AMERICAN BAR ASSOCIATION
COMMISSION ON MULTIJURISDICTIONAL PRACTICE
SAN DIEGO PUBLIC HEARING
Saturday, February 17, 2001
9:00 A.M. – 12:00 P.M.
San Diego Convention Center
SAN DIEGO, CALIFORNIA
CONTENTS
1. Wayne J. Positan, Chair - Opening Remarks 2
2. Simon M. Lorne – ABA Section of Business Law 2
3 Louis A. Mezzullo/– ABA Section of Real Property, Probate
David K.Y. Tang and Trust Law 17
4. Chief Justice Gerald W. Vandewalle – Council of the ABA Section on Legal Education and Admissions to the Bar 30
5. Sidney White Rhyne – Federal Communications Bar Association 43
6. Daniel B. Magraw, Jr./ - ABA Section of International Law and Practice
Robert E. Lutz, II 51
7. Lawrence J. Fox 66
8. Joseph L. Shea, Jr. – Louisiana State Bar Association 81
9. Jerome C. Hafter 91
10. Philip Matthew Stinson, Jr. – Center for Education Rights 100
11. Anthony Davis/ - Association of Professional Responsibility Lawyers 111
Robert Creamer
12. Barbara O. Bruckman – ABA Section of Antitrust Law 126
11SAN DIEGO, CALIFORNIA, SATURDAY, FEBRUARY 17, 2001
2 MR. POSITAN: We'd like to begin the
3 procedures at this time. I'd like to begin by welcoming
4 everyone to the convention on multi-jurisdictional
5 practice, continuing our public hearing this morning,
6 scheduled for 9:00 a.m. until noon, following up with more
7 proceedings from yesterday. I'm pleased to announce at
8 this point that the board of governors has endorsed the
9 extension of the commission for one year. And, therefore,
10 I think we probably have time to complete this important
11 project at the inputs that we've been seeking.
12 I will, as a matter of procedure, remind
13 everyone that the commission has, in fact, received all of
14 your submissions, unless some late arrivals this morning.
15 We've had an opportunity to look at them before we arrived
16 here so it's not necessary to read them into the record.
17 It will be, in fact, part of the record placed on the MJP
18 website. So when you do offer your remarks, certainly
19 summarize what you had to say in the papers, but we are
20 really more interested in other things that you may want to
21 add or engage in discussion with members of the commission.
22 I understand we have one substitution today,
23 also. The No. 1 slot at 10:30, Larry Shea is going to be
24 speaking on behalf of the Louisiana State Board Association
25 in lieu of Professor Deborah Rhode, who withdrew her
26 request to speak this morning.
27 First person is Simon Lorne, ABA Section of
28 Business Law.
3
1 MR. LORNE: Good morning. Thank you for the
2 opportunity to be here on behalf of the Section of Business
3 Law. I come here as chairman of the committee on
4 professional conduct, which is charged with reviewing
5 issues of this nature.
6 You have the statement of the section before
7 you. I won't repeat it here other than to say that this is
8 obviously a problem that has been before the profession for
9 a long time. I think I read an article in the Mission Law
10 Review 23 years ago addressing some of these issues before
11 the Kutak commission at that time was addressing the
12 problems, and they are very difficult problems. From the
13 section of business law's perspective, most of our members
14 have practices that invariably take them across state lines
15 and indeed across national borders, and yet we have and
16 respect a multi-jurisdictional regulatory basis of the
17 profession, if you will, with which we all have to deal in
18 finding a solution to the problems represented by that
19 council. It's difficult and the section appreciates very
20 much your efforts to get to a solution.
21 Rather than going on in terms of comments, I
22 think that the comments of the section are fairly clear and
23 they're in front of you. Let me entertain any questions
24 that you may have from the commission.
25 MR. EHRENHAFT: I have a question about your
26 endorsement of Ethics 2000 Safe Harbors, and in particular the one that is most prevalent among lawyers who have
28 extensive practice across the state lines and even national
1 boundaries. 4
2 Your last safe harbor would be that he or she
3 was acting in respect to a matter that arises out of
4 reasonably related to the lawyers practicing in the
5 jurisdiction where he or she is admitted, which is a --
6 seems to me to be a requirement of some kind of an existing
7 practice that wouldn't accommodate perhaps expansions of
8 practice people would be interested in doing. And I
9 wondered to the extent to which the business law would
10 support a notion that that safe harbor, instead of being
11 expressed in terms of an existing practice, would rather be
12 expressed in terms of what a lawyer is authorized to do in
13 their principal jurisdiction of admission. So that to the
14 extent that in my case the District of Columbia, I may
15 opine on Japanese law. So if I'm competent to do so, I can
16 opine on New York law if I'm competent to do so. And that
17 would then allow my practice, wherever it would be, not
18 inconsistent with the practice that I'm permitted to engage
19 in where I am admitted.
20 MR. LORNE: As usual, I've got the difficulty
21 of speaking on behalf of the section, and to some extent,
22 naturally, my responses are my own, although I think I
23 understand where the section business law is coming from in
24 responding to issues of that sort.
25 Seems to me it's -- if we try to put some kind
26 of constraints, it's difficult to determine exactly which
27 constraints or how to formulate the constraining
28 parameters. And I think the section's thought was that the
5
1 language we used in the statement is sufficiently elastic.
2 To permit considerable analysis in the direction that you
3 suggest, I think it's also true that the section would
4 endorse broader connections, if you will, than
5 those set forth in the statement.
6 MR. EHRENHAFT: If one of the problems defining
7 these so-called safe harbors is the problem of elasticity,
8 because what can define the parameters, what is your view
9 about taking the opposite approach and saying that
10 multi-jurisdictional practice will be permitted but for an
11 attempting to identify those things that you think would be
12 inappropriate and thereby concentrating on those aspects of
13 practice that -- that one could suggest are really contrary
14 to our traditions and what the needs are, which is kind of
15 the approach that the United States is taking in its
16 international negotiation with it's trading partners.
17 MR. LORNE: Correct. And I think that is an
18 approach that the section would be quite comfortable with,
19 if you will. I think it was more difficulty fitting within
20 the -- the holes available, if you will. But I think if
21 the commission and profession as a whole were prepared to
22 move in the other direction, I think the section would be
23 quite comfortable.
24 MR. EHRENHAFT: Do I understand your thrust to
25 be principally endorsement of safe harbors under concepts
26 2005.5 or is the section of business law taking a broader
27 position on multi-jurisdictional practice in terms of
28 things that go beyond the safe harbor?
6
1 MR. LORNE: The approach that we have taken to
2 date within the section is, as the statement suggests,
3 within the safe harbor approach of Ethics 2000. I was
4 suggesting that I think, if there were support behind a
5 broader approach, the section would be comfortable with
6 that broader approach.
7 MR. EHRENHAFT: At this juncture --
8 MR. LORNE: That is not -- pardon me.
9 MR. EHRENHAFT: At this juncture, that is not
10 limiting essentially to the safe harbor being a subject
11 that would be acceptable.
12 MR. LORNE: I think that is certainly the
13 approach we have taken to date.
14 MR. RAMIREZ: The position statement mentions,
15 and I think this was the discussion that the council, the
16 extension business law found itself in. Let's say somewhat
17 awkward position on the whole MJP issue because we have
18 Ethics 2000 pursuing a certain approach, and we have the MJ
19 commission proceeding on the same similar track, but
20 feeling a little bit part of what the house is dealing
21 with, rule 5.5.
22 And so what you see here, in essence, mirrors
23 our comments to the Ethics 2000 commission. When we favor,
24 we don't want them to shrink from the position they've
25 taken, but we'd like to expand it. And so since they
26 proceeded along safe harbor, a safe harbor approach, we
27 endorse their safe harbor approach and then ask for some
28 additional safe harbors. So it's a mix of saying we
7
Peterson & Associates Court Reporting, Inc.
1 support their safe -- the Ethics 2000 safe harbor approach,
2 we support it, but expand it somewhat covered by some of
3 the points in this position statement.
4 MR. POSITAN: One the things that's not
5 discussed, and let me know whether it's contemplated or
6 not, is at what point would anything such as mandatory CLE,
7 some type of registration, mandatory pro bono, the
8 responsibility kick in, if at all, either under our safe
9 harbors or under the expanded notion that --
10 MR. LORNE: I don't think those issues were
11 considered very much by the section of the council in
12 getting to where we are today. If I were to speculate, it
13 would be to the effect that those sorts of reasonable
14 effects, if you will, of doing business or practicing
15 beyond one's home jurisdiction would be acceptable.
16 MR. JENKINS: Mr. Lorne, most of the commentary
17 we've received yesterday and today has been receptive to
18 the idea of some expansion of across-the-border practice,
19 but one statement we received from a witness who will
20 testify later is negative.
21 And while he recognizes the need for some
22 change, he asserts, and I imagine that this must be said to
23 have done his share, that this entire effort is motivated
24 by economics, say, a free enterprise goal of lawyers that
25 he says is so unprofessional regulation. So what do we say
26 about the proposition or the criticism that this is simply
27 an effort by lawyers to enhance their own practices?
28 MR. LORNE: I would have thought if there were
8
Peterson & Associates Court Reporting, Inc.
1 criticism aimed in that direction, it would be toward
2 preservation of the status quo rather than expansion of the
3 ability to carry the practice along with one's client
4 across state lines. I would have thought the -- the normal
5 attacks one sees on unauthorized practice questions is that
6 it's the bar associations in a given state prohibiting
7 competition for the lawyers of that state.
8 I would have thought that the
9 economics-oriented attack, to the extent it exists, and I
10 would hope it doesn't have very much validity at all. I
11 would have thought it is driven much more toward the status
12 quo than toward expanding the ability of lawyers to move,
13 by and large, certainly speaking of my own practice, for
14 example, when I'm doing things in other states and I'm in a
15 law firm with offices in only one state. When I'm doing
16 things in other states, it's because my clients want me to
17 be involved in other states. It's not because I want to go
18 to another state and somehow increase my income or look to
19 that. I think it is, in fact, professionalism at its best.
20 MR. GILLERS: To the question about the extent
21 to which some of these other obligations are existing
22 professions with regard to pro bono work, CLE and so on,
23 did your council consider some kind of a system under which
24 a minimum activity within a state on a nonpermanent basis
25 would create obligation to that state, sort of like our tax
26 treaties? If you're in a state for over 180 days, then
27 you're going to have to pay taxes there. If you're up to
28 that, then you don't have to pay tax there. Could a
9
Peterson & Associates Court Reporting, Inc.
