The New York City Bar is pushing to change the state's rules governing attorney conflicts and discipline to better accommodate lawyers and law firms that practice both here and in other states and countries.
The proposed changes, outlined in a 20-page report, would allow New York lawyers handling non-litigation matters, such as deals and investigations, to follow attorney conduct rules in place outside the state. The city bar also proposed limiting the extent New York's ethics rules are applied outside the state, something the bar group said has caused an "unnecessary restriction on client choice."
Lawyers outside of New York "should not be required to comply with New York ethics rules solely by virtue of their affiliation with a New York lawyer, nor should a client who has engaged a lawyer on a matter with no nexus to New York" be deprived of its choice of counsel, the report said.
Among the city bar's proposals are suggested changes to how the Rules of Professional Conduct govern disciplinary authority and choice of law for lawyer conduct.
Attorneys licensed in New York working on non-litigation matters now follow the state's rules, while lawyers licensed in New York and another jurisdiction follow the rules of the place where they primarily practice, unless the conduct "clearly has its predominant effect in another jurisdiction."
Jeffrey Udell, a partner at Olshan Grundman Frome Rosenzweig & Wolosky who chairs the city bar's professional responsibility committee, called those rules "convoluted and illogical." The way the rules are structured, he said, produces different rules for two different lawyers doing the same work. Under the city bar's proposals, the distinction would be eliminated. Instead, if a lawyer believes the services his or her firm has been hired to provide have their "predominant effect" outside New York, the attorney could rely on that other jurisdiction's rules.
In the case of conduct in a tribunal, lawyers would continue to follow the rules where that proceeding occurs. But while current rules only govern matters before a court, the city bar proposes broadening the definition to include arbitrations and administrative proceedings.
The city bar's proposed changes would also attempt to limit the extent New York's rules on client conflicts are applied outside the state. Like every state except Texas, New York does not allow a lawyer to represent a client that is adverse to a pre-existing firm client without a waiver.
Yet many, if not most, other countries have starkly different conflict rules. Say a lawyer represents Company X in selling its New York assets to Company Y. The lawyer's London-based partner, meanwhile, is asked to represent a third company, Company Z, in acquiring Company X's U.K. subsidiary.
Under the United Kingdom's rules, the London lawyer would typically be able to represent Company Z without the permission of Company X. But New York's rules block such representation, and under one interpretation of the state's rules, the British lawyer by extension also would be forced to declare a conflict if he or she were affiliated with lawyers in New York.
The city bar has pitched eliminating that ambiguity. Under its proposals, the London lawyer would be allowed to take on the client as long as the United Kingdom continues to permit that representation.
"This rule will be welcomed by lawyers practicing at multinational firms with multinational offices and clients," Udell said.
The proposed changes would seem to most directly affect the so-called Magic Circle firms in London, which all have New York offices. The report in particular highlights the challenges faced by law firms with offices in both New York and London.
The report also contends the change would benefit clients by preventing them from being deprived of their choice of counsel because of a New York ethics rule with no relevance to the matter at hand.
NATIONAL DEBATE
The report comes amid a broader national debate over how to modernize the rules governing how lawyers practice.
The American Bar Association last year launched what it calls the Commission on Ethics 20/20, which has been in the process of reviewing ethics rules and regulations nationwide. A key focus of the commission has been looking at how the rules work in a global marketplace. The subject is set to be discussed at the ABA's annual meeting in San Francisco beginning today.
The city bar report followed three years of discussion by the group's professional responsibility committee. Proposed changes to New York's rules, which more typically come from the New York State Bar Association, would need the approval of Chief Judge Jonathan Lippman and the four presiding judges of the Appellate Division.
Past proposals to adopt rules for multijurisdictional practices in New York have met resistance. In adopting the Rules of Professional Conduct in 2008, the judges did not approve rules recommended by the New York State Bar Association that would have governed multijurisdictional practices.
David Keyko, past chairman of the city bar's professional responsibility committee, said, "What we heard through the grapevine is that the upstate judges don't see this as significant because quite frankly in their areas it isn't." But the situation may be different under Lippman, who has "consistently expressed the view he would like to look at reform," Keyko said.
Even if the changes are adopted, it is unclear to what extent lawyers would take advantage of them. The report notes that some clients may not welcome having their lawyers working for the other side.
"In the United States, a high premium is still placed on law firm loyalty, and many an in-house lawyer would be distressed to learn that one of the firms receiving substantial legal fees from the in-house lawyer's employer had undertaken a lawsuit against the employer, regardless of the jurisdiction in which the suit is brought," the report said.
The city bar also cautioned that lawyers still have a duty to tell their clients of any material issues affecting their representation. And the report recommended lawyers be mindful of confidential information acquired when taking on an adverse representation to a current client.
