Coast-to-Coast Legal Practice

Amy, a fourth-year associate, practices law in the real estate group at a large Chicago law firm that advertises itself to clients as being able to provide coast-to-coast legal services and expertise in a variety of real property matters. In a typical day, Amy may negotiate a lease on behalf of a local tenant regarding property located in California, offer advice to a corporate landlord organized under the laws of Delaware regarding Delaware law, draft a ground lease for a national retailer that leases properties in several states and prepare an easement that will be recorded in the land records in Maricopa County, AZ.

If your daily practice mirrors that of Amy's, you can probably classify your legal practice as multi-jurisdictional. In today's technology-driven culture, law firms are able to compete for the representation of clients located throughout the country and, as a result, many of us have provided legal services to clients located in a state other than the one(s) in which we are licensed. While we all studied legal ethics in law school, the constant pressure to meet client demands often makes it difficult to find time to stay current with the changes to our code of ethics. With the expansion of multi-jurisdictional practice, transactional lawyers would be well-advised to re-examine their ethical obligations and evaluate whether skirting a state's admission requirements and providing legal advice regarding property or laws of a state in which they are not licensed creates any ethical pitfalls.

State Licensure Requirements

All states regulate the issuance of law licenses by establishing certain minimum requirements that must be fulfilled before an attorney will be admitted as a member of a state's bar (e.g., bar examination or admission on motion). By regulating licensure, a state protects its citizens from the unauthorized practice of law. A client seeking representation from an attorney licensed in the client's state can reasonably expect that the attorney has at least a basic knowledge and understanding of the state's laws (tested by the bar examination and maintained by the state's continuing legal education requirement) and has a good moral character (verified by the state's character and fitness requirement).

While no one denies that states have a legitimate interest in protecting their citizens from the unauthorized practice of law, a state's interest must also be balanced against the benefits that the regulated allowance of multi-jurisdictional practice can provide to clients. For example, a national retailer seeking to lease space in several states may prefer to hire one law firm to allow for cost-effective and consistent representation. Unfortunately, lawyers who provide multi-jurisdictional law services do so at their own risk. Attorneys who have a multi-jurisdictional practice and represent clients in states where they are not licensed are subject to the Rules of Professional Conduct adopted by such state, including the state's rule pertaining to the unauthorized practice of law.

Summary of ABA Model Rule 5.5

Each state has the right to consider and adopt its own Rules of Professional Conduct, and many states have elected to base their rules on the American Bar Association's (the “ABA”) Model Rules of Professional Conduct (the “Model Rules”). In order to provide guidance on the multi-jurisdictional practice issue, the ABA formed a Commission on Multi-jurisdictional Practice (the “MJP Commission”). The MJP Commission submitted its recommendations to the ABA in 2002 to amend certain Model Rules so that a balance could be struck between a state's interest in regulating the unauthorized practice of law and the interests of clients in employing counsel efficiently and economically in today's national market. ABA, Report of the Comm. on Multijurisdictional Practice 5 (2002). In its report, the MJP Commission advocated for an amendment to the title and text of Model Rule 5.5. Prior to the 2002 amendment, Model Rule 5.5 was titled “Unauthorized Practice of Law” and simply proscribed: 1) practicing law in a jurisdiction in violation of the jurisdiction's legal profession regulations; and 2) assisting a non-lawyer in the unauthorized practice of law. The amended Model Rule 5.5, now titled “Unauthorized Practice of Law; Multi-jurisdictional Practice of Law,” still provides that a lawyer is prohibited from practicing law in a jurisdiction in which he or she is not licensed; however, a new exception provides that:

[a] lawyer admitted in another United States jurisdiction or in a foreign jurisdiction, and not disbarred or suspended from practice in any jurisdiction, may provide 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 to practice. Model Rules of Prof'l Conduct R. 5.5(c)(4) (2002) (emphasis added).

The comments to Rule 5.5 provide that “[t]here is no single test to determine whether a lawyer's services are provided on a 'temporary basis'” ' and that “[s]ervices may be 'temporary' even though the lawyer provides services in [the] 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.” Id. at cmt. 6. In order to qualify under the “temporary basis” exception, the representation must be “reasonably related” to the lawyer's practice in the jurisdiction in which he or she is admitted. Id. at cmt. 12. Comment 14 to Rule 5.5 provides that “[a] variety of factors evidence such a relationship.” Id. at cmt. 14. For example, the “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 ' ” or “ [t]he 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.” Id.

