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Ethics | The Unauthorized Practice of Law and Arbitration

Fri, 01/22/2016 - 09:34 -- admin25

by Mary Scott

It is now common for many lawyers to have a multijurisdictional practice, but it can lead to ethical problems for lawyers who do not exercise caution. Every jurisdiction prohibits the “unauthorized practice of law” and has its own rules, policies, and laws defining the unauthorized practice of law. This prohibition applies to both non-lawyers and lawyers who “practice law” in jurisdictions where they are not licensed to practice. Private arbitration, because of its non-judicial nature, is a practice area where lawyers may not expect to confront jurisdiction-specific rules on the unauthorized practice of law.

The American Bar Association attempted to address the myriad rules and laws relating to a lawyer’s participation in cross-border arbitrations with ABA Model Rule 5.5. Under the Model Rule, a lawyer may represent a client in an arbitration in a “foreign” jurisdiction if the lawyer has not been disbarred or suspended, the lawyer’s “services arise out of or are reasonably related to the lawyer’s practice” in the lawyer’s home jurisdiction, and the services provided do not require a pro hac vice admission. See ABA Model Rule 5.5(c)(3). While many jurisdictions have adopted some version of Model Rule 5.5, the differences between a state-adopted rule and Model Rule 5.5 can be significant.

A lawyer who has accepted representation of a client for an arbitration in a foreign jurisdiction should first familiarize himself with the ethics rules and opinions in the foreign jurisdiction applicable to the unauthorized practice of law. Violating a foreign jurisdiction’s rules on the unauthorized practice of law could in some cases also be a violation of the Texas Disciplinary Rules of Professional Conduct. Texas Disciplinary Rule 5.05(a) prohibits law practice that violates the regulation of the legal profession in another jurisdiction.

Some modified versions of Model Rule 5.5 require a lawyer to take certain steps before representing a client in an arbitration outside the lawyer’s licensed jurisdiction. For example, some states require the lawyer to file a certification form (California); file a verified statement containing specific information plus pay a fee (Florida); obtain pro hac vice admission under certain circumstances, including court-annexed arbitrations (Illinois); pay a fee and file a certification about professional liability insurance (Oregon); or apply for special admission in a circuit court (Maryland).

A handful of states, including Texas, have not adopted any version of Model Rule 5.5 or any rule akin to it. The lack of a rule on cross-border arbitration practice complicates the analysis and may require lawyers to take a harder look at cases and ethics opinions in those states.

A finding that a lawyer failed to abide by a jurisdiction’s rules on the unauthorized practice of law may lead to a number of negative consequences. The lawyer may be subject to sanctions, including disgorgement or denial of fees; a disciplinary charge in both the lawyer’s licensed jurisdiction and the foreign jurisdiction; an injunction prohibiting further participation in arbitrations without a law license in the foreign jurisdiction; contempt of court; and, in some states (e.g., Florida and Virginia), criminal charges.. If a lawyer has to litigate whether he engaged in the unauthorized practice of law, possible defenses include preemption under the Federal Arbitration Act and the strong public policies in most jurisdictions that favor private arbitration, which may trump the unauthorized practice of law rules.

There are a limited number of cases that address the effect of a court finding that a lawyer engaged in the unauthorized practice of law. At least two cases have held that such a finding does not affect the validity of an arbitration award. See, e.g., Colmer, Ltd. v. Fremantlemedia N. Am., Inc., 801 N.E.2d 1017 (Ill. Ct. App. 2003); Gerowitz v. Noll, 2003 WL 1711279 (Cal. App. March 8, 2003) (unpublished).

Forewarned is forearmed. Take the time to research the foreign jurisdiction’s ethics rules and laws on the unauthorized practice of law. Know where you stand. A few simple steps may alleviate future problems.

Mary Scott is a member of Spencer Scott pllc and can be reached at

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