Alice Senechal, Chair
Judge Karen Braaten
|Members Absent |
Dr. Gregory Post
Bob Udland Others Present
Paul Jacobson, Disciplinary Counsel
Chair Senechal called the meeting to order at 12:00 noon following lunch and drew Committee members' attention to the minutes of the February 28, 2003, meeting.
It was moved by Sandi Tabor, seconded by Barbara Cichy, and carried unanimously that the minutes be approved.
Chair Senechal recalled that Supreme Court action on proposed Rule 1.19 and related rule amendments (client files and papers, etc) had been held in abeyance pending enactment of legislation removing the remaining statutory references to attorney retaining liens. She distributed a copy of her recent letter to Chief Justice VandeWalle advising that the 2003 Legislative Assembly had passed the necessary legislation, which would take effect August 1. A copy of the letter is attached as an Appendix.
Multi-Jurisdictional Practice - Review of SBAND MJP Task Force Report
Chair Senechal drew attention to Attachment B (April 11, 2003) - submission of the Report of the SBAND Multi-Jurisdictional Practice (MJP) Task Force, and called on Dan Crothers, Paul Richard, and Randy Lee for a summary of the report and its recommendations.
Dan Crothers explained that the Task Force, chaired by Paul Richard, was established in June 2001 to review issues concerning multi-jurisdictional practice and prepare recommendations. During 2001-02, he said, the Task Force held 5 town hall meetings around the state to solicit comments from members of the bar concerning MJP and several conference call meetings of the Task Force were also held. He said a preliminary report was completed in March 2002 and after review by the Board of Governors a report was presented to association members for consideration. Following additional changes, he said, the Task Force's Final Report was submitted to the Supreme Court as indicated in Attachment B. The Final Report was subsequently referred to this Committee for review of the recommended rules and rule amendments.
By way of general background, Randy Lee explained that, generally stated, the rule has been that an attorney licensed in one state could not practice law in another state unless licensed in that particular state. A general exception to the rule, he said, was that states could not restrict the ability of the federal government to determine which and where lawyers provided legal services for the federal government. The general rule, he said, remains difficult to apply because of the inability to define with precision what constitutes the practice of law. In the past, he said, there were relatively rare instances of a lawyer coming into another jurisdiction to provide some kind of legal services. And, he said, if a lawyer were litigating an issue in another jurisdiction, most states had a pro hac vice ("for this particular occasion") rule which would allow the lawyer to file appropriate papers, name a local co-counsel, and appear in court for the proceedings. With respect to non-litigation issues, he said, there has never been an equivalent approach. Rather, he said, courts, when presented with the question, employed an informal standard which considered whether the lawyer's activity was isolated and was directly related to what the lawyer was doing for the client in the state in which the lawyer was licensed. Both practices, he said, arguably could continue were it not for the fact that more states have recently attempted to better define what constitutes the practice of law and more cases on the issue have arisen, with the consequent proliferation of often conflicting rules. He said the American Bar Association's recent effort ended with the admission that it was not possible to develop a model definition of what constitutes the practice of law.
Randy Lee further explained that even if it were possible to devise and enforce a definition of the practice of law, there are other considerations that might counsel against continuing with the present approach. He said lawyer licensing has historically been left to state regulation, but clients, such as large corporations that engage in interstate business ventures, increasingly chafe under restrictions that may seek to limit the provision of legal services to the client. He said an early Illinois case, a 1986 North Dakota case, and a recent California case all raised awareness of the perils associated with multi-jurisdictional practice. In each case, he said, the lawyer worked outside the state of licensure, the client did not pay the lawyer, and the lawyer sued the client seeking payment for services. The client, he said, argued that the lawyer could not sue to collect payment because the agreement was, in effect, an illegal contract, the lawyer not having been licensed to practice law in the state in which the services were provided. The client, he said, won in all three cases.
Randy Lee said another complexity concerns the role of in-house counsel for corporations that are engaged in federally protected interstate commerce. Such corporations, he said, are disinclined to accede to the argument that their in-house counsel, located and licensed in one state, cannot represent the corporation in matters in another state. The subtle threat in response, he said, has been the suggested possibility of federal credentialing or licensure for lawyers engaged in work affecting interstate commerce. He said concern in the states about this possible federal issue has taken the form of a new willingness to consider circumstances under which a lawyer can provide services in a state in which the lawyer is not licensed to practice law. He said the ABA had conducted a study of MJP issues; similar state efforts followed, with the SBAND Task Force being among the more recent.
