Posted Apr 16, 2011 11:36 pm CDT
The ABA Commission on Ethics 20/20 today heard a pitch to create a separate regulatory regime that would address the concerns of large law firms about such issues as conflicts of interest, liability and lawyer mobility.
The proposal was submitted by the Law Firm General Counsel Roundtable, representing a number of large law firms that primarily represent multinational corporate clients. The roundtable’s written proposal to the commission was signed by general counsel or risk management counsel from 23 firms around the United States, including such legal giants as Nixon Peabody, O’Melveny & Myers, Baker & McKenzie, Latham & Watkins, and Bryan Cave.
But while the proposal (PDF) was submitted by the lawyer group, the real beneficiaries would be the clients they serve, said Anthony E. Davis of Hinshaw & Culbertson in New York City, who presented the proposal to the commission with James W. Jones of Hildebrandt Baker Robbins, a legal consulting firm that helped create the General Counsel Roundtable in 2003.
“There is a sleeping giant: large multinational companies,” Davis told the commission at its meeting in Washington, D.C. “They and their lawyers are starting to say the current regulatory structure just doesn’t work for them.”
The primary causes of concern among large law firms and their clients, said Davis and Jones, are the lack of uniform professional conduct rules in the United States, where lawyers are regulated on a state-by-state basis, restrictions on lawyer mobility imposed by a number of states, and the basic purpose of lawyer regulation in the United States.
“The rules imposed by the separate states are primarily designed to protect individual consumers of legal services who may lack the experience or sophistication to protect themselves against unethical or otherwise improper conduct by the lawyers who represent them,” states the roundtable’s letter to the commission. “While such rules may be perfectly sensible when dealing with such unsophisticated clients, the strictures and presumptions they impose do not work well when applied to relationships between large commercial enterprises and their outside counsel.”
But the proposal also is based on a desire to help make large U.S. law firms more competitive in the global business environment. “Ultimately, we’re talking about an economic issue,” said Jones, who noted that some other countries offer law firms a more flexible regulatory environment than the United States. “The amount of business brought to the United Kingdom is not insignificant,” he said.
The roundtable is proposing that a definition of “sophisticated” clients be developed based on such criteria as whether a firm is publicly traded, the size of its balance sheet, the number of jurisdictions in which it operates, and how much it uses legal services.
The proposal also calls for more flexible rules for law firms on dealing with potential conflicts of interest, limitations on liability and greater mobility across jurisdictions for lawyers at firms that represent large clients.
Jones and Davis said they brought the proposal to the Ethics 20/20 Commission in hopes that it will be more responsive than other bar groups, given its mission of assessing the impact of technology and globalization on professional conduct rules for lawyers.
Right now, said Davis, “There’s no other place where we can have this type of conversation.”
The commission did discuss the proposal in depth, but its reaction was mixed and cautious. While acknowledging the concerns of large law firms, some commission members wondered whether a separate regulatory structure for them would be necessary or politically practical, and others suggested that at least some large firm concerns might be addressed by taking narrower approaches to specific issues.
A few concerns also were expressed about the tone of the proposal. In its current form, the proposal “would be dead on arrival in the House of Delegates,” said commission member Frederic S. Ury of Fairfield, Conn., who noted that the ABA’s policy-making body is made up largely of lawyers from smaller firms. It would likely be viewed as an effort to carve out special treatment for larger firms, he said, “and another system for the rest of us peons.”
Commission co-chair Michael Traynor of Berkeley, Calif., a past president of the American Law Institute, described the presentation by Jones and Davis as “forceful and provocative. It’s an issue we need to look at.” But, added Traynor, “a frontal assault, I’m skeptical about that.”
ABAJournal.com: “Ethics 20/20 Commission Settles on Recommendations on Outsourcing, Confidentiality, Foreign Lawyers”