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GATS’ Threat to the Legal Profession Is Worth a Serious Look Dear Editor: An article appeared in the September 2003 ABA Journalregarding the General Agreement on the Trade in Services. The gist of the article, entitled “Gearing Up for GATS,” by Martha Neil, was that GATS will have a direct impact on the ability of American lawyers to provide legal services to European clients. The author noted that the ABA created a task force this past May to study that impact and provided the ABA’s relevant Web page ( www.abanet.org/cpr/gats_home.html). The article’s brief outline of GATS’ impact on the multijurisdictional practice (MJP) debate raises serious concerns over the future of state control of lawyers’ admission, licensing and professional conduct. As noted, GATS was one of the agreements reached with the creation of the World Trade Organization (WTO) in 1994. The effect of that agreement is that the nearly 150 member countries ceded regulation of service providers such as lawyers to the WTO. Each of those member countries, including the United States, is charged with developing practice standards for discussion and agreement in international meetings. Federal negotiators are currently at work to present a uniform set of practice rules that will cover the admission and licensing of foreign lawyers and govern their professional conduct. The target date is 2005. Curiously with very little fanfare, negotiators apparently have been working without input from the ABA or state bar associations. Instead, they seem to have been receiving input from organizations like the WTO Working Group of the International Bar Association. That group’s chairman, Bernard L. “Ben” Greer Jr., hinted there was doubt that all states would consent to a uniform set of rules for foreign lawyers. He further admitted that lack of such consent would trigger constitutional issues. The article also noted the possible inconsistency in the way in which states would be required to treat foreign lawyers from the way in which they currently treat lawyers from other states. Therefore, the article suggests that the MJP debate should be focused on reconciling those differences between the states: in other words, reaching the same destination by a different way — namely, the adoption of uniform guidelines under GATS voluntarily — rather than by federal coercion. I agree that there needs to be a shift from the current MJP focus. That shift, however, should be to focus on how our current system of regulation of the legal profession is threatened by GATS and how can we preserve that local control which is so inherently American in character and served this nation so well. I suppose such subtle encouragement to the various state courts to continue their efforts at uniform MJP standards might work if they were led to believe that federal requirements were limited to foreign attorneys as the article suggests. And further, such encouragement might work if the states could be convinced that voluntarily conforming MJP rules for American and foreign lawyers made sense for them and the public. However, it is unlikely that the negotiators have in mind restricting their rules only to foreign lawyers. In any event, it is unlikely that such agreement on a domestic level will be in place by 2005, if ever. Integration of regulations of foreign attorneys is even more unlikely since the states are not even involved in the process. Moreover, the problem to be resolved is not that simple. Before there can be a resolution, an examination needs to be done as to how does GATS apply where you have disputes or transactions between foreign and local attorneys. Must the court and local counsel conform their rules and conduct to GATS? Consider also the situation of the hybrid firm. This is an enterprise formed between a domestic firm and a foreign firm. That foreign firm may also be engaged in multidisciplinary practices that are prohibited by almost all state jurisdictions. Can such a state prohibit admission of an attorney from such a firm or sanction the members or firm before it for violation of its rules of professional responsibility? And even if the court were free to act, it would have little ability to enforce its edicts. Indeed, under GATS, there is serious question whether any state court can prohibit a member of its bar from forming such a partnership with a foreign firm. Therefore, there is a serious constitutional test looming on the horizon. Will this process eventually lead to international licensing and through that to federal regulation of lawyers? Imagine the Federal Trade Commission charged with the licensing and oversight of lawyers. Imagine further the Attorney General entrusted with enforcing those regulations and determining the limits of federal control. There is precedent for this in the debate shaping up over the proposed amendments to the SEC regulations. This scenario does not bolster confidence in the continuation of a state-controlled system. Article I, Section 8 of the federal Constitution grants Congress the power to regulate commerce, a term which we have seen the federal government and the Supreme Court view broadly. That section also grants Congress the power to make all laws necessary and proper to carry out its power over commerce. Article II, Section 2 grants the President the power to make treaties with the approval of the Senate. Under Article VI, a treaty is the supreme law of the land and pre-empts any state constitution to the contrary. Now, under GATS, legal services are not only commerce, but also international commerce subject to federal regulation. By comparison, the 10th Amendment reserves in the states those powers not delegated to the federal government or prohibited by the Constitution. Ultimate jurisdiction resides with the United States Supreme Court to decide treaty disputes and reconcile these interests under Article III, Section 2. Traditionally, the practice of law has been treated as a profession that was local in character and subject only to local regulation. GATS now threatens to turn that tradition on its head with no impact study or input from those directly effected. When that threat is ultimately realized, those interested will not willingly yield control, nor should they. Thus, the positions will be drawn for a battle played out many times before with predictable results, victory for the federal government — a