Ethics rules vary from state to state, creating a challenge for lawyers engaged in multijurisdictional practice. How can you comply with your ethical obligations if you do not know which jurisdiction’s rules apply? While the jury is still out on whether the chicken or the egg comes first, there is no such conundrum when it comes to choice-of-law. Lawyers practicing in more than one state must first determine jurisdiction to be certain of their ethical responsibilities.

On March 1, 2023, the American Bar Association (ABA) issued Formal Opinion 504 “Choice of Law” (2023)¹ outlining specific guidance on choice-of-law questions under Model Rule of Professional Conduct 8.5, Disciplinary Authority; Choice of Law². ABA Formal Opinion 504 reads like a chapter on personal jurisdiction in a first-year law student’s civil procedure class. It is a dense read but ultimately worth the deep dive. It provides guidance on some multijurisdictional practice issues that lawyers may overlook. ABA Formal Opinion 504 presents five choice-of-law scenarios under Rule 8.5, including fee agreements, ownership of law firms, professional reporting obligations for misconduct, the duty of confidentiality, and lateral hire screening. Before delving into the specifics of some of these scenarios, lets revisit the basic tenants of discipline authority and choice-of-law.

Disciplinary authority

Under Rule 8.5(a), a lawyer is subject to the disciplinary authority of the state where the lawyer is admitted to practice and any other state where the lawyer provides or offers to provide legal services, including temporary legal services under Rule 5.5(c) or pro hac vice admission. This means that a lawyer may be subject to disciplinary action in multiple states for the same conduct. In the attorney discipline world, this is known as reciprocal discipline. The Office of Lawyers Professional Responsibility (OLPR) imposes reciprocal discipline on a handful of lawyers each year in Minnesota. The rationale behind this requirement is that permitting a lawyer who is suspended or disbarred in one jurisdiction to practice in another state exposes the public to an unjustified harm, disparages the legal profession, and undermines public confidence in the administration of justice.

What are the most important things to know about reciprocal discipline? If you are licensed to practice law in another jurisdiction and public disciplinary charges or discipline are issued against you in that jurisdiction, you must inform the OLPR. See Rule 12(d), Rules on Lawyers Professional Responsibility (RLPR). Most states have an equivalent requirement. Lawyers should be aware that, unless the Minnesota Supreme Court determines otherwise, a final determination of misconduct in another jurisdiction conclusively establishes the misconduct in any disciplinary proceeding in Minnesota. Critically, a lawyer cannot relitigate the misconduct in the reciprocal Minnesota disciplinary proceeding, absent the Court finding the judicial process in the other jurisdiction was unfair. See Rule 12(d), RLPR. This is a high hurdle that usually cannot be met.

Choice of law

Rule 8.5(b) answers which jurisdiction’s ethics rules are applied to a lawyer’s conduct. In litigation, the jurisdiction of the tribunal presiding over the matter apply, unless the tribunal’s rules specify otherwise. See Rule 8.5(b)(1). “Tribunal” is defined to include courts along with binding arbitration proceedings and any legislative body, administrative agency or other body acting in an administrative capacity. See Rule 1.0(n). For any other conduct, the rules of the jurisdiction in which the lawyer’s conduct occurred apply unless the “predominant effect” of the conduct occurs in another jurisdiction. See Rule 8.5(b)(2) Comment [4] clarifies that “other conduct” includes conduct in anticipation of litigation that is not yet before a tribunal. Think actions taken by a lawyer in preparation for litigation such as gathering evidence. How is “predominant effect” determined? Rule 8.5 is, unfortunately, silent and the comments do not offer much practical guidance. ABA Formal Opinion 504 helps fill that gap by suggesting lawyers should consider the following: where the client resides, where the transaction occurs, applicable law governing the transaction, where the lawyer is admitted and maintains an office, location of the opposing party, and what jurisdiction has the primary interest in the lawyer’s conduct.

