New Jersey's New Rules For Unadmitted Attorneys -In-House Counsel And Multijurisdictional Practice

Any in-house attorney employed but not licensed in New Jersey or any other attorney not licensed in New Jersey who may periodically work in the state should pay close attention to two new rules issued by the New Jersey Supreme Court on September 10, 2003. These rules may provide such attorneys with "safe harbors" from any claims of the unauthorized practice of law in New Jersey. The first, Rule 1:27-2, creates a new limited license for in-house counsel within the admission to practice rules. The second, Rule of Professional Conduct (RPC) 5.5(b), adds multijurisdictional practice (MJP) provisions that allow attorneys licensed in other states to engage in certain temporary activities within New Jersey. Both rules take effect on January 1, 2004.

As with any matters concerning attorney practice and ethics obligations, individual attorneys and/or their general counsel should review and determine who is subject to the requirements of the rules (including out-of-state co-workers who may work in New Jersey from time to time). The New Jersey Corporate Counsel Association (NJCCA) will provide appropriate updates on this process to its membership.

Limited License for In-House Counsel. Initially, some questioned whether the limited license provision is mandatory. This appears to have been settled, however, by the Court on December 11, 2003. In a notice issued on that date, the Court indicates that application for the limited license is mandatory for any in-house counsel who work in New Jersey and who are not already members of the Bar of the State through the plenary licensing process.

An in-house counsel is defined in the Rule as "a lawyer who is employed in New Jersey for a corporation, a partnership, association, or other legal entity (taken together with its respective parents, subsidiaries, and affiliates) authorized to transact business in the State that is not itself engaged in the practice of law or the rendering of legal services outside such organization, whether for a fee or otherwise, and does not charge or collect a fee for the representation or advice other than to entities compromising such organization."

The general prerequisites for a limited license are that the attorney be admitted to practice law in another state and be in good standing in that state. The limited license will subject the attorney to the annual assessments made of other admitted attorneys, such as the New Jersey Lawyers' Fund for Client Protection. The limited license expires if the lawyer ceases to be employed for the organization originally listed in the license application (unless the lawyer can make the required licensing certifications for the new employer within 30 days of leaving the first employer). Under the limited license, an in-house counsel would still need to be admitted pro hac vice for court appearances and would only be allowed to represent the organizational employer, not individual employees of the organization.

In the December 11 notice issued by the Court, the Clerk issued the initial description of the process to apply for the limited license. The filing deadline is March 31, 2004 and the application fee will be $750. Supporting documentation will include, among a list of other things, a driver's license abstract and credit report. More detail about this application process can be found at the following website: www.njbarexams.org/incounsel.htm. The Clerk of the Court indicates that the required forms and instructions will be placed on the general web site of the Board of Bar Examiners (www.njbarexam.org) as soon as possible.

The December 11 notice also indicates that until a limited license is issued, the applicant shall continue to be subject to the requirements of the Supreme Court Unauthorized Practice of Law Committee's Opinion 14 (98 N.J.L.J. 399, May 1, 1975). This opinion can be found by visiting: lawlibrary.rutgers.edu/ethics/cuap/cua14_1.html. The Clerk also indicates that questions on the limited license process should be addressed to his attention at: Stephen W. Townsend, Esquire, Clerk of the Supreme Court, Hughes Justice Complex, P.O. Box 970, Trenton, NJ 08625-0970.

MJP Rules of Professional Conduct. The second rule is an amendment to the unauthorized practice of law restrictions to allow for MJP on a limited basis. The MJP provisions specify those temporary actions that an attorney without a New Jersey plenary license may engage in without violating the State's attorney practice rules. These temporary activities include the following: negotiations; arbitration, mediation or alternative dispute resolution; and investigations, discovery, interviews or depositions. For all these actions, the matter must relate to or have originated in the jurisdiction in which the lawyer is admitted to practice law outside of New Jersey. The lawyer who engages in the above activities and wants the protections of this new rule must be licensed and in good standing in all jurisdictions of admission. Such lawyer also consents to the jurisdiction of the Supreme Court and its Rules of Professional Conduct and must not hold himself or herself out as being licensed in the State of New Jersey.

