by Cathy Tran Moses
Many California attorneys are authorized to practice law in multiple jurisdictions and may encounter difficult choice-of-law questions when deciding which state’s ethical obligations might apply in a particular circumstance. California Rule of Professional Conduct 8.5(b), which is based on ABA Model Rule 8.5(b), states that for conduct in litigation matters, the ethics rules of the jurisdiction in which the tribunal sits should govern; and for any other conduct, the rules of the jurisdiction in which the lawyer’s conduct occurred should apply, or if the “predominant effect” of the lawyer’s conduct is in a different jurisdiction, that jurisdiction’s rules should govern.
In practice, and as with other choice-of-law analyses, these rules are not always easy to apply. Last year, the American Bar Association’s Standing Committee on Ethics and Professional Responsibility issued Formal Opinion 504 to provide practical guidance regarding the application of these standards.
California’s Rule 8.5 Distinguishes Between Conduct in a Matter Pending Before a Tribunal, and Any Other Conduct To understand the choice-of-law rules that govern the application of an attorney’s ethical obligations, California attorneys first should turn to the text of California Rule of Professional Conduct 8.5.
Rule 8.5 begins by stating that a lawyer admitted to practice in California remains subject to the disciplinary authority of California, “regardless of where the lawyer’s conduct occurs.” Rule 8.5(a) (emphasis added). It also states that even if a lawyer is not admitted in California, that lawyer remains subject to the disciplinary authority of California if the lawyer provides, or offers to provide, legal services in California.
Next, Rule 8.5(b) sets forth the choice-of-law considerations. That section states that in any exercise of the disciplinary authority of California, the rules of professional conduct to be applied shall be:
(1) For conduct in connection with a matter “pending before a tribunal,” the rules of the jurisdiction in which that tribunal sits should apply, unless the rules of the tribunal provide otherwise; and (2) For “any other conduct,” the rules of the jurisdiction in which the lawyer’s conduct occurred, or, if the predominant effect of the conduct is in a different jurisdiction, the rules of that jurisdiction shall be applied.
Importantly, Rule 8.5(b)(2) includes a safe harbor provision which states that the lawyer “shall not be subject to discipline” if the lawyer’s conduct “conforms to the rules of a jurisdiction in which the lawyer reasonably believes the predominant effect of the lawyer’s conduct will occur.” The text of the Rule does not provide further guidance regarding this safe harbor.
ABA Issues Formal Opinion 504 Regarding Application of Model Rule 8.5 In Formal Opinion 504, the ABA Committee recognized uncertainty regarding several aspects of Model Rule 8.5, including the meaning of Rule 8.5(b)(1)’s phrase “in connection with a matter pending before a tribunal,” and Rule 8.5(b)(2)’s reference to “any other conduct.” The Committee thus set forth five hypothetical scenarios to help attorneys apply Rule 8.5(b)’s choice of law rules:
In the first scenario, the Committee dealt with a fee agreement that preceded the filing of litigation. The Committee described an attorney who was admitted to State X, and entered into an attorney-client relationship with a client in State X. The attorney would work in State X on a lawsuit to be filed in State Y. The Committee concluded that the lawyer would have to adhere to State X’s rules with respect to the terms of the fee agreement, even though the litigation would be filed in State Y. Comment 4 to the Model Rule notes that where an attorney acts “in anticipation of a proceeding not yet pending before a tribunal,” Rule 8.5(b)(2), not Rule 8.5(b)(1), applies. The agreement would concern work done by the lawyer in State X, and the client in the scenario also resided in State X. The Committee also noted that a lawyer could seek to avoid any confusion by stating in the fee agreement the bases for the lawyer’s belief that a particular jurisdiction’s rules applied to the agreement.
In the second scenario, the Committee discussed a law firm in State A that allows law firms to have nonlawyer partners. It posited that a lawyer in that law firm requested to appear pro hac vice in a litigation in State B, which does not allow nonlawyers to be partners. The Committee queried whether State B’s ethical rules would prohibit the lawyer from sharing fees from the litigation with the nonlawyer partners in State A. The Committee first made clear that the lawyer’s conduct in representing the client in the proceeding would be governed by the ethics rules of that jurisdiction. However, the lawyer’s law firm structure in State A was not “conduct in connection with a matter pending before a tribunal,” so that Rule 8.5(b)(1) did not apply. The law firm was not located in State B and its “conduct” in having nonlawyer partners was conduct occurring only in State A. Thus, even if the lawyer were admitted pro hac vice in a lawsuit occurring in State B, the lawyer’s law firm structure would be governed by State A’s ethics rules, not State B’s rules.