Finally, Rule 8.5(b)(2) provides a “safe harbor” for lawyers in non-litigation matters. If a lawyer licensed in Minnesota engages in conduct permissible in Minnesota and reasonably believes the actions occur within Minnesota, the lawyer would not face discipline. A lawyer’s reasonable belief is usually interpreted as an objective versus subjective person standard. See for example, Rule 1.0(j). As part of this safe harbor provision, Comment [5] outlines a special option for lawyers to contract around choice-of-law questions when it comes to conflicts of interest in non-litigation matters. A lawyer and client may insert a provision into their engagement letter specifying a particular jurisdiction will govern with respect to conflicts of interest. The engagement letter would have to be specific enough to constitute the client’s informed consent and must be confirmed in writing just like any other conflict of interest waiver. See Rule 1.7(b)(4).

ABA Formal Opinion 504: Fee agreements

If you are hired by a client in Minnesota to litigate a case in Iowa, which choice-of-law provision would govern under Rule 8.5(b)? ABA Formal Opinion 504 concludes that executing a fee agreement is “conduct in anticipation of a proceeding not yet before a tribunal” versus litigation. The ABA would apply Minnesota’s ethics rules when analyzing the parties’ fee agreement under Rule 8.5(b)(2). Looking at the factors the ABA cites for determining the “predominant effect,” this makes sense — the lawyer is licensed and offices in Minnesota, and the client resides in Minnesota.

The OLPR reached a different conclusion at least one time. A lawyer was admonished for representing a client pro hac vice in a federal criminal matter (litigation) in Iowa. The lawyer charged a “nonrefundable fee” that was not deposited into a trust account and without an engagement letter signed by the client. At the time, Iowa’s ethics rules did not permit nonrefundable retainers. The OLPR took the position that “[The] Attorney violated Iowa’s rule, which pursuant to Rule 8.5, MRPC (Choice of Law), was the applicable standard.” Martin A. Cole, Summary of Admonitions, Bench & B. of Minn., Apr. 2009, at 18.³

Absent specific case law guidance in a jurisdiction, interpreting both what constitutes “conduct in anticipation of a proceeding not yet before a tribunal” and what factors are considered in determining the “predominant effect” of a lawyer’s conduct remain open to interpretation. ABA Formal Opinion 504 offers one helpful suggestion: Lawyers can identify in their engagement letter which jurisdiction’s ethics rules will govern their fee agreement. Including factors considered by the lawyer and client in reaching this choice-of-law decision makes it even more persuasive in the event it is scrutinized.

ABA Formal Opinion 504: Law firm ownership

ABA Formal Opinion 504 offers the mind-bending scenario of whether one jurisdiction can find a law firm’s ownership structure, which may be permissible in the jurisdiction where the firm operates, to be unethical and a basis for seeking discipline. Think Arizona and Utah, which permit nonlawyer ownership interests in a law firm. The majority of states, like Minnesota, prohibit nonlawyer ownership in a law firm under Rule 5.4(a). The ABA posits whether a lawyer from Arizona, who gets admitted pro hac vice in Minnesota, would be able to ethically share fees from the Minnesota litigation with nonlawyer partners in Arizona. The ABA concludes that, despite being bound by the rules of the jurisdiction where the litigation is located (Minnesota), the law firm structure of the Arizona lawyer does not implicate “conduct in connection with a matter pending before a tribunal” under Rule 8.5(b)(1). The ABA finds the Arizona lawyer’s partnership with a nonlawyer is governed by the ethics rules in Arizona under Rule 8.5(b)(2) since the “predominant effect” of the Arizona lawyer’s partnership with nonlawyers is in Arizona.

The ABA guidance is a good reminder that jurisdictional preferences can impact the business side of law. Consider professional firm obligations. Some states require compliance regardless of where a law firm is organized and officed. For example, Wisconsin requires that law firms operating as limited liability organizations (LLC, LLP, or S.C.), regardless of whether organized in another state or jurisdiction, must provide a summary notice to clients and potential clients of the features of the law firm’s limited liability if doing business in Wisconsin. See Wisconsin SCR 20:5.7(e). Usually, a law firm provides such notice in its engagement letter. No such notice or equivalent notice exists in Minnesota.

