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ABA Ethics 20/20: Proposed Revisions to Model Admissions Rule and Rule 5.5

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ABA Ethics 20/20: Proposed Revisions to Model Admissions Rule and Rule 5.5 Powered By Docstoc
					                             October 6, 2011


By e-mail
ABA Commission on Ethics 20/20
natalia.vera@americanbar.org


To the ABA Commission on Ethics 20/20,

       My name is Carolyn Elefant and I am an attorney with offices in
Washington D.C. and Bethesda, Maryland. I am also the founder of
MyShingle.com, the longest running and most comprehensive blog on
solo and small firm practice. I am also an ethics hobbyist and although
unelected, I consider myself to speak as a voice of today’s solo and small
law firm interests. I write today to express my views on the Commission's
proposed changes to the ABA's Model Rule on Admission and ABA Model
Rule 5.5.

I.    Overview
        As a general matter, I endorse the Commission's proposal to
liberalize the rules governing attorney admission and cross-border
practice. The proposed changes reflect the realities of 21st century law
practice, such as the emergence of virtual online law firms, increased
mobility of two-career families and the re-entry of lawyers (primarily
women) into the profession following time spent home raising a family.
The reforms will enable lawyers to move seamlessly - both geographically
as well through different stages of their professional careers - without
being sidelined as they take a second bar exam or await admission in
another jurisdiction. Most important from my perspective, the reforms will
substantially benefit solos because without admission to the bar of the
jurisdiction where they intend to set up shop, a solo lawyer cannot
Comments by Carolyn Elefant,                                  Re: ABA Commission on Ethics 2020
MyShingle.com                                       Model Rule on Admissions and Model Rule 5.5


represent clients at all. By contrast, a lawyer employed by a firm or
working with a partner can practice under the jurisdictional attorney's
supervision while awaiting admission and thus, does not suffer the same
financial hardship as an unadmitted solo.

       While the Commission's reforms represent a positive step, they do
not go far enough. As such, I recommend the following revisions. First, the
proposed Model Rule on Admission should be amended to expand the list
of activities included within the definition of "active practice of law" for
purposes of the three-year requirement. Currently freelance services
provided to a law firm or another attorney – such as document review,
legal research and writing, or per diem work (e.g., appearances or
depositions) – are not considered the “active practice of law” under the
proposed Model Rule, thereby depriving freelance and document review
lawyers of the benefits of a streamlined admissions process.

       Second, Model Rule 5.5 continues to provide that lawyers who
physically work from a state where they are not licensed who wish to
provide legal service to clients in a state where they are licensed are
engaged in the unauthorized practice of law – though the rule is less clear
where the lawyer serves out-of-state clients virtually from a home location.
The Commission apparently believed that the burden that these UPL rules
pose might be mitigated by the proposed one-year grace period to
continue to practice while admission is pending, combined with a more
relaxed rule on admission. However, the Commission fails to take account
that some lawyers may not want to go through the expense of gaining
admission to the bar of another jurisdiction where they are physically
located but do not practice.

        Accordingly, the Commission should revise Model Rule 5.5 to state
explicitly state that lawyers who physically work from a state where they
are not licensed do not engage in UPL (unauthorized practice of law) so
long as they serve only clients, either virtually or in person, with matters in
those jurisdictions where they are licensed. Currently, some states do not
require lawyers physically located in one jurisdiction to seek admission if
they provide only virtual services aimed at clients in a jurisdiction where
they are licensed – even though if those same services to non-
jurisdictional clients are provided IRL (in real life) rather than virtually, they
would be considered UPL. The Model Rule should apply the same
standards for defining UPL to both virtual and IRL (in real life) services,
rather than according an exemption to one type of service but not the
other based solely on the method of delivery.



                                         2
Comments by Carolyn Elefant,                              Re: ABA Commission on Ethics 2020
MyShingle.com                                   Model Rule on Admissions and Model Rule 5.5




       In addition, the Commission should consider several other minor
improvements to Model Rule 5.5. to ensure that clients are adequately
protected. First, where lawyers handle out-of-state matters in a jurisdiction
where they are not licensed, they should be required to register to do
business in the locational state and disclose their actual address to virtual
clients.

      Collectively, these changes enable lawyers who do not wish to gain
admission to another jurisdiction to nonetheless make full use of their
experience in another jurisdiction while at the same time providing even
more protection to clients than the existing version of Model Rule 5.5. A
discussion of these recommendations follows.


