Stranger in a strange land

Arizona and Nevada may be our neighbors, but their bar members aren’t very neighborly when California lawyers step over the line. So, just where is the line?

2014 October

Law is an imperfect profession in which success can rarely be achieved without some sacrifice of principle. Thus all practicing lawyers – and most others in the profession – will necessarily be imperfect, especially in the eyes of young idealists. There is no perfect justice, just as there is no absolute in ethics. But there is perfect injustice, and we know it when we see it.

– Alan Dershowitz

Letters to a Young Lawyer

 

In 2004, after sitting and somehow passing the California Bar the first time, I thought I would try my luck again and I signed up to take the Arizona and Nevada State Bar. At that time, my firm’s practice was exclusively dedicated to motorcycle accidents, and there are two very large motorcycle shows that take place yearly in both of these states. In addition, the weather is beautiful and residents can enjoy the outdoors for months during the year.

My review course for the California State Bar was done by a professor that I had at Southwestern in 1999. Professor Schmitt was a complicated man, who chain-smoked feverishly, and had a great deal of difficulty conforming, despite a very impressive educational background. We had met when he taught Constitutional Law, and I, being an inquisitive nineteen-year-old, questioned everything he attempted to teach me. Some complained of his harshness, his commentary on the sexes, but in law school where everything can be bland, he brought color to his lectures. His rough-around-the-edges approach to his subject matter was to ensure that we all paid attention, and I adored it.

After I graduated from Southwestern, I took his review course which consisted of flashcards, outlines, lectures and mock exams called LECC. I remember one day, after failing every Performance Exam he gave us, approaching him for guidance. I was sobbing uncontrollably, and making very little sense while trying to convey to him my whole world was shortly going to be over, come July (funny how law school can skew your perspective). Professor Schmitt grabbed my shoulders, gave me a quick, playful, and pretend backhand to my cheek and shouted “get a hold of yourself, Kirby.” This was followed by him grabbing my shoulders and attempting to shake some sense into me. After this encounter, he left me standing there and went out to smoke yet another cigarette.

The slight reality check worked, and on the day the bar results came out, as I frantically pushed the reload button on the State Bar’s Web page, at some point, I found that I had passed the California State Bar. When it came time to study for the Arizona and Nevada State Bars, I used the same materials and supplemented my studies with Barbri’s state-specific books that I bought online. This was before the time when Amazon or Ebay really existed, so it is somewhat amazing that I actually received the books after sending my check to a stranger I met off a law school chat line.

When I began studying, I realized quite quickly how protective the State of Nevada was when admitting Out-Of-State Attorneys. At the time I took the Nevada Bar, there was a controversy because the only law school in Nevada was viewed as self-selecting attorneys with lower LSAT scores and grades over non-residents. These mumblings and complaints still exist, but are referred to as “soft factors” in the application process according to Wikipedia. Also, at this time, the Nevada State Bar required you to retake your ethics exam before practicing, even if you had just passed it a year or two before. Lastly, at that point, Nevada prevented larger, well-known firms from setting up shop by requiring all named partners be licensed in Nevada. This was later changed by the time I started practicing there.

Protective of cases and clients

For the reasons above, I took the Arizona exam first, and then sat for the Nevada exam. By some divine act of intervention, I passed both exams that year. For a matter of reference my State Bar license in California achieved in 2001 is 216909, however my State Bar in Nevada, just years later, is 8828. After these exams, through comity, I was able to join the Texas State Bar and Georgia State Bar. What I have learned in practicing in all of these states is that each bar is very protective of their own members, and likewise their members are very protective of their cases.

Two years ago, a younger firm that was just opening their doors called me into their office in Los Angeles. They had several Arizona-based cases and contacted me after getting a letter from an insurance company inquiring who was licensed in Arizona and managing their cases. Without much of a concern, they informed me they were buying Google Adwords in several states and had business coming in from multiple states. I gently reminded them that most states have ethical regulations regarding advertising and that they could lose their firm for “practicing law” in another state. The named partner looked at me like I was crazy, and I quickly made my way to the door.

To this day, I often speak with attorneys who mistakenly believe and insist that they are not practicing law by sending a demand or consulting with a client regarding an incident that happened out-of-state. I have tried at length to explain to attorneys that such acts constitute the practice of law when they ask me what the Statute of Limitations is in Arizona or Nevada on a certain cause of action. I have also pled with members regarding this issue through emails and other means; all to no avail. Just a few weeks ago a member asked what a Statute of Limitations was in Nevada to CAALA members.

So what is considered practicing law in California where we all hold licenses? Is it ethically necessary when you meet with a client that was injured out-of-state to associate counsel or refer them out? Lastly, can you take or give a referral fee on matters in another state? All of these questions have come up amongst our members, and because I usually see the cases when there is already a slight problem, this issue is dear to my heart. I love practicing law, and, to me, my bar licenses are like the golden ticket in Charlie and the Chocolate Factory. Without them, I could not afford everything I am so thankful to have for my children and me. I also know that because the state bars are so small outside of California, that local counsel do not hesitate on reporting these acts if the matters are not handled correctly.