Proposed Rule 5.5 - Review
Paul Richard then reviewed draft Rule 5.5 included in the Attachment B. He said paragraph (a), which is consistent with current Rule 5.5, establishes the general premise that a lawyer cannot practice law in a jurisdiction if doing so violates rules in that jurisdiction regulating the legal profession. The provision, he said, is also consistent with Model Rule 5.5(a). He said the remainder of the draft rule is divided into two parts: paragraph (b), which governs lawyer services provided on a temporary basis, and paragraph (c), which addresses services provided on a more permanent basis. He then summarized paragraph (b), (1) through (5), which establish 5 "safe harbors" in which a lawyer may provide legal services on a temporary basis without being licensed to practice law in the state. He noted that the ABA Model Rule addresses similar issues but in somewhat different ways. Additionally, he explained that the Model Rule contains a "catch-all" safe harbor, which would permit a lawyer to provide services under circumstances not covered by specific rule provisions, but which arise out of or are related to the lawyer's practice in the jurisdiction in which the lawyer is admitted. He said the Task Force did not follow this approach, considering it to be too open-ended.
In response to a question from David Hogue, Paul Richard said North Dakota's current pro hac vice rule (Rule 11.1 of the Rules of Court) does not require active participation by the local lawyer.
Paul Richard explained that proposed Rule 5.5(c) would govern those situations in which a lawyer actually establishes an office in the state. The situations under which that would be permitted, he said, are identified in (c)(1) and (2), which he then summarized. He noted that the registration requirement included in (c)(2) is not reflected in the ABA Model Rule, but is a concept the Task Force is recommending in its proposed amendments to Rule 3 of the Admission to Practice Rules. He said the Task Force viewed registration as a stop-gap measure that will afford an opportunity for a lawyer to ultimately become licensed to practice law in the state. With respect to proposed 5.5(d), he said the Task Force added to what is essentially Model Rule language a requirement that the lawyer practicing in the state under the previously described exceptions must disclose to the client that the lawyer is not licensed in this state. He said proposed 5.5(e) is essentially similar to current Rule 5.5(b) and the Model Rule provision.
Dan Crothers noted that the Task Force recommendations include several references to "safe harbor". He said the ABA has since abandoned that terminology, although keeping the concept, and wondered whether the reference ought to be deleted from the various rule proposals. Paul Richard said the proposed rules are clear in defining those circumstances in which a lawyer could be confident that services are being provided within a "safe harbor" that shields the lawyer from allegations of wrong-doing under the rules. In light of the clarity in the rules, he said, it likely is not necessary to retain the reference to safe harbor.
With respect to the disclosure requirement under proposed 5.5(d), Ron Reichert asked whether consideration was given to requiring that the disclosure be in writing. Paul Richard said a writing requirement was discussed at some length but ultimately not included in the proposal. Dan Crothers recalled that some lawyers were adamant that the disclosure be in writing, while others considered it an unnecessarily burdensome requirement.
David Hogue observed that proposed Rule 5.5(b)(4), which would require an out-of-state lawyer for whom pro hac vice admission is not available to be associated with a local attorney who "actively participates" in representation of the client. He noted that the proposed amendments to Rule 3 of the Admission to Practice Rules, which would incorporate much of the current pro hac vice rule (Rule 11.1), do not contain a similar requirement for active participation. He wondered whether the current Rule 11.1 requirement that the local attorney sign off on pleadings would be considered the same as "active participation." Dan Crothers noted that the Rule 3 amendments incorporate the current Rule 11.1 requirement that the local attorney personally appear with the nonresident attorney unless excused by the court. David Hogue suggested that if the overall goal of the proposal is protection of the client, then local counsel should be involved in reviewing the transaction, reviewing documents. However, he said in situations where pro hac vice admission is involved, there seems to be no parallel obligation to review pleadings or motions, other than to sign-off on the documents. Dan Crothers said that in situations where pro hac viceadmission was involved, the judge or presiding officer of the tribunal in which the lawyer is appearing would be responsible for ensuring the proper level of participation by the local lawyer. With respect a particular transaction, that is, something governed by proposed Rule 5.5, he said it is appropriate to impose by rule a requirement for active participation because there is no judge or other officer acting as the admitting official.
Dave Hogue wondered why it would not be possible to have the same standard ("active participation") for transactional work and litigation matters. Ron Reichert said one reason might be that it could significantly increase the cost for the client. Sandi Tabor reiterated that in a litigated matter, the court is involved in observing and monitoring the lawyer's performance, while the court is not involved if lawyer services are being provided with respect to a specific transaction.
