additional written responses and oral testimony on the subject. At its October 2012 meeting, it concluded that the 2 A July 2009 Report of the Special Committee on International Issues of the ABA Section of Legal Education and Admissions to the Bar noted that this was one of several areas where the ABA lacked policy relating to limited practice authority for foreign lawyers in the U.S. Another area where the Special Committee noted a policy gap related to pro hac vice admission of foreign lawyers. See ABA Section of Legal Education and Admissions to the Bar, Report of the Special Committee on International Issues (July 15, 2009), available at http://www.americanbar.org/content/dam/aba/administrative/legal_education_and_admissions_to_the_bar/council_r eports_and_resolutions/june_2012_council_open_session/2012_supplemental_report_5_foreign_law_schools.authch eckdam.pdf. This subject is addressed by the Commission in a separate Resolution to the House of Delegates. 30 2 28 The views expressed herein have not been approved by the House of Delegates or the Board of Governors of the American Bar Association and, accordingly, should not be construed as representing the policy of the American Bar Association. realities of client needs in the global legal marketplace necessitate that the ABA address more directly limited practice authority for inbound foreign lawyers and associated regulatory concerns. Foreign Lawyers Should be Added to the ABA Model Rule for Registration of In-House Counsel The ABA has long recognized that permitting foreign lawyers limited practice authority in the U.S. is beneficial to clients so long as appropriate client and public protections are in place (e.g., the ABA Model Rule for the Licensing and Practice of Foreign Legal Consultants, originally adopted in 1993). There is already a significant level of cross-border legal services, with U.S. lawyers providing assistance abroad and, to a lesser extent, non-U.S. lawyers providing assistance in the U.S. In 2011, the U.S. exported $7.4 billion in legal services while importing a little under $1.8 billion.3 In the last decade, the number of foreign companies with U.S. offices or operations in the United States has grown substantially – often due to active solicitation by U.S. jurisdictions – as has the number of U.S. companies with foreign offices or operations. See the accompanying Report supporting the Commission’s Resolution to Amend Model Rule 5.5. Those employers often require their in-house counsel to relocate to a U.S. jurisdiction or transfer to the U.S. for a period of time. As noted above, Arizona, Connecticut, Delaware, Georgia, Virginia, Washington and Wisconsin already permit foreign lawyers to work as in-house counsel with no adverse consequences that the Commission has been able to determine. Foreign lawyers are currently practicing in-house in the U.S. with little guidance in the Model Rules or other ABA policies. The realities of globalized legal practice means that states will need to ensure that these lawyers (a) abide by the limitations on their ability to practice in a state; (b) pay both bar dues and client protection fund contributions; (c) take on continuing legal education obligations; and (d) submit to the disciplinary process of the state. Adding foreign lawyers to the Model Rule for Registration of In-House Counsel achieves the worthwhile goal of facilitating the ability of the courts to hold these lawyers accountable for the limited conduct for which they are permitted to engage while in the U.S. Including foreign lawyers in the Model In-House Registration Rule would mean these lawyers are identifiable. Their employers have to vouch for them. They would be subject to the professional conduct rules of the jurisdiction where they are employed, subject to sanctions if they fail to register or do not comply with the those rules, and can be referred to appropriate authorities in their home jurisdictions of registration and licensure in the event of a violation.4 3 See U.S. Bureau of Economic Analysis, Table G. Other Private Services Receipts, available at http://www.bea.gov/international/xls/table_G.xls (last visited Nov. 10, 2012); U.S. Bureau of Economic Analysis, Table H, Other Private Services Payments, available at http://www.bea.gov/international/xls/table_H.xls (last visited Nov. 10, 2012). 4 As noted in the Commission’s Report accompanying its Resolution to amend Model Rule 5.5, the ABA Standing Committee on Professional Discipline and the ABA Task Force on International Trade in Legal Services are developing a model international reciprocal discipline notification protocol to facilitate the necessary information exchange between U.S. and non-U.S. lawyer regulators. 31 3 29 The views expressed herein have not been approved by the House of Delegates or the Board of Governors of the American Bar Association and, accordingly, should not be construed as representing the policy of the American Bar Association. This proposal to include foreign lawyers in the Model Rule for Registration of In-House Counsel also contains the added client protection (mirrored in the proposal to amend Model Rule 5.5) that, if a matter involves the law of a U.S. jurisdiction, the foreign in-house counsel’s services may not be undertaken except in consultation with a U.S. lawyer authorized to provide such advice.5 For purposes of the proposed amendments, qualified foreign lawyers are defined as those who are a member in good standing of a recognized legal profession in the lawyer’s home country, who must be subject to effective regulation and discipline by a duly constituted professional body or public authority. This definition has long been ABA policy and has been adopted by U.S. state supreme courts in their rules allowing foreign lawyers to practice as Foreign Legal Consultants.6 The Commission’s research revealed no problems that have arisen from its use. Further the foreign lawyer’s employer would have to have determined that he or she is competent to perform the job. The employer has a strong incentive to investigate the lawyer’s character, fitness, and background.7 The Conference of Chief Justices has indicated its approval, in principle, of the Commission’s approach to this issue, passing a Resolution to that effect. The Conference’s position was also consistent with its Task Force on the Regulation of Foreign Lawyers and the International Practice of Law, which endorsed an earlier version of the Commission’s proposal and urged adoption of the Commission’s recommendation by the ABA House of Delegates.8 Notably, the Conference’s Resolution related to a version of this proposal that did not yet include the new requirement for consultation with a U.S. lawyer and was, thus, less restrictive than the proposal the Commission has formally submitted to the House for its consideration. The Proposed Amendments to the Model Rule for Registration of In-House Counsel As noted above, the definition of “foreign lawyer” in Paragraph A of the Model Registration Rule is taken from the ABA Model Rule for the Licensing and Practice of Foreign Legal Consultants. The ABA Model Rule for Temporary Practice by Foreign Lawyers and the August 2012 ABA Model Rule on Practice Pending Admission also utilize that definition. The Commission also recommends requiring all registered lawyers to pay bar dues as well as the assessment for the lawyers’ fund for client protection normally paid by licensed lawyers in the jurisdiction. This requirement is consistent with Comment [17] of Model Rule 5.5, which states that lawyers who establish an office or continuous presence in the state “may be subject to registration or other requirements, including assessments for client protection funds and 5 The Commission used “authorized” in conjunction with the consulting U.S. lawyer, instead of “admitted,” because, while the consulting U.S. lawyer may not be admitted in the jurisdiction at issue, he or she may be permitted to advise on that U.S. jurisdiction’s law pursuant to authorization under another rule. 6 For example, see the foreign legal consultant rules for states including, but not limited, to Georgia, Massachusetts, New Mexico, North Dakota, Utah, and Virginia. 7 J. Charles Mokriski, In-House Lawyers’ Bar Status: Counsel, You’re Not in Kansas Anymore, Boston Bar J., Jan.Feb. 2008. 8 See Conference of Chief Justices, Resolution 13: Endorsing in Principle the Recommended Changes to the ABA Model Rules Regarding Practice by Foreign Lawyers, http://ccj.ncsc.dni.us/InternationalResolutions/resol13ABA.html (last viewed Nov. 12, 2012). In the Conference’s Resolution, it noted that “legal transactions and disputes involving foreign law and foreign lawyers is increasing.” 32 4 30 The views expressed herein have not been approved by the House of Delegates or the Board of Governors of the American Bar Association and, accordingly, should not be construed as representing the policy of the American Bar Association. mandatory continuing legal education.” It also is consistent with Rule 1(B)(2) of the ABA Model Rules for Lawyers’ Funds for Client Protection, stating in relevant part that “[e]very lawyer has an obligation to the public to participate in the collective effort of the bar to reimburse persons who have lost money or property as a result of the dishonest conduct of another lawyer…”.9 Consistent with the ABA Model Rule for the Licensing and Practice of Foreign Legal Consultants, the Commission also proposes adding language to the In-House Registration Rule to require that a foreign lawyer provide with the completed application form required by the registration authority accurate English translation(s) of any documents demonstrating his or her admission to practice and good standing as a lawyer in any foreign jurisdictions. The Registration Rule would continue to prohibit registered in-house lawyers from appearing in court or other tribunal under the auspices of this registration, even if on behalf of the employer, unless they are admitted pro hac vice or by some other exception to the local licensure law. The amended Rule would continue to provide that lawyers registered under the Rule, whether U.S. or foreign, bear the burden of reporting any change in licensure and employment status. Conclusion With the Commission on Ethics 20/20’s suggested changes to Model Rule 5.5, these corresponding amendments to the Model Rule for Registration of In-House Counsel ensure that foreign lawyers who practice in the United States as in-house counsel are identified and subject to the disciplinary authority of the jurisdiction where they practice. Accordingly, the Commission on Ethics 20/20 respectfully requests that the House of Delegates approve the amendments to the Model Rule for Registration of In-House Counsel. Respectfully submitted, ABA Commission on Ethics 20/20 Jamie S. Gorelick, Co-Chair Michael Traynor, Co-Chair February 2013 9 See MODEL RULES FOR LAWYERS’ FUNDS FOR CLIENT PROTECTION R. 1(B)(2), available at http://www.americanbar.org/groups/professional_responsibility/resources/client_protection/rule1.html. 33 5 31 The views expressed herein have not been approved by the House of Delegates or the Board of Governors of the American Bar Association and, accordingly, should not be construed as representing the policy of the American Bar Association. GENERAL INFORMATION FORM Submitting Entity: ABA Commission on Ethics 20/20 Submitted By: Jamie S. Gorelick and Michael Traynor, Co-Chairs 1. Summary of Resolution(s). Inbound Foreign Lawyers: Model Rule for Registration of In-House Counsel The Commission is proposing amendments to the 2008 ABA Model Rule for Registration of In-House Counsel to permit foreign lawyers to serve as in-house counsel in the U.S., but with the added requirements. One notable requirement is that the foreign lawyers not advise on U.S. law except in consultation with a U.S.