1 similar kind of a system work for lawyers?
2 MR. LORNE: I don't think that we considered
3 the imposition of those sorts of -- I don't want to say
4 restraints -- the imposition -- pardon.
5 MR. GILLERS: Obligations.
6 MR. LORNE: Obligations. Thank you. The
7 imposition of those sorts of obligations at the council.
8 However, I think imposition of reasonable obligations that
9 reflect the lawyers' and the bars' obligation to the public
10 would not be objectionable.
11 MR. GILLERS: We have -- we have another whole
12 year, so maybe you could sit --
13 MR. LORNE: That would be good, too.
14 MR. GILLERS: We'll have the opportunity for
15 statements on that issue because it's a very important one.
16 MR. LORNE: Certainly.
17 MR. GILLERS: And I don't think we really had
18 that issue developed.
19 MR. POSITAN: Any additional questions?
20 MR. GREEN: Mr. Lorne, the business law section
21 safe harbor that wasn't included in the proposed 5.5, it's
22 No. 5 on your list, which would be for work that would not
23 be unauthorized practice of law if performed by a
24 non-lawyer.
25 Could you tell us a little bit about what that
26 would include and what the rationale is for that proposal?
27 MR. LORNE: I think of that proposal as being
28 much more clarification than anything else. Seems to me
10
1 that all it is saying is if a non-lawyer in a given
2 jurisdiction could do whatever it is -- and one of the
3 problems that I think we all run into in thinking about
4 multi-jurisdictional practice questions is the vagaries
5 that surround the notion of practicing law.
6 One is there's some obvious cases when you're
7 standing in front of a judge in a courtroom, you're
8 practicing law, and whenever you're writing a will you are.
9 But when you move beyond that, as certainly the profession
10 has since the canons of ethics came in 100 years ago, we
11 are not quite sure anymore when you're still practicing and
12 when you're not.
13 When I was at the S.C.C. and we were
14 prohibiting people from practicing law before the S.C.C.,
15 we wrestle with the question, "What does it mean to be
16 practicing before the S.C.C."? I think all of this
17 suggests No. 5 -- Proposal No. 5 in the section
18 statement -- is simply to say that if a given activity
19 would be permissible for a non-lawyer, it shouldn't become
20 impermissible simply because it's performed by a lawyer who
21 is licensed in a different jurisdiction.
22 I don't think -- I think that is certainly a
23 useful sort of thing to have, but I think of it as much
24 more clarification than anything else.
25 MR. POSITAN: Let me give you an example.
26 Would I be able to go to all 50 states and counsel people
27 on how to run a sexual harassment investigation since I
28 have plenty compensation of people doing that from state 5
11
1 and other such entities?
2 MR. LORNE: My guess would be yes. That gets
3 into the question of again whether that's practicing law.
4 But it's not practicing law, the mere fact that you're
5 licensed to practice law in one jurisdiction shouldn't stop
6 you from doing it in other jurisdiction if everybody else
7 in the world can do it? Why should we exclude from that
8 activity only the people who happened to be licensed to
9 practice law?
10 MR. POSITAN: Some people say that the license
11 carries with it some kind of a special connotation in terms
12 of anything I do is practicing law even if somebody else
13 could do it that doesn't have a license.
14 MR. McDonnell: If I might follow up on that
15 with a similar question. Many administrative agencies
16 permit non-lawyers to appear on behalf of somebody at
17 various levels. Would that also, then, be encompassed in
18 this? There is usually -- in those cases there is no
19 admission procedure, and many of our competitors in state 5
20 do exactly that.
21 MR. LORNE: One of the problems you've got in
22 coming up with specific examples is the question of whether
23 those activities do, in fact, constitute the practice of
24 law and so would be permitted in the jurisdiction. And
25 less and less I'm believing that the big five doing it,
26 it's not practicing law. But that's a different question
27 entirely.
28 MR. McDonnell: I understand that, and I think
12
1 one of the things we are all struggling with is that if we
2 do come into a jurisdiction and we are licensed with
3 lawyers, and what we do would ordinarily be thought of as
4 practicing law as we do it, the fact that somebody else can
5 do it as well does raise some questions.
6 MR. LORNE: It does, and I think those are the
7 difficult questions of determining what it is that is the
8 practice of law.
9 MR. McDonnell: But the section's position on
10 this is not perhaps exactly as stated, then. So you might
11 draw the line where the practice of law as opposed to
12 something that everybody has done maybe it is not the
13 practice of law. In other words, I'm trying to understand
14 the position.
15 MR. LORNE: I think that the position is that
16 applying the test jurisdiction by jurisdiction, in a given
17 jurisdiction, the thing that you're doing is something
18 everybody else could do. You should not be precluded from
19 doing it simply because you're licensed in your home state.
20 MR. McDONNELL: Right. Even --
21 MR. POSITAN: I have a feeling disciplinary
22 counsel sitting next to you might disagree with you.
23 MR. GILLERS: Does the lawyer when he sends out
24 his bill for his services usually indicates professional
25 services. And it will indicate in greater than less detail
26 than services be performed. Have you ever in your
27 experience found lawyers differentiating in those
28 communications with their client? In this particular
13
1 session, we talked about my legal advice, and in this
2 particular session we talked about my financial planning
3 act or that this was my psychologists --
4 MR. LORNE: I don't think historically we've
5 certainly differentiated, and I haven't seen the
6 differentiations. I don't think that's responsive.
7 MR JENKINS: Mr. Lorne, picking up on the
8 chair's question, if doing a sexual harassment
9 investigation is not something for which jurisdiction
10 requires investigative to be a licensed member of the bar
11 so that someone from out of state who is a lawyer and is in
12 his home state would be able to do under your Exception 5
13 because a non-lawyer could do it, as I understand it,
14 wouldn't it then follow that there would be no
15 attorney-client privilege for the conversations between
16 that person who in the home state is acting as non-lawyer
17 and the persons with whom he's communicating who might be
18 considered the client?
19 MR. LORNE: That might well be the result.
20 That's a result we have today. You're hitting a sensitive
21 point, because I once had a court tell me I had no
22 privilege because I wasn't acting as a lawyer in a
23 particular matter.
24 MR. JENKINS: But Mr. Positan's point is that
25 there are some activities for which, when done by a lawyer,
26 will be deemed a lawyer's activities although a non-lawyer
27 can also do it. And the lawyer brings with his person the
28 protection of the privilege. But if you're going to shed
14
1 that status to enable you to do what the non-lawyer can do,
2 you don't have to give up the privileges.
3 MR. LORNE: I'm not sure I agree with your
4 premise. The District of Columbia court in the case I was
5 talking about decided that what I was doing was not a legal
6 activity even though I was a lawyer, so there was no
7 privilege protecting the discussions I'd had with my
8 client. We do that today, the courts say if what you're
9 doing is not practicing law, then the privilege does not
10 attach to it. Now, I would assume that on the fringes,
11 right now you have some confusion on those issues. The --
12 MR. POSITAN: On that client's position, I
13 often in many sexual harassment investigations, they're
14 going to tell me they don't necessarily want to come out.
15 MR. LORNE: That may very well be right. One
16 may need -- as we develop these sorts of notions, we may
17 need to increase the attention we give to clarifying for
18 the client the role of the privilege. I think that's a
19 real question you have today with investigations.
20 MR. POSITAN: Can't be a check off. You know,
21 my acting as an attorney, do you want -- in other words, if
22 you want me to act as an attorney and have the privilege,
23 whatever you tell me, check off here and we'll sign a
24 retainer agreement. Otherwise, you're going to sign
25 something that says I'm not acting as a lawyer in this
26 case. You're going to pay me, then your malpractice
27 carrier will get sued --
28 MR. LORNE: One could imagine procedures
15
1 evolving. They don't exist now because we don't have the
2 standards now.
3 MR. POSITAN: I have a serious problem with a
4 notion that somehow attorneys waive client's -- really, the
5 client privilege as to what we're doing at any particular
6 time that we're doing it, and then getting into some kind
7 of inadequate analytical process as to when we are acting
8 as an attorney when we are not. Turn that switch on and
9 off, it's a real --
10 MR. LORNE: I'm suggesting that exists today.
11 Whatever one does with the Item 5 proposal, that exists.
12 And I would suggest that the dividing line, if you will,
13 for the courts on the privilege question will not be
14 co-determined with a dividing line on the unauthorized
15 practice question.
16 MR. RAMIREZ: When would it be clearer in one
17 aspect -- one respect, perhaps more troubling to some from
18 another point of view if that Paragraph 5 had in the first
19 line, where it says, "Safe harbor for services," if it
20 said, "For services as a lawyer in the jurisdiction" so
21 that the safe harbor was designed to be a safe harbor to
22 permit a lawyer to render services as a lawyer in a
23 jurisdiction in which the very same services absent
24 privilege and confidentiality could be rendered by a
25 non-lawyer.
26 MR. POSITAN: I think I could do that.
27 MR. RAMIREZ: I mean, that would press your
28 issue.
16
1 MR. POSITAN: I think that's an important
2 distinction to draw in terms of end courts reserving what I
3 think extremely poor value.
4 MR. RAMIREZ: That may be something you want to
5 take back to when we meet in March.
6 MR. EHRENHAFT: Certainly I want to put lawyers
7 in a position where they have to worry about malpractice
8 coverage depending upon which switch they turn on that day.
9 I don't think any of us want to end up in that place.
10 MR. LORNE: No.
11 MR. POSITAN: I know we need to move along. Is
12 there one final question?
13 MS. NIRO: Actually, I had one, but I'm now in
14 the position of needing to speak to state bar leaders in
15 the other building. But perhaps I will leave my question.
16 And it was a follow-up to your suggestion that there were
17 state interests in protecting the economics of their
18 instate lawyers to those who would cross state lines with
19 their client in practice. And there are those who would
20 think that that is one of the protections that a state bar
21 organization provides to the lawyers of the state. And
22 there are supreme courts who feel very obligated to be the
23 gatekeepers of the practice of law in their state. And the
24 suggestion that those who have demonstrated their knowledge
25 of their state laws and satisfied the requirements of that
26 state's courts are properly practicing law within their
27 borders.
