The Myth Of The Single State Practitioner1
Del O’Roark, Loss Prevention Consultant, Lawyers Mutual Insurance Company of Kentucky
Thanks to modern communications you never need to be out of contact with the office or your clients. Sitting in the airport in Nashville it's easy to call clients in Bowling Green on your cell phone. On vacation in Florida the fax machine and e-mail will keep you supplied with the information you need to advise clients in Lexington. Investigating a matter in Tennessee, interviewing witnesses in Indiana, and negotiating a settlement in Ohio or West Virginia are things Kentucky lawyers often do in matters that cross state lines. Is there anything wrong with this? After all, you are a member of the KBA in good standing.
The whole area of unauthorized practice of law (UPL) is murky, but nowhere as much as when practicing a matter takes you across jurisdictional lines – federal and state. In all the examples the Kentucky lawyer is practicing law, but not in Kentucky. Is the lawyer violating Kentucky RPC 5.5 Unauthorized Practice of Law2 and the UPL laws of those states if not a bar member? With modern technology crossing state lines can be actual or virtual. For UPL purposes when does a lawyer "cross" jurisdictional lines into another state? With a telephone call? An e-mail message? Faxed documents? Or does it take physical presence in the other state?
If you've read this far, you may be wondering what's the big deal here. We all know that lawyers everyday for years have done these things and the sky has not fallen. What has happened is an unusual California case that electrified the issue of cross-border practice. This case brought into bold relief the point that few lawyers are single state practitioners anymore. Private practitioners often represent interstate clients or in-state clients with interstate legal matters. This has long been true for employed lawyers. These matters can be multistate and multijurisdictional. Archaic UPL rules simply do not do justice to the realities of modern interstate practice. This article uses the California case to illustrate the professional responsibility issues and provides an overview of the UPL factors you should consider when crossing the border.
The Geographical Setting
A California software company, ESQ, had contract claims against Tandem Computers, also a California based company. The contract expressly provided that California law governed its terms. ESQ representatives, while in New York, retained the New York Birbrower firm to investigate and prosecute these claims. No lawyer in the Birbrower firm was admitted to practice in California.
Birbrower lawyers traveled to California in 1992 to meet with ESQ accountants and discuss the dispute and case strategy with ESQ. Over a two day period the lawyers met four or five times with Tandem representatives to negotiate and make a demand for settlement. In March 1993 Birbrower lawyers traveled to California to interview potential arbitrators and work on the case. In August 1993 Birbrower lawyers again traveled to California to assist in settling the claims. They met with ESQ and Tandem representatives, gave ESQ legal advice, and recommended that ESQ not accept Tandem's settlement offer. ESQ subsequently settled with Tandem and in 1994 sued Birbrower for malpractice. Birbrower counterclaimed for fees for the work done in New York and California. ESQ defended on the basis that Birbrower engaged in the unauthorized practice of law in California causing the fee agreement to be unenforceable.
The California Supreme Court's Decision
California law provides "No person shall practice law in California unless the person is an active member of the State Bar." The Court easily found that Birbrower's activities while physically present in California were the practice of law. The hard question in applying the UPL law is what does "in California" mean. The Court reasoned:
Based on this analysis the Court found that Birbrower engaged in UPL in California and could not recover on its fee contract with ESQ for any legal services rendered in California, but might be able to recover for fees earned in New York.
The Birbrower decision caused great consternation, upset ethics experts, and was called bizarre. As a practical matter state bars rarely pursue interstate practice UPL violations and then usually only against out-of-state lawyers. The irony of Birbrower is that it is a fee dispute case – it was never prosecuted by the California State Bar to protect the public or discipline Birbrower lawyers. Nonetheless it is on the books and California is just too big economically and legally to ignore the implications of this decision. Its primary importance is that it addresses UPL issues that desperately need review. Pending some more definitive official guidance the following is offered as a review of some of the considerations in avoiding UPL when actually or virtually crossing jurisdictional lines:
Federal Courts: The Supreme Court and each circuit and district court have issued rules for admission. These admission requirements are derivative in that they rely on admission to a state bar for proof of competence, and character and fitness for Federal practice. If a lawyer is a member of any state bar, admission to most district and circuit courts is almost automatic. But this should not be take for granted. For example, some Federal district courts require lawyers seeking admission to be a member of the state bar of the state in which the district court is located. If you are planning to appear in a Federal court, research that court's local admission rules early in the representation. Although the current system is cumbersome, thanks to the internet, it is now much easier to determine Federal court admission requirements. There is an ongoing effort to develop uniform Federal court admission and professional responsibility rules, but when, and if, they will be promulgated is an open question.
Federal and State Administrative Agencies: Administrative agencies have the authority to regulate whom may appear before them in a representative capacity. Some agencies allow nonlawyers to appear. Some require specific qualifications other than legal such as passing an examination or being a certified public accountant.4 Some state agencies defer to the state supreme court rules on UPL to determine whom may appear. Consult agency regulations to be sure you are authorized to appear.
Arbitration and Mediation: The question when participating in out-of-state arbitration and mediation proceedings is whether this is the practice of law in that state. If it is not, then there is no issue of UPL. California law allows non-admitted lawyers to participate in arbitration if they file a certificate with specified information.5 KBA Ethics Opinion E-377 (1995) holds that mediation is not the practice of law, but excludes from the definition of mediation "the giving of legal advice in the course of such mediation." Non-admitted lawyers will have a UPL problem if they participate in mediation in Kentucky. This is a developing area of practice. If there is a trend, it is to take a more relaxed UPL approach in arbitration and mediation proceedings. It remains crucial, however, to consult state UPL rules prior to participation.
Other States: Other state admission requirements are manageable for litigation matters, but are problematic for transactional practice. A short review of options follows:
It pays to know what you're doing – and especially when it comes to UPL. The best risk management is to carefully analyze UPL exposure when engaged in interstate practice. Research the other jurisdiction's rules on formal admission, special admission, pro hac vice, association with local counsel, and incidental non-admitted lawyer contacts. The internet makes much of this information readily available. Stay abreast of virtual presence UPL developments. Birbrower is an extreme decision, but other states may follow suit by ruling that physical presence in the state is not required for a UPL violation.
Sometimes you just have to rise above principle and be practical. Accordingly, have out-of-state clients come to you whenever you can. Do as much work as possible in Kentucky. Most important, get significant retainers from out-of-state clients. UPL laws are designed to protect the public, assure lawyer competence, and provide a system for policing offenders. They were not intended to assist clients in avoiding paying lawyer fees.
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