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| In-House Counsel and
Unauthorized Practice Amendments dealing with
the unauthorized practice of law are among the most significant changes
in the recent amendments to the Minnesota Rules of Professional Conduct.
These changes were based primarily upon recommendations of
the ABA’s Multi-Jurisdictional Practice (MJP) Commission and were
intended to address the outdated unauthorized practice of law regulations
which often frustrated the needs of multistate clients.1
Generally, lawyers not licensed in Minnesota are still prohibited
from establishing an office or maintaining a systematic or continuous
presence in the state.2 The MJP recommendations defining circumstances
in which lawyers not admitted in Minnesota can temporarily practice
in this state were adopted in their entirety. These circumstances include associating with
local counsel, services rendered in reasonable expectation of being
admitted pro hac vice, and services related to the
lawyer’s practice in his or her own state that do not require pro hac vice admission in Minnesota.3 As an adjunct to the temporary practice exceptions
afforded to lawyers not admitted in Minnesota, Rule 8.5, MRPC, was
amended to provide that a lawyer not admitted here is nonetheless
subject to Minnesota’s lawyer disciplinary authority if the lawyer
provides or offers legal services in Minnesota. House Counsel Not Exempt Although the MJP
Commission also recommended that in-house counsel services be exempted
from the unauthorized practice of law prohibition, Minnesota declined
to follow this recommendation.4 The
rationale underlying exclusion of the in-house counsel exemption was
that exceptions should not be created for lawyers who establish a
continuous presence in Minnesota and advise clients concerning state
law. In addition, many services
typically provided by in-house counsel fall squarely within the existing
state law definition of unauthorized practice5 and Minnesota’s unauthorized
practice of law statute does not contain among its “permitted actions”
an exception for services provided by a lawyer not admitted in Minnesota
to the lawyer’s employer or its affiliates. 6 Although, the MSBA
Task Force recommended deviating from the MJP
scheme by eliminating the in-house counsel exemption, it also noted
that that existing rules of the Minnesota Board of Law Examiners (“BLE”) sometimes made admission difficult
for lawyers employed in Minnesota and assigned to perform services
for their employers. More specifically,
the BLE requirements for admission without
bar examination often created unique impediments for lawyers employed
in an in-house counsel capacity. Consequently,
the Task Force’s recommendation was predicated upon the expectation
that the BLE would make changes to the admission
rules to facilitate the admission of in-house lawyers who are admitted
elsewhere. In response, changes
to facilitate the admission of in-house lawyers were approved by the
Minnesota Supreme Court in August 2004. Prior to these changes, in-house counsel seeking reciprocal
admission to the Minnesota bar often faced one of two obstacles. First, Rule 7A of the BLE’s rules used to provide that in-house counsel applicants
were eligible for admission without examination only if they had been
engaged in the practice of law as in-house counsel or in other types
of law practice for five of the seven years immediately preceding
the application. Because large organizations often assign and
reassign lawyers between the organization’s general counsel department
and other departments or positions not requiring the practice of law,
the “five of seven” requirement sometimes proved to be an impediment
for these lawyers. A second obstacle involved the requirement in Rule 7A
that the five of seven years of in-house counsel practice occur in
the jurisdiction in which the lawyer was licensed.
Historically, many states, including Minnesota, have not actively
investigated or prosecuted in-house counsel for the unauthorized practice
of law where the lawyer was licensed in another jurisdiction. One rationale is that those who employ in-house
counsel tend to be sophisticated users of legal services and are in
a position to make their own determinations about counsel’s competency
and character and fitness. For
these reasons and others, a number of in-house lawyers have continued
to engage in the practice of law as in-house counsel in a number of
states, including Minnesota, even though they are not licensed there.
Under old Rule 7A, this type of “unauthorized practice” did
not fulfill the “five of seven” requirement, making these lawyers
ineligible for admission to the Minnesota bar unless they completed
the bar examination.7 House Counsel Admission Several changes were made to facilitate easier admission
for in-house lawyers without having to take the bar exam.
First, a new House Counsel
license was expanded for lawyers who desire only limited admission
to the Minnesota bar in order to represent their organizational employer
for an indefinite period of time. The
new House Counsel license authorizes the lawyer to represent
the employer in all legal matters, including court proceedings. House Counsel licenses stay in force for the duration of the lawyer’s employment
with the employer for which House Counsel admission was obtained and
may be reissued within 90 days at the discretion of the BLE Director if the license expires due to termination of the
lawyer’s employment.8 The preexisting practice requirements for admission without
examination have been relaxed for lawyers seeking a House Counsel license. Instead of meeting the traditional “five of
the past seven years” legal practice requirement, House Counsel applicants need only demonstrate that
they have been engaged in the practice of law in three of the preceding
five years. More importantly,
however, any practice as in-house counsel during this period will
qualify, even if the lawyer was not licensed in the jurisdiction where
she practiced as in-house counsel.
This essentially qualifies lawyers licensed elsewhere who are
or have recently practiced as in-house counsel in Minnesota to use
their heretofore “unauthorized practice” as the basis for obtaining
a House Counsel license. Enforcement of Unauthorized Practice Some states have a history of aggressive enforcement of
unauthorized practice of law rules and statutes. For example, Florida recently amended its statute
making the unauthorized of practice of law by anyone not licensed
by the Florida Supreme Court a third-degree felony.9 Texas has an active Unauthorized Practice of
Law Committee that investigates both nonlawyers and lawyers not licensed
in Texas who engage in the practice of law.