28 What do we say to those folks who hold those
17
1 values very strongly to the suggestion that we ought to be
2 able to go wherever our clients want?
3 MR. LORNE: I think the original question went
4 to the economic protectionism, if you will, and --
5 MS. NIRO: Dual.
6 MR. LORNE: -- and there are certainly other
7 interests at work that are important. And it seems to me
8 that that is the balance that the commission is trying to
9 find, and I hope you will ultimately find successfully.
10 MR. POSITAN: Thank you very much for your
11 comments, and hopefully the business law section stays very
12 much involved in this process as we move through it.
13 MR. LORNE: We will, Mr. Chairman. Thank you
14 very much for your time.
15 MR. POSITAN: Thank you.
16 Mr. Tang, on behalf of ABA Section of Real
17 Property and Probate and Trust Law.
18 MR. TANG: Good morning. Thank you very much
19 for this opportunity to appear before you. My name is
20 David Tang. I'm the chair elect of the Section of Real
21 Property and Probate and Trust Law. Our chair,
22 Lou Mezzullo, will be speaking in just a couple of minutes
23 here. Our section has 32,000 -- approximately 32,000
24 members, and primarily divided into two divisions on real
25 property and probate law.
26 There is a long historical connection as well
27 as some ongoing substantive overlap between our two
28 divisions. But on this issue, it wouldn't be
18
1 jurisdictional. And we are certainly in agreement and in
2 unity as to our position as a section.
3 I want to stress that our section is composed
4 of both sole and small firm practitioners, as well as
5 practitioners from the largest firms. Others in meetings
6 like this have often used real property lawyers and probate
7 and trust lawyers as the example of the utmost in localized
8 practice, or the most conservative when it comes to state
9 jurisdictional matters. We're here to inform the
10 commission that from the perspective of our section that is
11 not true.
12 Our section counsel has come out in
13 overwhelming support to change the existing rules. And
14 that includes not only the ethics rules, but also the state
15 statutes on unauthorized practice of law, to permit a
16 transitory presence in various -- in various states. Our
17 reasons for that are simply that our practice, in order to
18 reflect the reality of the marketplace and what we are
19 currently doing, would necessitate those changes in the
20 area of real estate. That has changed significantly in the
21 last couple of decades.
22 It has become regionalized, and in many cases
23 nationalized. If you think of just the various players and
24 the real estate market, the developers are national, by and
25 large. The lenders are certainly national these days.
26 That is national life insurance companies, pension plans,
27 the capital markets are no longer localized, are no longer
28 your community bank that make that loan. The users, that
19
1 is the tenants, are by and large national. The owners of
2 developed property, whether it's residential or industrial
3 or commercial, would also be national. The brokers on both
4 residential and commercial properties are national in
5 scope. And many of the vendors, including the title
6 insurance companies, are national in terms of what they do.
7 And they provide title insurance coverage across state
8 lines.
9 So our practitioners -- speaking on behalf of
10 the real property side, our practitioners would like to
11 move out of the shadows when we confer with clients across
12 state lines or -- and would like to comply with state rules
13 on what they can or cannot do. Our recommendations in
14 terms of changes that we would request are based on the
15 twin principles or twin values, if you will, of recognizing
16 client choice and recognizing competency, and that we don't
17 believe that a lawyer loses their competency simply because
18 they've crossed the state lines.
19 We also believe that as a part of that, that
20 certainly the lawyer who has a transitory presence in
21 another state, a state that they're not licensed in, would
22 be and should be willing to subject themselves to the
23 regulatory jurisdiction of the state in which they have
24 gone into, but that these are the principles that we looked
25 at in developing our recommendations. And I will now turn
26 it over to our chair to talk about those recommendations.
27 MR. MEZZULLO: Well, I understand that all of
28 you have already read our three specific proposals on Page
20
1 7 of our submission. So I would be glad to answer any
2 questions concerning those proposals. I also thought I
3 would give a little story about my own practice.
4 I was with a larger firm when I started, and
5 then left that firm to form a boutique. I should be
6 careful about using that word because if my clients found
7 that out, they wouldn't know what I was selling. But, at
8 any rate, a boutique firm (inaudible) administration, we
9 have three attorneys, eight people all together. I would
10 say over 50 percent of my practice involves clients from
11 outside the state of Virginia.
12 One example, I received a call from a lady who
13 was serving as executor of her mother's estate. She was in
14 Texas, the estate was in Mississippi. She was referred to
15 me by a law professor at the university in her hometown to
16 deal with an issue in the state tax return, qualified
17 family-owned business interest deduction, because the CPA
18 that was performing the -- that was preparing the return
19 wasn't familiar with it. The attorney that was handling
20 the estate wasn't familiar with it.
21 So I got involved in that respect to that
22 particular issue. But then another issue came up involving
23 whether Mississippi recognized the qualified family-owned
24 business interest deduction. In that situation, I called
25 an attorney in Mississippi that was familiar with
26 Mississippi's state tax.
27 So we have at least three states here involved
28 in a probate practice that I have in Virginia. And I can
21
1 give many, many examples of that situation or of situations
2 where I'm representing clients that are in other states.
3 And one thing that I do, if I'm preparing documents for
4 a client that lives in another state, it's with the
5 understanding that those documents will be reviewed by a
6 competent attorney in that other state. Otherwise, I will
7 not take the engagement.
8 I do that for two reasons. Number one, I think
9 that that protects me from the unauthorized practice of
10 law, but I think also makes sure that I'm not absolutely
11 liable absolutely for anything that may be wrong with
12 respect to those documents. But people in our division of
13 the section have practices that are similar to mine. That
14 is that they practice across the country, particularly in
15 the estate planning area where you're dealing with federal
16 and state tax so long as we still have it.
17 MR. POSITAN: To follow up to Professor Green
18 (inaudible) to the speaker. Your Recommendation No. 3 says
19 that you would propose expanding 5.5 to complete services
20 (inaudible) a lawyer in good standing admitted practice
21 rendered in that jurisdiction by a non-lawyer. Do you have
22 any examples of the type of service that your section is
23 talking about here?
24 MR. MEZZULLO: Well, for example, it's clear
25 the CPAs can prepare tax returns. I also prepare tax
26 returns, basically state, and give tax returns, sometimes
27 fiduciary tax returns. When I'm preparing those returns,
28 there may be issues that are legal in nature or they may be
22
1 issues that are just purely tax preparation that a CPA or
2 even someone who's not a CPA could perform.
3 So that would be one example. But I will say
4 that I would agree with the traditional language, that is
5 suggested by Mr. McCallum concerning making it clear that
6 you're still performing legal services in that situation
7 for all of the reasons that were already expressed.
8 MR. McCALLUM: Let me ask you this. You have
9 indicated that in No. 2 that the last part of that meeting
10 the lawyer is not based permanently in the jurisdiction.
11 Have you come to any conclusion as to how much activity
12 should be allowed before you reach the level of permanency?
13 In other words, a series of ad hoc transactions
14 that happens to occur, or do you have a situation like
15 Kansas City, Mississippi where basically every day services
16 are performed in each jurisdiction by lawyers who are not
17 licensed in those jurisdictions?
18 MR. MEZZULLO: I don't think we got into that
19 issue in that great debate. But I would say that I think
20 that, first of all, a lawyer should be subject to the
21 disciplinary rules wherever he is practicing, even though
22 he's not admitted in that particular state. I think that
23 after a certain amount of activity in a particular state,
24 then that lawyer should have to follow the formalities that
25 a lawyer that's admitted to practice in that state has to
26 follow.
27 Now, how much activity will warrant that type
28 of obligation. I don't think we have reached that quite
23
1 yet. But I think there should be a point where the lawyer
2 has more than just a passing obligation with respect to the
3 rules in that particular state. Again, I think that any
4 state that I'm practicing -- that I'm advising my client
5 in, I should be subject to those rules.
6 MR. POSITAN: You followed up with my earlier
7 question to the other -- to the section business law, as
8 well. Mr. Tang, you're free to come back to the podium,
9 help your partner out here.
10 But at what point, if any, does obligation --
11 does an obligation kick in such as mandatory CLE, mandatory
12 pro bono and client's security protection funds and those
13 kind of things? Have you thought about that?
14 MR. MEZZULLO: Well, we haven't. But as I
15 already indicated, I think that if I'm performing legal
16 services on a regular basis in Maryland, I think I need to
17 be subject to more obligations than just upon performing
18 service on every other year or something along those lines.
19 But we are, again, as I was answering the question earlier,
20 I can comment subject to all of those rules that we have
21 discussed that in any detail.
22 MR. TANG: I think those are the type of rules
23 that we need to be established in the same way that the
24 concept of permanent establishment for under tax treaties
25 have been worked out for over a long period of time.
26 Certainly, making phone calls in to another
27 state and providing legal advice may not subject you to
28 those types of requirements, but if you are regularly
24
1 crossing the border to advise a client in another state,
2 that, obviously, is a different matter. I think the two
3 ends of the spectrum are clear, phone calls being one end
4 of the spectrum. And if you actually establish a physical
5 presence, an office or even a temporary office of some
6 kind, that certainly anchors the other side of the
7 spectrum. Then where in the middle you would draw those
8 lines as to when some of the other requirements would kick
9 in.
10 The legal obligations would be from the state
11 that you're licensed in, presumably, and the malpractice
12 type of insurance would be regulated from the place where
13 you have the license. But the -- the risks and the
14 jurisdictional aspects that you subject yourself to when
15 you go into another state would simply be there. And the
16 responsibility would be there in providing quality service.
17 MR. POSITAN: Why should it be limited to
18 mandatory CLE in a jurisdiction that you're admitted?
19 If your practice, let's say -- let's pick a
20 number -- 20 percent of your practice. Let's assume you're
21 in Maryland, and for one reason or another, 20 percent of
22 your practice somehow throws you into the adjoining state
23 of Delaware. And I don't know whether Delaware has a
24 mandatory CLE or not, but let's assume okay, in fact, they
25 do. Why should you have to go take some CLE in Delaware if
26 you're doing 20 percent of your practice there? If the
27 attorneys in Delaware have to do it, and the reason,
28 presumably, that they've done it is the supreme court of
25
1 Delaware decided that it's a good thing for attorney
2 competency that you take continuing legal education
3 courses, which means that it is a test of competency.
4 MR. TANG: Well, if the principle is
5 competency, several observations.