fact which, I trust, the negotiators are well aware of since they do not seem to see a need in consulting the states. And given that often-successful challenges to federal “transgressions” are made by lawyers beyond the reach of federal regulation, the opportunity to pre-empt that protective state control may be too great a temptation to avoid. This may be so even for an administration that professes a commitment to smaller government. But more than just states’ rights is at issue. The theory behind GATS is that the members like the United States ceded the establishment of regulations over service commerce to the WTO. However, under the Constitution, that authority is nondelegable. That is because the People have given that grant of power to the federal government and only the People may take it away from the federal government and give it to the WTO. Accordingly, we should ask what the benefit is to the people through the relinquishment of representation to foreign counsel in our courts and to the application of international procedures relating to conduct in our courts. Certainly, there has been no rational debate on the subject. Consequently, these interests are being sacrificed without knowledge of (1) who the negotiators are and how they were selected, (2) what were their instructions, (3) what have they developed so far, (4) who has input into the process and how were they selected, (5) what are the proposals from other WTO members regarding legal services in the United States, (6) what does the federal government intend to do if the states do not unanimously consent to the proposals and, most importantly, (7) how will the proposed regulations impact on the practice of American lawyers and the states’ rights to regulate their courts and the people before them. Alarmingly, these do not appear to be the concerns of the federal negotiators. Does this mean that the federal government is unconcerned about the impact? Or, does it mean that the government intends to take control away from the states and deems consultation with the states unnecessary? Does this also mean that the government wants to avoid notice to the states in time for them to launch an effective campaign to thwart its efforts? More frighteningly, are we too late? And what of the procedural rules of our state courts? There does not appear to be a distinction between the practice of law and the business of law. If there were, then the latter would exclude state court procedures from federal regulation under the government’s definition of international commerce. Unwittingly, state courts such as New Jersey’s blurred the distinction and trumpeted how the courts were a business and how much product they produced over time at a given price. Justice in many state courts eyes was no longer individual, but instead an assembly line process. Well, if that is the case and the impact goes beyond state borders, then theses courts laid the basis for the argument on the need for federal control. Little did these courts know that their uniform approach played into the hands of federal regulators. Therefore, if they think they are immune themselves, they better think again. Taking GATS to its extreme, one could argue that it could signal the end of the significant role civil juries play in commercial disputes involving international parties. If a dispute covered by GATS could be distinguished from an action at law or equity as defined under the federal Constitution, then there would be no guaranteed right to a civil jury. Remember also, big business opposes the use of juries. And, while such an extension might be a stretch, it is not so impossible when recognizing that few of the WTO members recognize a right to a jury so freely as in the United States. Here a jury is uniquely viewed as the great leveler of interests. Now we are at a critical juncture for our profession. Any way you examine the issue, the future for local control does not look bright. The challenges, at first, may appear reasonable and the steps we take backward not too painful. But, with GATS’ each advance, our judicial landscape will irrevocably change until it becomes virtually indistinguishable from the systems anywhere in the WTO. Nonetheless, history has shown us that we are not indistinguishable. History has shown us that the differences between fifty states can be reconciled without yielding our individuality. Surely then, GATS and the WTO can accommodate the preservation of that individuality within its regulatory scheme. Our federal negotiators should be carrying on the fight to require that accommodation. To insure that accommodation, the main focus of the ABA and all states should be on GATS’ impact on the profession as we know it before it becomes the profession as we knew it. Robert B. Hille President Bergen County Bar Association ACDL-NJ Contests ‘Loser’ Label for Defense-Bar Dean Dear Editor: The recent characterization of Raymond A. Brown as a “loser” in the Sept. 15 Winners and Losers column [173 N.J.L.J. 919] is a serious gaffe by the New Jersey Law Journal, whose writers should certainly recognize Mr. Brown as the dean of the defense bar. The characterization of Ray Brown as a “loser” based on the fact that Mayor Sara Bost entered a guilty plea, which resulted in a sentence of six months, demonstrates a complete lack of understanding of what actually occurred. In fact, the result achieved by Mr. Brown in this case demonstrates that Ray Brown’s most accurate characterization is that of “winner.” The former mayor of Irvington, Ms. Bost was charged with offenses, which, if convicted, under the Federal Sentencing Guidelines, would have resulted in a sentence of eight to 12 years. It was onlyas a result of Mr. Brown’s masterful cross-examination of the witnesses in the first part of the government’s case that the government agreed to let the defendant plead guilty to an obstruction count, thus exposing her to a few months instead of 12 years of incarceration. On behalf of the ACDL-NJ officers and trustees, we ask the Law Journalto retract this inaccurate and insulting characterization and replace with the accurate characterization of Raymond A. Brown as “winner.” Maria D. Noto, President John P. McDonald, President Elect Association of Criminal Defense Lawyers of New Jersey Editor’s reply: We submit that it is a matter of opinion. We stand by ours and we welcome others.

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