Dan Crothers explained that the concept of multi-jurisdictional practice is being advocated by those with interstate practices. The proposed rule, he said, is an effort to allow the client to hire a lawyer from another jurisdiction if that suits the needs of the client, while providing sufficient protection for the client.
With respect to proposed Rule 5.5(b)(5), staff wondered whether there was a counterpart in the Model Rule. Dan Crothers recalled that the language was contained in the initial ABA drafts. Randy Lee said the provision's purpose was to make clear that a lawyer would not be required to be licensed in this state if performing services that could be performed by a person who is not licensed to practice law. Ron Reichert said the reference to "other authorization from a federal, state or local governmental body" is unclear in meaning. Dan Crothers said one example of authority conferred by the federal government would be with respect to admiralty proctors. Also, he said there are circumstances in state administrative proceedings in which a non-lawyer can be authorized to function in an adjudicative or representative capacity. He agreed with Randy Lee that the provision simply clarifies that an out-of-state lawyer could, without being licensed in the state to practice law, perform services for which a license to practice law is not required.
Alice Senechal said the "or other" structure in (b)(5) does not seem consistent with the initial language of the provision.
Rule 8.5 - Review of Proposed Amendments
Randy Lee next summarized the proposed amendments to Rule 8.5 (Jurisdiction). He said there are no proposed changes to the black-letter rule, and only minor suggested changes to the Comment. He noted that the ABA Model Rule was changed considerably, and no similar change s are suggested for North Dakota's rule because the new model rule addresses matters that have been covered in North Dakota's rule for some time.
Rule 3, Admission to Practice Rules - Proposed Amendments
Dan Crothers then reviewed proposed amendments concerning Rule 3, Admission to Practice Rules, and Rule 11.1, ND Rules of Court. He said the objective of the amendments is to combine Rule 3 and Rule 11.1, which governs pro hac vice admission, as well as implement a new registration requirement for non-resident lawyers. One goal, he said, is to simplify the process and address more matters than traditional litigation, such as alternative dispute resolution and appearances before administrative agencies. With respect to the new registration requirement, he noted that the safe harbors provided through proposed Rule 5.5 permit a lawyer to practice, without a license, within the defined safe harbor areas, but if the lawyer's services would not fall within one of those areas, then the lawyer would have to seek pro hac vice admission. Registration, he said, offers a parallel approach for lawyers employed exclusively by a single entity, such as a corporation, it's subsidiaries or affiliates. The underlying concept, he said, is that business entities are less in need of protection through state regulation than the average client. He then summarized the procedural requirements in the proposed amendments for securing registration.
Christine Hogan noted that the fee for registration under the proposed amendments would be the same as the current fee for admission to the bar.
Sandi Tabor wondered whether the availability of registration would dilute the generally recognized prerogative of the states to protect the public through the licensing process for lawyers. Randy Lee said the issue is part of the general debate about multi-jurisdictional practice and whether states should adopt the model rule approach. He said registration, in being primarily concerned with in-house counsel, is closely linked to those issues regarding multi-state corporate activity and involvement in interstate commerce. He said registration, while arguably an intrusion into the state's previous regulatory authority, might serve as a method of forestalling the greater intrusion represented by the previously mentioned concept of federal credentialing of lawyers.
Tim Priebe wondered whether the current $100 fee for pro hac viceadmission, which is increased to $250 under the proposed amendments, is a yearly fee. Dan Crothers said existing language in Rule 11.1 indicates the fee must be paid during each calendar year.
With respect to the fee, Ron Reichert suggested simply referring to the fee required for admission, rather than including a specific dollar amount.
Chair Senechal then requested discussion concerning action on the proposals.
Committee Discussion and Considerations
Sandi Tabor suggested paragraph (b)(5) in proposed Rule 5.5 should be restructured to aid in meaning and clarity. She said the "or other authorization" language appears to mean that the lawyer would not be required to be licensed if performing a service for which there is authorization from some governmental entity, e.g., a patent attorney. Dan Crothers cited comment language from an interim ABA MJP Commission report which described a recommended safe harbor that would allow a lawyer to render, on a temporary basis, law-related professional services that non-lawyers may render without the requirement of a license or other authorization from a governmental body. Ron Reichert suggested the early comment language was clearer in meaning than the proposed language in paragraph (b)(5). Christine Hogan noted that similar explanatory language is not contained in the current proposed Comment language.