6 It's ironic, Mr. Chairman, that you would pick
7 Delaware. Because clearly for transactional and business
8 lawyers, I'm sure there are, if not formal opinions, many
9 law firms across the nation have had -- been asked to
10 advise on Delaware corporate law simply because of so many
11 different corporations. And if the lawyer is competent to
12 advise on corporate law in many ways, as I believe you
13 heard testimony yesterday, isn't it more competent for a
14 business lawyer in another state to know what the issues
15 are and to know where the traps are than for someone who
16 does not practice business law in Delaware that would have
17 to advise on business law issues in Delaware? So if the
18 issue is competency --
19 MR. POSITAN: Let's talk about Delaware
20 business law. And let's say that Delaware conducts every
21 year for all of the business lawyers who want to deal in
22 Delaware where a mandatory CLE program that says you have
23 to take this course every year because we changed the law
24 that year so often and we want to make sure that everybody
25 knows what's going on. Why should you be subjected to
26 having to take that course?
27 MR. TANG: I'm not suggesting that we would not
28 be subject to it if that's the quid pro quo for allowing
26
1 transitory presence. My only point is if the issue is
2 competency, the lawyer certainly is subject to any of the
3 liabilities that would come up if there was not competency
4 exhibited in the advice that was being provided. And in
5 many ways the person providing business law about a
6 Delaware matter, I would submit, would be competent to take
7 those risks versus someone who does not practice business
8 law based and licensed in Delaware.
9 MR. POSITAN: I'm assuming that the superior
10 court of Delaware didn't decide to do that because they
11 wanted to figure liability. They wanted to make sure
12 people who were advising on Delaware law knew what they
13 were talking about.
14 MR. EHRENHAFT: Then isn't the answer,
15 Mr. Tang, that if a competency question were ever to arise,
16 one would examine that competency. And whether taking a
17 particular CLE course is evidence of that competency may be
18 a fact that might be considered. But it wouldn't
19 necessarily be just positive since somebody could be quite
20 competent without having -- not to say a jurisdiction may
21 not require CLE courses as a way of -- of assisting
22 competency. But it's not a test of competency if everybody
23 takes a course or not. It's not a defense that I took the
24 course and therefore I did what I did and could be an after
25 the fact examination of the existence of competency.
26 MR. TANG: I thank you. I think as I indicated
27 before, we wouldn't object to having any of the members of
28 our section who may want to practice real property or
27
1 estate planning in another state be required to take a
2 mandatory CLE course in the other state. I just wonder
3 whether that necessarily is the limits test for competency.
4 MR. POSITAN: Not necessarily. If you take the
5 logical end, basically you put in a position that says no
6 mandatory CLE is really necessary because it's really just
7 a thing to assist you and therefore should be mandatory.
8 MR. RAMIREZ: When could I suggest this whole
9 issue of CLE is obviously from the discussion in your
10 comments. I had this perhaps naive impression that most
11 states did not mandate CLE be taken in a state were
12 permitted to be taken in national programs. In fact, I --
13 it's my -- my impression from the A.B.A. relied for years
14 CLE from all over the United States.
15 I think the whole question of whether a state
16 might want to advantage law schools or CLE bodies within
17 the state by mandating their CLE be conducted in state,
18 that's a whole separate issue. But the fact is that most
19 states permit that CLE be taken in a variety of locations.
20 I -- I ask you, you gentlemen, what if this
21 commission were to conclude as a matter simply of policy in
22 the interest of the profession that it would be -- it would
23 be an advantage in requiring any lawyer who on a regularly
24 recurring basis is in the jurisdiction outside his or her
25 home jurisdiction to meet the minimal CLE requirements in
26 that jurisdiction. That is, if it's greater than the home
27 jurisdiction, they'll have to come up to that level.
28 We might conclude -- we haven't debated this,
28
1 but we could well conclude that the worst thing that can
2 happen is that we would improve the level of CLE around
3 the United States for lawyers. And we might conclude that
4 wouldn't be such a bad thing anyway.
5 MR. TANG: Not at all.
6 MR. McDONNELL: If I might ask a slightly
7 different question. I note that the section hasn't exactly
8 addressed any regulatory mechanisms or enforcement
9 mechanisms or mechanics. Have you given any thought to
10 that? For example, how would a state know that an
11 out-of-state lawyer was in there 20 percent of the time?
12 Does the section have any feelings about things like
13 registration or filings or whatever?
14 MR. TANG: The short answer is no. I don't
15 think the section has had the opportunity to drill down
16 that far to really think about how the enforcement would
17 work. Our focus has been on the fact that under our
18 current system where this is already occurring, that is,
19 lawyers crossing state lines, that there is no way for
20 current state bars to regulate or enforce that situation or
21 perhaps even to claim jurisdiction, whereas like having a
22 rule that says that if you are going to have some type of
23 transitory presence in another state, that that
24 automatically subjects you to the jurisdiction of that
25 state, that you at least establish a baseline that we don't
26 currently have.
27 MR. McDONNELL: Okay.
28 MR. POSITAN: To follow up on your
29
1 international tax treaties, essentially, the United States
2 or other countries adopted a rule that for better or worse,
3 we're going to draw a bright line because a bright line is
4 better than uncertainty. And, therefore, if someone is in
5 a jurisdiction for only 180 days, they're not going become
6 a taxpayer. Stay there 184 days, they become a taxpayer.
7 It's just a rule of means.
8 Does your concept to think of a similar kind of
9 rule of convenience would be inappropriate one for this
10 issue as well, that people know if they're spending more
11 than X number and maybe it's in threshold terms of value
12 rather than in time. Time is not the only criteria. It
13 might be value in transaction, something like that. These
14 kind of bright lines would facilitate what we are talking
15 about. Can you support that?
16 MR. MEZZULLO: Well, in today's situation,
17 probably something like that would be supportable, but I
18 would like to see the day when we would have minimum
19 standards across the country so we wouldn't have 51
20 different rules and regulations that we would have to
21 satisfy.
22 I realize that that's 10 or 20 years in the
23 future, but I think that the country as a whole, the law
24 profession as a whole should be able to come up with what
25 they think should be minimal standards as far as CLE and
26 pro bono and so forth. Propose an alternative regardless
27 of what state they practiced in, the only thing that you
28 would have to worry about is if you're going into another
30
1 state to practice.
2 For example, myself, if I'm drawing a will up
3 for someone that lives in Maryland, I better have another
4 Maryland lawyer read that will, or I better go to CLE put
5 on by Maryland attorneys about Maryland's state trust law.
6 And that's how I would like to see the law
7 eventually develop, rather than having 51 different rules.
8 And I think that in that situation, I think if rules would
9 be enforced much more evenly rather than what we have
10 today, which is probably the only time that the rules are
11 enforced, is in a suit for recovery of fees.
12 MR. POSITAN: We need to move the calendar here
13 along. I thank you both for your remarks. Once again, we
14 hope that you stay involved in the process and think about
15 some of the questions that we've raised and give us input
16 back so that we can think about it, too.
17 Chief Justice Gerald Vandewalle, who is here
18 speaking on behalf of the council of the A.B.A. Section on
19 Legal Education and Commission of the Bar.
20 JUSTICE VANDEWALLE: Good morning,
21 Mr. Chair. Thank you. It's a pleasure to be here. I am
22 Gerry Vandewalle. I'm a Chief Justice in North Dakota,
23 President of the Chief Justices. But for my purposes
24 today, I am appearing as the Chair-elect of the Council
25 Section on Legal Education and Commission of the Bar. And
26 I appreciate the opportunity to appear. I tell the lawyers
27 that appear before me, I ask the lawyers not to read their
28 briefs to me. And I will extend to you the same courtesy.
31
1 I will not read my prepared written remarks to you.
2 MR. POSITAN: I've waited all my life for this
3 opportunity.
4 JUSTICE VANDEWALLE: It's been 23 years,
5 Mr. Chairman, since I've been on this side, so I sat and
6 listened this morning. I'll try to get back in shape.
7 I have -- we have outlined some things for you.
8 The section has not yet taken a position on the specific
9 issues that the former chair outlined in her November 2000
10 memo. But what we have done is identified for you some
11 certain broad considerations that we believe are essential
12 to the resolution of the issues, tough issues with which we
13 are wrestling. We've also outlined for a little bit the
14 history of the section of legal education.
15 And I believe it's important to recognize that
16 the section is the oldest section in the American Bar
17 Association. Started with a committee back in 1878, and
18 that committee took the position very early that the law
19 school diploma is essential to qualification for the admit
20 to the bar, that law school curriculum should consist of
21 vigorous, three-year course of study. One of the section's
22 central functions, then, is the accreditation of law
23 schools. And I would note that the section appeared on the
24 very first list of accrediting agencies approved by the
25 Department of Education.
26 In November, the advisory committee to the
27 department recommended the section be renewed for another
28 five-year term. And in January, I'm happy to report that
32
1 the Department of Education did renew the council's
2 accreditation standing for another five years. We've
3 outlined for you also, I think, the roles of the
4 accreditation standards of the section. And those goals
5 are listed for you. There are six of them. I'm not going
6 to read them to you, but those goals then form our position
7 under the consideration that we believe this commission
8 must look at in formulating its response to the issue of
9 multi-jurisdictional practice.
10 And they are a national system of accreditation
11 of law schools that states to assure that all law schools
12 prepare new members of the profession for the practice of
13 law in accordance with those issues. And that whatever
14 position the commission ultimately adopts on the subject of
15 multi-jurisdictional practice should be consistent with the
16 council safeguarding these interests by continuing to apply
17 these accreditation standards in a vigorous manner.
18 Secondly, that the standards for admissions to
19 practice should be designed and enforced in a manner that
20 will protect consumers of legal services.
21 Thirdly, and this gets to what you were just
22 discussing with the former people that were testifying, the
23 standards and procedures should protect those jurisdictions
24 that are chosen to adopt them for continuing legal
25 education.
26 And finally, that appropriate criteria proceed
27 and enforcement mechanism for disciplining attorneys who
28 violate standards of professional conduct should remain in
33
1 place.
2 Our concern is that some of the proposals
3 before you on multi-jurisdictional practice would have the
4 unintended, and I emphasize "unintended," consequence of
5 undermining the clarity of the accreditation vice chair and
6 disciplinary standards. And we urge that you not do that.
7 We urge that you recognize those considerations and
8 whatever solutions you form to the multi-jurisdictional
9 practice issues. Our section stands ready to assist you in
10 whatever manner we can in formulating those proposals.
