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A new hot button for corporate watchdogs and other adversaries is the bar license status of in-house counsel. In August, Richard Poulson, general counsel of Smithfield Foods Inc., came under attack by representatives of Smithfield’s labor union, who provoked questions about Poulson’s Virginia bar license, which apparently was no longer valid. Beginning in October, political blog Milwaukee World made surprise calls to numerous Wisconsin companies to “check up” on the license status of in-house lawyers. Blogging the results, Milwaukee World claimed it “blew the lid off of the unlicensed general counsel racket,” and that unlicensed status is reason for corporate clients to lose the attorney-client privilege. The Virginia bar conducted a disciplinary investigation of Poulson, ultimately finding that he violated no state rules. Milwaukee World reports that Wisconsin licensing authorities will investigate the cases “uncovered” there. Certainly in-house attorneys should follow state licensing requirements, and those requirements should receive broader circulation within the in-house bar. Yet there is no reason to think an “unlicensed general counsel racket” threatens corporate America. Nor should licensing become a weapon to pierce the attorney-client privilege. To deny a company this privilege due to a technical defect in its lawyer’s license status would, perversely, harm the very client the license rules are intended to protect. In-house lawyers virtually always are licensed to actively practice law somewhere, though not necessarily in every state in which their employer transacts business. In-house lawyers are highly mobile among employers, and typically the employers have far-flung interests. Recognizing this fact, the American Bar Association adopted new Model Rule 5.5(d) in 2002, permitting in-house counsel to use a single state bar license as the basis for acting anywhere in the United States, so long as the in-house lawyer is acting only for his or her employer. The ABA recognized another fundamental justification for this rule: The need to protect the public from unlicensed attorneys simply doesn’t apply in the in-house setting. Corporations are deemed to be sophisticated consumers, able to assess the in-house lawyer’s qualifications. Moreover, corporations typically have available a wide array of legal services either in-house or elsewhere. Some states do, however, require in-house lawyers to seek local admission, which can subject an in-house lawyer to multiple states’ licensing standards. Noncompliant lawyers are now the targets of corporate adversaries. Privilege should still apply Bar license status should not be a weapon for piercing the corporate attorney-client privilege. Technically, one can argue that an “unlicensed” lawyer is incapable of creating a privilege. But this would be a wooden application-and unjust result-in the case of an in-house lawyer who is locally noncompliant but validly licensed elsewhere. Courts should view such privilege challenges with hostility because the situations are special. A licensed lawyer need not be licensed in a particular state to establish a privilege there. Through interstate travel or communication, privileges are continually created by lawyers acting outside their home states. Though academically interesting- and the basis for a potential risk-the argument that an in-house lawyer unlicensed in a particular state cannot create a privilege has long been rejected and likewise should be rejected today. Judge Irving Kaufman considered this theory in Georgia-Pacific Plywood Co. v. U.S. Plywood Corp., 18 F.R.D. 463, 466 (S.D.N.Y. 1956), pointing out that multistate licensing of in-house counsel would create a nearly impossible burden, requiring a practice devoted “almost entirely to studying for bar examinations.” He reasoned that this would elevate form over substance, would harm the very entity deserving protection (the corporate client) and would ignore reality. Happily, this reasoning still holds true. See, e.g., Florida Marlins Baseball Club LLC v. Certain Underwriters at Lloyd’s, 900 So. 2d 720 (Fla. Dist. Ct. App. 2005) (team’s in-house lawyer, though not admitted locally, was entitled to create privilege). The practice of law is now arguably more widespread geographically than ever before. A system by which each state independently regulates the practice of law, is likely to routinely generate compliance questions and conundrums. ABA Model Rule 5.5(d) would largely cure these problems but it has not yet been uniformly implemented. Because state in-house counsel rules are new and inconsistent from state to state, in-house counsel should be given generous leeway to comply in good faith. After all, the primary object of licensing authorities should be to encourage compliance, not punish failure, in the name of client protection. Thus, courts should vigorously protect the attorney- client privilege, when established by a licensed in-house attorney, regardless of his or her local compliance status. These defects can be readily cured, and there is no reason to think that the public or any client would be harmed. License status should be rejected as a weapon for tearing the privilege away. John E. Iole is a partner, and Rebekah B. Kcehowski is an associate, in the trial practice group of the Pittsburgh office of Jones Day.

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