One of the biggest traps for lawyers is "MJP." MJP stands for multi-jurisdictional practice. The ABA Model Rule of Professional Conduct 5.5 prohibits the practice of law where lawyers are not licensed, as well as the aiding and abetting of it: a "lawyer shall not: (a) practice law in a jurisdiction where doing so violates the regulation of the legal profession in that jurisdiction; or (b) assist a person who is not a member of the bar in the performance of activity that constitutes an unauthorized practice of law."
The case that got everybody talking: Birbrower
The Birbrower law firm was located in New York City and represented a California subsidiary of a New York client, which representation involved settling a dispute in California. Birbrower, Montalbano, Condon & Frank, P.C. v. Superior Court, 949 P.2d 1 (1998). The California Supreme Court found that the firm violated a statute making the unauthorized practice of law a misdemeanor criminal offense. The Court adopted an amorphous standard in determining whether a lawyer is practicing law in California: "whether the unlicensed lawyer engaged in sufficient activities in the state, or created a continuing relationship with the California client that included legal duties and obligations." Birbrower, 949 P.2d at 5. A lawyer could practice law in violation of the California statute "although not physically present here by advising a California client on California law in connection with a California legal dispute by telephone, fax, computer or other modern technological means." Id. at 5-6. The client's knowledge that the firm's lawyers were not licensed to practice law in California did not protect the lawyers from an MJP violation. As a consequence, the firm could not enforce any part of its California fee agreement.
Transactional Lawyers and In-House Counsel
The multistate nature of many real estate, lending, securities, and corporate transactions means that these lawyers will find it difficult avoid MJP issues. A recent New Jersey case found that the MJP prohibition applied to a New Jersey transactional lawyer licensed only in Massachusetts, and whose practice did not involve court appearances and was characterized as one where: "[h]e interviewed and counseled clients, prepared and signed documents to or on behalf of clients, and negotiated with lawyers on the merger and acquisition matters he handled." In re Jackman, 761 A.2d 1103, 1107 (N.J. 2000).
Similarly, an attorney without an Ohio license who gave advice to Ohio clients on the restructuring and sale of their businesses committed an MJP violation. Cleveland Bar Ass'n v. Misch, 695 N.E.2d 244 (Ohio 1998). The court rejected the argument that the advice was merely business or financial, not legal.
Contrast Birbrower with Condon v. McHenry, 76 Cal. Rptr. 2d 922 (Ct. App. 1998), where a Colorado probate lawyer did not violate the California statute in rendering services to a Colorado co-executor under a will written in Colorado for a California resident and which devised California property. The lawyer's connection to California was primarily by phone, fax, and mail. The court said "it is insular to assume that only California lawyers can be trained in California law. Surely the citizens of states outside of California should not have to retain California lawyers to advise them on California law." Id. at 928. Ultimately, the court decided the case on the basis that a nonresident of California is not in need of, nor entitled to, the protection of the California statute.
Even in-house counsel need to consider the limits on their licenses. Some states have ameliorated this risk through court rules allowing unlicensed in-house counsel to practice law. See e.g. Ohio Gov. Bar Rule VI (4)(A) (an attorney not licensed in Ohio may register to "perform legal services in Ohio solely for a nongovernmental Ohio employer, as long as the attorney is a full-time employee of that employer"); Mich. Board of Law Examiners Rule 5 (a lawyer may to apply for a special certificate to practice as counsel for a corporation, but he or she must "intend in good faith to maintain an office in [Michigan] for the practice of law"); Rules of the Supreme Court of Virginia, Part 6, Section I ("practicing law" does not include providing advice to a lawyer's "regular employer").
Litigators and Motions Pro Hac Vice
Getting admitted pro hac vice has not made lawyers bullet-proof. In Koscove v. Bolte, 30 P.3d 784 (Colo. Ct. App. 2001), the Colorado attorney was licensed only in Wisconsin (a fact known to the client), he and the client always met in Colorado, all the work was performed in Colorado, the client lived there, and the litigation related to a Colorado transaction. The lawyer associated with an attorney licensed in Colorado about six months after the fee agreement was signed, and he was later admitted pro hac vice in the federal court. The court ruled that the lawyer's admission to federal court did not retroactively legitimize the earlier legal work because he did not know that he would ultimately file the case in federal court, and because he was rendering advice on pendent state law claims.
