Lawyers focusing on corporate bankruptcy matters, especially those who work at firms with a large national presence, often represent clients throughout the country and are commonly admitted to practice in more than one jurisdiction. Further, bankruptcy attorneys often blend their practice with bankruptcy court litigation and out-of-court restructuring and transactional matters. So what happens when a dual-licensed bankruptcy attorney handling a non-court matter is subject to a state’s disciplinary authority? Which jurisdictional rules will govern that attorney’s conduct? Last month, the New York State Bar Association (NYSBA) Committee on Professional Ethics addressed this issue. See NYSBA Ethics Opinion 1027.1
The NYSBA Committee approached the hypothetical question of which jurisdictional rules it would apply to a disciplinary action involving a lawyer licensed and in good standing in both New York and the District of Columbia, with offices in both jurisdictions, and who handles state and federal matters outside of court, including representing clients before various federal agencies. Rule 8.5(b)(2)(ii) of the New York Rules of Professional Conduct provides that New York’s disciplinary authority shall apply the rules of professional conduct “of the admitting jurisdiction in which the lawyer principally practices; provided, however, that if particular conduct clearly has its predominant effect in another jurisdiction in which the lawyer is licensed to practice, the rules of that jurisdiction shall be applied to that conduct.”
The first question, then, is where does the lawyer principally practice? The NYSBA Committee’s Opinion referred to various factors that are relevant when determining the jurisdiction of “principal practice,” including (1) the number of days the lawyer works in each jurisdiction, (2) the number of hours the lawyer bills in each jurisdiction, (3) the location of the lawyer’s clients, (4) the activities performed in each jurisdiction (legal client-related work versus administrative firm-related work) and (5) other extenuating circumstances. The analysis does not end here, though, because Rule 8.5(b)(2)(ii) provides an exception where the attorney’s conduct “clearly has its predominant effect in another jurisdiction.”
The NYSBA Committee explained that the following factors should be considered when determining where the “predominant effect” will occur: (1) the client’s location; (2) the location of payments to be deposited; (3) the contract performance location; and (4) the location of new or expanded business. Note that the disciplinary authority will apply the rules of another jurisdiction when the attorney’s conduct has its predominant effect in that jurisdiction, but only when the attorney is licensed to practice law in that jurisdiction.
Interestingly, Rule 8.5(b)(2)(ii) departs slightly from the ABA’s Model Rule 8.52(b)(2), which incorporates a “reasonable belief” exemption: “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 lawyer’s conduct will occur.” Nevertheless, the NYSBA Committee pointed out in its opinion that if a lawyer “reasonably believes the predominant effect of the lawyer’s conduct will occur” in the jurisdiction where the lawyer principally practices, then it is unlikely that the predominant effect “clearly” would occur in another jurisdiction.
Finally, it is worth mentioning that because the dual-licensed attorney discussed in the opinion was said to handle matters before federal agencies, the NYSBA Committee recognized that a federal agency’s professional conduct rules may potentially pre-empt state legal ethics rules (where applicable), but otherwise chose not to address the issue, finding that such a question of law was beyond its jurisdiction.
In sum, “if a lawyer is licensed in New York and other jurisdictions, then the lawyer’s conduct in non-court matters will be governed by the rules of the jurisdiction where the lawyer principally practices unless the predominant effect of the lawyer’s conduct clearly will be felt in another jurisdiction where the lawyer is also licensed to practice.” Thus, it is critical that New York attorneys, who are oftne admitted in multiple jurisdictions and engaged in non-court matters, continue to monitor the rules of professional conduct of all states in which they are admitted.
1 The NYSBA Committee on Professional Ethics’ Opinion 1027 may be found at www.nysba.org/CustomTemplates/Content.aspx?id=52568.