11 Mr. Chairman, that completes my statement.
12 I've tried to catch you up. I'm happy to answer any
13 questions.
14 MR. RAMIREZ: I have one, Justice Vandewalle.
15 JUSTICE VANDEWALLE: Yes.
16 MR. RAMIREZ: In the middle of your second
17 bullet point, there's a statement, "If this commission were
18 to recommend the adoption of system national license, that
19 system will be guard against the dilution of additional
20 standards." Would it be fair to say that that pause or
21 that statement ought to really mean each of the bullet
22 points? That is, if there were to be a system of national
23 license, you'd also want to have discipline?
24 JUSTICE VANDEWALLE: Yes.
25 MR. RAMIREZ: Have standards -- I assumed it
26 was implicit that that would apply.
27 JUSTICE VANDEWALLE: It is.
28 MR. RAMIREZ: If a national license system,
34
1 which obviously is one of all ten that we are looking at,
2 were to be considered, do you think it should touch all of
3 those points?
4 JUSTICE VANDEWALLE: I certainly do. May I
5 switch hats very quickly and say that I'm not recommending
6 the system national licensure.
7 MR. POSITAN: How would you balance a system of
8 safe harbor such as those contemplated by 5.5 with
9 mandatory CLE along the lines of discussion from last week?
10 JUSTICE VANDEWALLE: Well, I've looked very
11 closely at my colleagues' committee, Chief Justice Norm
12 Bases for 5.5 and 8.5 safe harbor issues and the Ethics
13 2000. I'm not sure I have zeroed in, Mr. Chairman, exactly
14 on the CLE programs because they are so varied. And
15 it's -- there's no doubt that you've wrestled with this at
16 all your meetings, that we have 50 different jurisdictions
17 that have decided yesterday. I'm not sure I was aware of
18 it, but I sat in a meeting in which I was told
19 that (inaudible) supreme court is not enforcing.
20 I would suggest that you are going to have to
21 be a magician and the commissions have to be magicians and
22 draft some kind of a proposal that will enable those states
23 to at least satisfy their -- what they require in the line
24 of CLE requirement. I do agree -- I think most states that
25 have those CLE requirements permit you to take courses from
26 other states in other jurisdictions and qualify for the
27 CLE.
28 So I'm not so sure that that's a big problem
35
1 necessarily, the fact that you take your CLE requirements
2 in some other jurisdiction.
3 MR. POSITAN: Just so would be approved by the
4 state --
5 JUSTICE VANDEWALLE: Yes, I agree they do.
6 MR. POSITAN: You had to take a physical exam.
7 MR. EHRENHAFT: Mr. Chief Justice, you have
8 talked about the importance of the accredited law school
9 graduations, requirement for admission to the bar.
10 Yesterday we heard from the president of the
11 California bar. The California bar representatives now may
12 be 20 percent of all American lawyers. They have advisedly
13 not decided to include that as a requirement to the
14 admission to the bar. We have no evidence that California
15 lawyers are any less qualified by the fact that they do not
16 have that requirement.
17 And we have received information that, for
18 example, in England there's no requirement that people
19 seeking to became solicitors have any particular degree of
20 education not accredited not even to law school. They're
21 permitted to take the examination. And if they pass the
22 examination and do certain other things, they are qualified
23 as solicitors.
24 So we have a variety of situations where there
25 appear to be pretty qualified bars with no greater
26 incidents of malpractice on which we are aware because of
27 lack of accredited law school graduation. How is it that
28 we can be so confident that this is a necessary requirement
36
1 for admission to the bar?
2 JUSTICE VANDEWALLE: Well, you've asked several
3 questions, Mr. Ehrenhaft.
4 Let me start with California. I was not here
5 yesterday, so it's very difficult to respond. They do not
6 require A.B.A. accreditation, but they have their own
7 accreditation. And there are many states such as my own
8 that cannot afford that type of a system. We have a
9 proliferation laws. Some of them now, at least under the
10 antitrust agreement, are for-profit law schools.
11 I -- I assume you don't suggest that any of
12 those graduates of law schools be freely admitted to come
13 in at any stage of the game.
14 MR. EHRENHAFT: Just talking about whether one
15 could require -- I'm not arguing about the requiring an
16 examination for entry. But the question is whether one
17 needs to demonstrate that graduation as a criteria for a
18 lawyer, because we heard from people also saying they
19 couldn't be admitted on a reciprocity basis because of this
20 issue because of accredited law school.
21 JUSTICE VANDEWALLE: If you start with the
22 assumption, which I do not, that an examination is the all
23 and end all of a compensate for a lawyer, then you would be
24 correct. I do not agree with that. I think the education
25 is much more significant than the examination.
26 MR. POSITAN: Do you then say that if you don't
27 graduate from an accredited law school, that you should not
28 be able to engage in multi-jurisdictional practice beyond
37
1 the state?
2 JUSTICE VANDEWALLE: There are many states
3 that -- well, there's a difference, Mr. Chairman. Engaged
4 what? In a given case or be admitted to the bar of that
5 state?
6 MR. POSITAN: Well, let's assume that you are
7 a resident of California. You've graduated from a
8 non-accredited law school, not an A.B.A. accredited law
9 school. You've been admitted to the California bar. 25
10 percent of those people who passed the bar exam on the
11 first occasion, now you're going to engage in
12 multi-jurisdictional practice in five other states. Should
13 you be able to do it?
14 JUSTICE VANDEWALLE: In some of those states,
15 you would not be able to do it.
16 MR. POSITAN: The question is "should you."
17 JUSTICE VANDEWALLE: No. Let me give you an
18 example because I think it's a weak link. Let me give you
19 an example, and I've gotten my hat off as a section chair
20 elect, and my chief justice hat on. When I came to the
21 bench in North Dakota, I -- I looked at our list of people
22 that were coming in for admission to practice. We had all
23 these people that I never heard of, and in North Dakota you
24 know everyone. And I said, "Where are all these people
25 coming from?"
26 And they said, Well, they are some people going
27 into the military, and all they need is to be admitted in
28 some state, then they can -- they get in the military. And
38
1 so they looked at what they thought was the weakest link
2 and they thought North Dakota was the easiest part to take
3 the bar in North Dakota, get admitted, and you're home
4 scott free.
5 Seems to me that the same issue that got
6 passed, look at the weakest link in any of the 50 states
7 and say if we can get admitted there, then we can practice
8 anyplace else. It's the weak-link type of situation.
9 MR. McCALLUM: What I'm trying to wrestle with
10 is the reality here. We are in this close state. There's
11 several hundred thousand lawyers here. As the California
12 bar leaders told us yesterday, they feel very good about
13 their own competence. And you have a proposal for some
14 sort of national policy dealing with these issues.
15 How do we deal with the issue of the fact that
16 many of those several hundred thousand lawyers here had
17 never gone to an accredited law school? That it's already
18 too late for them to go to or have gone to an accredited
19 law school? How would you deal with that? How would you
20 organize that?
21 JUSTICE VANDEWALLE: I don't have an answer for
22 all those questions. I'm not sure I'm totally
23 understanding the issue of if you say if they're going to
24 be a multi-jurisdictional practice. And it gets back to
25 the issue of safe harbor. It seems to me there's a
26 difference between saying there are certain safe harbors
27 that you can use when you practice and saying that you are
28 freely -- you are free to practice anyplace you want at any
39
1 time as long as you're admitted in any jurisdictions
2 someplace, and those are two -- two extremes.
3 MR. DIMOND: Did you mean that the California
4 lawyer would be able to come in to your home state on a
5 temporary basis or out basis and do whatever services they
6 can perform for their client, from California that needs
7 service in North Carolina or North Dakota, as long as it's
8 sporadic, they can do it but not personally.
9 JUSTICE VANDEWALLE: It concerns me, but I must
10 tell you that under our rules, they can do that. And I
11 expect that's probably true of a lot of rules, they can
12 come in on -- for those isolated incidences.
13 MS. GARVEY: Mr. Chief Justice, one of the
14 things that we have been looking at is not simply the
15 sporadic -- that I think has engaged our attention this
16 morning, but also the question of easier, perhaps,
17 admission reciprocity, whatever that these people pass from
18 something that is a safe harbor, an occasional and perhaps
19 they're on what might be the find is a more regular basis,
20 and I think maybe that's where the issue that we're sort of
21 going around this to come to -- come to bear.
22 And I know that the last section looked at that
23 in that context. In other words, they're basically is an
24 issue of admission, but then there is the issue of where an
25 attorney has been practicing for a period of years and his
26 or her practice begins to bring that attorney into more
27 regular contact with another state. Are there criteria
28 that we need to look at or is this something we should
40
1 investigate a little bit more, since I am from the state of
2 California, but I did graduate from an accredited law
3 school.
4 JUSTICE VANDEWALLE: Well, we have not been direct in
5 response to your question. We have not looked at that
6 specific issue. I -- I would point out that the position
7 of the American Bar Association, the recommendation, and to
8 my knowledge, it's not been revised and is still there, is
9 that all law schools and all applicants for the bar should
10 be a graduate of an A.B.A. accredited law school.
11 California doesn't do it, but that is the recommendation of
12 the A.B.A. Indeed if all the states had that requirement,
13 it would not be an issue. It would not be an issue. So,
14 you know, we were not totally consistent. On the one hand,
15 the A.B.A. is saying every graduate, every applicant should
16 be a graduate of an A.B.A. law school. Yet we are sitting
17 here trying to figure out how we can allow people to
18 practice across the state lines and multi-jurisdictional
19 practice that are not graduates of an accredited law school
20 because all of the states don't follow.
21 MR. RAMIREZ: Do you happen to know how many
22 states permit admission for graduates from non-accredited
23 law schools?
24 JUSTICE VANDEWALLE: There are several. I have
25 some colleagues here that may be able to give me that
26 answer.
27 Do you have any idea?
28 MS. MOESER: I think about as many as two.
41
1 It's more common experience (inaudible) bar associations to
2 realize that there is included increasing to waive their
3 requirement. So in terms of are many states permitting
4 graduate under-accredited law schools to sit for the bar
5 exam, the answer is yes.
