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A MONTH AGO 33 general counsel and risk managers of major U.S. law firms proposed revolutionary changes in how the bar regulates corporate lawyers. And Monday, ACC general counsel Susan Hackett became one of the first to say the GC’s concepts have merit and deserve a full discussion. Hackett said the ACC would be sending a letter to the American Bar Association in support of the general concepts. “And we plan to join with them in conversations to move the issue forward,” she added. To do that, Hackett plans to work with Anastasia Kelly, a former general counsel of several major corporations, most recent at AIG during its restructuring. Kelly is now a partner in the Washington Office of DLA Piper, which took part in the proposal. In their letter to the ABA in March, the GCs proposed a different set of professional rules for “sophisticated clients,” such as big corporations. They said that law firms and big corporations should be able to negotiate such things as conflicts of interest and issues of liability, which are now governed by the bar’s rules on professional conduct. >>>>>Read the proposal here. The GC proposal also endorsed an earlier call from ACC for more uniform bar rules governing lawyer mobility, multijurisdictional practice, and the unauthorized practice of law. Both groups were responding to the ABA’s Ethics 20/20 Commission, which was formed in mid-2009 to review the ABA Model Rules of Professional Conduct, as well as the U.S. system of lawyer regulation in the context of advances in technology and developments in global legal practice. “What we have is a series of rules governing practice — ABA rules, and state bar ethics rules — designed in a model that is completely unrecognizable for what we do today,” Hackett said. “They were created back when Abraham Lincoln still rode the circuit on horseback.” In their written proposal as well as in an April 16 oral presentation, the law firm GCs said the current regulations are enforced inconsistently from state to state and “impose significant burdens on law firms and substantially increase the cost to clients” – primarily large corporations.” Existing rules also hinder flexibility, result in inefficiencies, “and ultimately will lead to U.S. law firms being placed at a competitive disadvantage in an increasingly global market,” they added. They pointed out that the U.S. approach is increasingly at odds with what is happening in other legal markets in the United Kingdom, Europe, Australia, and Canada, “where there is more certainty and flexibility.” Last July the ACC submitted its own proposal to help restructure the mish mash of state bar rules. Its proposal focused on freeing up licensed lawyers to practice across state or national boundaries on behalf of a client. The law firm GCs went further. They not only called for mobility but also for an entirely new rule structure when lawyers are dealing with “sophisticated clients,” such as large corporations with in-house law departments or multi-million dollar legal budgets. A key objection to changing the current rules is that the states can better protect unsophisticated clients. But the GCs said sophisticated clients stand to gain from lower legal costs if the rules are changed for them. For example, current rules require a U.S. lawyer to fully supervise all aspects of a case and to accept all liability stemming from it. But corporate clients sometimes want to outsource some of a case’s legal work to an e-discovery vendor, or a cheaper lawyer in India. Existing rules require the U.S. law firm to supervise and accept liability for such work. The GCs argue that a corporate client and its outside law firm should be able to negotiate the risk. “Not only is this an area in which the rules of practice around the world differ markedly, it is a topic about which sophisticated commercial clients are particularly well informed and …are fully capable of protecting their own interests,” the proposal stated. Hackett tends to agree. “It should be the client’s choice,” she said. “But right now a client is not allowed to make that choice.” Hackett said she has no firm opinion about a second set of rules for corporate lawyers. She is looking at the concept more as giving a corporation the right to opt in or out of existing rules. The ABA Journal reported that the ethics commission’s reaction to the GCs’ proposal “was mixed and cautious.” One member, Frederic S. Ury of Fairfield, Connecticut, said the proposal would likely be viewed as an effort to carve out special treatment for larger firms, “and another system for the rest of us peons,” according to the Journal. Any model rule changes would have to be approved by the ABA’s policy-making branch, the House of Delegates. On Monday, the ethics commission released several of its own draft proposals, including one on outsourcing that offers clearer guidance regarding an attorney’s ethical obligations when using lawyers and nonlawyers outside the firm. Another one would grant foreign lawyers limited practice authority in the U.S – something the ACC lobbied for. The commission will continue to solicit comments until September. Its final draft of recommendations is due May 2012, and the House of Delegates vote is scheduled for August 2012. Regardless of what the ABA decides, Hackett said the GC’s proposal is “one of the first shots over the bow on an issue that is going to have to be breached.”

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