-licensed lawyer. The proposed amendments would not authorize the licensing or full admission of foreign in-house lawyers. The Commission is suggesting only a limited and necessary practice authorization for qualified foreign in-house lawyers and a method to ensure they are identifiable, accountable and subject to monitoring. These proposed amendments respond to the increasing number of foreign companies with substantial operations and offices in the U.S. as well as U.S. companies with substantial foreign operations. These companies routinely encounter legal issues that implicate foreign or international law and want the advice of trusted lawyers from other jurisdictions. These companies often find that this advice can be offered most efficiently and effectively if those lawyers relocate to a corporate office in the U.S. The Commission learned that foreign lawyers (including foreign legal consultants) are already engaged as in-house counsel within the U.S., but are subject to little oversight. As stated above, the amendments would only provide a limited authority to practice for the foreign lawyer’s employer on matters that do not involve U.S. law, unless the foreign lawyer consults with a U.S. lawyer authorized to provide such advice. The definition of who would qualify as a foreign lawyer is also set forth in longstanding ABA policy, including the ABA Model Rule on Licensing and Practice by Foreign Legal Consultants, which state supreme courts have adopted with no adverse consequences. The proposed amendments to the Model Rule for Registration of In-House Counsel also would ensure that foreign in-house counsel are subject to the professional conduct rules of the jurisdiction where they are employed, contribute to the client protection fund, are subject to sanctions if they fail to register or do not comply with the professional conduct rules, and comply with continuing legal education requirements. Their employer would have to attest to their compliance with these requirements, and the lawyers could be referred to appropriate authorities in their home jurisdictions of registration and licensure in the event of a violation. 34 1 32 The views expressed herein have not been approved by the House of Delegates or the Board of Governors of the American Bar Association and, accordingly, should not be construed as representing the policy of the American Bar Association. This Resolution complements a separate Resolution to amend Rule 5.5 of the ABA Model Rules of Professional Conduct. The amendments to Model Rule 5.5 would provide the authorization for this limited form of practice, and the changes to the Model Registration Rule provide the mechanism to regulate these lawyers. The Commission concluded that adding foreign lawyers to both Model Rule 5.5 and the Model Rule for Registration of In-House Counsel has the benefit of ensuring that those lawyers are identifiable, subject to monitoring, and accountable for their conduct. The changes proposed by the Commission would provide state supreme courts with an approach to this issue that protects clients and the public while allowing global organizational clients to employ in-house foreign lawyers of their choice to work in their U.S. offices. Currently, seven jurisdictions have rules permitting foreign in-house counsel, and other jurisdictions are considering doing the same. The Commission’s proposal would ensure greater consistency across jurisdictions on this issue. 2. Approval by Submitting Entity. The Commission approved the Resolutions relating to inbound foreign lawyers at its October 25 and 26, 2012 meeting. 3. Has this or a similar resolution been submitted to the House or Board previously? No. 4. What existing Association policies are relevant to this Resolution and how would they be affected by its adoption? The adoption of this resolution would result in amendments to the ABA Model Rule on Registration of In-House Counsel. 5. What urgency exists which requires action at this meeting of the House? The ABA is the national leader in developing and interpreting standards of legal ethics and professional regulation, and therefore, has the responsibility to ensure that its Model Rules of Professional Conduct and related regulatory policies keep pace with social change and the evolution of law practice. By adopting the Commission’s proposal, the ABA would retain its leadership role in setting the ethical standards for limited practice in the U.S. by foreign inhouse counsel, just as other jurisdictions have adopted or are considering related changes. In sum, the Commission’s proposal would foster greater uniformity and ensure that jurisdictions adopt appropriate, and carefully limited, rules on the role of foreign lawyers in the U.S. 6. Status of Legislation. (If applicable) N/A 35 2 33 The views expressed herein have not been approved by the House of Delegates or the Board of Governors of the American Bar Association and, accordingly, should not be construed as representing the policy of the American Bar Association. 7. Brief explanation regarding plans for implementation of the policy, if adopted by the House of Delegates. The Center for Professional Responsibility will publish any updates to the ABA Model Rules of Professional Conduct and Comments, and also will publish electronically other newly adopted policies. The Policy Implementation Committee of the Center for Professional Responsibility has in place the procedures and infrastructure to successfully implement any policies proposed by the Ethics 20/20 Commission that are adopted by the House of Delegates. The Policy Implementation Committee and Ethics 20/20 Commission have been in communication in anticipation of the implementation effort. The Policy Implementation Committee has been responsible for the successful implementation of the recommendations of the ABA Ethics 2000 Commission, the Commission on Multijurisdictional Practice and the Commission to Evaluate the Model Code of Judicial Conduct. 8. Cost to the Association. (Both direct and indirect costs) None 9. Disclosure of Interest. (If applicable) 10. Referrals. From the outset, the Ethics 20/20 Commission agreed that transparency, broad outreach and frequent opportunities for input into its work would be crucial. Over the last three and onehalf years the Commission routinely released for comment to all ABA entities (including the Conference of Section and Division Delegates), state, local, specialty and international bar associations, courts and the public the following: its many issues papers; draft proposals; discussion drafts; and draft informational reports. The Commission held thirteen open meetings where audience members participated; conducted numerous public hearings and roundtables, domestically and abroad; created webinars and podcasts; made CLE presentations, received and reviewed hundreds of written and oral comments from the bar and the public. To date, the Commission has made more than 100 presentations about its work, including presentations to the Conference of Chief Justices, the House of Delegates, the ABA Board of Governors, the National Conference of Bar Presidents, and numerous ABA entities, and local, state, and international bar associations. All materials were posted on the Commission’s website. The Commission created and maintained a listserve for interested persons to keep apprised of the Commission’s activities. There are currently over 800 people on that list. The Commission’s process was collaborative. It created seven substantive Working Groups with participants from relevant ABA and outside entities. Included on these Working Groups were representatives of the ABA Standing Committee on Ethics and Professional Responsibility, ABA Standing Committee on Professional Discipline, ABA Standing Committee on Client Protection, ABA Standing Committee on Delivery of Legal Services, ABA Section of International Law, ABA Litigation Section, ABA Section of Legal 36 3 34 The views expressed herein have not been approved by the House of Delegates or the Board of Governors of the American Bar Association and, accordingly, should not be construed as representing the policy of the American Bar Association. Education and Admissions to the Bar, ABA Section of Real Property, Trust and Estate Law, ABA Task Force on International Trade in Legal Services, ABA General Practice, Solo and Small Firm Division, ABA Young Lawyers Division, ABA Standing Committee on Specialization, ABA Law Practice Management Section, and the National Organization of Bar Counsel. 11. Contact Name and Address Information. (Prior to the meeting. Please include name, address, telephone number and e-mail address) Ellyn S. Rosen Regulation Counsel ABA Center for Professional Responsibility 321 North Clark Street, 17th floor Chicago, IL 60654-7598 Phone: 312/988-5311 Fax: 312/988-5491 Ellyn.Rosen@americanbar.org www.americanbar.org 12. Contact Name and Address Information. (Who will present the report to the House? Please include name, address, telephone number, cell phone number and e-mail address.) Jamie S. Gorelick, Co-Chair WilmerHale 1875 Pennsylvania Ave., N.W. Washington, DC 20006 Ph: (202)663-6500 Fax: (202)663-6363 jamie.gorelick@wilmerhale.com 37 Michael Traynor, Co-Chair 3131 Eton Ave. Berkeley, CA 94705 Ph: (510)658-8839 Fax: (510)658-5162 mtraynor@traynorgroup.com 4 35 The views expressed herein have not been approved by the House of Delegates or the Board of Governors of the American Bar Association and, accordingly, should not be construed as representing the policy of the American Bar Association. EXECUTIVE SUMMARY 1. Summary of the Resolution Inbound Foreign Lawyers: Model Rule for Registration of In-House Counsel The Commission is proposing amendments to the 2008 ABA Model Rule for Registration of In-House Counsel to permit foreign lawyers to serve as in-house counsel in the U.S., but with the added requirements. One notable requirement is that the foreign lawyers not advise on U.S. law except in consultation with a U.S.-licensed lawyer. The proposed amendments would not authorize the licensing or full admission of foreign in-house lawyers. The Commission is suggesting only a limited and necessary practice authorization for qualified foreign in-house lawyers and a method to ensure they are identifiable, accountable and subject to monitoring. These proposed amendments respond to the increasing number of foreign companies with substantial operations and offices in the U.S. as well as U.S. companies with substantial foreign operations. These companies routinely encounter legal issues that implicate foreign or international law and want the advice of trusted lawyers from other jurisdictions. These companies often find that this advice can be offered most efficiently and effectively if those lawyers relocate to a corporate office in the U.S. The Commission learned that foreign lawyers (including foreign legal consultants) are already engaged as in-house counsel within the U.S., but are subject to little oversight. As stated above, the amendments would only provide a limited authority to practice for the foreign lawyer’s employer on matters that do not involve U.S. law, unless the foreign lawyer consults with a U.S. lawyer authorized to provide such advice. The definition of who would qualify as a foreign lawyer is also set forth in longstanding ABA policy, including the ABA Model Rule on Licensing and Practice by Foreign Legal Consultants, which state supreme courts have adopted with no adverse consequences. The proposed amendments to the Model Rule for Registration of In-House Counsel also would ensure that foreign in-house counsel are subject to the professional conduct rules of the jurisdiction where they are employed, contribute to the client protection fund, are subject to sanctions if they fail to register or do not comply with the professional conduct rules, and comply with continuing legal education requirements. Their employer would have to attest to their compliance with these requirements, and the lawyers could be referred to appropriate authorities in their home jurisdictions of registration and licensure in the event of a violation. This Resolution complements a separate Resolution to amend Rule 5.5 of the ABA Model Rules of Professional Conduct. The amendments to Model Rule 5.5 would provide the authorization for this limited form of practice, and the changes to the Model Registration Rule provide the mechanism to regulate these lawyers. The Commission concluded that adding foreign lawyers to both Model Rule 5.5 and the Model Rule for 38 1 36 The views expressed herein have not been approved by the House of Delegates or the Board of Governors of the American Bar Association and, accordingly, should not be construed as representing the policy of the American Bar Association. Registration of In-House Counsel has the benefit of ensuring that those lawyers are identifiable, subject to monitoring, and accountable for their conduct. The changes proposed by the Commission would provide state supreme courts with an approach to this issue that protects clients and the public while allowing global organizational clients to employ in-house foreign lawyers of their choice to work in their U.S. offices. Currently, seven jurisdictions have rules permitting foreign in-house counsel, and other jurisdictions are considering doing the same. The Commission’s proposal would ensure greater consistency across jurisdictions on this issue. 