Opinion 94-16 Notes
This Inquiry concerns one variation of the question what constitutes practicing law in the Commonwealth.
In this case, the facts provided are sparse. An out-of-state law firm has established an office in Philadelphia, staffed principally by two associates who are admitted to practice law in Pennsylvania. Two partners who are from outside the state and not members of the Pennsylvania bar will be present in the Philadelphia office a few days a week, but there will be no permanent resident partner in that office.
The Inquirer in this case asks for "guidance on any Pennsylvania requirements regarding the establishment of an office under the scenario outlined above." A meaningful response to this broad request for guidance requires evaluation of the actions both of the resident associates and of the non-resident partners.
There is no violation of the Rules of Professional Conduct for the attorneys in the Pennsylvania office of the firm to be associates, rather than partners, of the firm.
The facts supplied are not sufficiently detailed to permit a conclusion whether the Inquirer may be violating any professional ethical requirements by reason of the in-state activities of the non-resident partners. Moreover, the Committee is divided upon the appropriate standard for determining whether any such violation is occurring. Accordingly, the Committee is unable to respond definitively to the inquiry.
THE APPLICABLE STATUTES AND RULES
There are a number of provisions of the Pennsylvania Rules of Professional Conduct, the Pennsylvania Rules of Civil Procedure, and the Pennsylvania Consolidated Statutes that are germane to this circumstance. First, the General Assembly has provided by statute as follows:
42 Pa. C.S.A. §2521
Persons admitted to the bar of the courts of this Commonwealth and to practice law pursuant to general rules shall thereby hold the office of attorney at law.
42 Pa. C.S.A. §2524
Any person who within this Commonwealth shall practice law, or who shall hold himself out to the public as being entitled to practice law, or use or advertise the title of lawyer, attorney-at-law, attorney and counselor-at-law, counselor, or the equivalent in any language, in such a manner as to convey the impression that he is a practitioner of the law of any jurisdiction, without being an attorney-at-law, or a corporation complying with 15 Pa. C.S. Ch. 29 (relating to professional corporations), commits a misdemeanor of the third degree.
Second, there are a number of provisions of the Pennsylvania Rules of Professional Conduct (the Rules) that are pertinent. It should be pointed out, however, that these rules contain no definition of the term "lawyer" that is used throughout. Pertinent portions of the Rules are as follows:
A lawyer shall be responsible for another lawyer's violation of the Rules of Professional Conduct if:
(1) the lawyer orders or, with knowledge of the specific conduct, ratifies the conduct involved....
A lawyer shall not:
(b) practice law in a jurisdiction where to do so would be in violation of regulations of the profession in that jurisdiction.
A lawyer shall not make a false or. misleading communication about the lawyer or the lawyer's services. A communication is false or misleading if it:
(a) contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading....
A law firm with offices in more than one jurisdiction may use the same name in each jurisdiction, but identification of the lawyers in an office of the firm shall indicate the jurisdictional limitations on those not licensed to practice in the jurisdiction where the office is located.
It is professional misconduct for a lawyer to:
(a) violate or attempt to violate the rules of professional conduct, knowingly assist or induce another to do so, or do so through the acts of another;
(b) commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects; [or]
(c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation....
Finally, the Pennsylvania Rules of Disciplinary Enforcement provide, in Rule 201(a)(2) that "[t]he exclusive disciplinary jurisdiction of the Supreme Court and the Board under these rules extends to: ... Any attorney of another jurisdiction specially admitted by a court of this Commonwealth for a particular proceeding."
The body of applicable ethical law is not found solely in the Rules of Professional Conduct. With respect to whether a resident partner is required, the Committee has reached a consensus, discussed below. The members of the Committee, however, are not in agreement on what the governing standards are relating to the in-state activities of the firm's non-Pennsylvania partners. In the sections dealing with this issue, we discuss this disparity in view with the hope that the discussion will provide the Inquirer some guidance in the circumstances.
No Resident Partner is Required.
One apparent issue is whether the Rules require the presence of a resident partner in the Pennsylvania office of the out-of-state firm. There does not appear to be any such requirement in Pennsylvania. Accordingly, so long as those individuals regularly using the in-state office are admitted to the bar in Pennsylvania, it does not matter whether they are associates of the firm as opposed to partners. The Committee cautions, however, that both the Pennsylvania associates and the out-of-state partners of the firm must comply with their respective duties and responsibilities outlined in RPC 1.1 (Competence), 5.1 (Responsibilities of a Partner or Supervisory Lawyer), and 5.2 (Responsibilities of a Subordinate Lawyer).
