As many lawyers know, one of the one of the most pressing challenges for the legal profession right now is multijurisdictional practice and the unauthorized practice of law (UPL). For the latest in the ongoing saga of “is it UPL?” we turn to New Jersey where the Supreme Court’s Committee on the Unauthorized Practice of Law issued UPL Opinion 60. The Opinion reached the following conclusion:
Out-of-state lawyers who provide lower-level assistance, such as researching legal issues and drafting documents under the direct supervision of an admitted lawyer, need not register as a multijurisdictional practitioner. Similarly, out-of-state lawyers who merely consult with an admitted lawyer on specialized legal issues need not register as a multijurisdictional practitioner. In contrast, out-of-state lawyers who directly advise a client or provide other legal services, such as drafting documents, outside the direct supervision of an admitted lawyer in a New Jersey case are engaging in the unauthorized practice of law. If such lawyers do not seek pro hac vice admission under Rule 1:21-2 to appear in the case, they must register as multijurisdictional practitioners under Rule of Professional Conduct 5.5(b)(3).
The UPL Committee chose to issue the Opinion in response to a recent appellate division case, Johnson v. McClellan, 468 N.J. Super 562 (App. Div. 2021), in which a Pennsylvania lawyer (not licensed in New Jersey) assisted a client in the background in a medical malpractice action that was brought in New Jersey. According to the appellate decision, the plaintiff Johnson was represented in the action both by members of the New Jersey bar and also by a medical malpractice attorney who was admitted pro hac vice. However, Johnson apparently also sought the help of a Pennsylvania law professor, McClellan, who agreed to assist in the background. According to the UPL Opinion, McClellan “reviewed the complaint with the client, drafted an affidavit, communicated with expert witnesses, and otherwise assisted trial counsel, who was not a New Jersey licensed lawyer but was admitted pro hac vice in the case.” After the case ended, a fee dispute arose between Johnson and McClellan over the referral fee that McClellan received from the settlement proceeds. In support of her argument that McClellan should disgorge the referral fee, Johnson argued that McClellan was engaged in UPL because he assisted her in the medical malpractice action but was never admitted in New Jersey in any form. The Appellate Division concluded that McClellan did not engage in the unauthorized practice of law by assisting in the representation and instead concluded that the lawyer’s conduct fell within the temporary practice exception contained in New Jersey Rule of Professional Conduct (RPC) 5.5(b)(3)(iv). NJ RPC 5.5(b)(3)(iv) provides that a lawyer not admitted in New Jersey but admitted in another jurisdiction may engage in lawful practice in New Jersey if “the out-of-state lawyer’s practice in this jurisdiction is occasional and the lawyer associates in the matter with, and designates and discloses to all parties in interest, a lawyer admitted to the Bar of this State who shall be held responsible for the conduct of the out-of-State lawyer in the matter.”
Although the New Jersey Supreme Court apparently denied certiorari (see Johnson,249 N.J. 76 (2021)), the New Jersey UPL Committee, which is an arm of the New Jersey Supreme Court, took it upon itself to review the decision and issue Opinion 60 in response. Contrary to the Appellate Division holding, the UPL Committee concluded that McClellan was engaged in UPL. The Committee did not dispute that McClellan’s practice was “occasional,” however, the Committee took issue with the fact that McClellan did not associate directly with a New Jersey admitted lawyer (as required by NJ RPC 5.5(b)) and also did not register as a multijurisdictional practitioner, as required by NJ RPC 5.5(c). As a result, Opinion 60 concluded that the Appellate Division was wrong in Johnson v. McClellan, and that McClellan was engaged in UPL in New Jersey. (In a footnote, the Committee noted that while the Appellate Division’s decision is binding on the trial courts, the Supreme Court has authority to regulate the conduct of attorneys generally and the Committee had jurisdiction to issue advisory opinions that may be reviewed by the Supreme Court).
What Does Opinion 60 Mean For UPL In New Jersey?
Opinion 60 was issued with little fanfare (it was posted on the Court’s website on December 23, 2022) but raises a number of questions.
What are the UPL limits for an unadmitted lawyer who wants to help on a New Jersey case?
