Lawyers Across State Lines

Lawyers Across State Lines

A lawyer licensed in one state who does legal work in another faces the same obstacle as a nonlawyer: the second state has not authorized the work. Rule 5.5(a) reaches this lawyer by forbidding practice “in a jurisdiction” in violation of that jurisdiction's regulation of the legal profession.¹ The earlier sections of this chapter dealt with nonlawyers and the lawyers who help them. This section turns to lawyers who are fully licensed somewhere but serve clients, appear before tribunals, or handle matters in a state where they hold no license.

Multijurisdictional practice (MJP) is, at bottom, unauthorized practice of law applied to lawyers. Despite some interest during the ABA Ethics 20/20 debates in a “driver's license” model, authorization to practice law remains a state-by-state affair. A Missouri driver's license lets its holder drive in Illinois, but a Missouri-licensed lawyer without an Illinois law license may not practice law there. Suppose Lily, admitted only in New York, prepares a will for a Florida client or negotiates the settlement of a Florida client's civil lawsuit. She has violated Florida's unauthorized-practice regulations to the same extent a nonlawyer would by doing the same things.²

Rule 5.5 does not demand local admission for every out-of-state contact. It reduces barriers to interstate practice while still accounting for the state's interest in the quality and ethical behavior of attorneys practicing within its borders.³ Courts describe the same balance as a tension between interjurisdictional practice and the need for a state-regulated bar.⁴

Two questions organize what follows. The first is when an out-of-state lawyer practices law “in” the forum at all, and the California decision in Birbrower answers it. The second is where the forum's reach stops, and a Hawaii decision answers that one. The safe harbors that Rule 5.5 now provides for temporary practice come in later sections.

Practice 'In' a State

Rule 5.5(a) prohibits practice “in a jurisdiction,” and those words add a second question to the one asked earlier in this chapter.⁵ The earlier question was whether the lawyer's work was the practice of law, which the broad functional definition answers. The new question is whether that practice took place in the forum state. The two answers can differ, so a lawyer whose work is plainly legal practice has not yet violated a particular state's rule. The leading decision on the second question is Birbrower, Montalbano, Condon & Frank, P.C. v. Superior Court, 949 P.2d 1 (Cal. 1998).⁶

In Birbrower, a New York firm represented a California client in a dispute over a software licensing agreement. California law governed the agreement, and the negotiations and a later arbitration under it took place in California.⁷ The firm advised on the agreement's interpretation, negotiated with the other party, represented the client in the arbitration, and negotiated and drafted a settlement, so its work was plainly the practice of law. One detail seems counterintuitive: a nonlawyer could have appeared as a representative in the arbitration, yet an out-of-state lawyer still needed California authorization to do so.⁸

The court then turned to the words “in California,” which the statute, like the phrase “practice law,” left undefined. Earlier opinions had construed only “practice law.” The court held that the primary inquiry is whether the unlicensed lawyer “engaged in sufficient activities in the state, or created a continuing relationship with the California client that included legal duties and obligations.” It paired that quantitative inquiry with a qualitative one: the lawyer's contact with the client must be enough to make the service a clear legal representation.⁹

Physical presence is one factor under this test, and the court called it “by no means exclusive.” A lawyer who never enters California can still practice there by advising a California client on California law in connection with a California legal dispute by telephone, fax, computer, or other modern technological means.¹⁰ The result follows from the purpose of UPL regulation, which is to protect a state's citizens from incompetent or unethical service providers. A New York firm that bungles California law for a New York client has created a problem for New York, but the same firm serving a California client engages California's interest.¹¹ A presence requirement would let a lawyer serve forum clients entirely by phone and e-mail and avoid the state's regulation.

The test also cuts the other way. “Mere fortuitous or attenuated contacts” will not support a finding that the lawyer practiced in California, and the court rejected the notion that a person automatically practices law “in California” whenever that person practices California law anywhere or “virtually” enters the state by telephone, fax, e-mail, or satellite. The court declined to list the activities that suffice and decided each case on its own facts.¹²

Exam stems often stress that the lawyer never left home. They are testing whether you treat physical presence as a requirement, and the answer is that you should not. The facts that decide the question concern the recipient of the services: whether a client in the forum state was served, whether the contact was substantial or continuing, and whether the matter was connected to the forum. The source of the governing law and the lawyer's own location carry little weight by themselves.