Must the Nonresident Partners Practicing Law in the Pennsylvania Office be Admitted to Practice Law in the State?
The Inquirer has not provided any specific information concerning the activities of the nonresident partners when they are in Pennsylvania. In light of this and of the lack of consensus on the general principles applicable to nonresident lawyers practicing in Pennsylvania, the Inquirer should consider the following in evaluating the impact, if any, the nonresident partners activities may have on him or her. In the first part of the discussion, we address the factual issues and some of their implications. Thereafter, we address two alternative views of the ethical propriety of nonresidents practicing law in Pennsylvania without being admitted to the bar in the state.
1. Factual Issues and Certain Implications under the Rules.
a. The Non-Resident Partners
As noted above, the inquiry does not specify what the non-resident partners do when they are in the firm's Pennsylvania office. While not stated in haec verba by the Inquirer, it is apparent that the out-of-state partners are in the Pennsylvania office on a regular or routine basis. The Inquirer describes their presence as "a few days a week." This is clearly not an occasional or irregular presence1.
Because the facts provided by the Inquirer are lacking in detail, the Committee cannot conclude whether the non-resident partners are in compliance with Pennsylvania's requirements. The Inquirer is therefore cautioned to evaluate the non-resident partners' conduct while they are physically present in the firm's Pennsylvania office to determine whether it may require them to be admitted to practice in the Commonwealth2.
The Inquirer should also examine whether the non-resident partners' conduct may also violate several provisions of the Rules3. Rule 5.5(b) prohibits a lawyer from practicing law in a jurisdiction where to do so would be in violation of regulations of the profession in that jurisdiction. In addition, unless there is full disclosure of the jurisdictional limitations on the nonresident partners' licenses to practice, consistent with the standard reflected in Rule 7.5(b) 4, their regular presence in the Pennsylvania office could amount to a misleading communication about the lawyers in violation of Rule 7.1 of the Rules. And, finally, the partners' activities in Pennsylvania may likewise amount to professional misconduct under Rule 8.4(a) (violating the Rules) and Rule 8.48 (engaging in conduct involving misrepresentation), as well as possibly under Rule 8.4(b), but only to the extent their violations of §2524 reflect adversely on their honesty, trustworthiness, or fitness as lawyers in other respects. Without knowing what the non-resident partners do when in Pennsylvania, neither segment of the Committee can reach a conclusion on this aspect of the inquiry and must leave its resolution to the Inquirer based upon the actual facts of the situation.
B. The Resident Associates
The Inquirer and other associate in the office, as attorneys admitted in Pennsylvania, are clearly governed by the Rules. Pursuant to Rule 5.1(c)(l), they would be responsible for any violations by the non-resident partners, because the resident associates in effect ratify those violations by maintaining their practice in the same office with the non-residents. Similarly, the resident associates would violate Rule 7.1 pertaining to misleading communications to the same extent and in the same fashion as discussed above with respect to the non-resident partners, if the facts so indicate. As a result, the Inquirer must carefully evaluate the facts to determine whether he or she is committing professional misconduct under Rule 8.4(a) by violating the Rules and by knowingly assisting another in violating the Rules, and under Rule 8.48 by engaging in conduct involving misrepresentation.
Based on the actual facts, the Inquirer should evaluate whether a violation is occurring. Following is a discussion of two alternative views of applicable general principles.
2. Applicable Principles - One View
In the view of a segment of the Committee, the practice of law in a Pennsylvania office by attorneys who are not members of the bar in this Commonwealth results in a violation of the Rules by the Pennsylvania attorneys in the office. A number of sources of law are relied upon for this conclusion. This section is written from the point of view of this portion of the Committee.
As quoted above, for purposes of Chapter 25 of Title 42 of the Pennsylvania Consolidated Statutes, someone who is "admitted to the bar of the courts of this Commonwealth" is an "attorney at law." 42 Pa.C.S.A. §2521. Any person who is neither an "attorney-at-law" nor a professional corporation organized and established under Pennsylvania law violates 42 Pa. C.S.A. §2524 if "within this Commonwealth" he or she shall practice law, or . . . hold himself [or herself] out to the public as being entitled to practice law, or use or advertise the title of lawyer, attorney-at-law, . . . or the equivalent in any language, in such manner as to convey the impression that he [or she] is a practitioner of the law of any jurisdiction.... (emphasis supplied)
Under the predecessor to this statute, the Pennsylvania Supreme Court held that a lawyer admitted to practice in the District of Columbia5 and in federal court in Philadelphia but not in any Pennsylvania state courts could be enjoined from various activities in Philadelphia, including maintaining an office for the practice of law, practicing law, holding himself out to the public as entitled to practice law, and advertising that he practices or is authorized to practice law in any jurisdiction. Ginsburg v. Kovrak, 392 Pa. 143, 139 A.2d 889, appeal dismissed for want of a substantial federal question, 358 U.S. 52 (1958) 6, affirming 11 Pa. D. & C.2d 615, reprinted at 139 A.2d 889 (Phila. Cty. 1956). See also Washko v. Platz, 534 A.2d 522, 524 (Pa. Super. 1987) ("an attorney licensed to practice law only in a sister state is prohibited from practicing law in Pennsylvania unless a license to practice in Pennsylvania is obtained). Ginsburg establishes that, in Pennsylvania, the practice of law subject to license by the Commonwealth extends beyond merely appearing in a state court and encompasses as well maintaining an office and holding oneself out to the public as practicing law7.
