LEGAL
In-house counsel often find themselves in a unique position vis-à-vis the practice of law. While most traditional attorneys practice in a limited geographical scope, in-house counsel may often be called upon to become familiar with law in a number of jurisdictions, extending beyond state boundaries and sometimes even national ones.
But this broad scope of practice may pose problems for many in-house counsel – particularly those who may be actually “practicing law” under that specific jurisdiction’s rules and have not been licensed to practice therein. In many states, such an attorney may be engaged in the unauthorized practice of law (UPL), and may be subject to disciplinary action by the state’s ethics board and leave their company vulnerable. In 2010, Gucci in-house counsel put the case on the line by his inactive licensing status with the California State Bar. It was ruled (albeit eventually overturned) that the attorney-client privilege did not apply because he was technically not licensed at the time of the case.
To create a safe harbor for in-house counsel working in a jurisdiction wherein they are not admitted to practice, the American Bar Association (ABA) House of Delegates adopted Model Rule 5.5 l in 2002, sections (d) and (e) of which deal expressly with said safe harbor.
Section (d) (in greatly abbreviated form) allows for a lawyer “admitted in another United States jurisdiction or in a foreign jurisdiction, and not disbarred or suspended from practice in any jurisdiction or the equivalent thereof” to “provide legal services” to “the lawyer’s employer or its organizational affiliates.”
Unfortunately, while Rule 5.5(d) was created to lower the UPL risks of in-house counsel, it may have had the opposite effect. The rule’s conception generated awareness of the issue on the part of state bars that previously didn’t exist. That is, in many jurisdictions, ethics committees were investigating potential cases of UPL by in-house counsel because Rule 5.5(d) made them aware that such an issue existed.
Furthermore, although 48 states and the District of Columbia have adopted some version of Rule 5.5, nearly every state has adopted its own version. Some have adopted the rule largely as published by the ABA, allowing for in-house counsel to practice with relative ease. Others only allow in-house counsel to practice on a temporary basis, and those attorneys may face restrictions on their practice in the state, such as being barred from making court appearances. Still others require in-house counsel to register with the state bar (often with shortened or eased requirements) before practicing. As stated above, however, each state has its own version of the rule allowing in-house counsel to practice within its borders, and it’s important to check the requirements of each state before practicing therein. The ABA has published a comprehensive list of the requirements of each U.S. jurisdiction.
Although risks and compliance requirements may have increased in the majority of jurisdictions, at least now the rules and expectations are far clearer for in-house counsel. What’s more, the publication of Rule 5.5(d) resulted in its adoption in the majority of jurisdictions – substantially lowering the risk for in-house counsel practicing in those jurisdictions (assuming that in-house counsel comply with each jurisdiction’s particular requirements).
There are currently two states that have yet to adopt a rule allowing for the practice of in-house counsel: Mississippi and Hawaii. For in-house counsel to practice in either of these states, he or she must comply with the same rules of admission as local attorneys or seek pro hac vice admission. Although both of these states are likely to adopt a rule for in-house counsel at some point in the future, caution is currently advised for any such counsel with potential practice needs in either.
Truth be told, caution should be advised in any state in which in-house counsel are seeking to practice for the first time. No state’s rules are identical to another, requiring foreign in-house counsel to become familiar with the rules of practice before commencing such practice.
While the state-to-state changes are all quite complicated, another issue can arise. While the Gucci case was bad enough, in November 2015 the Al-Jazeera general counsel was found not only to be not licensed to practice in his state of New York, but not licensed altogether. This begs the question: where does that responsibility lie? Who should be checking the regulations surrounding this issue? Could a simple background check have saved Al-Jazeera and Gucci from embarrassment? Why are such checks not a regular part of a hiring process? What is a lawyer’s responsibility for ensuring they are compliant with that new state? As some brief research demonstrates here, the rules are largely spelled out for counsel or companies who know where to look – making compliance therewith all the easier.
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