The MJP Commission's report supports the notion that Comment 14 was intended to allow multi-jurisdictional practice in instances where a client would prefer to hire one lawyer “to work on multiple related matters, including some having no connection to the jurisdiction in which the lawyer is licensed.” ABA, Report of the Comm. on Multijurisdictional Practice 25 (2002).

Court Interpretation of Rule 5.5

The MJP Commission admitted in its report to taking a “conservative approach” in amending the Model Rules such that the amended rules would leave room for “individual opinion and judicial interpretation,” which is evident in the MJP Commission's use of the undefined phrases “temporary basis” and “reasonably related”. Id. at 21. At present, case law regarding the interpretation of revised Model Rule 5.5 is largely undeveloped. In the 2007 case Sample v. Morgan, 935 A.2d 1046, 1048 (Del. Ch. 2007), the Delaware Court of Chancery considered the issue of multi-jurisdictional practice when an Ohio-based corporation incorporated in Delaware hired an Ohio law firm to provide legal advice regarding Delaware corporate law. The court determined that because the Ohio law firm touted itself as providing “coast-to-coast” legal services and provided legal advice regarding Delaware law, the firm could have reasonably expected that they may be sued in a Delaware court and thus, would be subject to personal jurisdiction in the State of Delaware. Id. at 1047-48. Even though the Sample court rejected the notion that its decision would cause transactional law firms to fear that they would be “regularly hauled into court ' ,” this case serves as a reminder to lawyers that practicing law in a state in which one is not licensed presents certain risks. Id. at 1065. It is worth noting that while jurisdiction was addressed in the court's opinion, Model Rule 5.5 was not at issue in this case.

In addition to the possibility of being subject to the jurisdiction of another state's court for malpractice claims, amended Model Rule 8.5 makes it clear that “[a] lawyer not admitted in [a state's] jurisdiction is also subject to the disciplinary authority of [such] jurisdiction if the lawyer provides or offers to provide any legal services in [such] jurisdiction. A lawyer may be subject to the disciplinary authority of both [such state's] jurisdiction and the other jurisdictions for the same conduct.” Model Rules of Prof'l Conduct R. 8.5 (2002). Thus, in the event an attorney ill-advises a client regarding the laws of a state in which he or she is not admitted, the attorney could be subject to malpractice and professional disciplinary action in such state regardless of whether the attorney maintains an office in the state or even visited the state in connection with the representation. Further, under Model Rule 8.5, the same attorney could also be subject to disciplinary action in the state(s) where he or she is licensed.

In today's society of instantaneous, digital communication and fierce competition for clients, multi-jurisdictional practice is almost inevitable for transactional attorneys. Fortunately, the ABA has acknowledged this change in the legal climate and incorporated amendments to the Model Rules which allow transactional attorneys, such as Amy, to provide legal services in jurisdictions where they are not licensed so long as the services provided are rendered on a temporary basis and are reasonably related to the attorney's general practice.

All attorneys should be cautioned, however, that even though the ABA adopted and incorporated all of the MJP Commission's proposed amendments into the Model Rules, not all states have amended their own Rules of Professional Conduct to permit multi-jurisdictional practice. Further, some states elected to incorporate the underlying principles of amended Model Rule 5.5, but did not incorporate the language of the Model Rules verbatim. Even more noteworthy, some states modified their Rules of Professional Conduct so as to impose additional obligations on attorneys engaging in multi-jurisdictional practice. For example, Arizona requires all lawyers who are not licensed in Arizona to advise their clients that they are not admitted to practice law in Arizona and to obtain the client's informed consent to the representation. Ariz. Rules Of Prof'l. Conduct ER 5.5 (2004). South Dakota requires all lawyers who are not licensed in the state to obtain a South Dakota tax license and pay all applicable taxes required under state law. S.D. Rules of Prof'l Responsibility R. 5.5 (2004). (The ABA's Web site provides charts on each state's adoption of the MJP Commission's recommendations. See http://www.abanet.org/cpr/mjp/home.html.)

Accordingly, an attorney would be well-advised to research a state's rules regarding multi-jurisdictional practice prior to providing legal services in such state. Moreover, if an attorney suspects that he or she will be providing services in a state where he or she is not licensed and if the services could be characterized as substantial and continuous rather than temporary in nature, the attorney should associate with a local, licensed attorney in accordance with the state's Rules of Professional Conduct.

Heidi L. Golz is an associate in the Corporate Practice Group at Lewis, Rice & Fingersh, L.C. in St. Louis. She may be contacted at [email protected].