2. Summary of the Issue that the Resolution Addresses As the national leader in developing and interpreting standards of legal ethics and professional regulation, the ABA has the responsibility to ensure that its Model Rules of Professional Conduct and regulatory policies keep pace with social change and the evolution of law practice. In furtherance of this, in August 2009, then-ABA President Carolyn B. Lamm created the Commission on Ethics 20/20 to study the ethical and regulatory implications of globalization and technology on the legal profession and propose necessary amendments to and/or new ABA policies. Globalization continues to transform the legal marketplace, with more clients confronting legal problems that cross jurisdictional lines, more lawyers needing to respond to those client needs by crossing borders (including virtually) and relocating to new jurisdictions. The Commission on Ethics 20/20 reviewed the regulatory framework adopted by the House of Delegates in 2002 at the recommendation of the Commission on Multijurisdictional Practice. Unsurprisingly, in light of the accelerated pace of change and the growing proportion of legal work that involves more than one U.S. or foreign jurisdiction, the Commission found that ethical issues are arising with greater frequency. Courts, lawyers, clients and the public need enhanced guidance to address these issues. These proposed amendments to the Model Rule for Registration of In-House Counsel respond to the increasing number of foreign companies with substantial operations and offices in the U.S. as well as U.S. companies with substantial foreign operations. These companies routinely encounter legal issues that implicate foreign or international law and want the advice of trusted lawyers from other jurisdictions. These companies often find that this advice can be offered most efficiently and effectively if those lawyers relocate to a corporate office in the U.S. The Commission learned that foreign lawyers (including foreign legal consultants) are already engaged as in-house counsel within the U.S., but are subject to little oversight. The Commission’s proposal is consistent with following guiding principles that then ABA President Lamm directed the Commission to follow: protecting the public; preserving the core professional values of the American legal profession; and maintaining a strong, independent, and self-regulated profession. 39 2 37 The views expressed herein have not been approved by the House of Delegates or the Board of Governors of the American Bar Association and, accordingly, should not be construed as representing the policy of the American Bar Association. 3. Please Explain How the Proposed Policy Position will address the issue The proposed resolution of the Commission on Ethics 20/20, if adopted, will provide necessary guidance to the profession that will allow lawyers to meet the ethical and regulatory challenges posed by globalization, as well as take advantage of the opportunities for the ethical delivery of legal services. The Commission’s proposal will allow entity clients to meet their needs with counsel of their choice. The separately filed proposed amendments to Model Rule 5.5 provide the authorization for this carefully limited form of practice by foreign in-house counsel, and the changes to the Model Registration Rule provide the mechanism to regulate these lawyers. The Commission’s proposal has the benefit of ensuring that those lawyers are identifiable, subject to monitoring, and accountable for their conduct. The proposal are also appropriately limiting because they only provide a limited authority to practice for the foreign lawyer’s employer on matters that do not involve U.S. law, unless the foreign lawyer consults with a U.S. lawyer authorized to provide such advice. The proposed amendments to the Model Registration Rule would not authorize the licensing or full admission of foreign in-house lawyers. 4. Summary of Minority Views From the outset, the Commission on Ethics 20/20 committed to and implemented a process that was transparent, open, and provided broad outreach and frequent opportunities for input into its work. Inherent in any undertaking of this scope and complexity is the recognition that there will be disagreements about the approach to issues as well as the substance of proposals. That said, with the exception of concerns by only some ABA members the Commission was not aware of any organized or formal minority views or opposition at the time the Resolution and Report were filed. 40 3 38 October 12, 2012 ABA Commission on Ethics 20/20 321 North Clark Street Chicago, IL 60654-7598 Sent by email to natalia.vera@americanbar.org Re: Association of Corporate Counsel comments on proposed amendments to ABA Model Rules concerning foreign in-house lawyers who practice in the U.S. To the ABA Commission on Ethics 20/20: On behalf of the Association of Corporate Counsel, we are writing to comment on the amendments that the 20/20 Commission proposed on September 4 regarding foreign lawyers who practice in-house in the United States. (Specifically, the proposals concern ABA Model Rule of Professional Conduct 5.5, the ABA Model Rule for Registration of In-House Counsel, and the ABA Model Rule on Pro Hac Vice Admission.) I. INTRODUCTION ACC strongly supports the underlying goals of the September 4 proposals. These include removing obstacles to in-house lawyers who move between jurisdictions, and recognizing that in-house legal departments must have broad flexibility to hire the lawyers who best suit their needs. At the same time, we encourage the 20/20 Commission to take additional steps toward achieving these goals. The current proposals impose too many burdens on companies and their in-house lawyers. The most prominent examples include rules that require foreign lawyers to work with U.S.-barred lawyers, rules that require these lawyers to pay into client protection funds, and pro hac vice rules that will likely not be useful. Despite the Commission’s good intentions, these and other proposals would needlessly hem in corporate legal departments and the foreign lawyers who work there. II. BACKGROUND A. About ACC: ACC is a global bar association that promotes the common professional and business interests of in-house counsel, with over 30,000 members employed by over 10,000 organizations in more than 75 countries. For years, ACC has advocated removing obstacles that prevent companies and organizations from hiring and using lawyers as their needs require. As part of that mission, ACC has closely followed the 20/20 Commission’s work from its creation. 42 39 Page 2 B. ACC’s Previous Comment Letter: In 2010, ACC wrote to the Commission’s Working Group on Inbound Foreign Lawyers. That letter called for the Commission to adopt as a “bedrock principle” a system modeled on driver’s licenses. ACC 2010 letter at 2 (attached). Such a system would allow a lawyer “who is licensed and in good standing in his or her home jurisdiction” to “temporarily practice in other jurisdictions by simply agreeing to submit to regulation by the appropriate authorities and be subject to applicable rules.” Id. ACC continues to support a driver’s license system. It remains the best way to ensure that companies retain maximum flexibility to employ in-house lawyers, foreign or domestic, while also ensuring that lawyers comply with all applicable professional standards. Given the pending proposals, the Commission has apparently decided not to implement that model quite yet. So we limit our comments in the remainder of this letter to the specific amendments that the 20/20 Commission has proposed. Even so, we retain our hope that state bars will eventually adopt the broader changes that ACC proposed in 2010. C. Approach to Current Proposals: Viewed generally, the proposed amendments to all three of the model rules suffer from a common defect – they make it too difficult for U.S. companies to make the most of the in-house foreign lawyers they hire. This common problem seems to stem from key differences between the clients of in-house legal departments and law firms that the proposed rules do not reflect. Anyone from the public might hire a lawyer at a firm. Therefore, anyone might get hurt if a lawyer at a firm makes a mistake or has a conflict of interest. That’s not true with the clients of in-house legal departments. When a company hires in-house lawyers, except for pro bono matters, those lawyers will represent only that company and its affiliates. So if they cause a problem for the company, they expect that the company itself will punish them, or even fire them. The need to guard against malpractice, in the sense of protecting a vulnerable and unsuspecting client from an incompetent or malicious lawyer, is therefore much reduced in the in-house context. That’s because companies that hire in-house lawyers are sophisticated legal customers, with extensive experience in the legal marketplace, negotiating rooms, and courtrooms. They can calibrate the legal risk that they are willing to bear, even when that risk might be different than what law firms are willing to bear when representing outside clients. In short, companies that hire in-house lawyers are fully competent to make their own decisions about how to staff their legal needs. In theory, the 20/20 Commission understands this point. According to the Commission’s report on the proposed registration rule, “[t]he quality of these foreign-in house lawyers has also been subject to careful scrutiny” because “their employers have determined that their credentials are worthy of employment.” Registration Report at 4. And “[b]ecause these lawyers work under a limited scope of practice and only for their client/employer, risk to the public associated with these proposed amendments is de minimus.” Id. See 43 40 Page 3 also Comment 16 to Model Rule 5.5, at 5 (“the employer is well situated to assess the lawyer’s qualifications and the quality of the lawyer’s work.”). But even after stating these principles so well, the Commission does not follow through. Instead of allowing companies to hire lawyers to do whatever work is necessary, subject only to the local professional conduct rules, the proposed amendments would impose a string of new unnecessary requirements. These requirements are especially troublesome because the Commission acknowledges that there is no evidence indicating that foreign in-house lawyers currently authorized to work in the U.S. have caused any trouble for their clients, for other lawyers, or for the public. ACC has not heard of any such instances, and to our knowledge neither have any state bars that permit foreign in-house lawyers to practice in the United States. We would expect that amendments as restrictive as the ones that the Commission has proposed would rest on a foundation of solid evidence. But the Commission has presented none here. III. PROBLEMATIC PROPOSALS The most prominent unnecessary restrictions are: A. Consulting with U.S.