It was moved by Sandi Tabor, seconded by Barb Cichy, and carried unanimously that paragraph (b)(5) be clarified and that explanatory language be added to the proposed Comment.
Sandi Tabor recalled Ron Reichert's earlier suggestion concerning a written disclosure requirement in paragraph (d). She said that approach would be consistent with the Committee's earlier rule changes that imposed various writing requirements.
It was moved by Sandi Tabor, seconded by Ron Reichert, and carried unanimously that paragraph (d) be modified to require disclosure in writing.
Alice Senechal drew attention to the reference in paragraph (b) to "in this state", followed by a reference to "in this jurisdiction". She wondered whether a difference was intended, or whether one or the other reference could be used. She noted similar references in the Comment.
Sandi Tabor said there should be consistent use of the reference and noted that present Rule 8.5 refers to "this jurisdiction".
Committee members agreed the references should be reviewed in light of similar references throughout the rules, and a common reference adopted where appropriate.
Committee members then reviewed the proposed amendments to Rule 8.5. There were no suggested changes to the proposed amendments.
With respect to proposed Rule 3 concerning pro hac vice admission and registration, it was moved by Ron Reichert and seconded by Mike Williams that a generic reference to the fee paid by lawyers in practice for 5 years or more be substituted for the specific dollar fee reference in the proposed amendments.
Dan Crothers said one concern about a generic reference is that lawyers seeking admission or registration would have to search the statute or contact the bar association to determine the appropriate fee.
Paul Jacobson observed that imposing a significant fee on a lawyer that is appearing, for example, for a single proceeding may be regarded as impinging on the ability of a client hire the lawyer of the client's choosing.
Following further discussion, the motion carried unanimously.
Chair Senechal said the revised proposals would be prepared for review at the Committee's next meeting.
Chair Senechal briefly summarized the Committee's earlier work with respect to proposed amendments to the lawyer advertising rules, and the subsequent Supreme Court hearing on the proposed rules and rule amendments. She noted that at the time the proposals were scheduled for hearing, the Board of Governors submitted comments concerning language contained in the proposed Comment to Rule 7.3 (Direct Contact with Prospective Clients). She said the Board's comment has not yet been discussed as part of the Committee's further review of the proposals after the Supreme Court referred them back to the Committee for consideration in light of the Ethics 2000 Final Report. She then drew attention to Attachment B (June 12, 2003) - the comment submitted by the Board of Governors. She suggested the Committee take this opportunity to discuss the Board's comment before resubmitting the proposals to the Supreme Court.
Mike Williams explained that during the Supreme Court's hearing on proposed Rule 7.3, which would place new limitations on in-person solicitation, there seemed to be concern that the case for the limitations had not been made clearly or strongly enough. On the other hand, he said, the Board's comment suggests that the case is now too strongly made with the Comment language and that the language amounts to "extraneous and unnecessarily negative commentary about the potential for abuse." He said the Board's comment also suggests that Comment language should only be used to explain the rule and its application. His concern, he said, is that if the proposed Comment language is diluted or softened, it will be regarded as less convincingly making the case for the limitations imposed in the rule.
Alice Senechal noted that another, more recent comment from a Board member concerns the reference in paragraph (b) of proposed Rule 7.3 to "real-time electronic contact", which is inconsistent with the reference in paragraph (a) to simply "real-time contact." The Board member, she said, wondered whether a substantive difference was intended. Mike Williams and Dan Crothers agreed there was no intended difference and the reference to "electronic" could be deleted from paragraph (b).
It was moved by Mike Williams, seconded by Dan Crothers, and carried unanimously that paragraph (b) be modified as described.
With respect to the Board's comment concerning the Comment language, Randy Lee observed that the Comment language in ABA Model Rule 7.3 is essentially similar to the language in the Committee's proposal.
Following further discussion, it was moved by Dan Crothers, seconded by Randy Lee, and carried unanimously that the proposed rules and rule amendments regarding lawyer advertising, as further modified, be resubmitted to the Supreme Court for its consideration.
Chair Senechal will inform the Board of Governors of the Committee's action.
Lawyer Diversion and Assistance
Chair Senechal drew Committee members' attention to Attachment C (June 12, 2003) - revised draft rule amendments concerning lawyer diversion and assistance, and a related flowchart. She said she and Judge Braaten had prepared the revisions and flowchart in response to Committee discussion at the February 28 meeting. She also drew attention to Attachment D (June 12, 2003) - an article from The Professional Lawyer discussing the Arizona diversion program.