In Rhode Island, a late-filed motion for admission pro hac vice in an administrative proceeding did not retroactively protect the lawyer for what he had already done. In re Steven E. Ferrey, 774 A.2d 62 (R.I. 2001). Although the court allowed the lawyer's motion to be admitted pro hac vice, it did so non-retroactively so as not to be seen as "affixing an ex post facto imprimatur of approval of what might under some circumstances be construed as the unauthorized practice of law" or as pre-empting any criminal prosecution. Id. at 65.
Some courts have been more generous, recognizing that admission pro hac vice grandfathers in the prior legal work necessary to file the case. Where the lawyer could have, and would have, been admitted pro hac vice had he made such a motion, this fact authorized all his legal work "reasonably incident" to his representation of the client and immunized him from any violations of the New York law forbidding the unauthorized practice of law. Spanos v. Skouras Theatres Corp., 364 F.2d 161 (2d Cir. 1966). Where lawyers performed work in California on an Illinois case, and were licensed in California, the lawyers were entitled to their fees and were not obligated to seek admission pro hac vice because they never entered an appearance and never filed pleadings or other documents in the Illinois case. Berthold Types Ltd. v. Adobe Systems, Inc., 186 F. Supp. 2d 834 (N.D. Ill. 2002). In Shapiro, Lifschitz & Schram, P.C. v. R.E. Hazard, 24 F. Supp. 2d 66, 82 (D.D.C. 1998), the court "easily dismissed" the client's claim that an MJP violation existed because the attorneys had not been admitted pro hac vice when they were hired: the client's "interpretation of the law would put an out-of-state attorney seeking to represent a client in California in an impossible position: he would be unable to enter into a valid retainer agreement until he had been admitted pro hac vice, but he would also be barred…from being admitted pro hac vice until he was retained by a client."
There was also no MJP problem where outside general counsel for an Oregon company rendered services in Oregon on a Hawaii litigation, and hired local Hawaii counsel to handle the day-to-day litigation. Fought & Co., Inc. v. Steel Eng'g & Erection, Inc., 951 P.2d 487 (Haw. 1998).
Lawyers have also argued that the practicing in areas of federal law, or with permission of a federal court, makes state laws prohibiting MJP inapplicable. In Ranta v. McCarney, 391 N.W.2d 161 (N.D. 1986), the lawyer was admitted in Minnesota, but traveled to North Dakota to handle federal tax issues involved in selling an automobile dealership, with the commercial aspects being handled by a local attorney. The court found that the only protection provided by federal law is where a lawyer is admitted by a federal court to handle particular matters pending in that court.
In a matter involving a lawyer who devoted his practice to federal bankruptcy law, the Sixth Circuit Court held that federal rules, not the laws of the state where the federal court sits, control a membership in the federal bar. In re Desilets, 2002 WL 1159745 (6th Cir. June 2002). Admisson to the federal bar in the Western District of Michigan was available to lawyers properly licensed by any state, and such federal admission conferred the right to appear in bankruptcy court and to counsel clients with regard to bankruptcy matters in Michigan, without a Michigan license.
If lawyers do not physically leave the jurisdiction where they are licensed, this appears to work in their favor. Where there is a multistate transaction involving short site visits throughout the country, this is less likely to result in an MJP violation than if the lawyer opens an office or visits another state for prolonged periods. Nonetheless, if the law of another state has a significant impact on the transaction, it is best to get local counsel. This is not necessarily a panacea: the Birbrower decision specifically noted that there is no exception to the unauthorized practice of law statute if an out-of-state attorney associates with local counsel. Likewise, although it may not be an immunity idol, it is important for lawyers to tell the clients where they are licensed.
If the matter involves litigation, hiring local counsel and getting admitted pro hac vice at the earliest moment is recommended. To get the maximum protection, local counsel should review in earnest the legal work and not simply be treated as a "mail drop."
In order to avoid the risk of losing the benefit of your entire fee agreement for an MJP violation, as almost happened in Birbrower, a severability provision should be included, stating that the invalidity of some portions of the fee agreement (becasuse of an MJP violation, for instance) will not void the entire contract. If the contingent or premium payment provisions are voided for an MJP violation, the lawyer may be limited to a recovery in quantum meruit, and it will be important to have a complete record of the hours worked.
The MJP cases frequently involve clients seeking to avoid payment obligations to their lawyers, usually after a rupture in the lawyer-client relationship. Even the most diligent and responsive lawyer cannot always prevent this breakdown. Nonetheless, this is one more reason to keep the lines of communications wide open with clients: return telephone calls, e-mails, and letters promptly; keep clients up-to-date on their matters; send bills regularly; and make sure you thoroughly address clients' concerns and questions.