By contrast, other states, including Minnesota, have not made
prosecution of unauthorized practice violations a priority. Nevertheless, recent changes and trends suggest
that those who continue in-house practice in Minnesota without a Minnesota
law license or House Counsel
license risk discipline and possibly other consequences. Over the past several years, ethics complaints against
in-house lawyers have increased. Many
arise out of employment or noncompete disputes with former employees
or officers. Other allegations include improper ex parte communications with employees
who are represented by counsel, while still others originate as conflict-of-interest
allegations when officers or other high-level employees who regularly
dealt with counsel are ousted from the organization for misconduct. Ethical responsibilities of organizational lawyers are
also changing. The Enron and
WorldCom scandals spawned the Sarbanes Oxley Act, causing significant
changes in securities law governing publicly traded corporations. These developments in turn forced necessary
amendments to the ethics rule governing “organization as client.”10 All of these changes have placed greater responsibility
upon the lawyers who represent and advise organizations and thereby
create further opportunities for allegations of noncompliance. Jurisdictional changes arising out of MJP have also expanded opportunity for unauthorized practice
enforcement. Historically,
lawyer discipline agencies have been hesitant to exert disciplinary
authority over lawyers not admitted in their jurisdiction.
The recent amendment to Rule 8.5, MRPC,
authorizes state agencies to exercise jurisdiction in lawyer discipline
matters over attorneys not licensed in the state if they engage in
the practice of law. Unlike
in the past, disciplinary agencies can now legitimately proceed against
lawyers not admitted in their jurisdiction and, at the conclusion
of the proceeding, refer the disposition to the lawyer’s licensing
jurisdiction for the imposition of reciprocal discipline.11 Finally, those who practice with in-house counsel who
are not licensed in the jurisdiction may also be at risk for consequences. Rule 5.1, MRPC,
requires partners in a law firm or those with comparable managerial
authority in the law department of an enterprise to make reasonable
efforts to ensure that all lawyers in the department conform to the
Rules of Professional Conduct.12 In-house
lawyers having authority covered by this definition could face discipline
for permitting other lawyers in the organization’s law department
to continue to practice law in Minnesota without being licensed. Lawyers licensed elsewhere who are practicing as house
counsel in Minnesota without a Minnesota license should immediately
take advantage of the recent changes to the rules that facilitate
their admission as House Counsel.
Applications for a House Counsel
license may be obtained online from the Board of Law Examiners’
Web site at www.ble.state.mn.us. Applications
for House Counsel admission require proof of good standing in other
jurisdictions where the lawyer is licensed, verification of the legal
employment in Minnesota for which the House Counsel license is sought, and compliance with other eligibility requirements found
in Rule 4 and Rule 9 (temporary license) or Rule 10 of the BLE’s Rules for Admission to the Bar.
c NOTES 2. See Rule 5.5(b),
Minnesota Rules of Professional Conduct (MRPC).
The exception to this general rule is that a lawyer who provides only
services authorized by federal law (e.g., immigration
practice) may establish and maintain an office in Minnesota to provide
such services. See Rule 5.5(d). 3. See, e.g.,
Jorgensen & Wernz, n.1, supra,
at 17-18. 4. ABA Rule 5.5(d) authorizes practice by
lawyers lacking local licensure but licensed in another jurisdiction
if the services are provided to the lawyer’s employer or its organizational
affiliates and do not require pro hac vice admission. 5. See, e.g., Minn.
Stat. §481.01, subd. (1), making it unlawful for any person not admitted
to law practice in Minnesota, for a fee or any consideration, to give
legal advice or counsel, or to perform for or furnish to another legal
services. 6. See, e.g., Minn.
Stat. §481.02, subd. (3). 7. The alternative
to reciprocal admission or admission on motion is admission upon examination,
which requires the applicant to take the bar examination and obtain
a passing score. 8. The House Counsel
license could only be reissued if the lawyer found in-house counsel
employment with another Minnesota employer within the 90-day period. See Rule
9E, Rules for Admission to the Bar.
In addition, holders of House Counsel licenses are required
to notify the BLE and the Attorney Registration Office
within ten days of being terminated by the employer for whom the House
Counsel admission or licensed was granted. 9. Fla. Stat.
§454.23 (October 1, 2004). 10. See, e.g., Jorgensen
& Wernz, n.1, supra,
at page 16. 11. Most states,
including Minnesota, have a procedural rule that authorizes summary
discipline proceedings based upon a disciplinary sanction imposed
upon the lawyer in another state.
The lawyer is typically estopped in the reciprocal proceeding
from relitigating the misconduct adjudicated in the other state.
See e.g. Rule 12(d), Rules on Lawyers Professional Responsibility. 12. Paragraph
[1] of the comment to Rule 5.1 makes it clear that the ethical responsibilities
of a partner also extend to corporate or other organizational law
departments. KENNETH L. JORGENSEN is director of the Office
of Lawyers Professional Responsibility.
He has served the cause of lawyers’ self-regulation in Minnesota
for over 20 years. MARGARET FULLER CORNEILLE is executive director of the Minnesota boards of Law Examiners, Continuing Legal Education, and Legal Certification. |