Judge Braaten explained that, in addition to including the suggested changes discussed at the February meeting, the revisions more fully address the diversion process (proposed Rule 6.6) and clarifies guidelines to be used in determining when diversion or assistance would be appropriate. She said the flowchart is intended to provide an indication of how diversion or assistance would fit within the current lawyer discipline process.
With respect to proposed Rule 6.6, Judge Braaten said Section B addresses the kinds of cases appropriate for diversion and is patterned after Arizona's diversion rule. She said Sections C and D describe the process itself, including initial intake and screening and the development of an individual assistance plan. She said it is likely that contracting with an agency to conduct intake and screening services would be the most manageable way of implementing this part of the process. With respect to the individual assistance plan, she said Section D requires that the plan be approved by the lawyer assistance program committee. Further, she said, if lawyer assistance is to be a condition for diversion from the discipline process, the plan must be approved by the appropriate disciplinary entity.
Chair Senechal then requested Committee discussion regarding the draft revisions.
Randy Lee recalled earlier Committee discussion about kinds of conduct for which diversion would not be appropriate. He said proposed Rule 6.6B does not indicate that there are certain kinds of conduct for which diversion would not be appropriate, but seems to require at least considering whether the conduct at issue is so objectionable as to remove diversion as a possibility. He noted the related proposed amendment to Rule 3.4B of the Rules for Lawyer Discipline, which would provide that if there is an interim suspension, the Court may order the lawyer to participate in the lawyer assistance program. He said Rule 3.4A, not affected by the proposals in Attachment C, describes those situations that arrive at the point of interim suspension under Rule 3.4B, that is, a determination that the lawyer has committed misconduct and poses a substantial threat of irreparable harm to the public. Taken together with the proposed amendment to Rule 3.4B, he said, it seems there would be no kind of conduct for which diversion or assistance would not be appropriate. He wondered whether that is the intended result.
Alice Senechal noted that the proposed amendments to Rule 3.4B address only participation in the lawyer assistance program, rather than diversion. She said that under the proposed process diversion would not have occurred if there is to be an interim suspension. The proposed language for Rule 3.4B, she said, simply allows the Court to require participation in an assistance program as part of the interim suspension.
Dan Crothers noted the suggested addition of "or diversion from discipline" in Section G of Rule 3.1, which describes the reserved authority of the court to institute disciplinary or disability proceedings on its own initiative. He wondered whether a reference to participating in an assistance program should also be included.
It was moved by Dan Crothers, seconded by Randy Lee, and carried unanimously that Rule 3.1G be further amended as described.
Ron Reichert asked whether, given the need to assemble the assistance committee and review reports, time could become a factor and whether timeframes could be shortened to permit a pressing problem to be expeditiously addressed. Perhaps, he said, the subject lawyer could voluntarily initiate and speed up the process. Judge Braaten said the lawyer assistance program committee could likely move fairly quickly to consider the appropriate action with respect to an assistance plan. However, she said obtaining the necessary approvals with respect to diversion or assistance as part of diversion might require more time.
Ron Reichert noted the language in Section D of proposed Rule 6.6 which requires the assistance program committee to select a "volunteer" to work with the lawyer in developing an assistance program. He said there may be situations in which the involvement of a professional is required and the reference to "volunteer" may be too limiting.
It was moved by Ron Reichert, seconded by Barb Cichy, and carried unanimously that "person" be substituted for "volunteer" in Section D.
Randy Lee observed that the listing of inquiry committee actions in Rule 2.4E(3) is not parallel with the general structure of the section. Committee members agreed. The section will be reviewed for style and structure changes.
With respect to the reference to "disposition" in Rule 3.1D(8), Randy Lee asked whether there should be a definition of that term. He wondered whether "disposition" is intended to mean any of the inquiry committee actions described under Rule 2.4E(3) and (4), both of which propose additional new actions available to the committee with respect to diversion and assistance.
Chair Senechal requested any additional comments concerning suggested changes to the drafts.
It was moved by Mike Williams, seconded by Barb Cichy, and carried unanimously that "conduct themselves so as to" be deleted, as extraneous language, from the second full paragraph of Rule 6.1A.
It was moved by Mike Williams, seconded by Barb Cichy, and carried unanimously that proposed Rule 6.6B be modified to substitute "competence" for "competency" in the first paragraph, and that proposed Rule 6.6B(3) be modified to replace "and some" with "or" in the second paragraph.
Chair Senechal said the revised draft rules would be reviewed at the Committee's next meeting.
There being no further business, the meeting was adjourned at 3:00 p.m