As detailed above, the UPL Committee’s main problem with the Appellate Division’s holding in Johnson v. McClellan was that if McClellan was engaged in temporary practice and therefore subject to the protections of NJ RPC 5.5(b)(3)(iv), then he needed to comply with the remainder of the rule and register as a multijurisdictional practitioner. The thrust of Opinion 60, therefore, is that there are certain activities that qualify as the practice of law in New Jersey (and therefore require compliance with NJ RPC 5.5) and other activities that do not. The Opinion provided several examples where out-of-state lawyers would not be required to register as a multijurisdictional practitioner under RPC 5.5(c):
- “An out-of-state lawyer in the pro hac vice lawyer’s firm can engage in lower-level activities under the direct supervision of the admitted lawyer, such as researching legal issues, drafting documents for review by the admitted lawyer, and accompanying the admitted lawyer in witness interviews without registering as a multijurisdictional practitioner.” For example, if a partner and a senior associate are admitted pro hac vice in a New Jersey case, it is fully permissible for other lawyers in the firm to provide background assistance on the case to the pro hac vice-admitted lawyers under their supervision. Similarly, under this reasoning, a New Jersey admitted lawyer in a large national firm could ask an associate in another office to help with a research task without requiring that associate to register as a multijurisdictional practitioner.
- “[O]ut-of-state lawyers with special expertise in the subject matter who assist trial counsel in the preparation of a New Jersey case are often practicing New Jersey law. If the consultation is lawyer-to-lawyer and does not involve direct interaction with the client, this activity is not considered the unauthorized practice of law and generally does not require registration as a multijurisdictional practitioner.” Under this scenario, a lawyer who may be retained as a subject matter expert (e.g. a securities expert or a lawyer with special knowledge of the issues in the case) would not be required to register as a multijurisdictional practitioner provided the lawyer with the specialized expertise is advising the other lawyers in the case. This distinction makes logical sense as it allows lawyers seeking to obtain specialized advice to cast a much wider net and there is also no risk of client harm as the subject matter expert is not directly advising the client.
- “Lawyers who serve as in-house counsel to a company that is engaged in New Jersey litigation often interact with outside counsel who represents the company in court. In-house counsel lawyers are an extension of the client itself. Provided in-house counsel works with outside counsel in the New Jersey court case, neither pro hac vice admission nor multijurisdictional practitioner registration is necessary.” Exempting in-house counsel from registering as multijurisdictional practitioners also makes sense. In addition to the corporate client having outside counsel for the matter, requiring in-house lawyers to register as multijurisdictional practitioners whenever they were working on a New Jersey matter with outside counsel would be burdensome and unnecessary.
In contrast, Opinion 60 concluded that out-of-state lawyers who “directly advise a client about a New Jersey case or who provide legal services, such as drafting documents, outside the direct supervision of an admitted lawyer, must register as a multijurisdictional practitioner. If the lawyer does not, the lawyer engages in the unauthorized practice of law.” Therefore, if an out-of-state lawyer is likely to have direct client contact or is expected to undertake substantive work on a matter, even if the lawyer is not intending to formally appear, it may be required for that lawyer to register as a multijurisdictional practitioner.
What about referral fees?
Opinion 60 also raises an interesting question about the ability to pay referral fees to out-of-state lawyers. The NJ RPCs, like many other states’ ethics rules, do not permit quid pro quo referral fees and instead require fees to be shared by the referring lawyer either performing a proportional amount of work in the case or agreeing to take joint responsibility for the matter. However, a lawyer who is not admitted in New Jersey cannot take joint responsibility for the matter or perform work on the case unless they are permitted to do so under the state’s UPL rules. In other words, an out-of-state lawyer seeking to collect a referral fee would either need to get admitted pro hac vice or qualify under one of the temporary practice exceptions in NJ RPC 5.5(b). As a result, any lawyers who intend to rely on NJ RPC 5.5(b) should look closely at Opinion 60 to determine whether they need to register as a multijurisdictional practitioner.
The Reach of Opinion 60
The most problematic part of Opinion 60 is the suggestion that a lawyer would need to register as a multijurisdictional practitioner whenever a lawyer “directly advise[s] a client about a New Jersey case” or “provide[s] legal services . . . outside the direct supervision of an admitted lawyer.” The implied premise is that these activities therefore constitute the “practice of law” in New Jersey. But it is not at all clear from Opinion 60 how far the Committee believes its conclusion reaches, though the concluding paragraph suggests that it should only be read to apply to “an out-of-state lawyer who practices New Jersey law in connection with a New Jersey court case.” For example, can a lawyer admitted in Pennsylvania advise their Pennsylvania-based client about an issue under New Jersey law without triggering NJ RPC 5.5? Similarly, if the client is a multinational corporation how much of a nexus must the matter have to New Jersey before the lawyer is found to be practicing law in New Jersey? The Opinion did not address these issues and instead cautioned that the determination of whether a lawyer is engaged in UPL in New Jersey is a “fact-sensitive inquiry” and that “out-of-state lawyers are encouraged to seek guidance before engaging in the practice of New Jersey law.”
Regardless, practitioners should be aware of the evolving guidance from the New Jersey courts and should carefully analyze the rules and regulations governing UPL and temporary practice as they may differ from other jurisdictions.