ABA Formal Opinion 504: Reporting obligations and confidentiality

Some states have different reporting obligations for lawyer misconduct. Minnesota follows Model Rule 8.3(a), which requires a lawyer to report misconduct by another lawyer when it raises a substantial question about the lawyer’s honesty, trustworthiness, or fitness. Reporting is not required if it would violate the confidentiality provisions of Rule 1.6, such as when the client does not consent to the disclosure. See Comment [2]. Some states have variations on Rule 8.3 that can affect reporting obligations in multijurisdictional practice. Consider the scenario where a lawyer is licensed in two states: State A, which follows the Model Rules, and State B, which requires lawyers to report misconduct regardless of Rule 1.6 considerations. The lawyer offices in State B but is hired by a client in State A to handle litigation in State A. The lawyer learns of misconduct by the client’s prior attorney. Can the lawyer report? Yes, but only with the client’s consent. The ABA concludes that the ethics rules of State A apply under Rule 8.5(b)(1) because the lawyer is representing a client in litigation before a court in State A.

Confidentiality duties can also be impacted by choice-of-law analysis. Consider the scenario of a lawyer licensed in the two states (A and B). The lawyer offices in State A, which follows the Model Rule 1.6 that provides a lawyer may (emphasis added) disclose a client’s threats of substantial bodily harm. State B does not follow the Model Rules and requires that a lawyer must (emphasis added) disclose a client’s threat of substantial bodily harm.⁴ The lawyer is hired by a buyer living in State B who is purchasing real estate from a seller in State A. The representation involves a transactional matter that takes a turn for the worse. The parties have been meeting at the buyer’s place of business in State B to negotiate the transaction. The buyer is frustrated and makes a credible treat to his lawyer that he is going to greatly, physically hurt the seller at the next meeting if his terms are not accepted. Can the lawyer disclose the client’s threat? Here both States A and B are involved. The lawyer is meeting with the client in State B to negotiate the terms and the client resides in State B but the seller and transaction are in State A. The lawyer is drafting documents at his office in State A. Since the matter is transactional, the ABA looked to Rule 8.5(b)(2) to determine where the “predominant effect” of the threat occurs. The ABA concludes State B’s ethics rules apply since the client resides in State B and made the threat in State B. In this case, the lawyer is required to disclose the threat.

The biggest takeaway from these scenarios is that it is much easier to determine choice-of-law when a lawyer’s conduct involves litigation before a tribunal versus gauging the “predominant effect” of a lawyer’s conduct in a transactional matter.

Conclusion

It is understandable that lawyers may not want to spend a lot of time on choice-of-law questions, but such thinking does not reflect the reality of today’s multijurisdictional practice of law. ABA Formal Opinion 504 provides common-sense factors for lawyers to consider when thinking about which jurisdiction’s ethics rules should guide their conduct, particularly, in matters not involving a proceeding before a tribunal.

Endnotes

https://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/aba-formal-opinion-504.pdf
Rule 8.5 of the Minnesota Rules of Professional Conduct (MRPC) is identical to the Model Rule
Since 2011, Minnesota has prohibited lawyers from describing a fee as “nonrefundable.” Rule 1.5(b)(3), MPRC.
Model Rule 1.6(b)(1) says a lawyer may disclose such a threat.

Cassie Hanson is a legal ethics lawyer with substantial experience in the field of ethics and professional responsibility. As conflicts and ethics counsel at Fredrikson & Byron, P.A., Cassie is focused on legal ethics, conflict prevention and resolution, legal malpractice/loss prevention and trust account compliance. Additionally, Cassie worked for 20 years as a senior litigator and adviser at the Office of Lawyers Professional Responsibility. Cassie investigated and prosecuted high-level attorney discipline cases. She is an experienced trial attorney and appellate advocate who regularly argued complex attorney discipline cases in front of the Minnesota Supreme Court. She has advised various government agencies, law firms and other stakeholders on legal ethics and professional responsibility. Cassie is a frequent public speaker on ethics and lawyer well-being.