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NEW YORK STATE BAR ASSOCIATION
Committee on Professional Ethics
Opinion #762 – 03/05/2003
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Topic: Supervision by New
York lawyers and law firms of lawyers licensed in foreign countries
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Digest: Law firm with New York office and at least one affiliated New
York lawyer is subject to certain New York disciplinary rules;
obligation of New York law firm and of supervisory lawyers to ensure
compliance with the New York Code extends only to lawyers subject to the
New York Code; New York law firm has broad supervisory responsibilities
with respect to affiliated lawyers licensed in foreign countries, and
must ensure that compliance by such lawyers with foreign law and ethical
standards does not compromise the firm's adherence to the New York
Code.
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Code: DR 1-102; DR 1-104; DR 1-105; DR 1-106; DR 1-107; DR 2-101(E),
(G), (L); DR 2-102(A), (D); DR 2-105(A); DR 2-106(A), (C)(2); DR 2-111;
DR 3-102(A); DR 4-101(B), (D); DR 5-102(B); DR 5-105(E); DR 5-108(C); DR
6-101; DR 7-102(B)(1); DR 9-102(B), (D); EC 1-8; EC 2-19; EC
4-5;
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QUESTION
To what extent must a New York attorney or the attorney’s law
firm supervise associates, partners and non-lawyers who are admitted to
practice in foreign jurisdictions but not in New York?
FACTS
The inquirer is a lawyer admitted to practice in New York and
practices in a law firm that has as partners and associates lawyers
licensed in a foreign country who are not admitted in New York or any
other state.1 The firm has an office in
New York (where the inquirer works) as well as in the foreign
country.
OPINION
DR 1-104 of the Lawyer’s Code
of Professional Responsibility (the “New York Code”) imposes
certain supervisory responsibilities on law firms and
lawyers.
A. A law firm shall make reasonable efforts to ensure that all
lawyers in the firm conform to the disciplinary rules.
B. A lawyer with management responsibility in the law firm or
direct supervisory authority over another lawyer shall make reasonable
efforts to ensure that the other lawyer conforms to the disciplinary
rules.
C. A law firm shall adequately supervise, as appropriate, the
work of partners, associates and non-lawyers who work at the firm.
The degree of supervision required is that which is reasonable under the
circumstances, taking into account factors such as the experience of the
person whose work is being supervised, the amount of work involved in a
particular matter, and the likelihood that ethical problems might arise
in the course of working on the matter.
DR 1-104 provides ethical rules both for the law firm (DR 1-104[A]
and [C]) and for individual lawyers (DR 1-104[B]). We first
discuss the firms to which DR 1-104(A) and (C) apply. We then
discuss DR 1-104(A) and (B), which impose supervisory responsibility
with respect to compliance with disciplinary rules, and finally the more
general supervisory responsibility imposed by DR 1-104(C).
Law Firms Subject to Disciplinary Rules 2
A limited number of disciplinary rules in the New York Code apply to
law firms rather than, or in addition to, individual lawyers.3 See DR 1-102, 1-104, 1-106, 1-107, 2-101(E),
(G), (L), 2-102(A), 2-105(A), 2-111, 3-102(A), 5-102(B), 5-105(E),
5-108(C), 9-102(B)(2). Our initial task is determining
which firms are subject to these provisions of the New York
Code.
The New York Code specifically addresses which lawyers are subject to
the disciplinary authority of New York. See DR 1-105 (“A lawyer admitted to
practice in this state is subject to the disciplinary authority of this
state, regardless of where the lawyer’s conduct
occurs.”). It does not, however, provide a similar
rule for “law firms.” Although the First Department
has adopted such a rule, none of the other Departments in the State has
done so.4 In the absence of a clear
rule, the reach of the New York Code as it applies to law firms is
uncertain. At a minimum, however, the Disciplinary Rules that are
specifically applicable to law firms under the New York Code apply to
firms with a New York office and at least one New York lawyer affiliated
with the firm in that office. 5 For purposes of
this opinion we refer to such a firm as a “New York firm”;
it follows that DR 1-104 applies to a New York firm.