The consequence of a finding that the New York lawyers practiced in California without authorization was severe, even though they provided competent representation. The fee agreement between the firm and its client was illegal and against public policy, and therefore unenforceable.¹³ Competence is no defense, because the violation lies in lacking the state's authorization and not in the quality of the work.

The decision also exposed a gap that burdens transactional lawyers in particular. A lawyer in a litigated matter can ask the supervising court for pro hac vice admission, meaning permission to appear for a single matter. The Birbrower firm did only non-litigation work (negotiation, arbitration, and document drafting), so no supervising court existed to which it could appeal for admission.¹⁴ The court itself described the existing exceptions as generally limited to brief appearances before a state court or tribunal, narrowly drawn and strictly interpreted, such as an appearance in a particular pending action with the trial judge's consent.¹⁵ Cross-state practice is therefore a real headache for transactional lawyers, and the ABA responded to Birbrower and similar cases by amending Model Rule 5.5(c) to add safe harbors for temporary practice by out-of-state lawyers.¹⁶

Limits on Territorial Reach

Birbrower shows when a lawyer's contact with a state becomes practice there, and Fought & Co., Inc. v. Steel Engineering and Erection, Inc. shows where a state's reach ends.¹⁸ The Hawaii court asked whether the services of an out-of-state firm, Kobin, fell under two Hawaii statutes restricting the unauthorized practice of law. Those restrictions applied to Kobin's services only if the services were rendered “within the jurisdiction” of the state. The court called the meaning of that phrase a question of first impression and said its resolution must address the tension between interjurisdictional practice and the need for a state-regulated bar.¹⁹ The question is separate from whether the work was legal practice. Work can be the practice of law and still fall outside a particular state's reach.

Two pressures pulled against each other. On one side, the statutes must be broad enough to protect the public from incompetent legal advice and counsel, and the legislature had expressed a disinclination to define the practice of law in the face of new developments that continually create new legal problems.²⁰ On the other side, the court found compelling policy reasons, rooted in the transformation of the economy from local to global, to avoid an application so broad that an out-of-state firm would automatically be deemed to practice “within the jurisdiction” merely by advising a client about the effect of Hawaii law or by “virtually entering” the state through telephone, fax, computer, or other modern technological means. The court drew that language from Birbrower.²¹

The case before the court supplied the commercial picture. It involved parties domiciled in at least five jurisdictions, and the court observed that a commercial entity serving interstate or international markets is likely to receive more effective and efficient representation when its general counsel supervises the work of local counsel in each jurisdiction where it does business. The court noted that such a lawyer is based close to the company's home office and knows the details of its operations, and it added that many Hawaii corporations follow the same practice.²² The arrangement splits the work sensibly: local counsel handles the matter in each forum, and the home-office lawyer contributes knowledge of the client's business that local counsel cannot supply. A rule treating the home-office lawyer's supervision as practice in every state where the client does business would force the client to choose between duplicating lawyers and shutting out the one who knows the company best.

The two courts reach compatible conclusions from opposite directions. Birbrower asked whether the lawyer engaged in sufficient activities in the state or created a continuing relationship with a client there, and it refused to treat practicing a state's law anywhere, or reaching the state by telephone, fax, e-mail, or satellite, as automatically enough.²³ The Hawaii court likewise refused to key the statutes to advice about local law or to technological reach.²⁴ Both courts look to the lawyer's actual relationship with the forum, and that relationship differs between a lawyer who serves a forum client directly and a client's home-office counsel who supervises local counsel. The Hawaii passage supplies reasoning about the scope of the statutes, and that reasoning is what carries over to new facts.

Exam stems that say an out-of-state lawyer “researched forum law” or “e-mailed the forum” are asking whether you will treat those facts as decisive, and they are not. A lawyer who gives a client advice in the lawyer's home state is not practicing in another state merely because the advice concerns that other state's law, since the controlling fact is the geographic or virtual location of the lawyer in providing the services and not the source of the law.²⁵ Virtual location still counts when electronic contact amounts to serving a client in the state, which is why Birbrower found no automatic rule in either direction.²⁶ The narrow reading also gives a lawyer no license to set up shop in the forum. Rule 5.5(b) bars a lawyer from establishing a systematic and continuous presence there for the practice of law, and that bar reaches a virtual presence created through concerted and regular use of electronic media.²⁷