What is practicing law in California?

Rule 1-300 of the California Ethical Guidelines indicates: “(a) A member shall not practice law in a jurisdiction where to do so would be in violation of regulations of that profession in that jurisdiction.”

So for each jurisdiction wherein a matter comes up, as an attorney in California, you must research that state-specific definition of restrictions on practice. In Nevada, under NRS 7.285 they go so far as to make the unauthorized practice of law there a crime.

The California State Bar addressed a lot of these issues in State Bar Formal Ethics Opinion 2001-155. In this case, the State Bar examined whether sending a letter for a debt resolution service to prospective clients in nine (9) states wherein an attorney was not licensed was the unauthorized practice of law.

The court found:

In 12 counts, the State Bar alleges that Lenard violated rule 1-300(B) by committing UPL in nine different states by practicing law without complying with local practice rules in willful violation of each state’s professional regulations. We agree with the hearing judge that Lenard is culpable of all 12 counts of UPL, although we base our conclusions on different legal grounds.

Our analysis of UPL is not confined to a consideration of the content or underlying purpose of the Legal Service Agreements or cease-and-desist letters. We also look to the form of these communications – specifically, the use of the term “The Law Offices of Richard Lenard” and the representations that this office was acting as the “law firm” for the clients and providing “legal services.” By failing to make clear that he was only licensed to practice law in California, these representations are evidence that Lenard held himself out as entitled to practice to clients and creditors in states in which he was unlicensed.

By implying he was licensed in the relevant states, Lenard gave the false impression to his clients and their creditors that he held an advantage over a non-attorney debt negotiator. He explicitly represented to the clients that he would provide legal services, and informed creditors that he was representing each client utilizing his law office letterhead. The written communications Lenard provided to clients (and their creditors) in those states are evidence that he violated the applicable rules of professional conduct, as well as relevant case law and advisory authority. (State ex rel. Oklahoma Bar Ass’n. v. Samara (Okla. 1989) 775 P.2d 806, 807-808 [misleading use of “Attorney at Law” on suspended attorney’s letterhead constitutes UPL]; In re UPL Advisory Opinion 2003-1 (Ga. 2005) 623 S.E.2d 464 [non-attorney representing debtor in debt settlement negotiations committed UPL]; The Florida Bar v. Tate (Fla. 1989) 552 So.2d 1106, 1107 [out-of-state attorney engaged in UPL by handing out business cards that did not properly disclaim he was not licensed in Florida]; Ginsburg v. Kovrak (Pa. 1957) 11 Pa. D. & C.2d 615 [out-of-state attorney licensed in federal courts who used terms “law office” and “attorney at law” on business cards and stationery for his tax consulting business engaged in UPL]; Discipline of Lerner (Nev. 2008) 197 P.3d 1067, 1074-1075 [out-of-state attorney committed UPL by negotiating settlement of client insurance claims and signing demand letters]; Kentucky Bar Ass’n. v. Brooks (Ky. 2010) 325 S.W.3d 283, 289-290 [non-attorney who advertised “Legal Self Help” business in “Attorneys” section of yellow pages committed UPL by creating misleading impression]; Steele v. Bonner (S.D. 2010) 782 N.W.2d 379, 386-387 [unlicensed law school graduate engaged in UPL by rendering legal advice and holding herself out as attorney].)

The Opinion goes on to examine if under the ABA Model Rules, an exception for multi-jurisdictional practice can be found and states:

In addition to defining UPL, ABA Model Rule 5.5 also provides “safe harbor provisions,” which permit temporary practice in certain specified circumstances by lawyers licensed in other states. We find that Lenard’s conduct does not fall under any of the safe harbor provisions.

First, Lenard appears to argue that he is not culpable of UPL because one of the exceptions under ABA Model Rule 5.5(c)(4) applies, i.e., his legal services were reasonably related to his practice in California. He contends that all work was done in California and any legal opinions rendered were based on California law. However, the factors defined in comment 14 of the ABA Model Rule compel our conclusion that Lenard was not entitled to practice law even on a temporary basis in these states. Analyzing those factors, we find that he had no prior contact with the clients and they never lived in California or had substantial contact with this state. There is no evidence that California law would be relevant to any of the consumer debts in these matters. Further, Lenard has no knowledge of the specific laws of the states in which the clients resided, where they faced state collection actions and may have had assets. As such, the contact with these out-of-state clients was not reasonably related to Lenard’s practice in California, and he was not authorized to provide legal services on a temporary basis under the states’ versions of ABA Model Rule 5.5(c). (See Supreme Court of Ohio Board of Commissioners on Grievances & Discipline, Opn. 2011-2 (Oct. 7, 2011) Multijurisdictional Practice and Debt Settlement Legal Services [rule 5.5(c) of the Ohio Rules of Professional Conduct did not authorize out-of-state debt settlement attorneys to provide legal services on temporary basis in that state].)