-licensed attorneys: This requirement appears in the registration rule at (B)(2)(c), and also in the proposed amendment to Rule 5.5, at 5.5(d)(1). There is no need for it. It is a truism that companies hire lawyers to do the job the companies hire them to do. If the company determines that the lawyer should advise on foreign law, or on U.S. law, that should be the company’s choice. Requiring the company to have its foreign lawyer team up with a U.S. lawyer wastes resources, and fails to appreciate the dynamic of in-house legal departments, which we describe above. The consultation requirement also ignores that foreign lawyers who register will need to agree to abide with all governing local practice and professional conduct rules. Those rules already include a requirement that any lawyer, foreign or not, have competence in the area of law that she or he will practice in. ABA’s own Model Rule 1.1 has the title “Competence,” and states that lawyers must have “the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.” There is no need to impose any further requirement on any lawyer practicing in the United States. We also note what appears to be a telling typographic error related to the consultation requirement. The proposal to modify Section 5.5(d)(1) should probably state “U.S. jurisdiction” instead of just “jurisdiction.” Otherwise, the proposed change would not even allow a foreign lawyer to advise his or her client about the law in that lawyer’s home nation, which is of course a prime reason that the Commission recommends registration for foreign lawyers in the first place. At the same time, this apparent typo throws a spotlight on the artificial distinction that the Commission’s proposed amendments would create between foreign- and domestically-licensed lawyers, and reinforces the need for competence as the only meaningful standard. One plausible reading of the Commission’s proposals is that foreign lawyers are competent to advise on any foreign or international law, even in areas where they have no experience or 44 41 Page 4 expertise. Of course, the competence requirement of Rule 1.1 would prevent that from happening. But the framing of the proposal indicates that the Commission sees a fundamental difference between foreign- and domestically-licensed lawyers, where none exists. The only relevant standard is competence. Therefore, we urge the Commission to revise the rules to further highlight the importance of competence, and to delete the other proposed restrictions as meaningless. B. Payment of fees to client-protection fund: The proposals recommend that foreign in-house lawyers who practice in the U.S. should pay into any applicable client protection funds. See Proposed Registration Rule at Section (D); Proposed Amendment to Rule 5.5(d), cmt. 17; Pro Hac Vice Proposal at Section I(E)(4). This requirement makes no sense in the in-house context. The only client who might be hurt is the company or organization that hires the lawyer. And, in most situations, it’s likely that the company itself will pay the fee. As is discussed above, the employer/client already has a quite effective way to address incompetent or unethical conduct by its lawyers – it can sanction or fire them directly. As a result, forcing the company or its in-house lawyers to pay into the fund becomes an unnecessary insurance payment. We strongly recommend that the Commission remove these requirements for all in-house lawyers, foreign or not. C. Pro hac vice: We have several concerns about the pro hac vice proposals. (1) Overall, the requirements are too arbitrary to assist foreign lawyers. We appreciate the Commission has taken a much-needed step by suggesting that foreign lawyers can qualify for pro hac vice admission at all. But the implementation that the Commission suggests creates many layers of requirements. Then, even after passing through them, lawyers would still face a possible red light from the judge. Judges may indeed hesitate to open the doors of their courtrooms to foreign lawyers. This hesitancy might stem from heartfelt doubt about changing longstanding customs. Or it might stem from other reasons. No matter the cause, we suspect that foreign lawyers – facing a long and maybe expensive process plus a possible judicial veto – will simply throw up their hands and advise their clients hire locally-licenses lawyers instead. As an alternative, we recommend that the Commission switch the burden, so that any lawyer who satisfies the substantive pro hac vice requirements “shall” be admitted on a pro hac basis. This is in fact what the model Pro Hac Vice Rule already states. At Section I(D)(3), it provides that “[a]n application ordinarily should be granted.” We urge the Commission to repeat this language in the new proposed Section III, to make clear that there is no distinction between domestic and foreign lawyers in this regard. This solution would maintain the many layers of protection in the current rule. It would also maintain pro hac vice admission as a real option for foreign lawyers. (2) We also request that, for foreign in-house lawyers who seek pro hac vice admission, the Commission modify the requirement that the lawyer be in good standing in the bar in her or his home nation. See Pro Hac Vice Proposal at Section III(A), and Appendix Items 3 & 5. In some countries – most prominently, France – lawyers who practice in-house must surrender membership in their local bar. Yet it would make no 45 42 Page 5 sense to prohibit these lawyers from practicing on a pro hac vice basis in the United States simply because of the peculiarities of their home bar associations. The Commission should therefore consider adding a clause that accepts pro hac applications from foreign lawyers in this situation. (3) Finally, we recommend that the Commission limit the pro hac vice admission process to actual state courts. In state tribunals other than courts, we recommend that any foreign lawyer who has registered with the jurisdiction have the right to represent her or his employer without bearing the burdens of the pro hac process. There is less risk to the public in tribunals than in courts, and there are usually less formal practice rules. D. Pro bono practice: We commend the Commission for recommending that foreign in-house lawyers practicing in the U.S. have the right to represent U.S. clients on a pro bono basis. ACC has long focused on opening up opportunities for all in-house lawyers to provide pro bono legal services to clients in need, no matter the jurisdiction of the lawyers’ law license. We also understand that bar associations and the public need to ensure that lawyers meet all governing standards when foreign lawyers represent clients other than their employers. Therefore, we do not object to the requirement that foreign-licensed in-house lawyers work with established legal aid groups or programs. See Registration Rule Proposal at Section C. However, we strongly recommend that the Commission clarify that the list of approved pro bono programs includes any programs that the in-house legal departments themselves sponsor, whether individually, collectively through associations such as ACC Chapters, or with partners, such as law firms or organizations like Corporate Pro Bono (which ACC co-sponsors). In recent years many corporate law departments and ACC Chapters have created or expanded their own pro bono programs, and the Commission should allow foreign lawyers to participate in them. IV. BENEFITS OF PROPOSALS Despite our concerns above, ACC also wishes to commend the Commission for recognizing the legitimate needs that U.S. corporations, companies, and organizations have to employ in-house foreign lawyers. ***** We thank the Commission and its members for recognizing that, in today’s global economy, companies in the United States need to employ lawyers with foreign law licenses. Specifically, we appreciate that the Commission’s proposals would not require these lawyers to take local bar exams. At the same time, the proposed changes simply will not give companies and organizations the flexibility that they and their lawyers need. We hope that our discussion above offers reasonable alternatives to some of your proposals. 46 43 Page 6 Sincerely yours, Amar D. Sarwal Vice President and Chief Legal Strategist sarwal@acc.com Evan P. Schultz Senior Counsel and Director of Advocacy Attachment cc: Jamie S. Gorelick, Esq., Co-Chair (jamie.gorelick@wilmerhale.com) Michael Traynor, Esq., Co-Chair (michael@cobaltlaw.com) 47 44 1025 Connecticut Avenue, NW, Suite 200 Washington, DC 20036-5425 Tel 202.293.4103 Fax 202.293.4701 www.acc.com Submitted July, 2010 Response of the Association of Corporate Counsel to the Request for Comment on the Proposals of ABA Commission on Ethics 20/20 Working Group – Inbound Foreign Lawyers THE GUIDING PRINCIPLE – FREEDOM OF MOVEMENT FOR ALL LAWYERS ACROSS STATE BOUNDARIES I. EXECUTIVE SUMMARY In this paper we pose for discussion the following propositions: 1. FREEDOM OF MOVEMENT: Any lawyer (broadly defined) should be free to practice across jurisdictional boundaries on behalf of a client and in the course of the lawyer’s practice, and to relocate and apply for simple recognition in a new jurisdiction based on admission and good standing in their home and other practice jurisdictions. 2. DEFINING WHO IS AUTHORIZED TO PRACTICE AS A LAWYER: Any individual who has been admitted as a lawyer in a jurisdiction recognized as one that appropriately regulates the legal profession – whether foreign or domestic – should be entitled to operate under the first guiding principle as to freedom of movement. 3. CREATING A UNIFORM REGULATORY STRUCTURE TO ASSURE PROFESSIONAL PRACTICES AND METE OUT DISCIPLINE WHEN NEEDED: A simple and uniform set of regulations is needed to facilitate the practice of law across jurisdictional lines, perhaps overseen by a single clearinghouse/agency invested with determining who is authorized to practice as a lawyer across borders. II. BACKGROUND The Association of Corporate Counsel (“ACC”) commends the extensive, thoughtful work that the ABA Commission on Ethics 20/20 Working Group – Inbound Foreign Lawyers 48 Copyright © 2010, Association of Corporate Counsel (ACC) For more information on ACC, visit us online at www.acc.com 1 of 8 45 1025 Connecticut Avenue, NW, Suite 200 Washington, DC 20036-5425 Tel 202.293.4103 Fax 202.293.4701 www.acc.com Submitted July, 2010 (“WGIFL”) has done to date. We also wholeheartedly support what appears to be the underlying core concerns of the WGIFL, that the rules governing the movement of lawyers between jurisdictions need to be modified to include foreign as well as US admitted lawyers, that whatever rules are adopted have as their primary objective the improvement of service to clients (including improved access to professional services), and that regulation should be carefully tailored so as to allow the US to compete in the global marketplace for legal services. In this Response we address what we believe to be the principles that need to be embodied in rules that may ultimately be proposed for adoption. We hope that, as the discussion continues on proposals propounded by the WGIFL, we will have a further opportunity to comment on or even propose specific rules crafted to implement these principles. But at this stage, since the issues have not yet been joined, we feel it most appropriate to lay out principles and opinions that we hope can help shape the discussion. Core Recommendations: As indicated in the Executive Summary, ACC encourages the WGIFL to adopt as its bedrock principle a rule whereby a lawyer – however defined – who is licensed and in good standing in his or her home jurisdiction, may practice temporarily in other jurisdictions by simply agreeing to submit to regulation by appropriate authorities and be subject to applicable rules, without requiring local admission. This concept is often described as a “driver’s license” rule. Similarly, an equally simple and uniform rule is required to enable lawyers to relocate on a permanent basis and waive into a US jurisdiction based on their existing credentials (and not a full bar examination process). III. THE NEED FOR A SINGLE UNIFORM REGULATORY SYSTEM It is vitally important to regulate lawyer movement under a uniform set of regulations. Accordingly, whatever rules are to be promulgated should apply to all who fit within a broad definition of who is a “lawyer” (which is discussed separately below). No distinction should be 49 Copyright © 2010, Association of Corporate Counsel (ACC) For more information on ACC, visit us online at www.acc.com 2 of 8 46 1025 Connecticut Avenue, NW, Suite 200 Washington, DC 20036-5425 Tel 202.293.4103 Fax 202.293.4701 www.acc.com Submitted July, 2010 made, for instance, between lawyers admitted in the US who are private practitioners and those who employed as in-house counsel, or between US lawyers and foreign lawyers. If we take as a given that the purpose of regulating the bar is the protection of the public, then that objective is best accomplished by insuring that those who hold themselves out to practice as lawyers are subject to and governed by predictable and strong