Other Pennsylvania decisions are in accord. The habitual drafting of legal instruments for hire constitutes the practice of law, even though the individual so engaged makes no attempt to appear in court or to give the impression he or she is entitled to do so. Childs v. Smeltzer, 315 Pa. 9, 13, 171 A. 883, 885 (1934); McCarthy v. Panaccio, 49 Pa. D. & C.2d 501,510 (Phila. Cty. 1969).
While the drafting and execution of legal instruments is a necessary concomitant of many businesses and cannot be considered unlawful, such practices will be prohibited when the documents are drawn in relation to matters in no manner connected with the immediate business of the person preparing them....
McCarthy v. Panaccio, 49 Pa. D. & C.2d at 510, citing Childs. It has also been held that an attorney who has been licensed in Pennsylvania but is on "inactive" status may be denied compensation for his or her services as a lawyer. Estate of Drischler, 25 Pa. D. & C.3d 191 (Allegh. Cty. 1980).
Thus, quite apart from the regulation of nonlawyers, §2524 prohibits lawyers admitted elsewhere than in Pennsylvania from, at the very least, conducting any of the following activities in Pennsylvania: (1) practicing law; (2) maintaining an office for the practice of law; (3) appearing in court; and (4) drafting instruments for others8.
3. The Applicable Principles - An Alternative View
Another segment of the Committee views the requirements of statutory and case law differently. This section is presented from the perspective of this portion of the Committee.
The decision in Ginsburg, supra, is inapplicable to the present circumstances for a number of reasons. In that case, a lawyer who was not admitted in Pennsylvania or any other state, but was admitted to the federal court for the Eastern District of Pennsylvania, argued that he should not be enjoined from practicing anywhere in the Eastern District with regard to any legal matter in which a federal question was involved based on his admission to certain federal courts, including that in Philadelphia.
In its opinion, the court identified essentially two major problems with the defendant's argument. First, the defendant was unable to demonstrate that the procedures for admission to the federal courts at that time required any form of examination to test the professional and moral qualification of the applicant for admission to the federal bar. As the court pointed out, the machinery for this type of testing is left to the legislature and courts of the state lying within the federal geographic district. Then, as now, federal courts follow state law in this regard as they do in other fields of the law which are not covered by federal regulation. In support of its determination that admittance only to the federal bar does not provide prophylactic procedures offered by the states, the court cited In re Isserman, 345 U.S. 286, in which the Supreme Court stated that federal courts do not have such testing procedures because it would be to duplicate needlessly the machinery established by the states, whose function it has traditionally been to determine who shall stand to the bar.
The Ginsburg court's second concern with the defendant's argument related to his apparent violation of 17 P.S. §1608, the predecessor statute to 42 Pa.C.S. §2524. As then written, §l6089 contained language prohibiting the practice of law in Pennsylvania "without having first been duly and regularly admitted to practice law in a court of record of any county in this Commonwealth in accordance with the regularly established rules governing such admissions." This clause, in large measure, drives the court's analysis, because it clearly restricts the practice of law (in as broad a sense as possible) in the Commonwealth without the proper compliance. If this clause were still in effect, the Inquirer surely would have a problem. But as we see from 42 Pa.C.S. §2524, the language which generated the court's concern has been deleted and replaced by the language "without being an attorney-at-law...." This change arguably broadens the statute and makes it more tolerant of the practice of law within the Commonwealth of Pennsylvania by attorneys who are only licensed in other states.
The other important difference between 17 P.S. §1608 and 42 Pa.C.S. §2524 relates to the clause describing the jurisdiction of which a person claims to be a practitioner. Section 1608 stated, "this or any other state, nation, country or land." In §2524, the clause has been changed to read "in any jurisdiction." In view of this change, it is plausible that the legislature made the amendment to broaden the statute alter recognizing the problems created by Ginsburg in denying an individual the privilege of practicing law within the Commonwealth even though he or she is admitted to the bar of the federal courts. The dissent in Ginsburg provides support for this interpretation.