6 What some jurisdictions are doing, in order to
7 accommodate the discussion you're having today with the
8 chief justice will permit me (inaudible) elsewhere take the
9 position that they will not admit graduate non-accredited
10 schools on motion (inaudible) allow that passage of time
11 requirement satisfy the competency side in lieu of
12 practicing law school and therefore permit the -- the
13 moving lawyer to sit for the bar exam after his five years
14 of practice.
15 JUSTICE VANDEWALLE: I assume the commission members are
16 all familiar with their purpose as the executive director
17 of the National Conference of Bar Examiners. The other
18 people that are here today may not know it.
19 MR. EHRENHAFT: Do you have any view on the
20 possible application to this issue of a standard that we
21 all have with regard to driver's licenses? That person
22 takes a driver's license which may in one state require all
23 kinds of tests and road tests and other kinds of things.
24 And when that person moves to another jurisdiction, they
25 can simply use that driver's license.
26 If they become a resident there, then they have
27 to retake an exam, may not automatically be given a
28 driver's license. And it may be that more people will be
42
1 put at risk by inexperienced drivers and inexperienced
2 lawyers.
3 JUSTICE VANDEWALLE: I don't think that's
4 universally true. And I should tell you that I deal
5 regularly with some people in my state that insist that
6 they don't need a driver's license and that only after
7 they've had an accident should they -- should their driving
8 privilege be revoked? And so it's -- you know, do we let
9 everyone practice law until something happens and then say,
10 "Oh, you're not competent"? After the fact, we'll decide
11 that you're not competent. So, you know, there is a
12 relationship between the driver's issue and some of the
13 questions that have been asked this morning.
14 MR. EHRENHAFT: Has your section looked at the
15 considered feasibility of national licensure or a national
16 bar exam?
17 JUSTICE VANDEWALLE: We have not. As I said in
18 the opening remarks, we have not dealt with any of the
19 specific issues on that. We recognize that they're there.
20 Whether or not there's a national exam, or whether it's a
21 local exam or admission process, we've just asked that you
22 recognize the law school accreditation issue in any of
23 those -- in any level. I should tell you, I -- and my
24 colleagues may be upset. I suppose if you're looking at a
25 national exam, my state would be an example if one could go
26 there. We use all the products. This is our first year
27 national conference bar exam.
28 MR. GARVEY: So is it used entirely multi-state?
43
1 Is that your standard for admission?
2 JUSTICE VANDEWALLE: It is.
3 MR. EHRENHAFT: Just one last question. Farm
4 lawyers, what do you do about farm lawyers who obviously
5 have not been able to go to an A.B.A. accredited law
6 school?
JUSTICE VANDEWALLE: Well, as the section through a bar
8 admissions long ago, several years ago, came up with the
9 consult with legal consultant proposal that we thought up
10 along the way in satisfying some of that. Unfortunately
11 not a lot. Many of the states have not adopted that. Now,
12 I don't know if there is a cry for it in those states or
13 not. I cannot answer that. Some of the states, such as
14 New York, did allow that, and it seems to me that that may
15 be an answer. It's not an answer, and I understand the
16 issue of our lawyers going over to France and asking about
17 being admitted and being told, If you want to be admitted,
18 you have to write your bar exam in French in order to be
19 admitted because you don't allow French lawyers to be
20 admitted in the United States. I understand those issues.
21 But I don't necessarily agree that should drive the total
22 admission policy in the United States.
23 MR. POSITAN: Any further questions?
24 Chief Justice, we thank you for your appearance,
25 and we'll reserve this issue.
26 JUSTICE VANDEWALLE: Thank you.
27 MR. POSITAN: We'll have one more speaker
28 before we take a break. Sidney White Rhyne, Federal
44
1 Communications Bar Association.
2 MR. RHYNE: Thank you, Mr. Chair. I appear for
3 the Federal Communications Bar Association, the FCBA, in lieu
4 of Henry Rivera, whose name appears on the statement our
5 association submitted that you have before you. Mr. Rivera,
6 in addition to being our A.B.A. delegate, is an active Catholic
layman in Washington, D.C., and he was asked by the archbishop
of the Washington diocese to accompany him to Rome for his
investiture as a Cardinal. So, I think you can see that there
are some engagements that trump even the A.B.A.
I will attempt only to summarize Mr. Rivera's
statement within the five minutes allotted for our
presentation, and of course will be available to answer any
14 questions you may have.
15 The FCBA is an organization of lawyers with a
16 specialty practice primarily rooted in federal law and with
17 a nationwide and indeed an international client base. The types
18 of services our lawyers render and the types of clients
19 that they represent are described in Mr. Rivera's written
20 statement.
21 Communications attorneys more often than not
22 have their offices in, and are admitted to the bar in,
23 jurisdictions other than those in which their clients are
24 located. For instance, I have been representing
25 communications clients for over 40 years and have never had
26 one in Washington, D.C. where my office is located because
27 that is a seat of the Federal Communications Commission.
Clients frequently require the services of their
45
1 communications attorneys in the jurisdictions where the
2 clients are located and in other jurisdictions where they
3 have business dealings. Our members have a strong interest
4 in seeing that their clients are able to receive services
5 of the lawyers they have chosen to provide the expertise
6 they need in the places where they need to have those
7 services provided.
8 We have suggested that the A.B.A. follow the
9 lead of the American Law Institute in its Restatement of
10 Law Governing Lawyers published just this past September
11 after years of deliberative analysis begun in 1986, and
12 numerous drafts that generated extraordinary interest and
13 debate. The Restatement dealt with multijurisdictional
14 practice by saying that an attorney may provide services in
15 either of three instances.
16 First, of course, in a jurisdiction where the
17 attorney is admitted to practice. Second, it permits lawyers
18 to render services in another jurisdiction in where in accordance
with the rules for admission to practice before a tribunal of
that jurisdiction before which the lawyer is appearing. And
21 third, it says a lawyer may provide services "at a place within a
22 jurisdiction in which the lawyer is not admitted to the extent
23 the lawyer's activities in the matter arise out of or are
24 otherwise reasonably related to" the lawyer's practice in
25 either of the first two instances. We urge that this Commission
26 follow that sensible approach in its report.
We have also endorsed the changes in Rules 5.5 and
8.5 of the Model Rules of Professional Conduct proposed by the
46
A.B.A. Ethics 2000 Commission, with one suggested revision in
2 Rule 5.5.
3 Our suggestion is to protect lawyers such as our
4 members whose services in jurisdictions where they're not
5 admitted arise out of their primary representation in matters
6 of federal law. Even that change would not be necessary if the
words "on behalf of a client" were simply deleted from the
proposed safe harbor in Rule 5.5 for extra-jurisdictional
services. That safe harbor permits such services, and I
quote, "with respect to a matter that arises out of or is
11 otherwise reasonably related to the lawyer's practice on
12 behalf of a client in a jurisdiction in which the lawyer is
13 admitted to practice." The Commentary indicates that the
14 intention was that the services be related to the lawyer's
15 practice in a jurisdiction where admitted, not that they
16 necessarily be on behalf of a client in that jurisdiction.
Deleting the language "on behalf of a client" would make it clear
that the clause "in a jurisdiction in which the lawyer is
admitted" modifies the word "practice" rather than the word
which now immediately precedes that clause, which is the word
"client."
22 MR. POSITAN: If you add the word "any" to that
23 phrase, are you contemplating adding a non-existing client
24 that you might be soliciting in that jurisdiction for
25 purposes of practicing federal law?
MR. RHYNE: I -- I have to admit my view on this
is colored by the fact that I go back to the days when lawyers
presented themselves for service rather than soliciting
47
1 clients. My view is colored by that. I had a great deal of
2 difficulty yesterday with the question of lawyers who want to
3 solicit clients from outside their jurisdictions, when the young
4 lawyer from California made his presentation based on the fact
that he wanted lawyers to be more able to solicit on the
Internet.
I -- I suppose that if the courts tell us we must
8 permit solicitation and if the Rules of Professional Conduct
9 permit that, the standard should be the same. I have to say
10 that I am less sympathetic with lawyers who seek clients than
11 with lawyers who seek to serve their clients. You'll notice that
12 our presentation is in terms of furthering the ability of
14 clients to choose the lawyers they think can best serve them
15 rather than furthering the interests of lawyers attempting --
16 MR. POSITAN: That contemplates that you are
17 referring to an existing client, right?
18 MR. RHYNE: Yes, or -- or clients who know of
19 your reputation as being able to provide the kind of
20 services they require, come to you and ask you to do that.
22 MR. Ehrenhaft: That's a very difficult standard
23 to apply, isn't it? Who knows how a particular client
24 learns about a lawyer's reputation? The fact that you
25 publish articles, and that you do other kinds of things that
26 may be disseminated in another jurisdiction, could be
regarded as solicitation or as simply as a contribution to the
28 profession. You're making suggestions that
48
1 just happen to hit the client's fancy and he then calls you.
I mean, I think to try and I mean, among the
3 reasons for saying that you can't stop the lawyer advertising is
4 that it's very difficult to draw some of these lines between what
6 we regard as a very appropriate activity for lawyers directed
7 at others who share their views in other states, if you will,
8 and actually going and calling on that other person initially.
9 MR. RHYNE: There is no bright line. And there
10 was none before the rules changed.
11 MR. POSITAN: This is really from yesterday where
12 we really have three models. We have the model of an existing
13 client who would like to retain the lawyer to something in a
state where the lawyer is not admitted. And we have model B,
15 which is the "I got called because I'm the world's expert on
16 agriculture." Even though I don't have the existing client
17 relationship with that person, I might go to that
18 jurisdiction because they think I'm the greatest labor
19 lawyer that ever lived. And C is the third one, which is
20 "I'm free to go solicit those people who don't know about me
21 yet, but I can tell them that I'm the greatest labor lawyer
22 that ever lived."
23 MR. RHYNE: I suppose, if the rules permit
24 solicitation of clients then, in the interest of permitting
25 clients to acquire legal expertise from lawyers they deem best
26 suited to serve them, we must also permit clients to do that
if they are attracted by a solicitation from a particular lawyer.
49
1 MR. EHRENHAFT: I have a question about the ALI
2 Restatement, because I had this discussion with Jeff Hazard
3 as Reporter for that Restatement. He pointed out quite
4 clearly that the ALI is restating the
5 law, that it's not a model rule like the A.B.A. is
6 adopting. Its Restatement was therefore intended to
7 be a reflection of the present U.S. standards. And to
8 the extent that our Commission is looking at that, I'm not
9 sure that we are similarly constrained.