II.      Proposed Revisions to Model Rule on Admissions

       As drafted, the proposed Model Rule on Admissions provides, in
relevant part that an applicant may be admitted upon motion to
practice law in any given jurisdiction provided that the applicant is
admitted to practice and in good standing in another state and has been
engaged in the “active practice of law” for three of the seven years
preceding the application for admission. The Model Rule goes on to list
the types of activities that constitute “active practice of law,” including
(1) representation of one or more clients in private practice, (2) service as
a government attorney, teaching at an approved law school, (3)
teaching at an approved law school; (4) service as a judge; (5) service as
a judicial law clerk or (6) service as in house counsel. However, the list
does not include two genres of law practice that have become
increasingly common: (a) providing outsourced legal research and writing
or per diem services (like appearances or depositions) to other attorneys
(collectively, freelance services) and (b) contract-based document
review.

       The only category of “active practice of law” listed in the Model
Rules that might even plausibly include freelance services and document
review is “private practice of law,” Lawyers who provide legal research
and writing or per diem services perform many of the same tasks as a
lawyer representing clients in private practice. And while document
review involves work a few steps down on the sophistication scale from
legal research or appearance work, most document review projects
require a contract lawyers to be licensed. However, neither freelance


                                      3
Comments by Carolyn Elefant,                              Re: ABA Commission on Ethics 2020
MyShingle.com                                   Model Rule on Admissions and Model Rule 5.5


legal work nor document review fit the definition of “private practice”
because freelance and document review lawyers do not represent clients
directly, but instead, effectively subcontractor to the clients’ lawyers.

        The distinction between a lawyer who represents clients directly and
freelance and document review lawyers is significant. Freelance lawyers
do not execute retainer agreements with clients and are not required to
comply with trust accounting requirements because they do not hold
funds for clients. Superficially, a freelance lawyer’s role resembles that of
a law firm associate who also does not deal directly with clients. However,
an associate, as an employee of the law firm representing the client, is
similarly bound by the firm’s obligations to the client whereas the
freelance attorney, as an independent contractor, is not.

       Document review lawyers are a further step removed from the
attorney-client relationship since they do not even contract with the law
firm or corporation requiring service, but instead, are considered to
contractors to the placement agency staffing the project.

       Though excluded from the definition of “private practice,”
freelance and document review services that they provide comes closer
to commonly accepted notions of “active practice of law,” than
teaching at a law school which the Model Rule treats as “active
practice.” Freelance lawyers research complex legal issues, draft briefs,
appear in court and participate in depositions, all of which sharpen
practical legal skills far more effectively than engaging students in the
Socratic method or writing a law review article. Even a task seemingly as
pedestrian as document review requires a legal understanding of
privilege and keeps lawyers current on e-discovery.

        Defining freelance and document review work as “the active
practice of law” so as to expedite admission in a new jurisdiction reflects
the realities of the legal profession in the 21st century. Increasingly, law
firms from solos to biglaw are replacing associates and non-equity
partners with less expensive – and frequently more capable -- freelancers.
In addition, because freelance and document review lawyers are not tied
to a permanent job, they are more likely to pick up and move to another
jurisdiction either to follow a spouse or to take advantage of another
opportunity. As such, the availability of a streamlined admissions process
represents an enormous benefit for freelance and document lawyers.




                                      4
Comments by Carolyn Elefant,                                      Re: ABA Commission on Ethics 2020
MyShingle.com                                           Model Rule on Admissions and Model Rule 5.5


       Therefore, to ensure that freelance and document review lawyers
enjoy the benefits of the proposed Model Rule on Admissions as their
colleagues, the Commission should amend the Model Rule to include
freelance and document review services provided to other lawyers or
firms on the list of activities that are considered “active practice of law”
for purposes of the Model Rule’s three-year eligibility requirement for
admission by motion.

III.     Proposed Revisions to Model Rule 5.5

         A. Recommendations to address the lingering UPL confusion under
             Model Rule 5.5
       My comments and recommendations focus on a question that
remains even under the revised Model Rule 5.5 which has long perplexed
many solos. Specifically, does a lawyer engage in UPL when he physically
works from home in State A where he is not admitted, but virtually serves
only clients in State B where he is admitted? In this regard, Model Rule
5.5(b), as revised states:

          A lawyer who is not admitted to practice in [a given
        jurisdiction] shall not:

              •    Except as authorized by these Rules or other law,
                   establish an office or other systematic and continuous
                   presence in this jurisdiction for the practice of law, OR

              • Hold oneself out to the public or otherwise represent that
                   the lawyer is admitted to practice in this jurisdiction.