In the third scenario, the Committee described a lawyer who is admitted to practice in States A and B, and who is hired by a client in State A to continue litigation that is in State A. The lawyer is located in State B, but becomes aware that the client’s prior attorney committed intentional misconduct. State A would require the lawyer to report the former lawyer’s misconduct even if doing so required the lawyer to disclose information relating to the representation without client consent, but State B requires such misconduct to be reported only if the client provides informed consent. The Committee reasoned that because the lawyer is representing a State A client in connection with a matter pending in a State A tribunal, Rule 8.5(b)(1) would require the lawyer to follow the rules of State A and report prior counsel’s misconduct.
In the fourth scenario, a lawyer is assisting a client/buyer in State B to purchase real estate in State A, from a Seller in State A. The parties have engaged in negotiations at Buyer’s place of business in State B. The buyer privately makes a threat to the lawyer that the buyer may physically harm the Seller at their next meeting unless Seller agrees to terms. State A permits but does not require a lawyer to disclose information relating to the representation to the extent the lawyer reasonably believes necessary to prevent reasonably certain death or substantial bodily harm, whereas State B’s rules require the lawyer to reveal such information. The Committee opined that the predominant effect of the lawyer’s conduct would be in State B, so that the ethical rules of State B governed. The Committee noted a number of relevant factors in coming to this conclusion, but the most persuasive fact seemed to be that the threatened harm would most likely occur in State B, where the parties’ negotiations had been occurring.
The final scenario involved the common scenario of lateral screening at law firms. The Committee described a law firm who wished to hire Lawyer A, which could impute a former client conflict of interest to another lawyer at the firm, Lawyer B, who is licensed in State B. State A would allow the law firm to screen the lawyer without obtaining the consent of the affected client, but State B would impute the conflict to Lawyer B unless the former client and Lawyer B’s current client gave informed, written consent. The Committee noted that the first consideration should be whether the imputed conflict concerns a pending lawsuit or transactional matter. If the matter is a lawsuit filed in State B, then State B’s screening rules would govern. But if the imputed conflict were transactional in nature, the analysis would have to turn on other considerations, such as the location of the subject of the contemplated transaction, the law governing the transaction, and the location of any deposited funds. The Committee also pointed out that it can be unclear where the predominant effect of Lawyer B’s representation will occur; and in such cases, it would be more prudent to follow the more restrictive rule of State B and obtain informed written consent from the prior and current clients.
In addition to the hypothetical scenarios discussed above, the Committee also shed further light on factors that a lawyer should consider in determining where the “predominant” effect of the lawyer’s conduct occurs, given that Rule 8.5(b)(2) is silent on such factors. The Committee identified as potentially relevant information: the client’s location or principal place of business, where the transaction may occur, which jurisdiction’s substantive law applies, the location of the lawyer’s principal office, and where the lawyer is admitted.
Conclusion The hypothetical scenarios discussed in Formal Opinion 504 show that practical applications of the Rule are neither easy nor intuitive. That is because traditional choice-of-law and jurisdictional analyses in other settings, i.e., not concerning ethics, also tend to be complicated, and require the careful consideration of all facts and the balancing of competing interests. When it comes to ethical rules, a choice-of-law analysis should be similarly detailed and thoughtful. As the ABA Opinion demonstrates, simply because an issue may relate in some way to a litigation does not automatically mean that the ethics rules of that tribunal’s state will be held to govern. Nor should an attorney reflexively conclude that because a contract concerns the purchase of property in one state, that that state’s ethics rules should apply to all aspects of the attorney’s engagement. All of the facts matter.
The ABA Opinion also illuminates that different jurisdictions’ ethical rules can apply to an attorney at different points of a single representation, that is, as in the first hypothetical, one state’s ethical rules may govern the terms of a fee agreement before a lawsuit is commenced while another state’s rules govern the filing and conduct of the litigation. Accordingly, attorneys may be required to revisit at different points of a matter whether a different state’s ethical rules might be triggered, depending on the circumstances and if the conduct truly should be considered “in connection with a matter pending before a tribunal.”
Finally, in part because these choice-of-law questions are often difficult, attorneys should remain mindful of Rule 8.5(b)(2)’s safe harbor, which states that a lawyer shall not be subject to discipline if the lawyer’s conduct conforms to the rules of a jurisdiction in which the lawyer reasonably believes the predominant effect of the conduct will occur. Accordingly, attorneys should discuss with their clients their reasonable beliefs regarding where they believe the predominant effect of their conduct may occur and the specific grounds for such beliefs, and also document those understandings, to fall within the safe harbor.
Cathy Tran Moses is a litigation partner at Cox, Castle & Nicholson LLP in Irvine and a member of OCBA’s Professionalism and Ethics Committee. Ms. Moses specializes in complex business litigation, and can be reached at cmoses@coxcastle.com.