Responsibility With Respect to New York Disciplinary Rules
DR 1-104(A) requires a New York firm to “make reasonable
efforts to ensure that all lawyers in the
firm conform to the disciplinary rules.” (Emphasis
added). Read literally, this might imply that partners and
associates of a New York firm who are licensed in a foreign country but
not admitted in New York must conform to the New York Code. We
believe that this broad reading is unintended. We conclude that DR
1-104(A) requires a New York firm to make reasonable efforts to ensure
that lawyers subject to the New York Code who are affiliated with the
firm comply with the New York Code.6
The New York Code contemplates that New York lawyers will enter into
partnerships with lawyers admitted in other jurisdictions, see, e.g., DR 2-102(D), and it is common
knowledge that the ethics and disciplinary rules of various
jurisdictions differ in material ways. Furthermore, this
Committee has opined that partnerships of New York lawyers and lawyers
licensed in a foreign country are ethical in circumstances where
professional standards of conduct applicable to the foreign lawyers are
compatible with the New York Code.7 Thus, it is clear that New
York lawyers may enter into partnerships with lawyers who are bound by
ethics rules other than the New York Code.
In addition, the rules of the
four Departments, which subject lawyers to the Code of Professional
Responsibility, vary somewhat, but generally provide that the New York
rules with respect to professional misconduct apply to attorneys who are
admitted to practice, reside in, commit acts in, or have offices in New
York. 22 NYCRR
603.1, 691.1, 806.1, 1022. Thus, a lawyer licensed in a foreign country who has no
relationship to New York is not subject to the New York Code under the
Appellate Division rules.
A New York law firm must make reasonable efforts to ensure that any
lawyer in the firm who is subject to the New York Code complies with its
disciplinary rules. DR 1-104(A) does not impose an obligation on a
New York law firm to ensure compliance with the Disciplinary Rules by
affiliated lawyers licensed in foreign countries who are not subject to
the New York Code.8
We note that the more general
supervisory responsibility imposed by DR 1-104(C) -- which specifically
embraces “non-lawyers who work at the firm” -- may in some
circumstances require a New York firm to supervise lawyers licensed in
foreign countries to ensure that their conduct does not limit the
ability of the firm and its New York lawyers to comply with the New York
Code. This
responsibility is discussed in the next section.
DR 1-104(B) imposes similar obligations on a lawyer with management
responsibility in the law firm or direct supervisory authority over
another lawyer. Thus, these individuals have responsibilities to
the same extent the law firm has a responsibility under DR 1-104(A) to
ensure that lawyers in the firm subject to the New York Code abide by
the New York disciplinary rules.9
Both DR 1-104(A) and (B) provide that the law firm and lawyers with
management or supervisory responsibility in the law firm must make
“reasonable efforts” to ensure that other lawyers in the
firm conform to the disciplinary rules. While what constitutes
“reasonable efforts” will vary from firm to firm, some
general standards are applicable. First, the firm should adopt
procedures to deal with ethical questions and problems. EC 1-8
suggests that these measures may include “informal supervision and
occasional admonition, a procedure whereby junior lawyers can make
confidential referral of ethical problems directly to a designated
senior lawyer or special committee, and continuing legal education in
professional ethics.” What constitutes reasonable efforts
will depend, in part, on the size of the firm and its structure.
Informal supervision may be sufficient in a small one-office firm, but
detailed written policies and procedures may be necessary in a
multi-office firm. See ABA Model
Rule 5.1, cmt. [2]. The locus for confidential referral of
ethical questions confronting a New York lawyer should be another New
York lawyer. Other ways in which a firm may carry out its
responsibilities include adopting internal standards of conduct or an
ethics manual, seeking opinions of bar ethics committees, or consulting
outside experts. See generally New York Code
of Professional Responsibility: Opinions, Commentary & Caselaw
bk. xi at 20-22 (Mary C. Daly ed. 2002); Roy D. Simon, Jr.,
Simon’s New York Code of Professional Responsibility
Annotated 50-52 (2003).
Second, in addition to having procedures in place to respond to ethical
inquiries or lapses, the firm has an obligation to respond to any
ethical issue that comes to its attention. Third, while the firm
does not need to monitor every aspect of every representation undertaken
by one of its lawyers, it does have a duty to make inquiries where it
has reason to believe there is a likelihood that there may be ethical
problems.