      The Model Rule goes on to emphasize that lawyers can establish a
“systematic and continuous presence” where they are not physically
present if they render legal services virtually to that jurisdiction. Thus, a
New Hampshire lawyer who offers virtual online estate planning services in
Massachusetts and promotes the service through keyword and web-
based advertising targeting Massachusetts clients is deemed under the
Model Rule to have a systemic and continuous presence in Massachusetts
such that the lawyer would need to be licensed in Massachusetts to avoid
UPL claims.



                                             5
Comments by Carolyn Elefant,                              Re: ABA Commission on Ethics 2020
MyShingle.com                                   Model Rule on Admissions and Model Rule 5.5


        Unfortunately, the Model Rules resolve only the easy part of the UPL
conundrum. Most lawyers realize that they need to be licensed in the
jurisdiction where they’re representing or counseling clients, even if they
do so remotely. The far trickier issue left unresolved by Model Rule 5.5. is
whether a lawyer who’s licensed in Massachusetts but not New Hampshire
can provide virtual legal services to Massachusetts clients from a New
Hampshire address – or whether that activity would constitute UPL
because the lawyer is not licensed in New Hampshire.1

       Model Rule 5.5 is fairly clear that a the New Hampshire-based,
Massachusetts-barred lawyer is precluded from opening a physical office
in New Hampshire if not licensed there, even if the lawyer serves only
Massachusetts clients only. (“a lawyer who is not admitted to practice in a
given jurisdiction shall not establish an office….except for a purely federal
practice) But what if the Massachusetts-barred lawyer planned to
operate out of a spare room in his New Hampshire while representing
Massachusetts clients online only? Do virtual legal services which are
provided from a site in New Hampshire to Massachusetts clients constitute
a “systematic and continuous presence” in New Hampshire such that bar
admission is required.

      From my own experience in the solo community, I am aware that
most lawyers adopt the same approach taken by Rachel Rodgers and do
not seek admission in the state where they are physically located if they
are providing service elsewhere. These lawyers do so in part because
prevailing rules are unclear. However, they also reason that lawyers

         1
         This issue arose recently when a relatively new solo, Rachel
Rodgers, who has garnered national attention for her virtual practice
which focuses on young entrepreneurs, moved from New York (where she
was barred) to Arizona and continued to serve New York clients remotely.
Following national coverage of Rodgers practice in which she openly
discussed her Arizona-based, New York focused practice, a complaint
was filed against Ms. Rodgers in Arizona alleging that she engaged in UPL.
Eventually, the disciplinary committee found that because Ms. Rodgers
did not attempt to serve clients in Arizona and directed her marketing
towards New York and New Jersey clients. However, Arizona has not
changed its existing rules on UPL or rescinded an ethics opinion which
states fairly clearly that lawyers in Ms. Rodgers situation must gain bar
admission to avoid UPL claims. The incident is summarized in detail at my
blog, MyShingle.com, http://myshingle.com/2011/08/articles/myshingle-
solo/ethics-rules-may-be-stupid-but-rules-are-rules/.

                                      6
Comments by Carolyn Elefant,                               Re: ABA Commission on Ethics 2020
MyShingle.com                                    Model Rule on Admissions and Model Rule 5.5


affiliated with a law firm in a jurisdiction where they are licensed may
telecommute several days a week and handle matters from home even if
they are not barred in their home state. The telecommuting situation is
not all that different from one where a lawyer is licensed in one state and
provide services – either virtually or even physically – to clients in another
jurisdiction but physically performs the work in the jurisdiction where he is
unlicensed.

       For this reason, as a first step, Model Rule 5.5. should be revised to
explicitly state that lawyers do not engage in UPL when they serve out-of-
state clients from a physical location where they are not licensed. In
addition, to ensure parity between virtual lawyers and lawyers who serve
clients face to face, Model Rule 5.5 should go even farther and permit
lawyers to open an office in a jurisdiction where they are not licensed to
serve out of state, provided that they make clear to the public that they
are not licensed within the jurisdiction where they are physically located.
These revisions must go hand in hand to avoid giving virtual lawyers a
competitive advantage over those who choose to open a physical office.
Using the Rachel Rodgers example, it would be unfair for the Model Rule
to permit a lawyer physically located in Arizona to serve clients virtually in
New York without gaining admission in Arizona but prohibit another lawyer
from opening an office in Arizona to represent clients (for example,
transplanted New York retirees or vacationing New Yorkers) with matters e
arising exclusively under New York law.

