Legal Ethics

Ethics 20/20 Recommends Helping Foreign Lawyers to Practice in US, Sidesteps Nonlawyer Ownership

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The ABA Commission on Ethics 20/20 decided last week that its final recommendations to the association’s policy-making House of Delegates will focus on measures that would make it easier for foreign lawyers to obtain limited authority to practice in U.S. jurisdictions.

Meeting in Washington, D.C., the commission also decided that it will not submit a recommendation on a question at the fringes of the topic of nonlawyer ownership of law firms—a potentially hot-button issue for some members of the House.

Specifically, the proposal under consideration by the commission would have revised a comment to Rule 1.5 of the ABA Model Rules of Professional Conduct

to assert that, subject to provisions in Model Rule 5.4 (Professional Independence of a Lawyer), it is permissible for a lawyer in one jurisdiction to divide a fee with a lawyer in another jurisdiction that permits law firms to have nonlawyer owners or that allows fee-sharing with nonlawyers.

Instead, the commission is referring the fee division issue to the Standing Committee on Ethics and Professional Responsibility, which is empowered to write formal ethics opinions for the ABA. In September, the commission referred to the Ethics Committee the question of whether fee-sharing among lawyers in a single firm is permissible under Model Rule 8.5 when the rules applicable to one of the firm’s offices permit nonlawyer owners and the rules applicable to another of the firm’s offices do not. In April, the commission decided not to develop a proposal on whether nonlawyers should be allowed to have some form of limited ownership interest in U.S. law firms.

The commission reached consensus at last week’s meeting that, subject to prohibitions in Model Rule 5.4, “the authority to divide fees between lawyers in two independent firms currently exists in Model Rule 1.5,” says a statement issued today by the commission. “It became clear that there would be very few occasions for lawyers to make use of that authority, as in most instances, the two firms can simply send separate invoices to the client for their work in the matter.”

The commission is co-chaired by Jamie S. Gorelick, a partner at Wilmer Cutler Pickering Hale and Dorr in Washington, D.C., and Michael Traynor of Berkeley, Calif., a past president of the American Law Institute. The commission has been working since 2009 to study the impact of technology and globalization on the legal profession, and to propose possible revisions to the Model Rules of Professional Conduct and related standards for lawyers where appropriate.

“In deciding which proposals to bring to the House of Delegates, we have considered the importance of the issue to the profession, whether there is confusion as to the application of the rules that we can helpfully address, and whether a change in the rules is necessary and helpful to address changes in the legal environment,” says Gorelick in the commission’s statement. “We have used our best judgment as to which issues are worthy of debate and consideration in the House and capable of making a difference for the profession.”

In a lengthy discussion about those priorities, members of the commission took into account the possibility that opposition in the House to even narrow measures that might be viewed as an effort to endorse nonlawyer ownership could dominate consideration of other measures that the commission considers more important. The commission got a dose of that in August, when the House engaged in a lengthy and contentious debate before voting to postpone indefinitely a resolution co-sponsored by the Illinois State Bar Association and the ABA Senior Lawyers Division that called for the House to reaffirm policy originally adopted in 2000 stating that nonlawyers should not have an ownership role in law firms and should not share legal fees with lawyers, and to oppose any proposals to revise those prohibitions. The sponsors made it clear that their resolution was aimed at the work of the commission.

“We set our priorities in the decisions we made today,” said Gorelick in an interview with the ABA Journal after the commission adjourned on Friday. Emphasizing that the fee division issue is a narrow one that can be addressed in other ways, “We did not feel it was worth spending time and energy on that because it’s a distraction from our most important remaining proposals” relating to foreign lawyers practicing in the United States.

The commission will submit three recommendations to the House relating to “inbound” foreign lawyers.

One proposal would apply Model Rule 5.5(d) to qualified foreign lawyers. In its current version, the rule permits a lawyer admitted in one U.S. jurisdiction to provide legal services in another jurisdiction where the lawyer is not admitted to practice if those services are provided to the lawyer’s employer or its organizational affiliates, and are not services for which the second jurisdiction requires pro hac vice admission. The amendments essentially would apply Model Rule 5.5(d) to a foreign lawyer who is a member in good standing of a recognized legal profession in a foreign jurisdiction whose members are admitted to practice. In addition, the foreign lawyer would be allowed to advise a client on the law of U.S. jurisdictions only in consultation with an American lawyer.

A second proposal would amend the ABA Model Rule for Registration of In-House Counsel to include foreign lawyers working in the United States, subject to certain restrictions. A third proposal would add a new section to the ABA Model Rule on Pro Hac Vice Admission to allow state courts or agencies to admit a foreign lawyer in a particular proceeding as co-counsel with an in-state lawyer, or to serve in an advisory role in that proceeding. But the in-state lawyer would be responsible for the conduct of the proceeding and for independently advising the client on substantive law in the U.S. jurisdiction and procedural issues. The current version of the model rule applies only to lawyers admitted to practice in U.S. jurisdictions.

The commission is fine-tuning the language on the inbound foreign lawyer resolutions, and plans to finalize them by Nov. 14, the deadline for submitting resolutions for consideration by the House of Delegates when it convenes on Feb. 11 during the ABA’s 2013 Midyear Meeting in Dallas.

Related articles:

ABA Journal: “Clear Track: Ethics 20/20 Commission Can Now Address Issues of Fee-Splitting with Nonlawyers” “Ethics 20/20 Proposals Would Make It Easier for Foreign Lawyers to Practice in US”

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