Crossing the Line: A California Lawyer’s Guide to Understanding the New Multi-Jurisdictional Practice Rules
by Harry W. R. Chamberlain II
(County Bar Update, October 2004, Vol. 24, No. 9)

 

Crossing the Line: A California Lawyer’s Guide to Understanding the New Multi-Jurisdictional Practice Rules

 

By Harry W.R. Chamberlain II, member of Stephan, Oringher, Richman & Theodora, P.C. in Los Angeles where his practice emphasizes the representation of attorneys and other professionals in complex litigation. He is certified as an appellate specialist by the California State Bar Board of Legal Specialization, and is also admitted in North Carolina, the District of Columbia, and the U.S. Supreme Court. Chamberlain has argued numerous cases and served in an advisory capacity to national bar organizations on topics relating to professional responsibility and legal ethics. He may be contacted at hchamberlain@sortlaw.com

 

As the Internet and high-speed communication technologies shrink the global marketplace, under what circumstances may lawyers cross state lines to engage in multi-jurisdictional practice for their clients?

 

Half a decade ago, Birbrower, Montalbano, Condon & Frank v. Superior Court, 17 Cal.4th 119 (1998) sent shockwaves through the national legal community, holding that New York lawyers violated California’ s unauthorized practice statute by handling a contract dispute on behalf of a California client. According to Birbrower, “...[A]lthough not physically present here [, out-of-state counsel may engage in unlawful practice] by advising a California client on California law in connection with a California legal dispute by telephone, fax, computer, or other modern technological means.” Birbrower, 17 Cal.4th at 128-129.

 

The consequences for non-admitted counsel can be serious indeed: denial of compensation for unlicensed services, bar discipline, and even criminal prosecution. Birbrower, 17 Cal.4th at 127; Werner, Licensed in One State, but Practicing in Another: Multi-Jurisdictional Practice, Probate & Property, Mar./Apr. 2003, at 6-7.

 

Commentators decried such restrictions as “turning back the clock” on 21st century law practice and ignoring the realities of the modern business world by imposing archaic regulations. Were existing limitations on MJP necessary to protect consumers or merely a form of economic protectionism for the benefit of local attorneys? Baker, Lawyer Go Home, 84 A.B.A.J. 22 (May 1998). The controversy continues with the recent enactment of MJP rules to address these competing concerns.

 

ABA Model Rule 5.5

 

The ABA amended Model Rule of Professional Conduct 5.5, proposing a framework for acceptable interstate law practice. Model Rule 5.5(a)-(c); Report 201B at 1-3, http://www.abanet.org/cpr/mjp/home.html

 

The new rule clarifies that lawyers licensed in State A may travel to State B to conduct activities related to an anticipated or pending litigation in their home state, such as interviewing clients and witnesses, and taking depositions. Lawyers also may represent clients in cross-border arbitration or other ADR proceedings having some relationship to their state of admission. Model Rule 5.5(c)(1); Werner, supra, at 11.

 

Legal services may be performed in multi-state transactions under the supervision of an admitted local attorney who assumes actual responsibility for the work performed, provided the non-resident lawyer identifies the licensing limitations in all communications with clients or members of the public. Report 201B at 3-4.

 

However, each state’s disciplinary authority may define whether any activities conducted within its borders are so systematic and continuous, or misleading, as to disqualify the visiting attorney from invoking the MJP exemption. See Model Rule 5.5(d), cmts. 5-6; Davis, Professional Responsibility: Two Attorneys Indicted, N.Y. Law J., July 7, 2004 (Georgia lawyers indicted for counseling a North Carolina college about employment law and NCAA eligibility issues).

 

New California Rules of Court 964-967

 

ABA’s Model Rules are not binding in California, and the Supreme Court appointed a task force to develop our own MJP guidelines. Cal. Sup. Ct. Advisory Task Force on MJP Rep. at 5, www.courtinfo.ca.gov/reference/documents/finalmjprept.pdf The task force recommendations were implemented by the recent adoption of California Rules of Court 964 through 967, effective November 15, 2004. Under the new rules, out-of-state lawyers may perform services in California in four specified categories:

 

1. Registered Public Interest Lawyers (CRC 964): An attorney admitted in another jurisdiction may register annually with the State Bar to practice at a “qualifying public interest organization,” a non-profit entity whose primary purpose is providing legal services without charge to indigent persons. The lawyer must practice exclusively for the public interest organization under the supervision of a licensed California attorney (and may simultaneously qualify as registered in-house counsel, discussed below). The maximum registration period is three years.

 

2. Registered In-House Counsel (CRC 965): A similar registration procedure applies to in-house counsel for a “qualifying institution,” a non-governmental entity (one that does not provide legal services to others) that has at least 10 full-time employees in California or employs a member of the California bar who supervises the legal work.

 

Registered house counsel may only provide legal services to the employing institution and is not authorized to make court appearances or represent the employer’s individual customers, shareholders, owners, partners, officers, or employees. There is no limit on the number of years that resident house counsel may continue to register under this rule, but the State Bar must be notified within 30 days if counsel leaves the employ of the qualified institution. CRC 965(a)-(c)

 

3. Temporary Litigation Practice (CRC 966): A non-resident lawyer may temporarily conduct “permissible activities” in connection with a “formal legal proceeding” (e.g., activities authorized by Model Rule 5.5). Such proceedings include litigation, arbitration, mediation, or any legal action before an administrative decision-maker. CRC 966(e)(1).

 

After Birbrower, the California Legislature passed an interim pro hac vice rule allowing out-of-state counsel to represent clients in arbitration by registering with the State Bar and serving notice of certification. Cal. Code Civ. Proc. Sec. 1282.4(b)-(j); CRC 983.4, sunsetting on January 1, 2006. What will happen when that registration procedure expires at the end of 2005 is not entirely clear.

 

4. Temporary Nonlitigation Practice (CRC 967): Like its ABA counterpart, Rule 967 permits a non-resident attorney to provide “temporary” legal assistance:

 

• To a client concerning a transaction or other nonlitigation matter any substantial part of which takes place in a jurisdiction where the lawyer is licensed to practice;

 

• To California lawyers on an issue of federal law or the law of the non-resident attorney’s home state; and

 

• To an employer-client, its affiliates, or subsidiary companies.

 

But to qualify under Rules 966 and 967, the lawyer cannot reside in California, or be employed or maintain a permanent office in the state. Query whether these “reverse residency” restrictions would pass constitutional muster if challenged. See Barnard v. Thorstenn, 489 U.S. 546 (1981) (residency restrictions on bar admission violated Privileges and Immunities Clause).

 

No Safe Harbor

 

Until a more uniform system of national practice rules is devised, many unresolved questions will continue to catch unwary lawyers coming and going across state lines. ABA Model Rule 5.5 provides no safe harbors. And California’ s recently adopted MJP rules are narrower than those allowed in most other states.

 

So before setting up that virtual law office on your Web site, check the practice rules of the local bar where you intend to offer your legal services.  And be sure to associate local counsel on any aspect of a multi-state deal or lawsuit requiring their assistance and advice.

 

This article is intended to inform the reader of potential liability exposures for attorneys. This article reflects general principles only and does not render legal advice. Readers should consult legal, financial, insurance, and other advisors if they have specific concerns. Neither the Los Angeles County Bar Association, Aon and its affiliates nor the author assumes any responsibility for how the information in this article is applied in practice or for the accuracy and completeness of the information. Reproduction without written permission is prohibited. This article is made available by Aon Direct Insurance Administrators, administrators of the LACBA Sponsored Aon Insurance Solutions Program, to the LACBA members.   www.aonsolutions.com

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