      The Commission apparently assumed that relaxing admissions rules –
for example, requiring only three years of active practice to qualify for
admission by motion or allowing lawyers a year’s grace period to practice
while moving for admission in a new jurisdiction – would accommodate
lawyers who relocate to other jurisdictions. However, what the
Commission fails to take into account is that many lawyers who find
themselves licensed in one state, but physically located in another do not
want, or cannot afford the additional expense of admission by motion.

        Consider, for example, the case of junior associates who work at
large firms in cities such as New York, Washington D.C. or Boston but
choose to reside in less expensive suburbs in adjacent states. While
naturally, these associates are admitted to the jurisdiction where the firm is
located, most likely, few have sought admission in the state where they
live. In many instances, these associates may choose to leave biglaw to
start their own practices to achieve work-life balance – or, has been the
case recently, they are laid off for economic reasons and must start a firm


                                      7
Comments by Carolyn Elefant,                               Re: ABA Commission on Ethics 2020
MyShingle.com                                    Model Rule on Admissions and Model Rule 5.5


of necessity. In this scenario, these lawyers may need to launch their firm
from homes for economic reasons but are precluded from doing so under
even revised Model Rule 5.5. Likewise, Model Rule 5.5 prevents lawyers
from experimenting with innovative ways of delivering legal services –
such as a Florida-based, New York-licensed lawyer who opened an office
in Florida to help snowbirds (vacationing New Yorkers) with legal issues in
their home state.2 In this instance, the New York licensed, Florida-based
lawyer’s services are a preferable option for older clients in Florida who
may prefer face-to-face meetings than dealing with a New York lawyer
by phone. Moreover, clients save money where the New York lawyer can
handle their matters directly, instead of being forced to retain a Florida
lawyer who must then affiliate with a New York lawyer.

      The Commission also completely overlooks the exorbitant costs of
gaining and maintaining admission in another jurisdiction. Even admission
by motion (i.e., assuming no bar exam is needed) generally entails fees of
as much as $1000 for processing and background checks – which should
be unnecessary if a lawyer is in good standing in another jurisdiction.
Once admitted, lawyers must pay annual bar dues and potentially
comply with additional CLE requirements.

       Of course, these expenses are justified when lawyers actually
practice in the jurisdiction where they are newly admitted. But many
lawyers, particularly those who have practiced in another jurisdiction for
many years or parents who want to cut back to spend time with family,
do not want to practice in the state from which they physically work. Yet
under Model Rule 5.5., they are forced to pay additional bar dues simply
for the privilege of performing work for out-of-state clients from their home.

        For these reasons, the Commission should revise Model Rule 5.5. to
state that lawyers do not engage in UPL when they work from a location
in a jurisdiction where they are not licensed but serve clients, either




         2
        See, http://myshingle.com/2011/08/articles/myshingle-solo/ethics-
rules-may-be-stupid-but-rules-are-rules/. However, if this lawyer had set up
an online virtual firm to serve clients elsewhere, Florida would have
allowed it. In fact, virtual law pioneer Richard Granat operates a virtual
law firm handling Maryland family law matters from his home in Florida.
See, Bio at http://solopracticeuniversity.com/faculty/richard-granat/.



                                      8
Comments by Carolyn Elefant,                                   Re: ABA Commission on Ethics 2020
MyShingle.com                                        Model Rule on Admissions and Model Rule 5.5


virtually or physically, with matters in only the jurisdiction where they are
licensed.3

         B. Additional Measures to Protect Clients
       Understandably, the Commission may have concerns over the
potential for confusion to clients that may result when lawyers provide out
of state legal services in a state where they are not licensed. Likewise,
clients may also be deceived at the other end of the transaction, i.e.
where they hire a lawyer online who is licensed in, and provides virtual
services in Nebraska and whom consumers believe is located in Nebraska,
but who actually works from California or even another country. Below, I
propose several measures to guard against potential confusion or
deception.