General Supervisory Responsibilities
DR 1-104(C) requires a law firm adequately to supervise, as
appropriate, the work of partners, associates, and non-lawyers who work
at the firm. This provision imposes obligations on the New York
firm with respect to affiliated lawyers licensed only in foreign
countries who are, for this purpose,
“non-lawyers.”
In general, DR 1-104(C) requires a New York law firm to have systems
in place to ensure that the firm’s practice will be conducted in a
professional and ethical manner. For example, the law firm has an
obligation (i) to have a policy and system for detecting conflicts of
interest, DR 5-105(E); (ii) to provide accurate bills to clients, EC
2-19; see DR 2-106(A); (iii) to retain
appropriate records, DR 9-102(D); (iv) to provide retainer agreements
where necessary, DR 2-106(C)(2); and (v) to segregate client funds, DR
9-102(B). The law firm must take reasonable measures to
assure that its lawyers and non-lawyers are familiar with these
procedures and comply with them. It is not sufficient for the firm
simply to assume that its lawyers and non-lawyers will comply.
Cf. Dresser Industries v. Digges,
1989 WL 139234 (D. Md. 1989) (finding nonparticipating partners liable
for misconduct of a partner based in part on the firm’s failure to
have a system in place to assure compliance with disciplinary rules);
Restatement (3d) of The Law Governing Lawyers § 11(1)
(partners can be disciplined for failing to “make reasonable
efforts to ensure that the firm has in effect measures giving reasonable
assurance that all lawyers in the firm conform to applicable code
requirements”). The firm’s responsibility
for developing and implementing systems to ensure professional and
ethical practice may be delegated to a management committee or similar
group. See id. §
11, cmt. d.
Furthermore, DR 4-101(B) imposes on lawyers the obligation to
preserve the confidences and secrets of a client. DR 4-101(D)
requires that a lawyer “exercise reasonable care to prevent his or
her employees, associates, and others whose services are utilized by the
lawyer from disclosing or using confidences or secrets of a client . . .
.” See also EC
4-5. The firm must acquire, store, retrieve, and transmit
client confidential information “under systems and controls that
are reasonably designed and managed to maintain
confidentiality.” Restatement (3d)
of The Law Governing Lawyers § 60, cmt. d. The
firm must take steps to ensure that all persons affiliated with the firm
understand the sanctity of this provision. Non-lawyers and lawyers
licensed in foreign countries whose confidentiality rules may differ
need to be sensitized to the obligation not to disclose or use a client
confidence or secret. See generally
James Altman, “An Associate’s Duty to Supervise
Non-Lawyers,” N.Y.L.J., Oct. 11, 2002, at 28.
In addition, Canon 6 provides that a lawyer should represent a client
competently. DR 6-101 specifically provides that: “A lawyer
shall not handle a legal matter which the lawyer knows or should know
that he or she is not competent to handle, without associating with a
lawyer who is competent to handle it.” The presence of
another lawyer in the firm competent to handle the matter does not
absolve the first lawyer of the obligation under DR 6-101 unless he or
she actually consults with the second lawyer. Therefore, a New
York firm should assure itself that all lawyers (including lawyers
licensed only in foreign countries) working in the New York office are
competent to handle matters undertaken by them, and if not, to have in
place a procedure for consultation with a lawyer who has competence in
the area. As DR 1-104(C) suggests, the degree of supervision
will vary with the circumstances, taking into account “the
experience of the person whose work is being supervised, the amount of
work involved in a particular matter, and the likelihood that ethical
problems might arise in the course of working on the
matter.”