standards of professionalism and competence. Local admission rules based largely on jurisdictional origin or educational dissimilarities have a stronger purpose in sustaining anti-competitive structures than in promoting protection of the public or lawyer competence or client choice in counsel, and should be swept away. Unless and until a way can be found to attain uniformity in practice requirements and admission, the United States and our legal profession will be at a growing disadvantage in the global marketplace, and we will not be serving the needs of clients who increasingly operate in a cross-border or global fashion. IV. WHO IS A LAWYER? If we seek uniform admission and recognition standards, then we necessarily need a definition for “who is a lawyer” that is simple, fair, and can be uniformly applied. A definition that can be applied to lawyers who are admitted in foreign (non-US) jurisdictions – the specific problem that the WGIFL is seeking to address in its Proposal – is subordinate to the larger, required conversation about defining who is a lawyer generally. This issue is unnecessarily complicated by the traditional manner in which lawyer admission and movement within the United States is restricted (even as those same practice proscriptions are widely ignored by both sophisticated lawyers and their clients who practice across borders both virtually and in reality every day). The traditional regulatory model still in place in the states rests on three criteria for admission: 1) qualifying legal education, 2) the passage of a local examination, and 3) passing a local character and fitness review. In turn, the 50 Copyright © 2010, Association of Corporate Counsel (ACC) For more information on ACC, visit us online at www.acc.com 3 of 8 47 1025 Connecticut Avenue, NW, Suite 200 Washington, DC 20036-5425 Tel 202.293.4103 Fax 202.293.4701 www.acc.com Submitted July, 2010 restrictive impact of these regulations is reinforced – and enforced – through the application by states of the laws relating to the unauthorized practice of law (“UPL”), which are themselves also different from state to state. In ACC’s view, according weight to a person’s formal legal education at a locally accredited institution or passage of a local bar examination is not an appropriate substitute for the more meaningful assessment of their professionalism and actual competence to provide legal services to clients. An emphasis on whether a person attended a specific number of defined/required courses, or sat in classrooms for a defined period of time, or took requisite tests on which they scored sufficient grades (all suggesting that completing “academic” class work is a better indicator of fitness to practice than the person’s actual experience representing clients) impedes admission and recognition of well qualified lawyers (both in the US and outside our borders) simply on the basis of geographic origin. Such restrictions have little to do with the protection of the public and even less to do with assuring competent and professional client service. ACC suggests the question to be asked in determining competency to practice should be simple and complete – has the person been admitted to practice as a lawyer by a properly constituted regulator in a jurisdiction which regulates the practice of law in a manner consistent with professional regulation as it exists in each of the United States, and is that person in good standing? Such a standard has an important additional advantage in that it facilitates the negotiation of similarly simple reciprocal rights for US lawyers entering other foreign jurisdictions to serve their client’s multinational legal needs. Establishing a single standard that rests on good standing to practice in a jurisdiction that appropriately regulates lawyers can be easily understood and replicated, creating the necessary basis for comity. This removes the barrier to the negotiation of 51 Copyright © 2010, Association of Corporate Counsel (ACC) For more information on ACC, visit us online at www.acc.com 4 of 8 48 1025 Connecticut Avenue, NW, Suite 200 Washington, DC 20036-5425 Tel 202.293.4103 Fax 202.293.4701 www.acc.com Submitted July, 2010 reciprocal rights not only for inbound foreign lawyers, but also for outbound US attorneys who are “products” of the traditional US state-based licensing rather than a national standard of admission. Other countries cannot negotiate admission rights with individual US states, but could accept a nationally recognized and uniform standard that allows for freedom of movement by both US and foreign counsel crossing national and state borders. In the same way, uniform adoption throughout the United States of a “driver’s license” model would – appropriately – make the UPL question irrelevant. The essence of the “driver’s license” model suggests that if you have a license and a good driving record, you may drive temporarily in another jurisdiction by subjecting yourself to abide by that jurisdiction’s rules and laws. If a driver/lawyer moves permanently to another jurisdiction which is in comity with the licensing pact, then the license is largely transferrable based on a clean record and good standing, and without suggesting that the driver needs to be re-tested again. The presumption is that a good driver, like a good lawyer, develops the requisite skill to not only perform the essential tasks needed to practice the craft of driving elsewhere, but can learn and live by the local rules of the road. Thus, under a driver’s license regime, any individual who is a lawyer (as defined above), wherever admitted (whether within or outside the United States), would be free to move across state boundaries on behalf of their clients and in the course of their practices. This approach should apply to everyone falling within the definition of lawyer, whether US- or foreign-trained and licensed. In sum, ACC urges the WGIFL to propose and support regulation that recognizes that any individual who has been admitted as a lawyer in a jurisdiction recognized as one that appropriately regulates the legal profession – whether foreign or domestic – should be entitled to operate under the guiding principle of freedom of movement. 52 Copyright © 2010, Association of Corporate Counsel (ACC) For more information on ACC, visit us online at www.acc.com 5 of 8 49 1025 Connecticut Avenue, NW, Suite 200 Washington, DC 20036-5425 Tel 202.293.4103 Fax 202.293.4701 www.acc.com Submitted July, 2010 V. ACTING TO PRESERVE BUT UPDATE STATE-BASED REGULATION Acceptance of the guiding principle of freedom of movement, and of a simplified definition of “who is a lawyer,” does not require us to abandon state-based original admission systems or state-based regulation and enforcement standards. But when examining greater comity between the states (through a driver’s license-type pact), the Commission will need to consider at least two closely linked questions that are critical to lawyer mobility: first, whether we should assume that all lawyers (as broadly defined above) are equally entitled to move among jurisdictions in the US; and, second, who should regulate moving lawyers and how? Some may suggest that there should be limitations defining which lawyers are or are not entitled to rely upon the guiding principle of freedom of movement. ACC suggests that two of these limitations may merit consideration: one is experience and the other is language skill. While not requirements we would seek to impose across the board, we could envisage a legitimate addendum to the definition of who is a lawyer to require that a lawyer must practice for a period of time to establish a record of good standing and proven capability before that lawyer should be empowered to take full advantage of the right to move among jurisdictions. We are also aware that in some kinds of practice, a lawyer entering a jurisdiction where his or her language skills (in the host jurisdiction’s predominant language) are limited could present problems for clients who may share the lawyer’s language, but not understand the limitations that the lawyer will encounter in representing the client’s interests before local courts, regulators, or in other situations where the lawyer must navigate the local legal system. The question of who should authorize and regulate the movement of lawyers between jurisdictions will likely create the need to discuss whether lawyers should be required to register their presence in a host jurisdiction or their general intention to cross multiple borders. In our view, registering in each host jurisdiction in the US creates unnecessary administrative burdens for both the bars and lawyers, doing little or nothing to improve the protection of the public, and 53 Copyright © 2010, Association of Corporate Counsel (ACC) For more information on ACC, visit us online at www.acc.com 6 of 8 50 1025 Connecticut Avenue, NW, Suite 200 Washington, DC 20036-5425 Tel 202.293.4103 Fax 202.293.4701 www.acc.com Submitted July, 2010 much to frustrate the multijurisdictional practice that is an integral part of almost every lawyer’s activities in the modern world. Redundant, document-heavy applications are of no utility in determining the competence or professionalism of lawyers who are serving clients across jurisdictional borders. Continuing to focus on jurisdiction-by-jurisdiction registration will encourage bureaucratic and prohibitively expensive documentation and fee requirements. As local regulators are unevenly equipped and often poorly staffed/funded to evaluate credentials (even where fees attach to registration procedures), local registrars may be left to do nothing more than to assure that relevant “boxes are checked,” especially for applications from lawyers not licensed in the US. Thus, in our view, registration requirements will likely do little or nothing to improve quality or assure meaningful evaluation of lawyers entering any particular jurisdiction, or moving among multiple jurisdictions. No one can deny that lawyers cross jurisdictional lines every day (whether in cars, on planes, or over the phone lines and internet). The vast majority of lawyers in corporate practice and a large and increasing number of lawyers engaged in individual representations commonly engage in cross-border practices as a standard part of their work, whether it entails child custody arrangements, criminal extradition, or a complex merger or multistate litigation. Instead of investing further in a system that already creates almost universal disregard of current state-bystate restrictions on practice, bars interested in protecting their local populations from bad lawyering should encourage compliance with a rule that focuses not on trying to stem (or document) the irreversible and overwhelming direction of the tide, but rather clearly establishes their full authority to prosecute any lawyer from any place else who actually does harm in their local jurisdictions. Legitimate concerns regarding the protection of the public within any individual state will, in our view, be much better addressed by requiring that all lawyers who avail themselves of the privilege of crossing jurisdictional lines for purposes of legal practice be 54 Copyright © 2010, Association of Corporate Counsel (ACC) For more information on ACC, visit us online at www.acc.com 7 of 8 51 1025 Connecticut Avenue, NW, Suite 200 Washington, DC 20036-5425 Tel 202.293.4103 Fax 202.293.4701 www.acc.com Submitted July, 2010 automatically subject to the rules and disciplinary authority of the jurisdiction in which lawyers are working. Accordingly, we suggest that the WGIFL consider proposing a single, simple uniform set of standards to authorize practice and regulation across jurisdictional lines, reserving local protection of the public to the states, but facilitating comity between states for the movement of properly credentialed lawyers (both US and foreign). Ideally, the states would see the benefit of vesting the administration of such regulations in a single national clearinghouse or agency, the role of which is to determine who is a properly credentialed lawyer and to facilitate their “registration” in the multiple US jurisdictions into which their work might take them, relieving states of this burden and assuring that all lawyers practicing in their jurisdictions are authorized (and regulated) as they do