Identifying and Avoiding the Unauthorized Practice of Law in a Global Economy


Identifying And Avoiding the Unauthorized Practice of Law in a Global Economy

By Alison Buchanan

With the globalization of the economy, avoiding the inadvertent unauthorized practice of law (UPL) has become a greater concern for many practitioners. Clients’ businesses span borders, as do their disputes and their employees. The conscientious lawyer may worry whether he or she is exposed to a UPL claim each time the lawyer touches an issue involving some jurisdiction other than that in which the lawyer is licensed.

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California Laws Prohibiting UPL

For California lawyers, several bodies of law prohibit the unauthorized practice of law. They include the California Rules of Professional Conduct (Rule 1-300 prohibits UPL and aiding and abetting UPL), the Business and Professions Code (section 6125 provides that, "[n]o person shall practice law in California unless the person is an active member of the State Bar," and makes UPL a misdemeanor), and the Rules of Court (Rule 9.40, et seq., contains California’s temporary practice rules). Additionally, a wide body of case law provides guidance.

Identifying UPL

Despite the various statutory schemes prohibiting UPL, there is no statutory definition of UPL in California. Nor is there a statutory definition of what constitutes the practice of law.

Oft-cited case law defines the practice of law as "the doing and performing services in a court of justice in any matter depending therein throughout its various stages and in conformity with the adopted rules of procedure." (People ex rel. Lawyers’ Institute of San Diego v. Merchants Protective Corp. (1922) 189 Cal. 531, 535.) The practice of law "includes legal advice and counsel and the preparation of legal instruments and contracts by which legal rights are secured although such matter may or may not be pending in a court." (Ibid.) Other states generally define the practice of law similarly.

Most jurisdictions considering whether a lawyer who is licensed in another jurisdiction has committed UPL look at whether the lawyer has established an office or other systematic and continuous presence for purposes of practicing law. In New York, holding oneself out as a lawyer is, by itself, conduct sufficient to constitute the practice of law.

California Lawyers Temporarily Practicing Law in Other Jurisdictions

California lawyers temporarily stepping into other jurisdictions for professional purposes must be familiar with ABA Model Rule 5.5, the ABA’s rule prohibiting UPL. Most U.S. jurisdictions have adopted some form of Rule 5.5. But only about 70% of states have adopted the portion of Rule 5.5 that allows for temporary practice, commonly referred to as multijurisdictional practice (MJP).

Specifically, Rule 5.5 (c), added in 2002, allows lawyers in good standing in their admitted jurisdiction to temporarily practice in another jurisdiction in the following four narrow circumstances: (1) where the services "are undertaken in association with a lawyer who is admitted to practice in this jurisdiction and who actively participates in the matter"; (2) where the services "are in or reasonably related to a pending or potential proceeding before a tribunal in this or another jurisdiction, if the lawyer, or a person the lawyer is assisting, is authorized by law or order to appear in such proceeding or reasonably expects to be so authorized"; (3) where the services "are in or reasonably related to a pending or potential arbitration, mediation, or other alternative resolution proceeding in this or another jurisdiction, if the services arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice and are not services for which the forum requires pro hac vice admission"; or (4) where the services "are not within paragraphs (c)(2) or (c)(3) and arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice."

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Given the variations of Rule 5.5(c) amongst those states that have adopted some form of the MJP rule, and given the rapid pace in which states are responding to the increasingly global nature of the economy, lawyers seeking to lawfully engage in temporary practice in another jurisdiction are best protected by carefully examining that specific jurisdiction’s version of Rule 5.5 before taking any steps. For example, New York has historically been on the more protective side, allowing almost no temporary practice, except by law students and officers for societies for the prevention of cruelty to animals. However, article 523 of the Rules of the Court of Appeals, effective December 30, 2015, expanded New York’s rules to allow temporary practice by lawyers from other U.S. jurisdictions and foreign (non-U.S.) jurisdictions.

California lawyers should also be aware of state-specific MJP nuances before stepping into another jurisdiction. For example, Montana only allows two pro hac vice admissions. Nevada and New Jersey both allow temporary practice, but require that the visiting lawyer register and pay a fee.