10 I think that our mission might be if this is
11 the present situation as the Restatement perhaps indicates, or
12 the best distillation or best rule today, may it
13 nevertheless not be expanded further or be modified in some
14 way in order to achieve another goal. So the Restatement,
15 I think you have to remember what that word "restatement"
16 means. It isn't to model the way the Ethics Rules are. So,
18 therefore, we might not give it that same kind of binding
19 effect.
20 MR. RHYNE: I -- I agree that you are not
21 constrained by what law now is. I have the greatest respect
22 for Geoffrey Hazard, who teaches at my law school, and whose
reputation of course is, well evident. But the Restatement of
Law Regarding Lawyers footnotes Birbrower in its rule on
multijurisdictional practice and recognizes that its rule is
inconsistent with what is stated in that decision.
28 I'd like to go just briefly in termination to
50
1 the proposed new Rule 8.5, which we have no problem.
2 We have no problem having lawyers made subject to the
3 disciplinary authority of the jurisdiction in which they
4 render services, even though not a member of the bar of that
5 jurisdiction. We also think that the Ethics 2000
6 Commission dealt fairly with possible conflicts between the rules
7 in different states by protecting lawyers who, in such instances,
8 follow the rules of a jurisdiction where they reasonably believe
9 the "predominant" effect of their conduct will occur.
10 MR. POSITAN: Is it fair to say that your
11 section sees a disconnection between state and federal law?
12 In other words, if you practice in an area that's very much
13 exclusively federal law, that boundaries should be less strict
14 than if you practice in state law?
15 MR. RHYNE: Our association, which is affiliate
16 of the A.B.A., recognizes that questions of federal law and
17 state law are frequently intertwined. And when our members
18 go to a state in which they do not have an office, to represent
19 their client such as in a closing on the sale of a broadcast
20 station, they recognize that those transactions involve
21 both federal and state law. Every such transaction has an
22 overlay of federal regulation. Also, it has elements of
23 state law.
24 We consider it to be our professional
25 obligation to assess whether in this particular instance it
26 is necessary to bring in a state -- a member of the
27 local bar.
28 If, for instance, the station studio is owned
51
1 and a real estate transfer will take place, I invariably
2 recommend that a local real estate practitioner be brought
3 in. If there are questions of local zoning compliance, we
4 will always recommend that. Our clients don't always take
5 our advice. A small broadcaster may well feel that he has
6 enough contacts down at city hall to resolve these
7 questions for himself so he's going to save that money.
8 But he knows he's been advised as to what we think is in
9 his best interest.
10 It is, I submit, one of the primary obligations
11 of a lawyer to use his or her judgment in assessing what
12 other representation and advice the client needs, and to
13 make the recommendation to the client.
14 MR. POSITAN: Any further questions? Why don't
15 we take a five or ten-minute break.
16 (A recess was taken.)
17 MR. POSITAN: Next speakers will be
18 Daniel Magraw and Robert Lutz, Section of International Law
19 Practice.
20 MR. MAGRAW: Thank you very much, Mr. Chairman.
21 I'll summarize our comments and then I'll be happy to
22 engage in any kind of dialogue you'd like.
23 As you already mentioned, Bob Lutz, who's our
24 chair elect is here and will also be available to answer
25 questions. I'd like to begin with an overview. You've
26 heard a lot of this before, I think, but I think it's
27 important for us to weigh in, as well. The first people
28 interest in the values that are served by regulating and
52
1 watching over the legal system remain constant over the
2 year, but the environment in which that occurs is changing
3 dramatically.
4 The size and geographical scope of the
5 corporate client has changed immensely. The ability to
6 communicate through telecommunications has changed so that
7 there's much greater ease of counseling over long
8 distances. The globalization is obviously occurring on
9 trade and investment, meaning there's an increase for
10 demand in international legal expertise, increased
11 difficulty to separate international and national, and
12 probably also national and local -- the federal and local,
13 and increase competition.
14 The expectations of clients have changed. They
15 want efficiency. They don't want to have to change lawyers
16 every time there's a new political boundary encountered,
17 and the basis of the legal profession on the part of the
18 public have also evolved. That's not clear that there's a
19 (inaudible) of political trust that we can draw on when we
20 are dealing with these issues.
21 The result of this is that the licensing system
22 is an artifact and it's out of touch with the reality that
23 we are dealing with. This has important impacts on the
24 tradition of legal services. There are artifices in legal
25 opinions where lawyers who will say, Well, assuming that
26 the law of California or the law of Bahrain is the same
27 laws of New York, similar artifacts like that define those
28 opinions. There's a greater use of electronic
53
1 communications instead of face to face when, in fact, face
2 to face might make more sense. There's hypocrisy.
3 Obviously, and I think consequential decrease
4 in the effectiveness of the legal profession because we are
5 often thought of as I am, more in private practice in the
6 posture of counseling our clients to obey the law and we
7 are not obeying those rules if they know that undercuts our
8 credibility.
9 MR. POSITAN: Let me cut to the chase in terms
10 of the international law question.
11 In your discussion, you talk about the model
12 role concerning foreign legal consultant. If all 50 states
13 adopted that rule, would it not solve the problem?
14 MR. MAGRAW: Well, there are a number of
15 problems that I was just alluding to, and I was going to
16 turn to that almost immediately, so I will do that now
17 because of the time limit.
18 One of the issues that we face that as --
19 really as an association is trying to facilitate the -- the
20 abilities of U.S. lawyers to practice abroad -- and this as
21 an aside, the rules that you're looking at affect
22 international lawyers, both in terms of their practice
23 domestically and their practice abroad. And I'm going to
24 focus primarily on the latter and foreign consults rule
25 relate primarily to that.
26 One thing we encountered in trying to do that,
27 when we go to a foreign country and try to say, "Well, U.S.
28 lawyers should be able to establish an office or should be
54
1 allowed to come in and do transient kind of practice" is
2 their response. And I know you've heard this from other
3 speakers that "Well, you don't allow that in the States"
4 and so that was the main genesis of the 1993 house of
5 delegates resolution on the model rule.
6 And if all the states and the District of
7 Columbia did adopt that and at present we only have 23
8 states, but the districts that have adopted it, if all of
9 the states adopted it, we think that would be a long way
10 towards that. And the dissention international law
11 practice is actively engaged in trying to promote that.
12 We --
13 MR. POSITAN: How would that affect you
14 practicing, let's say, in Spain? We had the gentleman here
15 from Spain yesterday who discussed the European to some
16 extent. To the extent that you want to add anything to
17 that, I don't want to say everything he said is absolutely
18 verbatim, so feel free to comment on that. But let's
19 assume this commission recommended that all states adopt
20 foreign legal consultant model rule. What would that mean
21 to you going to Spain and being able to do the same kinds
22 of things in Spain? Would that happen?
23 MR. MAGRAW: Well, first we'd hope not only
24 that the commission would recommend the adoption by all of
25 the states, but also that the A.B.A. commits the necessary
26 sources to achieve that. But let's assume that all states
27 did do that. That would help across the board. I'm not
28 familiar with the specific situation in Spain, and I don't
55
1 know the testimony of the gentleman yesterday.
2 MR. POSITAN: Just using that as an example.
3 France, England, wherever --
4 MR. MAGRAW: The general situation is that we
5 are better off if we can say that your lawyers can come and
6 practice at least your own local, your own foreign,
7 whatever that local law is, Spanish law in the U.S. We are
8 better off being able to argue that we should have access,
9 and you can understand why that is. Because --
10 MR. POSITAN: They may still say no at that
11 point?
12 MR. MAGRAW: They can still say no. And there
13 are efforts underway and in the general agreement on trade
14 and services, too. I believe there's already, in fact, an
15 obligation to work towards reciprocity on professional
16 services generally, not just legal services.
17 MR. POSITAN: If we in our little area of the
18 world on legal services ended up with a situation where we
19 adopted everybody, as New Jersey has, New York has, the
20 foreign legal consultants rule, I don't think there's any
21 huge administrative cost, at least attached to the A.B.A.
22 in that regard. Would we not be in a position under GATT
23 to say to the European union countries "Why don't do you
24 this, too, and then we'll have the kind of free exchange at
25 least on those parameter terms that's contemplated under
26 GATT"?
27 MR. MAGRAW: Well, we would. Whether we'd be
28 able to demand is a different question, but we certainly
56
1 are in a better position diplomatically to be able to make
2 that argument. Of course, it's not only the -- in the EEO,
3 but also in the Third World many, many, many -- all
4 countries that are.
5 MR. EHRENHAFT: Dan, I think that you indicated
6 at the outset of your testimony that the foreign legal
7 consultant rule was an important part of this, but it is
8 related exclusively to the permanent establishment of
9 lawyers opening offices in another jurisdiction and their
10 qualification to do that. And as we know, from the few
11 empirical studies that have been made, there are probably
12 not more than a thousand or two thousand U.S. lawyers who
13 are, in fact, stationed overseas. And not to denigrate at
14 all the importance of the profession, I think you're
15 absolutely right about what we're talking about.
16 But the foreign legal consultant rule does not
17 address what has been the principal focus of our discussion
18 here, which is the transitory provision of services, which
19 involves a much greater number of American lawyers going
20 abroad performing services in other countries in violation
21 of immigration laws and labor codes. When we go into
22 another country and perform services paid there and foreign
23 lawyers coming here similarly risk violating our
24 immigration laws and our labor laws by being engaged in
25 those transitory services, even though as we heard from the
26 gentleman about Canada/U.S. trade, the immigration people
27 really don't care much, turning a blind eye to the fact
28 that Canadian lawyers come to the United States and
57
1 practice, you know, consult here, and no one asks them, Are
2 you, in fact, going to perform services to pay which they
3 under their visas they otherwise should be permitted to do.
4 But I think the transitory service rule, which
5 is the main focus of, I think, so far of our discussion, is
6 not addressed by that foreign --
7 MR. MAGRAW: There are a number of different
8 legal aspects. Maybe I -- I misinterpreted Wayne's
9 question too narrowly, but Alan had a question, too. I
10 don't know how you want to do this, Wayne.
11 MR. DIMOND: Let me ask my question because
12 Wayne asked you what if you can't permit a foreign
13 government from saying no to allowing a reciprocal foreign
14 consultants situation in that country. What I was curious
15 about was how hopeful would it be if they said yes, in
16 fact, you were then given the right to have a permanent
17 location in these various other jurisdictions.