so. VI. SUMMARY ACC encourages the WGIFL to address the broad issues raised in this paper before drafting rules – we know it will be tempting to respond by stating that what we propose is beyond the charter of the WGIFL to consider. But someone must and we hope the Commission will be interested in leading this important discussion. We also recognize that many states may find these proposals threatening, even though what we propose is a solution that allows us to preserve a traditional state-based licensing system in a multijurisdictional practice world. Our purpose is to place the Proposals on which we have been asked to comment into their proper – and wider – context as a prelude to engaging in more detailed discussion that requires the Commission to balance many perspectives. One thing is clear to us: we need comprehensive solutions to the challenges we face as a profession: a series of modest proposals to amend traditional admission rules will not protect clients or help lawyers navigate legal and global practice challenges in the modern era. 55 Copyright © 2010, Association of Corporate Counsel (ACC) For more information on ACC, visit us online at www.acc.com 8 of 8 52 67 July 20, 2012 The Honorable Michael G. Heavican Chief Justice Nebraska Supreme Court Room 2214, State Capitol Lincoln, NE 68509 Chair Professionalism and Competence of the Bar Committee of the Conference of Chief Justices c/o Association Management 300 Newport Avenue Williamsburg, VA 23185-4147 Re: Association of Corporate Counsel’s support for resolution to reduce obstacles that prevent in-house lawyers from offering pro bono services Dear Chief Justice Heavican: The Association of Corporate Counsel is pleased to present this letter supporting the proposed resolution to encourage states to expand opportunities for many in-house lawyers to meet pro bono needs. In-house lawyers have the sophistication, the experience, and the capacity to help people who need legal services but cannot afford to pay. Unfortunately, many state practice rules often prevent in-house lawyers from offering as much help as they can give. A resolution now pending before the Conference of Chief Justices would encourage conference members to help eliminate the obstacles to in-house pro bono work. On behalf of the Association of Corporate Counsel, we are writing to ask you and the Conference to support that resolution. ACC is a global bar association that promotes the common professional and business interests of in-house counsel, with over 30,000 members employed by over 10,000 organizations. For years, ACC has strongly supported efforts across the country to remove obstacles that often make it difficult for the country’s experienced and sophisticated in-house lawyers to donate their legal expertise to people who need their help. Practice rules in most states prevent in-house lawyers from fully engaging in pro bono. State practice rules usually allow in-house lawyers with out-of-state law licenses to work 53 68 !"#$%&%'(%)*% for their employer. But the practice rules of many states do not allow those same lawyers to fully help pro bono clients. This makes no sense. In-house attorneys are smart, experienced, responsible, and zealous. They meet and exceed the highest professional legal standards. That’s why their employers hire them. The pending resolution recognizes that in-house lawyers will serve pro bono clients with the same excellence that they serve their employers. And there’s no question that people need their help. Put plainly, most people living in tough financial conditions don’t get help from lawyers when they need it. According to the Legal Services Corporation, fewer than “one in five low-income persons get the legal assistance they need” from pro bono or legal aid lawyers. Legal Services Corporation, Documenting the Justice Gap In America: The Current Unmet Civil Legal Needs of LowIncome Americans, An Updated Report of the Legal Services Corporation (2009). In-house legal departments have already made strong contributions to meeting this need. Hundreds of in-house legal departments have formalized efforts to provide pro bono legal services. According to Corporate Pro Bono, a partnership of the Pro Bono Institute and ACC, many of the Fortune 500 companies and a majority of Fortune 100 companies have either set up or are moving to set up formal pro bono programs. They want to do even more, but state practice rules often stand in their way. Nearly half of the states have taken no steps at all to accommodate the growing in-house surge of volunteer work. And even in the states that have changed their rules, most still impose some burdensome restrictions on in-house lawyers who want to practice pro bono. These restrictions – such as requirements to work only under the supervision of instate lawyers, or with registered legal services providers – drain resources that otherwise would be available to help people who need legal services. The pending resolution recognizes that lawyers who help their corporations and organizations with difficult problems are equally qualified to help people in legal distress who cannot pay. By helping to make a simple change to more state practice rules, the Conference of Chief Justices will help countless people in need. Sincerely yours, Amar D. Sarwal Vice President and Chief Legal Strategist sarwal@acc.com Evan P. 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an Oregon corporation, Plaintiff-Adverse Party, v. DAVIS WRIGHT TREMAINE LLP, a Washington limited liability partnership, FREDERICK ROSS BOUNDY, an individual, and WILLIAM BIRDWELL, an individual, Defendants-Relators. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Multnomah County Circuit Court Case No. 1108-10810 Oregon Supreme Court Case No. S061086 BRIEF OF AMICUS CURIAE ASSOCIATION OF CORPORATE COUNSEL IN SUPPORT OF PLAINTIFF-ADVERSE PARTY CRIMSON TRACE CORPORATION On Petition for Writ of Mandamus Multnomah County Circuit Court The Honorable Stephen K. Bushong Amar D. Sarwal, Pro Hac Vice sarwal@acc.com Evan P. Schultz, Pro Hac Vice e.schultz@acc.com Association of Corporate Counsel 1025 Connecticut Ave., N.W., Suite 200 Washington, DC 20036 (202) 293-4103 Attorneys for Amicus Curiae Association of Corporate Counsel Kelly Jaske, OSB No. 081704 kelly@jaskelaw.com Jaske Law LLC 521 SW Clay St., Suite 209 Portland, OR 97201 (503) 227-2796 Attorney for Amicus Curiae Association of Corporate Counsel August 2013 68 84 i TABLE OF CONTENTS TABLE OF AUTHORITIES .............................................................................. ii INTRODUCTION AND STATEMENT OF INTEREST ................................. 1 ARGUMENT ...................................................................................................... 4 A. Lawyers owe clients profound loyalty...................................................... 4 1. The entire attorney-client relationship rests on loyalty and trust ....................................................................................................... 4 2. The duty of loyalty prohibits lawyers from taking on clients with conflicting interests ..................................................................... 6 B. Loyalty to existing clients bars law firms from using privilege against them .............................................................................................. 7 1. The court below correctly denied privilege here.................................. 7 2. The law firm had no right to try to hire itself ....................................... 9 3. The duty of loyalty reaches beyond even a regular fiduciary’s responsibilities ................................................................................... 10 C. The parade of horribles that the firm holds up will not occur ................ 11 1. Law firms surrender rights when clients hire them ............................ 11 2. Oregon’s privilege statute does not mix up lawyers with clients, and does include the loyalty duty ............................................. 13 3. This Court routinely considers professional responsibility rules outside of the disciplinary setting ................................................. 14 4. Law firms can assert an internal law firm privilege when the loyalty duty allows it .............................................................................. 15 CONCLUSION ................................................................................................. 16 CERTIFICATE OF COMPLIANCE WITH BRIEF LENGTH AND TYPE SIZE REQUIREMENTS ....................................................................... 18 CERTIFICATE OF FILING AND SERVICE ................................................. 19 69 85 ii TABLE OF AUTHORITIES Cases Bank Brussels v. Credit Lyonnais, 220 F Supp 2d 283 (SDNY 2002)...... 6, 8, 12 Cold Spring Harbor Lab v. Ropes & Gray LLP, No. 11-10128-RGS, 2011 US Dist. LEXIS 77824 (D Mass 2011) ....................................................8 Crimson Trace Corp. v. Davis Wright Tremaine, LLP, No. 110810810, Op. Re: Alt. Writ of Mandamus (Apr 2, 2013) ...............................8, 10 Flatt v. Superior Court, 9 Cal 4th 275, 885 P2d 950 (Cal. 1994) ......................10 In re Drake, 292 Or 704, 642 P2d 296 (1982) .....................................................5 In re Hassenstab, 325 Or 166, 934 P2d 1110 (1997) ...........................................5 In re Schaffner, 325 Or 421, 939 P2d 39 (1997) ..................................................4 In re: SonicBlue, Inc., Adv. No. 07-5082, 2008 Bankr LEXIS 181 (Bankr ND Cal Jan. 18, 2008) .....................................................................8, 11 In re: Sunrise Sec. Lit., 130 FRD 560 (ED Penn 1989) .......................................9 Kidney Ass’n of Oregon, Inc. v. Ferguson, 315 Or 135, 843 P2d 442 (1992) ............................................................................................... 6, 9, 14, 15 Koen Books Distribs. v. Powell, Trachman, Logan, Carrle, Bowman & Lombardo, P.C., 212 FRD 283 (ED Pa 2002) ..............................................8 Meinhard v. Salmon, 249 NY 458, 164 NE 545 (NY 1928) ................................6 Thelen Reid & Priest LLP v. Marland, No. C 06-2071 VRW, 2007 US Dist. LEXIS 17482 (ND Cal 2007) ...................................................................8 Trammel v. United States, 445 US 40, 100 SCt 906, 63 LEd2d 18 (1980) ..............................................................................................................16 Upjohn Co. v. United States, 449 US 383, 101 SCt 677, 66 L Ed 2d 584 (1981) ...................................................................................................3, 16 Valente v. Pepsico, Inc., 68 FRD 361 (D Del 1975) ................................... 10, 14 Williams v. Reed, 29 F Cas 1386 (CC Me 1824)..................................................4 Rules RPC 1.6(b)(4)........................................................................................................1 RPC 1.7(a)(1) ........................................................................................................6 RPC 1.7(a)(2) ........................................................................................................6 70 86 iii RPC 1.7(b)(4)........................................................................................................7 Treatises ABA STANDARDS FOR IMPOSING LAWYER SANCTIONS (1992) .............................5 RESTATEMENT (THIRD) OF THE LAW OF GOVERNING LAWYERS ........... 