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For years, thousands of in-house attorneys have been the undocumented aliens of the legal profession. While these lawyers originally passed the bar in one state, they later went to work for a company in another state where they never bothered to get licensed, simply because the local state bar didn’t insist on it. Take Illinois, for example. “It’s not that we ‘let’ them practice law,” says Mary Robinson, administrator of the Illinois Supreme Court agency that oversees attorney registration and discipline. “It’s just that no one ever did anything about [the licensing problem] before.” A 2003 study by Robinson’s office found that at least 700 in-house lawyers working in Illinois were not licensed to practice in the state. The days of a wink-and-a-nod are passing, however. In July, Illinois becomes the latest of nine states to require that in-house attorneys obtain a “limited license” if they haven’t taken the local bar exam. (See the bottom of this article for a link to a site listing particular states and requirements.) After filling out some paperwork and paying the required fees, lawyers get a license that allows them to practice for their company, but no one else. Another 16 states are in the process of adopting similar procedures, and the remaining 25 have committees studying the issue, according to the Association of Corporate Counsel (ACC). The states are acting in response to a 2002 change in the American Bar Association’s model rule on multijurisdictional practice. The move to adopt limited licensing can’t happen fast enough, according to Susan Hackett, senior vice president and general counsel of ACC. No one has an exact number of how many of the country’s 70,000 in-house attorneys aren’t admitted to the local state bar. But on the basis of ACC’s limited surveys and conversations with its members, Hackett estimates that 10-20 percent of the in-house bar nationwide doesn’t have a local license. And that can create problems, Hackett says, particularly when an in-house attorney takes a new job in a state that requires licensing, or when he tries to go into private practice. “An accusation of [past unauthorized practice of law] can prevent that lawyer from even taking the bar in another state . . . or seeking some other safe harbor,” she explains. Hackett cites an in-house attorney who contacted ACC for advice last year after his Illinois-based company promoted him to a new position at its New Hampshire subsidiary. The attorney’s problem? He hadn’t been licensed in Illinois because the state didn’t require in-house lawyers to be locally licensed at the time. But Hackett says that when the attorney applied for a license in New Hampshire, he was initially turned down because officials ruled that he had been practicing law without authorization in Illinois. A New Hampshire court granted the lawyer a safe harbor to practice until he could apply for a limited license, which the state began offering in March 2003. However, the attorney still had to apply for a waiver to clear up his Illinois problem. According to John McGuckin, Jr., licensing isn’t just a problem for individual in-house attorneys � companies suffer too. McGuckin, the chair of ACC’s board of directors and general counsel at Union Bank of California in San Francisco, notes that the Golden State insists that all lawyers take its bar exam. That can be an obstacle when a California company tries to hire out-of-state lawyers. The more experienced a lawyer is, McGuckin explains, the more likely he’ll refuse a new job if it requires taking another bar exam. Still, some California in-house attorneys try to skirt the state’s requirement. ACC reports that only 76 percent of its California members say they’re locally licensed. Hence the appeal of a limited license. Getting one is far easier than taking the bar, and it clears up an unlicensed attorney’s legal ambiguity. The new Illinois rule comes as a relief to many lawyers in the state, says Steven Pflaum, the GC of the Chicago Bar Association since 1996 and a litigation partner at McDermott, Will & Emery. According to Pflaum, the new policy “accommodates the reality” of in-house practice, which has become increasingly interstate. ACC reports that only 76 percent of its Illinois members say they’re locally licensed. Sears, Roebuck and Co. is one big Illinois-based corporation getting ready for limited licensing. Andrea Zopp, senior vice president and GC at Sears, said through a spokesman that only a “handful” of the retailer’s 75 in-house attorneys are affected by the new requirement. Zopp added it was too early to comment on the rule’s impact, except to say that attorneys at Sears would comply with it. The only other state to adopt limited licensing so far this year has been New Jersey, which implemented the procedure on January 1. In-house attorneys who weren’t locally licensed had until March 31 to comply. The New Jersey court received more than 300 applications as of March 24, according to spokesperson Tammy Kendig. Prior to the rule change, 49 percent of ACC’s members in the Garden State said they weren’t locally licensed. ACC’s Hackett thinks that New Jersey didn’t need to change its rules, since it already had a 1975 bar ethics opinion that allowed in-house counsel to practice in the state if they were licensed elsewhere. But not only did New Jersey decide to adopt limited licensing, Hackett says, “the state rubbed some additional salt on the matter by deciding to charge a fee that is far and away the most expensive fee I’ve seen, as well as mandating some pretty onerous application requirements.” John Liftin, GC at Newark-based Prudential Financial, Inc., is one of those unhappy about the new rule. Of 150 in-house attorneys in Prudential’s New Jersey offices, Liftin says that 72 were unlicensed. The company has agreed to pay the $54,000 needed to cover their application fees. The process is unnecessarily complicated, Liftin maintains, since it requires “massive” documentation of past legal work, as well as fingerprinting. “It is a highly labor-intensive process taking up a lot of time, a great inconvenience, and it’s very expensive.” Liftin adds, “Everyone is scratching his head and wondering what was the need of this rule.” New Jersey court spokesperson Kendig declined to respond to the complaints, except to say that the state’s rule went through a hearing process in which critics could comment and seek changes. Despite the grousing, most observers agree that limited licensing will eventually be adopted nationwide. According to Pflaum in Chicago, the nine states that have already adopted the procedure are “a harbinger of what to expect in most jurisdictions across the country.”
For a list of states that have instituted limited licensing so far, visit http://www.acca.com/practice/mjp.php. There are two multijurisdictional practice links at the top. One takes the user to a state-by-state chart; the other takes the user to a state-by-state “scorecard” containing more detailed information.

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