Ethics in International Dual-Jurisdictional Practice

CLE presented on December 16, 2014 by John A. Strait, Seattle University School of Law
Summary prepared by Jonathan M. Lloyd, WSBA IPS CLE Chair, 2014-15

 

Professor John Strait provided an entertaining and thought-provoking presentation on ethics issues in international dual-jurisdictional practice.  Professor Strait began his presentation by discussing certain general issues regarding Washington’s Rules of Professional Conduct (“RPC”), recent guidance by the WSBA’s Committee on Professional Ethics committee on marijuana and imputed conflicts, ethics resources (including the WSBA ethics hotline), and the Washington Supreme Court’s decision not to adopt the American Bar Association’s comment 22 on RPC 1.7 on advanced waivers.

After these preliminary points, Professor Strait discussed a series of hypotheticals addressing specific ethics issues that may arise in international, dual-jurisdictional practice.  As a threshold matter, there are two Washington RPCs that apply generally to cross-border legal work by Washington attorneys.  First, Washington RPC 8.5 provides a baseline jurisdictional rule for application of Washington’s RPCs, and provides that if an attorney is admitted in Washington and is performing services in Washington, Washington’s ethics rules apply.  However, if the attorney is working on a “proceeding” in another jurisdiction, the ethics rules of that other jurisdiction will apply instead.  Second, Washington’s RCP 5.5, which prohibits the unauthorized practice of law, specifically authorizes transactional lawyers to practice law in a jurisdiction even when they are not admitted in that jurisdiction, including in-house counsel for a company that conducts significant business in that jurisdiction.

Existence and Scope of Representation.  Using the example of a law firm representing the promoter of a real estate investment in Seattle, which hosted a presentation by the promoter to three Japanese Kumiai (a form of pooled investment), Professor Strait discussed potential ethics issues that could arise if the investment failed and the Kumiai participants’ sued the law firm.  In particular, if Washington ethics rules applied under Washington RPC 8.5, the question of whether the law firm was deemed to have represented the individual investors, and the scope of that representation, would be governed by the reasonable belief of the investors (an objective test).  To avoid potential litigation in this situation, the law firm could include specific written disclaimers in forms it asked attendees to sign, and have a representative provide corresponding oral disclaimers at the beginning of the presentation.  In the event the law firm was offering to perform some limited work for the individual investors, such as setting up US LLCs necessary to participate in the investment, the firm should use a written retention letter and fee agreement with express statements of the scope of the representation, non-representation beyond that limited scope, and a statement of who the firm views as its client.  Washington RPC 1.2(c) specifically authorizes this sort of limited scope representation, so long as the work performed provides “real value” to the client.  Finally, if the work performed expands beyond the agreed scope memorialized in the retention agreement, the client’s reasonable belief will govern the expanded scope.

Confidentiality and Privilege.  Building on the same example, Professor Strait discussed issues regarding confidentiality and privilege that might arise in the event the dispute with the Kumiai investors were to be resolved in an international arbitration.  Under Washington RPC 8.5, assuming the arbitration were seated outside of Washington, Washington’s privilege and ethics rules would not apply; instead the rules of the seat jurisdiction (and potentially the administering arbitral institute) would apply.  If instead, Washington law did apply, the lawyer would be placed in an irreconcilable conflict, forced to choose between violating his obligation of confidentiality to one client with his obligation to disclose information necessary to his representation of the other client.  To avoid this sort of conflict, an attorney representing multiple clients should consider obtaining specific confidentiality waivers (separate from conflict of interest waivers) from each client, permitting disclosure of that client’s confidential information relating to the presentation and related work.

Client solicitation.  Professor Strait then discussed ways in which Washington’s RPCs may affect client solicitation in other jurisdictions.  As a general rule, under RPC 8.5, the ethics rules of the jurisdiction where a solicitation is taking place will govern that solicitation, so a solicitation of potential clients in China would be governed by Chinese law.  And a Washington-based attorney’s association as co-counsel with a Korean law professor, who solicited potential clients for an airplane crash lawsuit in Korea (when soliciation is permitted under Korean law), would not give rise to a violation of Washington’s ethics rules prohibition soliciation by the Washington-based co-counsel.  However, if the Washington lawyer actively solicited the potential clients, either via email or by flying over to Korea, he could potentially be found in violation of Washington’s ethics laws.

Cloud Computing.  Professor Strait discussed the fact that, while prior versions of RPC 1.1 permitted a lawyer to rely on a third party vendor and avoid any liability for a breach of confidentiality, recent revisions to RPC 1.1 and the ABA’s comments thereto now make it very clear that the lawyer must perform due diligence on the vendor in order to escape potential liability.  Generally speaking, the lawyer must confirm that the vendor uses generally accepted security protections, such as firewalls and password protection.  One specific issue that has arisen is that many third-party providers’ form contracts state that they own any data stored with them, and that if their contract is terminated, they can do what they want with the data.  This is obviously unacceptable for storage of any data lawyers store for their clients.  Separately, tech-saavy clients are now demanding that law firms provide heightened security over their data, both in terms of web storage and intra-firm password protection.

General issues associated with representation of foreign clients.  The mere non-US location or nationality of a client will not affect the applicability of the attorney-client privilege in a dispute in US court (though other factors involving the client’s protection of the privileged communications may).  If a dispute ends up being litigated or arbitrated in a non-US jurisdiction, however, the privilege law of that jurisdiction will likely govern.  Separately, if a Washington-admitted attorney travels to France and responds to client questions via email or Skype, Washington’s ethics rules will still apply.  If that attorney receives legal questions from French citizens while on vacation, she may be able to provide legal advice under the Washington RPCs, so long as she is competent to answer the question, and the legal advice fits within the parameters of RPC 5.5, but there may still be issues with whether the provision of that advice violates French law on unauthorized practice of law.

 

The preceding summary discusses certain key points discussed during the CLE presentation, all of which were outlined in greater detail in the accompanying written materials.  This summary is a publication of the WSBA International Practice Section, and is posted with the approval of the speaker and the WSBA International Practice Section executive committee.  It is designed to inform members of the WSBA International Practice Section of recent legal developments, and may not be used to claim CLE credit.  This summary is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may only be given in response to inquiries regarding particular situations. If you have specific questions about this topic, please feel free to contact Professor Strait by email at straitj@seattleu.edu or by phone at 206-398-4027.

 

For the original announcement of this CLE, please visit HERE.