The supervision mandated by DR 1-104(C) requires reasonable efforts
to ensure that adherence to the disciplinary rules of a foreign country
by a lawyer licensed in a foreign country does not expose the New York
firm or its New York lawyers to the possibility of violating the New
York Code. In N.Y. State 646, which permitted New York lawyers
generally to enter into partnerships with lawyers licensed in foreign
countries, we required that the partnership “not compromise the
New York lawyer’s ability to uphold ethical
standards.” Specifically, “the New York lawyer who
enters into a partnership with lawyers licensed in . . . [a] foreign
country has an obligation to ensure that participation in the law
partnership does not compromise the lawyer’s ability to abide by
the ethical standards of this State, including the standards governing
attorney-client confidentiality.” Id. at 3-4; see also D.C. Op. 278 (1998)
(same). Furthermore, a New York lawyer is responsible for a
violation of the New York Code by a lawyer or non-lawyer employed,
retained, or associated with the New York lawyer where the New York
lawyer (1) orders, directs or ratifies the conduct or (2) is a partner
or has supervisory responsibility for the person who engaged in the
conduct and knows of such conduct or in the exercise of management or
supervisory responsibility should have known of such conduct so that
remedial action should have been taken. DR 1-104(D).
For example, while there might be no per se prohibition against a New
York lawyer entering into a partnership with lawyers from Country X
where the ethical and disciplinary rules of both jurisdictions are
similar, the New York lawyer could not enter into the partnership if one
of the Country X partners was not a lawyer. Although such a
partnership might be permitted in Country X, the New York lawyer could
not enter into the partnership because it would compromise the
lawyer’s ability to abide by the New York ethical rules.
See DR 3-103 (lawyer cannot form a
partnership with a non-lawyer if the partnership practices law); see
also ABA 423, supra.
Even where forming a partnership with lawyers licensed in foreign
countries is ethically permissible, in carrying out its supervisory
obligations under DR 1-104(C) the law firm may need to take steps to
ensure that particular actions of the foreign lawyers do not compromise
the New York lawyer’s ethical responsibilities. Cf. EC 1-8 (“A law firm should adopt
measures giving reasonable assurance that all lawyers in the firm
conform to the Disciplinary Rules and that the conduct of non-lawyers
employed by the firm is compatible with the professional obligations of
the lawyers in the firm.”) Suppose, for example, that
the ethical rules of Country X generally comport with the New York
confidentiality rules but require a lawyer
to reveal a client’s past fraud. Because a New York
attorney is prohibited from revealing a client confidence or secret in
that situation (DR 7-102[B][1]; DR 4-101), the firm must take reasonable
steps to ensure compliance with the New York Code (for example, by
ensuring that such confidential information is unavailable to the lawyer
licensed in Country X).10 To ensure that adherence
to the disciplinary rules of a foreign country by a foreign lawyer does
not expose the New York firm or its New York lawyers to a violation of
the New York Code, supervision of the lawyer licensed in the foreign
country by the firm should be by a lawyer (or lawyers) familiar with the
New York Code.
The New York firm may also have
affirmative duties with respect to a client whose matter will be handled
in a foreign jurisdiction with differing ethical rules. For example, the firm must
explain to the client the extent to which the confidentiality rules in
the foreign jurisdiction provide less protection than they do in New
York.
CONCLUSION
New York lawyers with management or supervisory authority in law
firms with New York offices, as well as the firms themselves, are
required to make reasonable efforts to ensure that lawyers subject to
the New York Code who are affiliated with the firm in such offices
comply with the New York Code. A New York firm has broad
supervisory responsibility under DR 1-104(C) with respect to non-lawyers
and lawyers licensed in foreign countries in the New York office, and
must ensure that compliance by foreign lawyers with the ethical rules of
a foreign jurisdiction does not compromise the firm’s adherence to
the New York Code.
(24-01)
1 We assume for purposes of this inquiry that the inquirer may
ethically form a partnership with the lawyers involved. See N.Y. State 658 (1994), in which we opined that whether a New
York lawyer could affiliate with an attorney or firm from another
country was dependent upon the educational requirements and ethical
standards for the attorneys licensed in foreign
countries. We assume that the New York lawyer here has made an independent
inquiry to ensure that there are not substantial differences in the
educational requirements or ethical standards applicable to the foreign
attorneys that would make it impossible for the inquirer to uphold his
or her ethical obligations. N.Y. State 658, at 3.
2 The Definitions section of the New York Code
provides:
“Law firm” includes, but is not limited
to, a professional legal corporation, a limited liability company or
partnership engaged in the practice of law, the legal department of a
corporation or other organization and a qualified legal assistance
organization.