Further, In United States v. Kimsey (668 F. 3d 691 - Court of Appeals, 9th Circuit, 2012 - Google Scholar), the District Court considered whether a non-attorney was engaging under the unlawful practice of law by “ghost writing” various pleadings. The court said:

[T]he district court noted the difficulty of defining what constitutes the practice of law: “We know it when we see it or the courts know it when they see it.” Nevertheless, the court concluded that “this clearly is a case that crosses the line between simply providing assistance or offhand recommendations of looking at a particular case,” and summarized its findings of the services that Kimsey had provided Rizzolo as follows: Mr. Rizzolo, whether it’s through suggestions of others or just his own conjured up views on something, raises with Mr. Kimsey, asks Mr. Kimsey if [t]here’s a case or [to] research [ ] a particular point. Mr. Kimsey conducts the research. Mr. Kimsey writes an argument, gives it to Mr. Rizzolo to analyze, review, edit, whatever − factually correct certainly. And ultimately the [eight] products that are filed [in July and August 2009] are documents the Court finds beyond a reasonable doubt authored by Mr. Kimsey. In support of these findings, the court noted that the eight documents “are clearly in the form of pleadings citing case authority that had been researched, that had been structured or formatted in a way to present legal arguments seeking specific relief including dismissal of the claims against Mr. Rizzolo,” and that Rizzolo responded affirmatively when asked, “Wasn’t what you did with Mr. Kimsey what you did with your attorneys?” The court had “no difficulty” holding that Kimsey had violated Local Rules IA 10-1 and 10-2 of the district court, as well as Nevada Revised Statute § 7.285, based on his role in preparing and filing the eight pleadings. In addition, the court relied on the following facts to find that Kimsey had willfully violated these provisions, as required for a conviction under § 402: Kimsey had been convicted of unauthorized practice of law in the past; he had failed to sign the eight pleadings; he had not “identif[ied] himself”; he had “refused to acknowledge his status”; and he had declined to receive service.

Other views of out-of-state lawyers

The cases above illustrate how the California State Bar would examine out-of-state practice by an attorney licensed in the State of California. But how might the Nevada State Bar look at a California attorney who attempts to resolve claims pre-litigation for Nevada residents?

The most clear case on point is that of In Re Discipline of Glen Lerner, ((Nev. 2008) 197 P3 1067). In this case, the State Bar was examining whether sending a demand was the practice of law and required discipline:

A key distinction drawn by many courts in determining whether a given activity is the practice of law is whether the services include the application of the general body of legal knowledge to a client’s specific problem. As stated by the Colorado Supreme Court, a “touchstone” of whether an activity constitutes the unauthorized practice of law is whether an unlicensed person offers “advice or judgment about legal matters to another person for use in a specific legal setting.” Similarly, a bankruptcy court applying Tennessee law stated that the practice of law “relates to the rendition of services for others that call for the professional judgment of a lawyer,” that is, the lawyer’s “educated ability to relate the general body and philosophy of law to a specific legal problem of a client.” 

The Ninth Circuit, applying Oregon law, likewise held that ‘the “practice of law” means the exercise of professional judgment in applying legal principles to address another person’s individualized needs through analysis, advice, or other assistance.’” For example, simply providing forms or offering a service to type client-provided information onto the forms was not the practice of law, but advising the client about how to complete a form, e.g., what information to include and on what portions of the form, was the practice of law.

Application of these general principles, however, is highly fact-specific, and the practice of law definition is not susceptible to a bright-line, broadly stated rule. Courts throughout the country agree that what constitutes the practice of law must be decided on the facts and in the context of each individual case. The Pennsylvania Supreme Court has stated that “[m]arking out the abstract boundaries of legal practice would be an elusive, complex task more likely to invite criticism than to achieve clarity.”

While at times the line between lay and legal judgments may be a fine one, it is nevertheless discernible. Each given case must turn on a careful analysis of the particular judgment involved and the expertise that must be brought to bear on its exercise. In determining what constitutes the practice of law, the public interest should be of primary concern – both protection of the public from incompetent legal services and also ensuring that regulation of the practice of law is not so strict that the public good suffers.

(In Re Discipline of Glen Lerner, supra.)

After reviewing the lengthy decision in Nevada, it is clear that consulting with a client is the practice of the law, and if unauthorized, can lead to discipline. So what can a California-based attorney do if confronted with an accident that occurred in Las Vegas or Arizona? I would suggest contacting the Nevada and California State Bar Ethics hotlines. I would then suggest meeting with an attorney licensed in that state and the client to make sure the retainer is state specific and that an agreement in writing about the fee split is shared and signed by all those that are present. The attorney that is out-of-state can then work under the supervision of the local counsel and share in the fee. This allows for both attorneys to work together and protects the client from slight variations in the Civil Tort Law amongst the states. While this may seem like a lengthy process to simply resolve a traffic accident with an insurance company, the purpose of these regulations is to protect the consumer and the practice of law in that state.