Two ethics opinions: one good, one bad, but both reveal systemic problems.

So, New York and Florida. Interestingly, those states have been bookends of our nation’s problems with COVID-19 and with fighting it. New York got hit very badly early, given the concentrated nature of its population centers, but then engaged in a very serious effort of taking the virus very seriously and managed to significantly flatten its curve. Florida’s government ignored and downplayed the situation, and now is experiencing horrible daily numbers and now has overall numbers of cases and deaths that are worse than New York’s. The two states contrasting efforts though still combine to tell a large part of the problem plaguing the United States when it comes to the pandemic — the lack of a coordinated national strategy because we have an incompetent and dysfunctional federal executive.

Two recent developments in ethics opinions from each state also offer contrasting approaches to issuing ethics opinions, contrasting results, and combine to tell part of the larger story of issues plaguing the profession as a whole.

First, let’s start with New York State Bar Association Op. 1200 which is good on procedure but bad on outcome. This opinion addresses application of New York’s RPC 5.7 and the combination of legal services and wealth management services. It was issued after what would appear to be the traditional, efficient, process of receiving a written request for an opinion, having a committee meet and deliberate, and then issuing a written opinion.

The answer it gives to the question whether the same lawyer can render legal services to a client and, through another entity, provide wealth management services to the same person is baffling. Despite the clear rationale for a why a rule like RPC 5.7 exists and, despite the fact that RPC 1.7 should provide for the ability for a waiver of such a conflict, the answer provided is that the conflict is so severe as to be unwaivable. And the only real explanation that is proffered for why is that the lawyer is simply going to be making too much more money from the provision of the wealth management services than from the provision of legal services. Maddening because of all that implies about not only evaluating the conflict rules but how it can justify other assumptions raising questions about a number of other ethics rules that operate under the assumption that lawyers can do the right thing in terms of representing their clients ethically even when it is in conflict with their own financial interests.

Next comes Florida where there exists a proposed ethics opinion waiting on action by the Florida Supreme Court. Technically, it isn’t an ethics opinion as it comes from the Florida Bar Standing Committee on the Unauthorized Practice of Law, but given the relationship to RPC 5.5, that’s a bit of a tomato/tomahto situation.

Now, procedurally it is nightmarish. To get to the point of even issuing the opinion, they held what for all intents and purposes looks like the equivalent of a trial. Sworn witnesses and all. Even after that, it still has to be approved by someone else. Substantively, proposed Florida Advisory Op. 2019-4, would be good because it would conclude that a New Jersey-licensed lawyer who had retired from his job, moved to Florida, and then took a new job for a New Jersey company would not be engaged in UPL if he continued to reside and work in Florida (where he was not licensed) and advised the New Jersey employer about federal law issues.

Now, it is an opinion that shouldn’t be necessary at all for a few reasons, including that if all that is occurring is advising about federal law issues, then Model Rule 5.5(d)’s language should pretty straightforwardly and clearly allow that activity. Unfortunately, Florida curiously does not have that language in its rules and does not appear willing to facially admit the underpinnings of federalism and the Supremacy Clause that require that result. And, even if the question had been about general work for the New Jersey company remotely, it shouldn’t take the equivalent of a trial to figure out that the answer should be that no UPL takes place.

This may all have been less clear to the profession before the pandemic, but during (and if we ever get to a point of “post”) the pandemic it should be painfully clear that the physical presence alone of a lawyer in a particular location should not be dispositive of whether UPL is occurring.

For what it is worth, my proposal for a practical solution to the question of UPL in modern practice that would still allow for things that truly should be regulated to be regulated would be as follows:

There should be a uniformly used “totality of the circumstances/most substantial connection”-style test that evaluates:

  1. where the lawyer is located
  2. where the client is located
  3. if there is a contemplated legal proceeding (or other matter involved such as commercial transaction or closing) where that is located or expected to be located; and
  4. what state’s law would govern in such a proceeding (or other matter).

And, unless the majority of those factors involve a state where the lawyer is not licensed then it simply isn’t UPL.

If my math is correct that would mean that as long as any 2 of the factors touched the lawyer’s state of licensure, then the lawyer is free and clear (or stated differently, unless 3 of the 4 involve a state where the lawyer isn’t licensed, then the lawyer is free and clear).

And, there would still have to be a continued exception acknowledged for purely federal law situations.

