Submitted by Douglas J. Brocker and Barbara B. Weyher

This article is the second in a series concerning the most recent revisions to the Rules of Professional Conduct, which took effect on March 1, 2003. In the articles, the authors discuss the practical implications of the more significant changes to the Rules of Professional Conduct.

The North Carolina State Bar has waded into the turbulent waters of the Multi-Jurisdictional Practice (MJP) debate with the recent revisions to Rule 5.5 of the Rules of Professional Conduct. MJP concerns a complex set of issues involved when a lawyer from one state engages in activities that arguably constitute the unauthorized practice of law (UPL) in another state in which the lawyer is not licensed. Under most states’ UPL statutes, lawyers licensed in another state traditionally were treated the same as persons not licensed in any state, unless afforded pro hac vice status.

The ABA established a Commission on MJP to study these issues and make recommendations. The MJP Commission’s primary objective was to balance the interests of clients who want to retain counsel across state or national borders against the legitimate interests of states in protecting their residents and justice systems from incompetent representation. In June 2002, the MJP Commission proposed a series of changes to existing rules or statutes. The Commission’s basic approach creates certain identifiable “safe harbors” that allow attorneys licensed in other jurisdictions to perform certain activities in states in which they are not licensed without running afoul of the UPL statutes or rules. In August 2002, the ABA House of Delegates adopted the Commission’s recommendations.

North Carolina became one of the first states to adopt the revisions to Rule 5.5 concerning MJP. North Carolina’s revisions to Rule 5.5 adopt the basic framework of the safe-harbor approach set out in the MJP Commission’s report. The significant changes regarding MJP are contained in Revised Rule 5.5(c), which states that a lawyer licensed in another jurisdiction does not engage in UPL in North Carolina if the lawyer:

• Is authorized or reasonably expects to be authorized to appear before a tribunal or administrative agency (pro hac vice),
• Provides legal services to the lawyer’s employer or its affiliates (in-house counsel),
• Acts concerning a matter arising out of representation of a client in the lawyer’s licensed jurisdiction,
• Acts with respect to a pending or potential alternative dispute resolution proceeding concerning representation of a client in the lawyer’s licensed jurisdiction,
• Is associated with a North Carolina lawyer who actively participates in the representation, or
• Provides services limited to federal law, international law, the law of a foreign jurisdiction or the law of the lawyer’s licensed jurisdiction. Rule 5.5(c)(1) & (c)(2)(A) – (E).

The State Bar, following the MJP Commission’s proposal, decided that the above situations do not create significant risk to the interests of clients, the courts or the public in North Carolina. Comment 2, Rule 5.5. Although these changes do permit certain limited actions by lawyers licensed in other states that would previously have been considered UPL, Revised Rule 5.5 makes it clear that the scope of these newly created exemptions is limited. Specifically, a lawyer licensed in another jurisdiction may not:

1. Establish an office or other systematic and continuous presence in North Carolina for the practice of law, except in-house counsel, or
2. Hold out to the public or otherwise represent that he or she is admitted to practice law in North Carolina. Rule 5.5(b)(1) and (2).

This limiting language is designed to prevent lawyers licensed in other states from exploiting the changes to support any effort to practice on a regular basis or establish a permanent presence for the purpose of practicing North Carolina law without becoming licensed in this state. Comments 1 and 2, Rule 5.5.

In adopting these revisions to Rule 5.5, the North Carolina State Bar put itself on the forefront of the MJP issue among the states. North Carolina’s approach seeks to retain legitimate protections for the state’s citizens while at the same time recognizing the changing reality of the practice of law, particularly in representing large multi-state or multi-national corporations or entities. Hopefully, other states will follow this lead and soon adopt comparable changes allowing North Carolina lawyers the same professional privileges when representing clients in other states.