THE COURTS
PART V. PROFESSIONAL ETHICS AND CONDUCT
[204 PA. CODE CH. 81]
Amendment to Rule 8.5 of the Rules of Professional Conduct Regarding Disciplinary Jurisdiction; Notice of Proposed Rulemaking
[26 Pa.B. 2094] Notice is hereby given that The Disciplinary Board of the Supreme Court of Pennsylvania is considering recommending to the Pennsylvania Supreme Court that it amend Rule 8.5 of the Pennsylvania Rules of Professional Conduct as set forth in Annex A.
The amendment being proposed herewith is based on a recent amendment to Rule 8.5 adopted by the American Bar Association. The proposal to adopt that amendment in Pennsylvania has been developed and approved by the Committee on Legal Ethics and Professional Responsibility of the Pennsylvania Bar Association. In addition, the Board of Governors of the Philadelphia Bar Association passed favorably on this proposed rule revision earlier this year.
The objective of the proposed change in Rule 8.5 is to bring some measure of certainty and clarity to the frequently encountered, and often difficult, decisions a lawyer must make when encountering a situation in which the lawyer is potentially subject to differing ethical requirements of more than one jurisdiction. It is generally the case that such decisions cannot await an authoritative ruling or advisory opinion from an independent source.
The most compelling circumstance of a lawyer caught between conflicting ethical obligations in all likelihood is that where a lawyer has become aware of a client's fraud committed in the course of the lawyer's representation, and the rule of one jurisdiction with authority over the lawyer would require disclosure of the fraud and that of another jurisdiction with authority would forbid it. Cf. Md. Final Op. No. 86-28 (Oct. 7, 1985). But this is by no means the only circumstance in which the problem arises.
As the Comment to present Rule 8.5 states, such issues may be expected to be governed by ordinary principles of conflict of laws; but those complex and subtle principles, well presented though they are in the Restatement (Second), Conflict of Laws, do not ordinarily provide to the practitioner (or the practitioner's client, who is likely to be affected by the lawyer's decision as to which rule the lawyer will follow) clear and readily decipherable guidance as to what a lawyer, facing a concrete decision where the potentially applicable ethical rules are at variance, should do. If, in the usual case where a lawyer was faced with a choice of law decision with respect to conflicting ethical requirements any of the potentially interested jurisdictions had adopted a clear and simple choice of law rule for purposes of application of its ethical rules to lawyers subject to those rules--or, even better, if all of the affected jurisdictions had adopted the same choice of law rules--the problem would undeniably be much ameliorated.
The problem of lack of clear guidance that the proposed change to Rule 8.5 seeks to address is exacerbated by the fact that existing authority as to choice of law in the area of ethics rules is unclear and inconsistent. Some authorities suggest that particular conduct should be subject to only one set of rules, while others suggest that more than one set of rules can apply simultaneously to the same conduct. Compare, e.g., Md. Final Op. No. 86-28 (Oct. 7, 1985) (Maryland attorney practicing in another jurisdiction need only comply with the other jursidiction's rules), with, e.g., In re Porep, 60 Nev. 393, 111 P.2d 533 (1941) (attorney disciplined under Nevada rules for the same California advertising that California had previously held not to violate California rules). Widely differing approaches to how to identify the applicable rules have been taken. See, e.g., Md. Final Op. No. 86-28, supra (rule of state in which practice occurs governs), Ala. Ethics Op. RO-81-542 (Dec. 4 & 28, 1981) (same); Mich. Informal Op. No. CI-709 (Dec. 28, 1981) (suggesting that any connection with Michigan, however small, would be sufficient to make Michigan rules applicable to lawyer admitted in both California and Michigan and practicing in California); Ariz. Op. No. 90-19 (Dec. 28, 1990) (applying the full panoply of choice-of-law factors from Restatement (Second), Conflict of Laws § 6(2)); Fla. Prop. Adv. Op. No. 88-10 (1988) (''most significant relationship test,'' with important factors being the client's state of residence, the state where the cause of action arose, and the state (or states) where suit may be filed''); In re Dresser Industries, Inc., 972 F.2d 540 (5th Cir. 1992) (conduct of attorney in federal district court suit is governed by general ''national standards of legal ethics,'' even where contrary to state rules adopted by the district court to govern attorneys practicing before it).