5, 7, 12, 13 Other Authorities ABA MODEL RULES, Preamble, cl. 1 ..................................................................11 ABA MODEL RULE 1.6(b)(5) ................................................................................1 ABA MODEL RULE 1.7(a)(2)) ...............................................................................6 ABA MODEL RULE 1.7(b)(4) ................................................................................7 ACC Advocacy, at http://advocacy.acc.com/tags/privilege/ ................................2 California Bar Standing Committee on Professional Responsibility and Conduct, Formal Opinion 1984-83 (1984) .................................................6 71 87 1 INTRODUCTION AND STATEMENT OF INTEREST Clients pay law firms to serve them as advocates, not fight them as adversaries. In other words, more than anything else, clients need loyalty and transparency from outside law firms. That is why the legal profession values lawyers’ duty of loyalty as a bedrock principle. Without it, firms can turn their knowledge and their experience and even their claims about ethical rules against clients whenever it suits them, as this case demonstrates. Creating a new privilege that applies only to law firms and allows them to hide information from existing clients would allow lawyers to put their own interests first, even when doing so harms their existing clients. Lawyers would be free to hide evidence of malpractice from their clients, undermining the fundamental bond of trust that inheres in the lawyer-client relationship. The duty of loyalty demands the opposite. Indeed, if law firms retained privilege over this client-related information and the government or some third party wanted access to that confidential information, who would have authority to waive the privilege? The law firm? The client? Both? And the perplexity does not end there. Traditionally, if a law firm seeks payment on fees from a client or to otherwise defend the representation itself, it is free to introduce otherwise-confidential information into the case. See RPC 1.6(b)(4), see also ABA MODEL RULE 1.6(b)(5) (same language). If there is indeed an internal law firm privilege of the sort proffered 72 88 2 in this case, can a client seeking to prove malpractice by its law firm introduce otherwise-confidential information (from the law firm’s perspective) into the case? If not, why not? Naturally, given these sorts of questions, the issue that this case presents – whether law firms can rely on misguided claims of privilege to hold back information from existing clients about the clients’ own matters – deeply affects the Association of Corporate Counsel and its members. ACC is a global bar association that promotes the common professional and business interests of inhouse counsel. For 30 years, ACC has advocated across the country to ensure that courts, legislatures, regulators, bar associations, and other law or policymaking bodies understand the role of true in-house counsel and the legal departments where they work. ACC has over 30,000 members who are in-house lawyers employed in more than 75 countries by over 10,000 organizations. These include public and private corporations, partnerships, trusts, and nonprofits. But ACC’s long-standing policy bars membership to lawyers who work at law firms, even if they are characterized as “in-house counsel.” Since its creation, ACC has championed attorney-client privilege. In one filing after another – in the United States and around the world – ACC has pushed courts and agencies to adopt and expand the scope of the privilege. 1 And ACC has especially advocated to ensure that a robust privilege applies to a 1 See http://advocacy.acc.com/tags/privilege/ (listing recent briefs, letters, and meetings where ACC has advocated for stronger attorney-client privilege). 73 89 3 client’s confidential communications with in-house lawyers, as the Supreme Court held in Upjohn Co. v. United States, 449 US 383, 390, 101 SCt 677, 66 L Ed 2d 584 (1981). No one holds the bona fide attorney-client privilege in higher esteem than ACC. But the privilege must serve the broader relationship between law firms and the clients who hire them. That relationship rests on trust. Without it, inhouse lawyers and their clients would have no good reason to securely rely on lawyers. ACC’s members hire law firms for every imaginable legal assignment – to litigate bet-the-company cases, to write and enforce contracts that ensure necessary revenue and resources, to restructure their businesses to better serve consumers and shareholders, and even to investigate them internally for potential wrongdoing when something may be wrong. These issues are sensitive. Companies by necessity make themselves vulnerable to law firms they hire. Recognizing an internal privilege that law firms can assert against existing clients will corrode that trust. It will lead clients to fear that the law firms they hire will use it against them, as the law firm in this case has done. And that fear may well lead clients to hesitate to seek outside legal advice, a result that directly contradicts the goal of the attorney-client privilege. Finally, ACC emphasizes that it knows in-house counsel. Its members are in-house counsel. It works to promote and protect the interests of in-house counsel in a legal culture that can treat them as second-class citizens while often 74 90 4 going out of its way to accommodate law firms at the expense of their clients. Law-firm lawyers are not in-house counsel – especially not when they wear that hat to harm their actual clients. Law-firm lawyers are not at liberty to act as free agents. They must put their clients’ interests before their own. In the relationship, they cannot use privilege to protect themselves at the expense of their own clients. Firm lawyers with clients must answer to a higher standard. Therefore, ACC urges this Court to not grant the writ, and to refuse to recognize the existence of an internal law firm privilege that undermines the lawyer’s primary duty of loyalty to the client. ARGUMENT A. Lawyers owe clients profound loyalty. 1. The entire attorney-client relationship rests on loyalty and trust. US Supreme Court Justice Joseph Story held in a case almost 200 years ago that a lawyer must work with “exclusive devotion to the cause confided to him,” and ensure “that he has no interest, which may betray his judgment, or endanger his fidelity.” Williams v. Reed, 29 F Cas 1386, 1390 (CC Me 1824). That essential nature of the attorney-client relationship has not changed in two centuries, as ethics standards in Oregon and the United States clearly demonstrate. This Court has stated that “the most important ethical duties are those obligations which a lawyer owes to clients.” In re Schaffner, 325 Or 421, 426, 75 91 5 939 P2d 39 (1997), quoting ABA STANDARDS FOR IMPOSING LAWYER SANCTIONS at 6 (1992) [hereinafter “ABA STANDARDS”] (available at http://www.americanbar.org/content/dam/aba/administrative/professional_respo nsibility/corrected_standards_sanctions_may2012_wfootnotes.authcheckdam.p df). It has repeatedly emphasized that “[t]he client’s trust and confidence in the lawyer is, in many cases, an indispensable ingredient in the relationship.” In re Hassenstab, 325 Or 166, 178, 934 P2d 1110 (1997), quoting In re Drake, 292 Or 704, 713, 642 P2d 296 (1982). This Court also stated in Hassenstab that a lawyer’s conduct cannot violate “the principles of trust and confidence that should exist in every lawyer-client relationship.” Id. Other authorities and jurisdictions treat the duty of loyalty with equal reverence. According to the American Bar Association, “[m]embers of the public are entitled to be able to trust lawyers to protect their property, liberty, and their lives.” ABA STANDARDS at 6. Similarly, the RESTATEMENT (THIRD) OF THE LAW OF GOVERNING LAWYERS makes clear that “the law seeks to assure clients that their lawyers will represent them with undivided loyalty” and that “[a] client is entitled to be represented by a lawyer whom the client can trust.” RESTATEMENT at § 121 cmt. b (emphasis added). Very much along the same lines, the California Bar’s ethics committee has stated that “[t]he most fundamental quality of the attorney-client relationship is the absolute and complete fidelity owed by the attorney to his or 76 92 6 her client.” Calif Bar Standing Comm on Prof Resp. and Conduct, Formal Op. 1984-83 (1984) (available at http://ethics.calbar.ca.gov/LinkClick.aspx?fileticket=iiHlBo5qfrE%3D&tabid= 841#N_1_). Put another way, for lawyers, “[n]ot honesty alone, but the punctilio of an honor the most sensitive, is . . . the standard of behavior.” Bank Brussels v. Credit Lyonnais, 220 F Supp 2d 283, 286 (SDNY 2002) quoting Meinhard v. Salmon, 249 NY 458, 464, 164 NE 545 (NY 1928) (Cardozo, J). 2. The duty of loyalty prohibits lawyers from taking on clients with conflicting interests. This vital duty of loyalty, not surprisingly, prohibits lawyers from taking on clients whose interests conflict with existing clients. According to Oregon’s Rule of Professional Conduct 1.7, a lawyer of course must avoid direct conflicts. RPC 1.7(a)(1). But more than that, lawyers must also avoid a conflict that might exist if “there is a significant risk that the representation of one or more clients will be materially limited by a lawyer’s responsibilities to another client . . . or by a personal interest of the lawyer.” RPC 1.7(a)(2). See also Kidney Ass’n of Oregon, Inc. v. Ferguson, 315 Or 135, 143, 843 P2d 442 (1992) (“[o]ne of the disciplinary rules prohibits a lawyer, in most instances, from representing two clients whose interests conflict.”) This same prohibition on conflicts between the client’s interests and the lawyer’s interests exists in the ABA’s Model Rules of Professional Conduct (see ABA MODEL RULE 1.7(a)(2)). It also exists in the RESTATEMENT. See 77 93 7 RESTATEMENT at § 121 (“a lawyer may not represent a client if the representation would involve a conflict of interest.”); § 125 (“a lawyer may not represent a client if there is a substantial risk that the lawyer’s representation of the client would be materially and adversely affected by the lawyer’s financial or other personal interests.”). And in the narrow circumstances in which the lawyer may still want to represent a client despite the conflict, the lawyer may do so only if “each affected client gives informed consent, confirmed in writing.” RPC 1.7(b)(4). See also ABA MODEL RULE 1.7(b)(4) (using same language); RESTATEMENT at §§ 121, 125 (requiring consent to waive conflicts). B. Loyalty to existing clients bars law firms from using privilege against them. 1. The court below correctly denied privilege here. None of the arguments above is particularly controversial. No one would for a minute think that a law firm can ethically start to represent a new client whose interests conflict with those of an existing client, at least without giving notice and receiving a waiver. But the law firm here wants a special rule, when the new “client” is itself. That is precisely the wrong conclusion to draw. If the duty of loyalty means anything, it means that law firms especially cannot take themselves on as clients. Instead, they must put their clients’ needs before their own, as the duty of loyalty demands. 78 94 8 That is the conclusion that the court below correctly drew. As it stated, the firm’s “ duciary duties of candor, disclosure, and loyalty to its outside client – Crimson Trace – were paramount.” Crimson Trace Corp. v. Davis Wright Tremaine, LLP, No. 1108-10810, Op. Re: Alt. Writ of Mandamus (Apr 2, 2013) at 3. The firm here is not the first to ask for special treatment and an exemption from its duty of loyalty. But a long line of cases have rejected those pleas. See, e.g., Bank Brussels, 220 F Supp 2d at 286 (“[t]herefore, while [the firm] was still in the employ of [the existing client], [the firm] was still obligated to maintain a fiduciary duty to [the existing client], even in performing its internal conflict review.”); In re: SonicBlue, Inc., Adv. No. 075082, 2008 Bankr LEXIS 181, at *28-*29 (Bankr ND Cal Jan. 18, 2008) (“[a]ttorneys are governed by an ethical code that requires the utmost loyalty on the part of the attorney, including the duty not to represent another client if it would create a conflict of interest with the first client.”); Koen Books Distribs. v. Powell, Trachman, Logan, Carrle, Bowman & Lombardo, P.C., 212 FRD 283, 286 (ED Pa 2002) (“the firm still owed a fiduciary duty to plaintiffs while they remained clients. This duty is paramount to its own interests.”); Cold Spring Harbor Lab v. Ropes & Gray LLP, No. 11-10128-RGS, 2011 US Dist. LEXIS 77824, at *5 (D Mass 2011), (in patent case, “[the firm’s] fiduciary duty to [the existing client] overrides any claim of privilege.”); Thelen Reid & Priest 79 95 9 LLP v. Marland, No. C 06-2071 VRW, 2007 US Dist. LEXIS 17482 at *19-*20 (ND Cal 2007), (“[the law firm’s] fiduciary relationship with . . . a client lifts the lid on these communications.”); In re: Sunrise Sec. Lit., 130 FRD 560, 597 (ED Penn 1989) (“law firm’s communication with in-house counsel is not protected by the attorney client privilege if the communication implicates or creates a conflict between the law firm’s fiduciary duties to itself and its duties to the client seeking to discover the communication.”).2 These opinions use reasoning essentially identical to the analysis of the lower court here. Those courts were correct, and so is the court below. 