Our discussion of DR 1-104 is applicable to all of
these entities.
3 We note that although state law generally treats a partnership
as an aggregate of its partners, the New York Code in some cases treats
the partnership as an entity and imposes certain obligations on the
firm. This requires the firm, through
its governance structure, to take steps to satisfy its entity
obligations.
4 22 NYCRR 603.1(b), 603.2(b) provide that any law firm (as
defined in the New York Code) that has as a member, employs, or
otherwise retains an attorney or legal consultant who is subject to the
New York Code can be disciplined for professional misconduct under the
New York Code. 22 NYCRR 603.1(a)
provides that “all attorneys who are admitted to practice, reside
in, commit acts in or who have offices in this judicial department, or
who are admitted to practice by a court of another jurisdiction and who
practice within this department [in certain situations]” as well
as those admitted pro hac vice are subject to the New York
Code.
Read literally the First Department’s rule is
extraordinarily broad. It would apply
the New York Code to any firm that has a partner or associate who
resides in New York or who is admitted to practice in New
York. For example, the First Department
apparently would apply the New York Code to a Connecticut law firm that
has a single partner who lives in Westchester County but who is admitted
to practice and practices only in Connecticut. It also apparently would apply the New York Code to an Idaho
firm that employs an associate who is admitted in both New York and
Idaho, but practices only in Idaho. We
question whether the court intended to extend the reach of the New York
Code in these circumstances.
5 We note that two court rules use the existence of a New York
office as a determinant. Part 137, the
rule implementing a comprehensive fee dispute resolution program, states
that the rule does not apply to "disputes where the attorney is admitted
to practice in another jurisdiction and maintains no office in New York,
or where no material portion of the services was performed in New
York." 22 NYCRR Part 137.1(b)(7). The
written letter of engagement rule, Part 1215, contains an identical
exception. See 22 NYCRR Part
1215.2(4).
6 EC 1-8 contains a similar rule, but capitalizes the term
“Disciplinary Rules,” providing support for the view that DR
1-104(A) is referring only to the disciplinary rules found in the New
York Code.
7 In opining that it would be ethical for a New York lawyer to
enter into a partnership with a British lawyer, we commented on the
“essential compatibility of our standards of professional conduct
and discipline.” N.Y. State 542
(1982). Similarly, in finding it would
be ethical for a New York lawyer to enter into a partnership with a
Japanese bengoshi, we noted that “the standard of professional
conduct and discipline in Japan appears to be sufficiently similar in
relevant aspects.” N.Y. 646, at
3. In neither situation did we require
an identity of ethical and disciplinary rules, which is not likely to be
the case. See also ABA 423 (2001)
(“The law and ethical standards applicable to the legal profession
in foreign countries will differ from some of the law and ethical
standards that apply to U.S. lawyers.”); Detlev F.
Vagts, Professional Responsibility in Transborder
Practice: Conflict and Resolution, 13
Georgetown J. Legal Ethics 677 (2000) (outlining some differences
between ethical rules in EU countries and the United
States).
8 Under the ABA Model Rules, “[a] partner in a law firm
shall make reasonable efforts to ensure that the firm has in effect
measures giving reasonable assurance that all lawyers in the firm
conform to the Rules of Professional
Conduct.” Model Rule
5.1(a). The ABA Standing Committee on
Ethics and Professional Responsibility interpreted this to mean the
Model Rules if they are in effect in a jurisdiction and, if not, other
ethical and disciplinary rules applicable in the United States or
foreign jurisdiction. See ABA 423
(2001). The ABA Committee did not address the choice of law question as
to which ethical rules apply to lawyers engaged in a multinational legal
practice.
9 DR 1-104(B) does not apply to managing or supervisory lawyers
who are not subject to the New York Code. So, for example, a British lawyer who directly supervises a New
York lawyer in a London office has no responsibility to ensure that the
New York lawyer complies with the New York Code.
10 If this is impossible because of the size or the nature of the
firm, the partnership itself may be unethical.
Related Files
Opinion 762 (Adobe PDF File)
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