Because of uncertainty resulting from the variety of choice of law approaches that the pertinent authorities of different jurisdictions have adopted, lawyers wishing to understand their ethical obligations often find themselves stymied by threshold questions of choice of law. In particular, two types of situations frequently arise: (a) the lawyer who is involved in litigation in another jurisdiction and does not know whether the rules of that jurisdiction, of the jurisdiction in which he or she principally practices, or of both, apply to conduct in connection with the litigation; and (b) the lawyer who is admitted in two jurisdictions and does not know whether the rules of one or the other jurisdiction, or both, apply to particular conduct.
The proposed amendment to Rule 8.5 seeks to provide clear answers to these problems in nearly all cases. In litigation, the ethical rules of the tribunal, and only those rules, would apply. The ABA version of new Rule 8.5 has been modified in this proposal by the addition of references to an ''agency'' in Rule 8.5(b)(1), thus broadening the scope of that provision to include litigation before an administrative agency. In non-litigation matters, the lawyer admitted in more than one jurisdiction would be subjected only to the rules of the jurisdiction where he or she principally practices, except when the particular conduct clearly has its predominant effect in another admitting jurisdiction.
The basic thesis of the proposal is that what it achieves in certainty and simplicity is worth much more than whatever regulatory interest it sacrifices in possibly preventing, in particular cases, a different set of rules, or two sets of rules, simultaneously, from being applied to a lawyer's conduct. The interests of the clients and of the profession alike are likely to be best served by clarity as to the governing rules. Under the proposed amended Rule, the rules of one jurisdiction, which undeniably will have a legitimate and substantial interest in the conduct, will in all cases govern every act of an attorney (and more than one jurisidiction may be empowered to enforce those rules). This being so, the benefits of clarity and simplicity of the proposal would appear to outweigh any benefit, in the form of substituting one set of rules for another or simultaneously applying two sets of rules in particular cases, to be had from more complex and uncertain alternatives.
It might be argued against the proposed amendment that, by providing for a single rule to apply to particular conduct, it would promote ''forum-shopping.'' However, this seems unlikely, since a lawyer would rarely if ever be in a position to change the determinative factors (whether conduct relates to litigation, where he or she principally practices, and whether conduct clearly has its predominant effect in a particular jurisdiction) in order to affect the choice of ethics rules.
It might also be argued that under the proposed amendment an admitting jurisdiction might have to apply another jurisdiction's rules in a disciplinary proceeding. However, that is at least equally the case under the present regime.
Finally, it might be argued that, because of the exception for particular conduct that clearly has its predominant effect in another jurisdiction, the proposal falls short of achieving perfect clarity and certainty. This is indeed true, and there may be instances in which it is difficult to define the ''particular conduct'' and to decide whether it has its ''predominant effect'' in one jurisdiction or another. However, to provide for no exception would allow substantial conduct to occur in a second admitting jurisdiction without being subject to that jurisdiction's rules; and the exception has been crafted in a manner that is intended to minimize to the extent possible the difficulty of applying it in particular cases.
The proposed revised Comment would also make clear that the choice of law rules laid down in the black letter text are not intended to apply to transnational practice; in other words, the references in the Rules to other ''jurisdictions'' implicitly only assume such other jurisdictions as have promulgated some version of the Model Rules of Professional Conduct (or the predecessor Model Code of Professional Responsibility), thus providing complete reciprocity and certainty. Unlike domestic choice of law, on the other hand, international choice of law issues are not at this time resolvable by the adoption of uniform rules; although this may be possible in the future, at present they must continue to be resolved by internationally accepted conflict of law principles.
Interested persons are invited to submit written comments regarding the proposed amendment to the Office of the Secretary, The Disciplinary Board of the Supreme Court of Pennsylvania, First Floor, Two Lemoyne Drive, Lemoyne, PA 17043, on or before June 3, 1996.
By The Disciplinary Board of the
Supreme Court of PennsylvaniaELAINE BIXLER,
Secretary
Annex A
TITLE 204. JUDICIAL SYSTEM GENERAL PROVISIONS
PART V. PROFESSIONAL ETHICS AND CONDUCT
Subpart A. PROFESSIONAL RESPONSIBILITY
CHAPTER 81. RULES OF PROFESSIONAL CONDUCT
MAINTAINING THE INTEGRITY OF THE PROFESSION Rule 8.5. [Jurisdiction] Disciplinary Authority; Choice of Law.
(a) Disciplinary Authority. A lawyer admitted to practice in this jurisdiction is subject to the disciplinary authority of this jurisdiction [although engaged in practice elsewhere], regardless of where the lawyer's conduct occurs. A lawyer may be subject to the disciplinary authority of both this jurisdiction and another jurisdiction where the lawyer is admitted for the same conduct.