2. The law firm had no right to try to hire itself. This Court has held that “[r]epresenting clients in actual conflict is barred.” Ferguson, 315 Or at 145. Put another way, the law firm here simply never had the authority to treat itself as a client. Its loyalty duty demanded that the firm place its client’s interest above its own. Given that ironclad duty, and given the brewing conflict between itself and its client, the firm simply could not hire itself. The California Supreme Court came to a similar conclusion in another case involving conflicting clients, though one that involved a law firm trying to serve two external clients in conflict. The Court held that the law firm simply 2 For a discussion of other cases considering whether law firms can assert privilege against existing clients, see Plaintiff-Adverse Party’s Answering Br at 39-43. 80 96 10 had no obligation whatsoever to the second client that hired it. According to the Court, “the requirement of undivided loyalty to the first client negates any duty on the part of the attorney to inform the second client” of even harmful legal issues. Flatt v. Superior Court, 9 Cal 4th 275, 279, 885 P2d 950 (Cal. 1994) (emphasis added). See also Valente v. Pepsico, Inc., 68 FRD 361, 368 (D Del 1975) (“in situations which involve other obligations of attorneys . . . , the applicability of the privilege must be determined in light of the obligations.”). Just like in Flatt, here, the law firm’s loyalty duty ran to the client it already had, and nowhere else. 3. The duty of loyalty reaches beyond even a regular fiduciary’s responsibilities In reaching its conclusion that the attorney-client privilege does not apply here, the court below used the language of “fiduciary” duty. Crimson Trace, at 3. Many of the opinions quoted above that have rejected an internal law firm privilege use similar phrasing as well. Viewing the duty of loyalty as a fiduciary duty captures only by analogy some of the scope of lawyers’ obligations to their clients. Using that analogy is fine as far as it goes, and will indeed lead this Court to the correct conclusion, just as it worked for the court below. But in fact, a lawyer’s obligation of loyalty stems from the lawyer’s professional obligations, rather than from trust 81 97 11 law. Any changes to or new interpretations of the law of trusts or fiduciaries should not affect how courts view lawyers’ duty of loyalty. 3 Viewed in its entirety, the duty of loyalty demands even more of lawyers than of fiduciaries. As the court in Sonic Blue noted, the “very nature of the attorney-client relationship exceeds other fiduciary relationships where the fiduciary must execute its duties faithfully on behalf of its beneficiaries.” SonicBlue, 2008 Bankr LEXIS 181 at *28 (emphasis added). Or, in the words of the ABA’s Model Rules, “[a] lawyer, as a member of the legal profession, is a representative of clients . . . having special responsibility for the quality of justice.” ABA MODEL RULES, Preamble, cl. 1 (emphasis added). That “special responsibility” is the source of the lawyer’s loyalty, even more than a standard fiduciary duty. See also id. at cl. 2, cl. 9 (requiring lawyer to “zealously” protect the client’s interests). However high a standard the law imposes on a fiduciary, it requires even more from a lawyer serving its existing clients. C. The parade of horribles that the firm holds up will not occur. The firm makes a series of arguments about terrible things that will happen if this Court grants the writ. There is no merit to these claims. 1. Law firms surrender rights when clients hire them. Much of the firm’s brief boils down to “What about us?” By repeatedly referring to themselves as “clients,” the law firm and its lawyers beg the 3 For a fuller discussion of the differences between fiduciary duties and the duty of loyalty, see Plaintiff-Adverse Party’s Answering Br at 50-53. 82 98 12 question – shouldn’t they, just like every other client, have the right to privileged communications? In this context, no. As explained above in Section B-2, the firm had no ability to take on a client – including itself – whose interests conflicted with the one it already had. That is, to be sure, a limit – however small – on the firm’s options. But part of a lawyer’s duty of loyalty involves accepting limits, in exchange for the financial and other rewards of working as a licensed attorney to help clients. Requiring law firms to respect their duty of loyalty will not even prevent them from obtaining legal advice internally. They are free to use the full body of knowledge and experience from the lawyers that they employ. They simply cannot keep those communications from their existing clients. As the court said in Bank Brussels, 220 F Supp 2d at 288, “[c]ontrary to [the firm’s] arguments, [the firm] can still perform its responsibilities under the Code of Professional Responsibility—it just is not protected by the attorney-client privilege.” While this does place law firms with loyalty duties in a different posture than other actors, those other actors have not assumed the duty of loyalty. The RESTATEMENT offers a helpful example of another restriction that the duty of loyalty places on lawyers. Normally, lawyers have the ability to speak their minds on matters of public policy. RESTATEMENT at § 125 cmt. e. But that right has limits: “a lawyer’s right to freedom of expression is modified by the 83 99 13 lawyer’s duties to clients.” Id. Therefore, “a lawyer may not publicly take a policy position that is adverse” to a current client “if doing so would materially and adversely affect the lawyer’s representation of the client in the matter.” Id. That shushes lawyers from fully exercising their First Amendment rights. But it’s part of the deal that lawyers strike when they decide to let clients hire them. The same deal and the same limits apply here, and prevent the firm from claiming privilege against Crimson Trace. 2. Oregon’s privilege statute does not mix up lawyers with clients, and does include the loyalty duty. The firm also asserts that this Court can consider “only one source of law” – the privilege statute, OEC 503 – when deciding this case. DefendantsRelators’ Br at 5. According to the firm, because that statute does not contain an explicit “fiduciary” exception to privilege, this Court should treat the firm like every other client. This reasoning is flawed. Even relying on the express terms of the Oregon provision, the rule nowhere grants a pass to ignore the traditional structure of the attorney-client relationship. Rather, it proceeds on the basis that, for purposes of the attorneyclient relationship and the attorney-client privilege, the client is the client and the lawyer is the lawyer. There’s no evidence that the rule intends to mix up the relationship. In other words, the duty of loyalty is implicitly embedded in the privilege statute. 84 100 14 Further, reading the rule in the unduly strict manner that the firm suggests would stack the deck in the firm’s favor. As discussed above, the firm is most definitely not an ordinary client. It’s not a client at all. Rather, it’s a group of lawyers with a duty of loyalty to Crimson Trace. By asking this Court to read the evidence statute to ignore the duty of loyalty, the firm seeks to conveniently escape the main legal authority that imposes a higher standard on the firm than on real clients.4 Oregon’s rules on privilege are essentially the same as the rules across the country. As one court has stated, “[t]he attorney-client privilege is not complex on its face. Whatever formulation is used . . . the elements of the privilege are substantially the same.” Valente, 68 FRD at 366-367. Just as other courts discussed above have used the duty of loyalty to reject claims of internal law firm privilege, this Court should do the same. 3. This Court routinely considers professional responsibility rules outside of the disciplinary setting. On a related note, the firm claims that even if the firm has potentially committed an ethics violation here, it would be “irrelevant,” DefendantsRelators’ Br at 38, and at worst should be taken up in a separate proceeding “reserved to this court and the Disciplinary Board appointed by the court.” Id. at 52 (quoting Ferguson, 315 Or at 141). 4 Perhaps not surprisingly, the defendants-relators’ opening brief to this Court mentions the duty of loyalty only twice, and both times minimizes the duty’s importance and scope. See Defendants-Relators’ Br at 30, 49. 85 101 15 But this Court is not so stingy with Oregon’s ethics rules as the defendants make it out to be. Ferguson concerned whether this Court can use ethics rules to “illuminate a court’s inquiry” into a separate legal matter, specifically, setting legal fees. 315 Or at 142. This Court answered with a clear yes, stating “[t]his court has noted the applicability of disciplinary rules to nondisciplinary contexts.” Id. This Court should do the same here, and allow the ethics rules to inform its privilege analysis. 4. Law firms can assert an internal law firm privilege when the loyalty duty allows it. To be clear, ACC is not asking this Court to always deny attorney-client privilege to law firms that represent themselves. Rather, this case – and therefore this brief – only addresses the question of how to proceed when law firms have duties of loyalty to existing clients. In other contexts, where the duty of loyalty does not apply or has not yet attached, law firms can treat lawyers within their firm as in-house counsel if they want to. They can do so when deciding whether to accept new clients; when they sue someone on their own behalf, or get sued, and there’s no loyalty duty involved; when they write contracts for the firm; or need legal advice or counsel or assistance in any of the myriad contexts that do not involve a duty of loyalty to existing clients. In those situations, law firms are just like everyone else when it comes to legal advice, and the privilege that attaches to it. Because just like everyone else, they would not be operating under a duty of loyalty. But for the period of time at issue in 86 102 16 this case, with this client, and with this law firm, the duty of loyalty applied with full force. CONCLUSION Even considering the vital importance of the attorney-client privilege, it serves the broader duty of loyalty. The privilege ensures that “the professional mission is to be carried out.” Upjohn, 449 US at 389 (quoting Trammel v. United States, 445 US 40, 51, 100 SCt 906, 63 LEd2d 18 (1980)). The professional mission, of course, is to serve the client. Lawyers cannot assert a privilege that exists solely to serve their clients in order to interfere with a client. In that context, the law firm is not a client, and cannot hire itself. Its duty of loyalty runs only to an existing client, which means it cannot assert privilege against one. /// /// /// 87 103 17 Therefore, ACC requests that this Court deny the writ that the law firm has requested. DATED: August 8, 2013 Respectfully submitted, /s/ Kelly Jaske_____________________ Kelly Jaske, OSB No. 081704 kelly@jaskelaw.com Jaske Law LLC 521 SW Clay St., Suite 209 Portland, OR 97201 (503) 227-2796 Attorney for Amicus Curiae Association of Corporate Counsel Amar D. Sarwal, Pro Hac Vice sarwal@acc.com Evan P. Schultz, Pro Hac Vice e.schultz@acc.com Association of Corporate Counsel 1025 Connecticut Ave., N.W., Suite 200 Washington, DC 20036 (202) 293-4103 Attorneys for Amicus Curiae Association of Corporate Counsel 88 104 18 CERTIFICATE OF COMPLIANCE WITH BRIEF LENGTH AND TYPE SIZE REQUIREMENTS Brief length I certify that (1) this brief complies with the word-count limitation in ORAP 5.05(2)(b), and (2) the word count of this brief (as described in ORAP 5.05(2)(a)) is 3,892 words. Type size I certify that the size of the type in this brief is not smaller than 14 point for both the text of the brief and footnotes as required by ORAP 5.05(4)(f). /s/ Kelly Jaske_____________________ Kelly Jaske, OSB No. 081704 Attorney for Amicus Curiae Association of Corporate Counsel 89