Amy, a fourth-year associate, practices law in the real estate group at a large Chicago law firm that advertises itself to clients as being able to provide coast-to-coast legal services and expertise in a variety of real property matters. In a typical day, Amy may negotiate a lease on behalf of a local tenant regarding property located in California, offer advice to a corporate landlord organized under the laws of Delaware regarding Delaware law, draft a ground lease for a national retailer that leases properties in several states and prepare an easement that will be recorded in the land records in Maricopa County, AZ.

If your daily practice mirrors that of Amy's, you can probably classify your legal practice as multi-jurisdictional. In today's technology-driven culture, law firms are able to compete for the representation of clients located throughout the country and, as a result, many of us have provided legal services to clients located in a state other than the one(s) in which we are licensed. While we all studied legal ethics in law school, the constant pressure to meet client demands often makes it difficult to find time to stay current with the changes to our code of ethics. With the expansion of multi-jurisdictional practice, transactional lawyers would be well-advised to re-examine their ethical obligations and evaluate whether skirting a state's admission requirements and providing legal advice regarding property or laws of a state in which they are not licensed creates any ethical pitfalls.

State Licensure Requirements

All states regulate the issuance of law licenses by establishing certain minimum requirements that must be fulfilled before an attorney will be admitted as a member of a state's bar (e.g., bar examination or admission on motion). By regulating licensure, a state protects its citizens from the unauthorized practice of law. A client seeking representation from an attorney licensed in the client's state can reasonably expect that the attorney has at least a basic knowledge and understanding of the state's laws (tested by the bar examination and maintained by the state's continuing legal education requirement) and has a good moral character (verified by the state's character and fitness requirement).

While no one denies that states have a legitimate interest in protecting their citizens from the unauthorized practice of law, a state's interest must also be balanced against the benefits that the regulated allowance of multi-jurisdictional practice can provide to clients. For example, a national retailer seeking to lease space in several states may prefer to hire one law firm to allow for cost-effective and consistent representation. Unfortunately, lawyers who provide multi-jurisdictional law services do so at their own risk. Attorneys who have a multi-jurisdictional practice and represent clients in states where they are not licensed are subject to the Rules of Professional Conduct adopted by such state, including the state's rule pertaining to the unauthorized practice of law.

Summary of ABA Model Rule 5.5

Each state has the right to consider and adopt its own Rules of Professional Conduct, and many states have elected to base their rules on the American Bar Association's (the “ABA”) Model Rules of Professional Conduct (the “Model Rules”). In order to provide guidance on the multi-jurisdictional practice issue, the ABA formed a Commission on Multi-jurisdictional Practice (the “MJP Commission”). The MJP Commission submitted its recommendations to the ABA in 2002 to amend certain Model Rules so that a balance could be struck between a state's interest in regulating the unauthorized practice of law and the interests of clients in employing counsel efficiently and economically in today's national market. ABA, Report of the Comm. on Multijurisdictional Practice 5 (2002). In its report, the MJP Commission advocated for an amendment to the title and text of Model Rule 5.5. Prior to the 2002 amendment, Model Rule 5.5 was titled “Unauthorized Practice of Law” and simply proscribed: 1) practicing law in a jurisdiction in violation of the jurisdiction's legal profession regulations; and 2) assisting a non-lawyer in the unauthorized practice of law. The amended Model Rule 5.5, now titled “Unauthorized Practice of Law; Multi-jurisdictional Practice of Law,” still provides that a lawyer is prohibited from practicing law in a jurisdiction in which he or she is not licensed; however, a new exception provides that:

[a] lawyer admitted in another United States jurisdiction or in a foreign jurisdiction, and not disbarred or suspended from practice in any jurisdiction, may provide 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 to practice. Model Rules of Prof'l Conduct R. 5.5(c)(4) (2002) (emphasis added).

The comments to Rule 5.5 provide that “[t]here is no single test to determine whether a lawyer's services are provided on a 'temporary basis'” ' and that “[s]ervices may be 'temporary' even though the lawyer provides services in [the] 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.” Id. at cmt. 6. In order to qualify under the “temporary basis” exception, the representation must be “reasonably related” to the lawyer's practice in the jurisdiction in which he or she is admitted. Id. at cmt. 12. Comment 14 to Rule 5.5 provides that “[a] variety of factors evidence such a relationship.” Id. at cmt. 14. For example, the “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 ' ” or “ [t]he 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.” Id.