(b) Choice of Law. In any exercise of the disciplinary authority of this jurisdiction, the rules of professional conduct to be applied shall be as follows:
(1) for conduct in connection with a proceeding in a court or agency before which a lawyer has been admitted to practice (either generally or for purposes of that proceeding), the rules to be applied shall be the rules of the jurisdiction in which the court or agency sits, unless the rules of the court or agency provide otherwise; and
(2) for any other conduct,
(i) if the lawyer is licensed to practice only in this jursidiction, the rules to be applied shall be the rules of this jurisdiction, and
(ii) if the lawyer is licensed to practice in this and another jurisdiction, the rules to be applied shall be the rules of the admitting jurisdiction in which the lawyer principally practices; provided, however, that if particular conduct clearly has its predominant effect in another jurisdiction in which the lawyer is licensed to practice, the rules of that jurisdiction shall be applied to that conduct.
Comment [In modern practice lawyers frequently act outside the territorial limits of the jurisdiction in which they are licensed to practice, either in another state or outside the United States. In doing so, they remain subject to the governing authority of the jurisdiction in which they are licensed to practice. If their activity in another jurisdiction is substantial and continuous, it may constitute practice of law in that jurisdiction. See Rule 5.5.
If the rules of professional conduct in the two jurisdictions differ, principles of conflict of laws may apply. Similar problems can arise when a lawyer is licensed to practice in more than one jurisdiction.
Where the lawyer is licensed to practice law in two jurisdictions which impose conflicting obligations, applicable rules of choice of law may govern the situation. A related problem arises with respect to practice before a federal tribunal, where the general authority of the states to regulate the practice of law must be reconciled with such authority as federal tribunals may have to regulate practice before them.]
Disciplinary Authority
Paragraph (a) restates longstanding law.
Choice of Law
A lawyer may be potentially subject to more than one set of rules of professional conduct which impose different obligations. The lawyer may be licensed to practice in more than one jurisdiction with differing rules, or may be admitted to practice before a particular court or agency with rules that differ from those of the jurisdiction or jurisdictions in which the lawyer is licensed to practice. In the past, decisions have not developed clear or consistent guidance as to which rules apply in such circumstances.
Paragraph (b) seeks to resolve such potential conflicts. Its premise is that minimizing conflicts between rules, as well as uncertainty about which rules are applicable, is in the best interest of both clients and the profession (as well as the bodies having authority to regulate the profession). Accordingly, it takes the approach of (i) providing that any particular conduct of an attorney shall be subject to only one set of rules of professional conduct, and (ii) making the determination of which set of rules applies to particular conduct as straightforward as possible, consistent with recognition of appropriate regulatory interests of relevant jurisdictions.
Paragraph (b) provides that as to a lawyer's conduct relating to a proceeding in a court or agency before which the lawyer is admitted to practice (either generally or pro hac vice), the lawyer shall be subject only to the rules of professional conduct of that court or agency. As to all other conduct, paragraph (b) provides that a lawyer licensed to practice only in this jurisdiction shall be subject only to the rules of professional conduct of this jurisdiction, and that a lawyer licensed in multiple jurisdictions shall be subject to the rules of the jurisdiction where he or she (as an individual, not his or her firm) principally practices, but with one exception: if particular conduct clearly has its predominant effect in another admitting jurisdiction, then only the rules of that jurisdiction shall apply. The intention is for the latter exception to be a narrow one. It would be appropriately applied, for example; to a situation in which a lawyer admitted in, and principally practicing in, State A, but also admitted in State B, handled an acquisition by a company whose headquarters and operations were in State B of another, similar such company. The exception would not appropriately be applied, on the other hand, if the lawyer handled an acquisition by a company whose headquarters and operations were in State A of a company whose headquarters and main operations were in State A, but which also had some operations in State B.
If two admitting jurisdictions were to proceed against a lawyer for the same conduct, they should, applying this rule, identify the same governing ethics rules. They should take all appropriate steps to see that they do apply the same rule to the same conduct, and in all events should avoid proceeding against a lawyer on the basis of two inconsistent rules.
The choice of law provision is not intended to apply to transnational practice. Choice of law in this context should be the subject of agreements between jurisdictions or of appropriate international law.
Code of Professional Responsibility Comparison
There is no counterpart to this Rule in the Code.
[Pa.B. Doc. No. 96-716. Filed for public inspection May 3, 1996, 9:00 a.m.]
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