        First, the Commission should require lawyers physically located but
unlicensed in one jurisdiction who serve clients with matters in another
jurisdiction to prominently display the jurisdictions where they are licensed
on letterhead, business cards, websites and other advertising materials.
Further, the disclosure should be communicated to clients by phone or
email prior to scheduling an initial consultation. The disclosure could be
similar to those required of lawyers with an exclusively federal practice
who may have an office in a jurisdiction where they are not barred. The
disclosure enables clients to readily avoid retaining, or even consulting
with a lawyer who is not licensed to handle the clients’ matters.

       Unfortunately, many lawyers unlicensed but physically located in
one jurisdiction who represent clients in another jurisdiction are able to “fly
under the radar” of the bar regulators in the where they are physically
located. Because these lawyers are not licensed, regulators do not learn
of their presence until an in-state client or competitor brings a UPL claim.
         3
          I realize that I should have brought these issues to the attention of
the Commission sooner. However, I have a law practice to run and
participate in these Ethics 2020 initiatives as a side hobby and already
devoted significant time to commenting on technology and marketing
issues. See, e.g., http://myshingle.com/2010/12/articles/tech-
web/myshingle-weighs-in-on-aba-ethics-initiative/ It would have been
nice if the organized bar groups that purport to represent solo interests or
the lawyers who will benefit from these revisions to the Model Rules but
prefer to violate them rather than change them could actually take the
time to file comments in these proceedings!

                                        9
Comments by Carolyn Elefant,                                Re: ABA Commission on Ethics 2020
MyShingle.com                                     Model Rule on Admissions and Model Rule 5.5


       Therefore, to allow regulators some level of oversight over lawyers
who serve out-of-state clients from a jurisdiction where they are not
licensed, Model Rule 5.5. should require these lawyers to register to do
business in the state just as a foreign corporation must register to do
business outside of the state of incorporation. The registration process
should not be costly or onerous; it might consist of a single form that simply
informs state regulators that the lawyer is located in the jurisdiction but will
be providing legal services (either virtually or in person) only to those
clients in the jurisdiction where the lawyer is licensed. The registration
requirement would allow regulators to keep an eye on lawyers who are
not licensed in the state without subjecting these lawyers to the enormous
costs of moving for admission and the subsequent burden of complying
with other jurisdictional requirements.

        Finally, lawyers who operate an exclusively virtual law practice
should be required to disclose to clients the general location from which
the service is rendered.4 When lawyers market virtual services in a
jurisdiction where they are licensed, potential clients may reasonably
assume that the lawyer is similarly located in that jurisdiction. If a problem
with the services arises,5 clients may be upset discover that the lawyer is
physically located halfway across the country – or even outside of the
country entirely. Although it may be argued – and indeed, I personally
agree -- that physical location should be irrelevant so long as clients
receive competent legal service, even clients who work with a lawyer
virtually may feel more comfortable knowing that the lawyer is located
close by. Clients have “unfettered discretion” to choose a lawyer for
whatever reason they like, and as such, they are entitled to consider
physical proximity even when retaining a virtual lawyer. However, virtual
lawyers are required to disclose at least a rough approximation of their
physical location to clients, clients will not have the ability to take this
factor into account when choosing a lawyer.



         4
         A lawyer working from a home office should not be required to
disclose a home address; a post office box or virtual address within the
same general geographic area as the lawyer’s home or city would
suffice.
         5
       Reference to potential problems is simply hypothetical and is not
intended in any way to suggest that a virtual lawyer is more likely to
provide inadequate service than a lawyer who works with clients face to
face.

                                       10
Comments by Carolyn Elefant,                              Re: ABA Commission on Ethics 2020
MyShingle.com                                   Model Rule on Admissions and Model Rule 5.5




IV.      Conclusion
       Over the past few years, the legal profession has gone through
enormous upheaval with lawyers forced to move locations either for
better job opportunities, lower cost of living or to follow a spouse. Many
of these lawyers have amassed tremendous skills in the jurisdictions where
they are licensed to practice and have no interest in practicing in, or
gaining admission to another state simply because it is where they will
work physically. Moreover, because of technologic advancements, it is
feasible for lawyers physically located in one state to seamlessly continue
their practice in another.

        The proposed revisions to Model Rule 5.5 facilitate mobility but they
do not go far enough. With the recommended changes discussed in
these comments, the Commission can provide lawyers with increased
flexibility and encourage innovative models – like virtual practices, or the
Florida lawyer’s “snowbird” service -- while at the same time ensuring
additional protection to clients.




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Carolyn Elefant Carolyn Elefant Principal Attorney www.fercfights.com
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