New Jersey Supreme Court's Approach to MJP and In-House Licensing. In a word - unique. While most of the national debate on MJP over the last few years (by such groups as the American Bar Association (ABA), the New Jersey State Bar Association (NJSBA), and the Association of Corporate Counsel (ACC)) have included the in-house counsel issue within one overall set of MJP provisions, New Jersey's top court elected to separate the two. As discussed below, the Court was generally concerned with lawyers not admitted to practice in the State, but specifically separated in-house counsel from other unlicensed attorneys. While this may have been due to the existence of Opinion 14 regarding unlicensed in-house counsel, the outcome in creating Rule 1:27-2 separate from the RPC 5.5(b) does allow for the mandatory nature of the limited license.

The two rules are contained in the following document released by the Court on September 10, 2003: Administrative Determinations in response to the Report and Recommendation of the Ad Hoc Committee on Bar Admissions (administrative determinations apply to matters considered by the Court in its administrative capacity for overseeing the practice of law in the State).

In the preamble to the rules found in the Administrative Determinations, and as to issues pertaining to in-house counsel, the Court noted that it created an ad hoc committee on bar admissions ("Ad Hoc Committee") to consider and make recommendations for the following issues: 1) the admission of out-of-state lawyers by motion; 2) the status and oversight of in-house counsel (and transaction attorneys generally) who are not admitted in New Jersey; and 3) the issues relating to MJP (including those raised by the ABA and the NJSBA in relation to Model Rule of Professional Conduct 5.5).

The Ad Hoc Committee deliberated on these issues (and a few others not directly affecting in-house counsel) from approximately February 2001 until April 2003. In this process it requested public comment and held several public hearings. Correspondingly, NJCCA wrote to the Committee supporting rules to allow in-house counsel to practice without plenary admission to the Bar of New Jersey. (Note: this was part of a national effort supported by ACC and state chapters to promote some form of professional conduct "safe harbor" for in-house counsel not licensed in the state where they work.) The Commission on the Rules of Professional Conduct also considered MJP issues and its output was considered by the Court.

As to the three issues noted above, the Ad Hoc Committee recommended that the Court adopt rules for admission by motion; license and regulate in-house counsel; and modify the unauthorized practice of law Rules of Professional Conduct to address MJP issues. The Court rejected the first recommendation on admission by motion but approved the other two.

In approving of Rule 1:27-2, the Court did indicate that the language was consistent with and expanded upon Opinion 14. This approach was consistent with the views of the NJSBA, which wanted Opinion 14 to become the standard for a model rule (see NJSBA Report and Recommendations on Multijurisdictional Practice, March 2002).

As to the MJP language to end up in RPC 5.5, the Court noted that while the Ad Hoc Committee and Commission each opted for slightly different views of the ABA Model Rule 5.5, the Court elected to follow, in its words, the "more conservative" view of the Model Rule taken by the NJSBA (for a more detailed discussion on this matter see High Court Repeals New Jersey's Bona Fide Office Rule And Creates Limited License For Corporate Counsel, interview with Douglas S. Eakeley, Director at Lowenstein Sandler PC, in the December 2003 issue of The Metropolitan Corporate Counsel).

The Court will review its changes to the RPC 5.5 after three years and decide whether to retain or modify the language it has used to address MJP.

The above-referenced "Administrative Determinations" and the accompanying rules can be found by visiting the website: www.judiciary.state.nj.us/notices/reports/admin-deter-rpcs.pdf. General matters about New Jersey courts and the Supreme Court and ethics opinions can be found by visiting the state judiciary website: www.njcourtsonline.com. Ethics opinions (such as Opinion 14) can be found at the Rutgers-Camden Law School website referenced above. The Board of Bar Examiners web site is: www.njbarexams.org. For information about the status of efforts in other states in adopting MJP language or Model Rule 5.5, visit www.acca.com - click on the "advocacy" link and select "MJP". The nearby "ethics" link is also informative.

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