A recent ethics opinion from the New Jersey Committee on Unauthorized Practice of Law provides useful guidance to out-of-state lawyers on the scope of multijurisdictional or cross-border practice under Rule 5.5(b)(3) of the New Jersey Rules of Professional Conduct.
By way of background, in 2004, New Jersey amended Rule 5.5, which restricts out-of-state lawyers from practicing law in New Jersey, to include five narrow exceptions modeled after amendments to ABA Model Rule 5.5. The exceptions include: (i) negotiating transactions for existing out-of-state clients where the transaction originates or relates to the lawyer’s jurisdiction; (ii) representing parties in alternative dispute resolution proceedings arising out of or relating the lawyer’s practice where pro hac vice admission is not required; (iii) engaging in investigation or discovery in New Jersey for a proceeding in the lawyer’s jurisdiction; (iv) occasional matters where the lawyer associates with a New Jersey lawyer who takes responsibility for the out-of-state lawyer’s conduct; and (v) other occasional circumstances where the activity arises out of the lawyer’s representation of an existing client and the lawyer’s disengagement would result in substantial inefficiency, practicality or detriment to the client. All lawyers who practice in New Jersey under the multijurisdictional or cross-border rules must maintain a “bone fide office” in New Jersey during the period of practice. In addition, lawyers who take advantage of the exceptions in Rule 5.5(b)(3)(i), (iv) or (v) must register with the Clerk of the Supreme Court (including consenting to the Clerk as agent for service of process), submit annual registration statements, and pay annual assessment fees.
The Opinion clarifies that the purpose of the amendments is to facilitate the “occasional” practice of law in New Jersey, while ensuring that out-of-state lawyers do not establish a “continuous or systematic presence in New Jersey.” According to the Opinion, “occasional” practice means “occurring infrequently or from time to time,” in contrast to “recurring” or “frequent” practice of law.
The Opinion addresses three specific applications of Rule 5.5(b)(3) that have been the subject of various inquiries to the Committee by out-of-state lawyers. First, registration with the Clerk of the Supreme Court does not permit out-of-state lawyers to appear in a New Jersey court. As the Committee explains, the purpose of the amended rule is to allow lawyers to engage in “certain transactions or other nonlitigation matters in New Jersey.” Pro hac vice admission is still required for an out-of-state lawyer to appear, with local counsel, in a New Jersey court.
Second, out-of-state lawyers may not engage in the ongoing practice of law by simply bringing a New Jersey lawyer into the law firm. As discussed above, Rule 5.5(b)(3)(iv), which authorizes out-of-state lawyers to “associate” with New Jersey lawyers, permits only the “occasional” practice of law in New Jersey, not the ongoing or recurring practice of law.
Third, an out-of-state lawyer may represent an out-of-state real estate developer in a commercial real estate transaction in New Jersey under the following circumstances: (a) the developer is an “existing” client in the lawyer’s jurisdiction; (b) the New Jersey transaction relates to the developer’s out-of-state business; and (c) the developer and its business are located in the same jurisdiction where the lawyer is admitted. Assuming these criteria are met, Rule 5.5(b)(3)(i) permits the lawyer only to “negotiate” the terms of the transaction, but not to prepare a contract of sale or other pertinent legal documents, according to the Opinion. Nevertheless, Rule 5.5(b)(3)(v) may permit the lawyer to prepare such contracts or documents because, having negotiated the terms of the contract, the lawyer’s disengagement at that point would likely “result in substantial inefficiency, impracticality or detriment to the client.” Thus, the lawyer’s continued involvement is allowed as long as the practice in New Jersey is also “occasional.”
Arguably, the Committee’s definition of “negotiating transactions” draws too fine a distinction between “negotiating” and “preparing” contracts. As most lawyers know, the activities involved in negotiating contracts and drafting contracts are usually inextricably intertwined. The Committee provides little insight into why it settled on such a restrictive definition of “negotiation,” rather than a more inclusive and – some would argue – practical definition that includes preparing contracts.
Putting aside that small quibble, however, I believe the amendments to Rule 5.5 are a positive step in the direction of improved, efficient multijurisdictional practice and reflect the changing reality of the legal profession and the increasingly mobile world in which we live and practice. Similar amendments have been hotly debated in New York (where I practice) and continue to face substantial opposition from various quarters. Given that New York was the last hold-out in converting from the old Code of Professional Responsibility to the Rules of Professional Conduct, it may take some time for New York to embrace these new changes.
Does the "bona fide office" requirement mean that if I want to take a deposition in New Jersey, I have to set up an office in the state for that purpose? That seems unreasonable. It might be reasonable for a lawyer who has regular and systematic contacts with the State, but, of course, those lawyers are not covered by the rule.
Does NJ Rule 5.5(c), in effect, allow only lawyers in multistate firms with NJ offices practice under NJ's MJP rules?
Posted by: Noah Rosenthal | December 12, 2012 at 06:28 PM
EVERYTHING about the bona fide office requirement is unreasonable, and likely unconstitutional. I am actually a NJ-licensed attorney, but I can't even use my license because of the bona fide office requirement. The problem? I live in California... It's simply not possible for a solo, especially a young one saddled with law school debt, to comply with that requirement while physically residing in another state. (Of course, it's hard for one located in the state too -- which is partly why I'm a strong proponent of virtual practices -- but that's a separate issue.)
Posted by: Cathy | December 12, 2012 at 07:09 PM
I have to admit that I view NJ's law on these issues as hopelessly protectionist.
Posted by: John Steele | December 12, 2012 at 09:43 PM
No question. If an angel of the Lord ever visited me and said "choose one RPC that you think should be abolished in every state throughout the land and it shall be so," I would pick the bona fide office rule.
Posted by: Nicole Hyland | December 13, 2012 at 04:51 PM
Actually, the "Attorney News" e-newsletter of the Disciplinary Board of the Pennsylvania Supreme Court, following up to correct themselves from a statement made in an earlier issue, just called attention to the fact that New Jersey Rule 1:21-1(a) clearly states that "[f]or the purpose of this section, a bona fide office may be located in this or any other state...." I confess that this was a surprise even to me, an in-house, non-litigating attorney who both lives in NJ and has plenary admission to its Bar, but whose office is at my company's headquarters in Philadelphia. (I am also admitted in PA.) It seems to me that the only permutation left unaddressed by the NJ Supreme Court is that of a lawyer both domiciled and admitted in NJ but who doesn't maintain an office there. (By the way, the Court has also made it very clear that I and others similarly situated are subject to its mandatory pro bono requirement, notwithstanding my unfamiliarity with courtrooms and the fact that I do not maintain a "law office" in the traditional sense. The lack of a "bona fide office", whether in NJ or elsewhere, cuts no ice with them on that score!)
Posted by: Rob MacIver | January 31, 2013 at 01:07 PM