In his dissent, Justice Musmanno vigorously contested the restrictive analysis of the statute by the majority. He stated, among other things, that:
[d]espite the impressive and documentarily established fact that Kovrak is duly qualified to practice law in four United States courts, including the highest tribunal in our country, the Court of Common Pleas . . . has issued an injunction restraining him from practicing law in Philadelphia, and further declaring that he must not hold himself out as a lawyer, as an attorney, or as a counselor, "or the equivalent in any language, in such manner as to convey the impression that he is a practitioner of the law of this or any other State, nation, country, or land.
It is not denied the Kovrak is a member of the bar of the Supreme Court of the United States. Is the United States not a nation, country, or land?
What right does a Court of Common Pleas have to say that Kovral may not use a title or designation conferred upon him by a Court of the United States of America?
139 A.2d at 894.
Arguably, based on the dissent's view of the statute, the significant changes in the statute, and the subsequent developments relating to the interstate practice of law, especially by larger firms, the legislature has determined that amendments to the prior statute were necessary to relax its restrictive nature to accommodate the realities of modern day practice. More importantly though, Ginsburg's value to our analysis of Inquiry 94-16 is suspect because it involves a person unlicensed in any state and construes an outdated statute that is materially narrower than its replacement.
Washko v. Platz, 534 A.2d 522 (Pa. Super. 1987), is also cited as significant to Inquiry 94-16. In Washko, an attorney licensed only in the state of Ohio filed a complaint on behalf of his client, which he endorsed and which did not contain the endorsement of an attorney licensed to practice law in Pennsylvania. Preliminary objections were filed on the grounds that, because the complaint was not properly endorsed by an attorney licensed to practice law in Pennsylvania, the complaint was a nullity.
Within fifteen days alter the preliminary objections were filed, an appearance was entered on behalf of the plaintiff by an Erie County law firm, and an amended complaint correcting the defective original complaint was filed. Despite these corrections, the trial court issued an order granting the defendant's motion to strike off the complaint and dismiss the suit. The plaintiff appealed.
While the Superior Court recognized that an attorney licensed to practice in a sister state is prohibited from practicing law (endorsing a complaint in this instance) in Pennsylvania unless he or she obtains a license to practice in Pennsylvania, the court also stated that there is no Pennsylvania appellate authority to support the conclusion that a complaint filed in Pennsylvania by such an attorney must be considered a nullity and that no opportunity to amend the defect can be provided. Id. at 524. Moreover, considering that the Rules of Civil Procedure are to be liberally construed, the court held that where an attorney licensed to practice law in a foreign jurisdiction endorses a complaint filed in Pennsylvania, the defect in the complaint does not render the complaint a nullity; rather, it may be amended to correct the defect.
The error complained of in Washko is a procedural error, not a substantive error, and therefore substantially different than one involving an endorsement of a complaint on behalf of another by a person who is not licensed to practice law in any state in the United States. Under the latter scenario, such an error would be substantive and should prevent the complaint from moving forward as argued by the defendant in Washko. Accordingly, Washko's value, like Ginsburg's, is limited by the facts and cannot be cited for broader pronouncements on the propriety of the Inquirer's professional conduct.
4. An Additional Consideration
As a separate matter, the Committee recommends that inquiry be made of. a qualified accountant concerning various tax implications, for the firm and/or the non-resident partners, by reason of their presence in the local office.
From and after the passage of this act, it shall not be lawful for any person, partnership, association, or corporation, in any county in the State of Pennsylvania, to practice law, or to hold himself, herself, or itself out to the public as being entitled to practice law, or use or advertise the title of lawyer, attorney-at-law, attorney and counselor-at-law, counselor, or the equivalent in any language, in such manner as to convey the impression that he, she, or it is a practitioner of the law of this or any other state, nation, country or land, or, in any manner, to advertise that he, she, or it, either alone or together with another person or persons, has, owns, conducts, or maintains a law office, or law and collection office of any kind, for the practice of the law of this or any other State, nation, country or land, without having first been duly and regularly admitted to practice law in a court of record of any county in this Commonwealth in accordance with the regularly established rules governing such admissions: Provided, however, That nothing herein contained shall be construed as prohibiting corporations of the first class, acting in good faith and in pursuance of the purposes of their charters, from rendering, through attorneys-at-law, legal service to the members of such corporations.