The MJP Commission's report supports the notion that Comment 14 was intended to allow multi-jurisdictional practice in instances where a client would prefer to hire one lawyer “to work on multiple related matters, including some having no connection to the jurisdiction in which the lawyer is licensed.” ABA, Report of the Comm. on Multijurisdictional Practice 25 (2002).

Court Interpretation of Rule 5.5

The MJP Commission admitted in its report to taking a “conservative approach” in amending the Model Rules such that the amended rules would leave room for “individual opinion and judicial interpretation,” which is evident in the MJP Commission's use of the undefined phrases “temporary basis” and “reasonably related”. Id. at 21. At present, case law regarding the interpretation of revised Model Rule 5.5 is largely undeveloped. In the 2007 case Sample v. Morgan , 935 A.2d 1046, 1048 (Del. Ch. 2007), the Delaware Court of Chancery considered the issue of multi-jurisdictional practice when an Ohio-based corporation incorporated in Delaware hired an Ohio law firm to provide legal advice regarding Delaware corporate law. The court determined that because the Ohio law firm touted itself as providing “coast-to-coast” legal services and provided legal advice regarding Delaware law, the firm could have reasonably expected that they may be sued in a Delaware court and thus, would be subject to personal jurisdiction in the State of Delaware. Id. at 1047-48. Even though the Sample court rejected the notion that its decision would cause transactional law firms to fear that they would be “regularly hauled into court ' ,” this case serves as a reminder to lawyers that practicing law in a state in which one is not licensed presents certain risks. Id. at 1065. It is worth noting that while jurisdiction was addressed in the court's opinion, Model Rule 5.5 was not at issue in this case.

In addition to the possibility of being subject to the jurisdiction of another state's court for malpractice claims, amended Model Rule 8.5 makes it clear that “[a] lawyer not admitted in [a state's] jurisdiction is also subject to the disciplinary authority of [such] jurisdiction if the lawyer provides or offers to provide any legal services in [such] jurisdiction. A lawyer may be subject to the disciplinary authority of both [such state's] jurisdiction and the other jurisdictions for the same conduct.” Model Rules of Prof'l Conduct R. 8.5 (2002). Thus, in the event an attorney ill-advises a client regarding the laws of a state in which he or she is not admitted, the attorney could be subject to malpractice and professional disciplinary action in such state regardless of whether the attorney maintains an office in the state or even visited the state in connection with the representation. Further, under Model Rule 8.5, the same attorney could also be subject to disciplinary action in the state(s) where he or she is licensed.

In today's society of instantaneous, digital communication and fierce competition for clients, multi-jurisdictional practice is almost inevitable for transactional attorneys. Fortunately, the ABA has acknowledged this change in the legal climate and incorporated amendments to the Model Rules which allow transactional attorneys, such as Amy, to provide legal services in jurisdictions where they are not licensed so long as the services provided are rendered on a temporary basis and are reasonably related to the attorney's general practice.

All attorneys should be cautioned, however, that even though the ABA adopted and incorporated all of the MJP Commission's proposed amendments into the Model Rules, not all states have amended their own Rules of Professional Conduct to permit multi-jurisdictional practice. Further, some states elected to incorporate the underlying principles of amended Model Rule 5.5, but did not incorporate the language of the Model Rules verbatim. Even more noteworthy, some states modified their Rules of Professional Conduct so as to impose additional obligations on attorneys engaging in multi-jurisdictional practice. For example, Arizona requires all lawyers who are not licensed in Arizona to advise their clients that they are not admitted to practice law in Arizona and to obtain the client's informed consent to the representation. Ariz. Rules Of Prof'l. Conduct ER 5.5 (2004). South Dakota requires all lawyers who are not licensed in the state to obtain a South Dakota tax license and pay all applicable taxes required under state law. S.D. Rules of Prof'l Responsibility R. 5.5 (2004). (The ABA's Web site provides charts on each state's adoption of the MJP Commission's recommendations. See http://www.abanet.org/cpr/mjp/home.html.)

Accordingly, an attorney would be well-advised to research a state's rules regarding multi-jurisdictional practice prior to providing legal services in such state. Moreover, if an attorney suspects that he or she will be providing services in a state where he or she is not licensed and if the services could be characterized as substantial and continuous rather than temporary in nature, the attorney should associate with a local, licensed attorney in accordance with the state's Rules of Professional Conduct.

Heidi L. Golz is an associate in the Corporate Practice Group at Lewis, Rice & Fingersh, L.C. in St. Louis. She may be contacted at [email protected].