Frustrations with Formal Ethics Opinion 2017-F-164

Recently (and one of the frustrations I have with this opinion I am now writing about is, that “recently” is about as specific as I can pin things down in terms of the date of issuance), the Board of Professional Responsibility in Tennessee issued a Formal Ethics Opinion giving some guidance on the ability of a Tennessee lawyer to be a part of a multi-state law firm using a trade name.

It is, on the whole, an adequate ethics opinion in that it essentially gets the answers to the questions it raises correct, but it is more frustrating than it is adequate given how it addresses the issues and, as hinted at above, how it was surfaced by the Board as having even been issued.

First, here are my frustrations with the substance.  Here are the questions FEO 2017-F-164 tackles:

I. Do the Tennessee Rules of Professional Conduct allow a partnership between a Tennessee Professional Services Corporation and a Florida Professional Services Corporation?

II. Can the partnership ethically use a trade name?

III. Can the Florida office of the partnership ethically lease space from SETCO Services, a title company?

Admittedly, the Board gets the answers to each of these questions correct.  Those answers are, of course, “yes,” “yes,” and “yes.”  But the opinion does not do the best job of showing its work as to some of the answers, completely ignores the fact that the questions being answered also can’t be addressed without taking a look at Florida’s analogous ethics rules, and, as to the third question, misrepresents to an extent how RPC 5.7 actually works in Tennessee, appears to assume more facts beyond the facts indicated in the opinion.

As further background to understand my griping, here is the entirety of the facts provided by the Board about the request that has been directed to them:

The requesting lawyer proposes a 50%-50% partnership between a Tennessee Professional Services Corporation (PA) and a Florida Professional Services Corporation (PA) that will operate under a trade name, SETCO Law. The Florida PA will lease space from SETCO Services, a title company, for which the requesting lawyer is in-house counsel, in Destin, Florida. The Tennessee PA will lease space from another law firm, Brannon Law, located in Memphis, TN.

The proposed Firm will have a separate computer system, including secure email system, apart from SETCO Services and can only be accessed by employees of the Firm. The Firm will have its own logo which will be conspicuous within the building. All clients, before engagement with the Firm, will be provided with a written engagement letter that provides in detail that SETCO Law is an entity separate and apart from SETCO Services and Brannon Law and that engagement with the Firm is in no way tied to any affiliation with SETCO services or any services provided therefrom.

The first two questions are readily capable of dispatch under Tennessee’s rules given that we are very reasonable on questions of trade names and, of course, do not present any unreasonable barriers to lawyers being part of a multi-state law firm.  However, it is exceedingly unhelpful for this opinion to be issued and make no reference to the fact that a lawyer seeking guidance about the second question needs to take a look at Florida’s ethics rules as well and that makes no reference at all to the fact the lawyer ought to also be educated about RPC 8.5 and how that rule provides for choice of law determinations when more than one jurisdiction’s ethics rules may be applicable to the conduct of a lawyer.

The method of addressing the third question though presents the most frustrating piece from a substantive standpoint.  This is because the third question only asks whether or not the law firm’s Florida office can lease space from a title company.  The answer to that question is: of course they can.  The first paragraph of that part of the opinion gets the answer exactly right:

No ethical rules restrict the location of the office of a lawyer. Nothing prevents a lawyer from entering into a landlord-tenant relationship and having an office in the same building as a land title company.

Unfortunately, it doesn’t stop with those two sentences but instead offers further advice and guidance about RPC 5.7 with respect to law related services.  That advice and guidance is fine – in a vacuum but this opinion isn’t in a vacuum – but the opinion reads as certain things being mandatory in order to be able to lease the space, rather than being explained as being important in evaluating whether or not acts undertaken by a lawyer affiliated with the title company can be treated as providing services that are separately distinct from the delivery of legal services so that only some, but not all, of the Tennessee ethics rules apply to that conduct.  Nothing about RPC 5.7 requires a lawyer to do any of those things simply to be able to lease office space from someone.

And that would be bad enough but, again, the opinion completely overlooks or ignores that the office space lease question involves the office in Florida and so there is no compelling analysis given why it would be Tennessee’s RPC 5.7 that would govern at all, rather than Florida’s version of any such rule.

Having now unburdened myself on the substantive flaws, I’d like to offer a quick word about the frustrating problem with the process.  For whatever reason, the Board of Professional Responsibility did not publicize the issuance of this opinion until they happened to insert it in a regular quarterly publication that is a much larger document.  And even then what has been published is an unsigned, undated version of the opinion.  Seems very difficult to understand why that approach was undertaken.

Should you want to go read for yourself the undated, unsigned Formal Ethics Opinion 2017-f-164, you can do so at that link.