Non-California Lawyers Temporarily Practicing Law in California

California’s Rules of Court allow temporary practice by non-California licensed lawyers in specific, limited circumstances. These rules set forth specific, separate rules for foreign legal consultants, qualified legal services providers, in-house counsel, litigation attorneys, and non-litigating attorneys.

California’s rules specifically permit pro hac vice admissions, and there is no limit on the duration or the number of matters. However, if a lawyer fails to promptly seek authorization, under rule 9.47 (the rule on temporary practice for litigation attorneys), that failure ends the lawyer’s eligibility for temporary practice. In other words, rule 9.47 contemplates that temporary litigation attorneys will promptly seek pro hac vice admission and seemingly punishes those who do not.

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Consequences of UPL

The consequences for engaging in UPL, or aiding and abetting another’s UPL, are substantial. Of course, the State Bar may pursue discipline based on a violation of the Rules of Professional Conduct. The Business and Professions Code provides that one who engages in UPL may be subject to criminal prosecution and fines. And, of course, a lawyer who commits UPL in another state can be disciplined not only by the jurisdiction in which he or she committed UPL, but also by his or her home state. (In the Matter of Wells (2005) 4 Cal. State Bar Ct. Rptr. 896.)

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Additionally, while UPL is a disciplinable offense, and in many states also a misdemeanor, in at least two states (New York and Florida) UPL is a felony.

Finally, consequences for UPL can also include civil liability and, as one famous California case demonstrated, fee disgorgement. (Birbrower, Montalbano, Condon & Frank v. Superior Court (1998) 17 Cal.4th 119.)

Virtual UPL and Recent Illustration

Of course, technology and its prevalence in modern law practice has made avoiding UPL even more challenging. A California lawyer can sit at her desk in California and, by phone, email, or other technology, provide legal advice to a California-based client regarding an employee issue in Texas. As illustrated by the recent matter, In the Matter of Lenard (2013) 5 Cal. State Bar Ct. Rptr. 250, physical presence is not the litmus test for identifying or establishing that a lawyer has committed UPL.

In the Matter of Lenard involved a California lawyer disciplined in California for committing UPL in nine other jurisdictions. Lenard had been performing contract work for consumer debt settlement companies. In the course of that work, Lenard sent "welcome letters" to consumer clients in various states, but none of those letters specified that Lenard was only licensed in California. Lenard evaluated the clients’ eligibility for bankruptcy relief and then sent cease and desist letters to those clients’ creditors, again failing to specify that Lenard was only licensed in California.

The Review Department of the State Bar Court of California evaluated Lenard’s UPL culpability by examining the rules of each of the nine states involved. After doing so, the Review Department affirmed the hearing judge’s finding that Lenard committed twelve acts of UPL in nine states. The Review Department accepted and affirmed the hearing judge’s recommendation for disbarment.

In the Matter of Lenard serves as a UPL cautionary tale for several reasons. First, Lenard never set foot in the jurisdictions in which he was found to have committed UPL, illustrating that a lawyer’s physical presence is not required to be engaged in UPL. Second, the Review Department focused on Lenard’s written communications and specifically his failure to mention either in his "welcome letters" to clients or in the cease and desist letters to creditors that he was only licensed in California. The Review Department considered this to be "holding himself out" as licensed to practice in each of the various jurisdictions. Third, Lenard’s discipline in California was independent of any investigation or discipline in the various jurisdictions in which he was found to have committed UPL; indeed, there is no mention in the opinion as to whether the nine subject states pursued UPL charges against Lenard.

Best Practices for Avoiding UPL

The best approach for avoiding UPL is to know the rules of your own jurisdiction and to carefully evaluate the rules of any jurisdiction in which you plan to, even arguably, engage in the practice of law (either physically or virtually). Ascertain whether that foreign jurisdiction allows for temporary practice and, if so, familiarize yourself with those rules and comply with them fully before engaging in the practice of law.

Alison Buchanan is a shareholder with Hoge Fenton Jones & Appel in San Jose. Her practice focuses on business litigation and representing lawyers and law firms. alison. buchanan@hogefenton. com

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