18 And then the -- the issue came up with the
19 transitory services. So we are starting with the concept
20 of full-time services and then backing off from there,
21 transitory. I was wondering what if they said yes? Does
22 that solve your problem?
23 MR. MAGRAW: Yeah, it's important to step back
24 here and look at the whole range of ways of providing the
25 service. I think you're right to do that.
26 Does it help to have the model rule adopted by
27 all 50 states? Clearly it would. Would it help to allow
28 foreign lawyers to actually be allowed to have licenses in
58
1 this country without going to an American law school and
2 taking exactly the same bar exam? That would help, too.
3 All these things would help. And -- but the result in the
4 foreign country would also depend on their rules.
5 They say well, you can be established here.
6 But if they said, for example, you couldn't come in and
7 without permanent office, that would not be very helpful.
8 So one has to be very careful in terms of looking at these
9 different things.
10 I would point one to project that we started an
11 international law section that deals with precisely the
12 problems that Peter was raising. And that is that it is
13 not uncommon for U.S. lawyers, when they go into Canada, to
14 be detained at the border. And you know, you don't even
15 need a passport, let alone a visa, to go to Canada. But it
16 is not uncommon for our lawyers to be taken into a room and
17 questioned for several hours about why they are going to
18 Canada.
19 So we started to -- tried our project on the
20 Canadian bar to look at those issues to try to figure out
21 is there a way to resolve that within the NAFTA of the
22 countries, but this is a multi-layered issue. And the model
23 rule, although it's very important, it does not solve all
24 of those questions.
25 Did I respond to your question enough?
26 MR. DIMOND: Almost, and certainly in part.
27 What I'm wondering about is how helpful on the scale of all
28 possibilities would it be to have this kind of uniform
59
1 adoption in the United States of the provision in each
2 state. How helpful would that be in terms of solving the
3 overall kind of problem that you're dealing with, or is that
4 just a small piece of it, really not significant to you?
5 MR. MAGRAW: I think it's a very significant
6 part of the issue. And if I might move for a second only
7 away from the practice of broad issue to the fact
8 domestically those rules also are important in this
9 context. You know, there's many international lawyers that
10 I know in D.C. that have virtually no D.C. clients. Their
11 clients are either foreign companies or they're U.S.
12 companies with international issues. And, for example, if
13 they do due diligence, if they negotiate, if they do many
14 of the things that you U.S. lawyers probably are the best
15 in the world at, and where our practices became
16 international standard or due diligence, for example.
17 The risk that I'm now talking about, the D.C.
18 lawyers raise these questions about unauthorized practice.
19 That's also true of the foreign legal consultants. If they
20 get involved in those sorts of things, they have the same
21 issues in this country. So how you deal with the domestic
22 context is also important for those foreign lawyers when
23 they think about coming in. And the context for us and --
24 you know, I speak as a trading in part, when we talked to
25 these other countries, if we have a system that doesn't
26 make sense, it's very hard for us to say well, you know you
27 have to have a system that makes sense.
28 And this is an important part to the foreign
60
1 legal consultant rule but it's not alone enough to solve
2 the problem.
3 MR. POSITAN: What can present a more coming
4 state interest than to control the activities of foreign
5 lawyers in this country? And things that may affect our
6 citizens when you get into the question of poor value such
7 as privilege imputation, being an officer of the court,
8 conducting yourself with our system of justice. So why do
9 we go beyond the foreign legal consultants rule in allowing
10 those kinds of activities on a broad nature when I think if
11 you want to protect the legal system, protect our citizens,
12 I can't think of an area more compelling.
13 MR. MAGRAW: I'm not sure I'm arguing against
14 that. It seems to be that can be looked at in terms of
15 whether we have -- I don't know if it matters if there are
16 state rules or national rules, but if we have rules about
17 confidentiality or go right down the line that you
18 mentioned, whether they're state or federal, then you'd
19 want to have the foreign lawyers subject to those. And we
20 are certainly not arguing anything different from that.
21 I think that's separate than whether they're a
22 foreign lawyer as authorized to actually practice, and
23 that's what we are focusing on.
24 MR. POSITAN: 78.5 doesn't mean much in that
25 scenario; does it?
26 MR. MAGRAW: You have to elaborate.
27 MR. POSITAN: Well, discipline system. If a
28 foreign lawyer comes over here on a transaction, does
61
1 something that we consider untoward and it's an ad hoc
2 situation or a very federal kind of representation, does
3 something horrible cost somebody a couple million dollars
4 and goes back to France, how are we going to appease that?
5 MR. MAGRAW: That's a very good question. It's
6 not one that we've addressed here. I would say that we
7 raise that kind of question if the context of
8 Martha Barnett's and Bob Sarntino's organization conference
9 on Tuesday. It seems to us that one of the kinds of
10 questions, the areas of questions that that organization
11 could look at are whether we want harmonized rules of
12 confidentiality. What are the conflicts of law rules about
13 ethics?
14 If we go to France and do we something or vice
15 versa, your hypothetical, which set of rules apply? Then
16 how can those be enforced? In the future, I think we need
17 a system that makes sense. On all those questions that you
18 mentioned, it doesn't really say much about the model rule.
19 But those are very important questions and they're ones
20 that should be addressed. Those have to be --
21 MR. POSITAN: Treaties seem to me right
22 MR. MAGRAW: Those have to be addressed on --
23 well, I suppose in theory they could be addressed on a
24 state-by-state basis, but the reason we have a constitution
25 is because the -- you know, the Article of Confederation
26 primarily didn't work under our national constitution. So
27 that almost by definition has to be a federal -- a national
28 interaction with other countries. And I think very
62
1 important as I say because of organization we are going to
2 have to have that.
3 MR. POSITAN: What would happen in a situation,
4 for example, when the foreign lawyers were MJP such as
5 Landwell from England, we say you can't have -- were going
6 to now permit them to come in and practice on a temporary
7 basis. We won't let them practice or you can't do that
8 here anyway, at least so far as that may be the District of
9 Columbia.
10 MR. MAGRAW: Well, actually, the point at which
11 you cut me off, that was going to be my next point. Is the
12 shift of lawyers who are coming from partly because of
13 the -- of the disarray in terms of these rules. So when we
14 think about those questions, it has to be in great. I
15 think you've heard this before. We were struck by how the
16 MJP issue or set of issues is interrelated to M.D.P. to
17 Ethics 2000 to the kind of immigration questions we are
18 addressing in this new initiative we have with the Canadian
19 and Mexican bars.
20 You have a very daunting challenge in terms of
21 trying to integrate all these questions. And I'm not sure
22 where you're drawing the lines of your group jurisdiction,
23 but those are all relevant questions.
24 MR. DIAMOND: Let me ask this. Is it your view
25 in these problems international basis would ultimately be
26 solved in these either bilateral trade negotiations or the
27 GATT kind of negotiations where they're actually going to,
28 in effect, assume each of the countries that are
63
1 participants?
2 MR. MAGRAW: There are a couple of ways it
3 could be resolved. One is to leave it in chaos, which
4 seems to not be a very good result.
5 The second is to have bilateral or regional
6 arrangement, and you could have NAFTA, for example.
7 And the third is a legal system, the global --
8 any of those international arrangements could -- could
9 occur at different levels.
10 You could have a kind of a soft obligations to
11 try to find reciprocity, which is eventually where we are
12 now or you could have much harder kinds of rules, and this
13 is something I think that the association has to be very
14 careful about, is the protection agency is -- we try to be
15 very careful about that because the trade rules in that
16 area are very specific.
17 They say you can't regulate to protect health,
18 safety and the environment except in certain ways. That is
19 your regulations in the United States or any country that's
20 a party to these agreements has to satisfy certain
21 criteria. We don't have that on services yet, but that
22 could happen. It's something that -- I'm not sure it's
23 within the scope of your permission, per se, but it's
24 something that as an association we have to watch very
25 carefully in the upcoming negotiations, essentially
26 something we need to be thinking about.
27 MR. DIAMOND: One more are professional
28 services. One of the subjects that are going to be
64
1 discussed in the upcoming rounds of NAFTA and GATT
2 negotiation.
3 MR. MAGRAW: Well, to tell you the truth, I'm
4 not entirely sure. Maybe Bob or Peter may know this. In
5 Seattle, we tried to have them be part of the agenda and
6 you remember what happened in Seattle. It was not as happy
7 outcome as we hoped, but I'm not exactly sure what's coming
8 up now.
9 Peter or Bob, do you --
10 MR. EHRENHAFT: Next round of negotiations
11 begins in March of this year, and the United States has
12 already tabled a proposal on legal services, professional
13 services very much a part of the negotiation. I think that
14 the most important aspects of those proposals in the United
15 States on professional services that whatever rules we have
16 that any country adopt be transparent and understandable.
17 And secondly, that they be -- they satisfy a
18 rule of necessity, they be no more onerous for achieving an
19 objectively appropriate goal than necessary. And that's
20 the big stumbling block on exclusionary types of rules that
21 look as though they are protecting vested economic
22 interests without having an objectionably defensible goal.
23 And that's, I guess, one of the problems about rules such
24 as we're talking about.
25 MR. POSITAN: One final thought. Is it worth
26 looking at the foreign legal consultant model rule and
27 perhaps modifying that in some ways, which may create some
28 safe harbors, or perhaps bring into it's coverage some of
65
1 the kinds of things you're talking about that may allow for
2 us some lesser regulatory presence, but still permit some
3 kind of registration which might protect the public
4 interest?
5 MR. MAGRAW: It might be worth doing that. I
6 don't know how easy that would be since we've already got
7 23 states plus the district who has adopted them.
8 MR. POSITAN: New Jersey, for example, about a
9 week ago took a look at it and, in fact, the board of
10 trustees made some recommendations to modify it in some
11 ways to bring into play some other things beyond the
12 original scope.
13 And my understanding in sitting on that board
14 was that there was some effort, I forget by whom at this
15 point, to perhaps take that path.
16 MR. MAGRAW: Well, we'd certainly be willing to
17 look at that as I would imagine other parts.
18 MR. POSITAN: Provided those things
19 John Holtaway might have those things and might communicate
20 and get a copy of what New Jersey looked at a week ago.
21 MR. MAGRAW: Why don't we do that and then get
22 back to the commission.
23 MR. POSITAN: We appreciate your continued
24 support as we wrest