Can a lawyer admitted in New York, in good standing, represent a client in an arbitration taking place in a state where the lawyer isn't admitted to practice law?

Here is the scenario. You've been asked to represent a client who is a New York resident, in an arbitration being heard in New Jersey. Moving the hearing to New York City isn't an option because the arbitration clause specifies Newark, N.J. as the site. Your adversary has refused your request to have the hearing moved. The matter involves a contract dispute. The contract specifies that for all purposes, New Jersey law will govern. You're admitted in New York and you're in good standing, but you're not admitted in New Jersey. Most of your practice involves contract dispute litigations.

New York doesn't look kindly on a lawyer, admitted in this state, practicing law in a state where the lawyer is not admitted. The State Attorney General has the power to bring a civil action for the unlawful practice of law. N.Y. Judiciary Law §476-a. The New York State Rules of Professional Conduct, Part 1200, §5.5 provide:

(a) A lawyer shall not practice law in a jurisdiction in violation of the regulation of the legal profession in that jurisdiction.

(b) A lawyer shall not aid a nonlawyer in the unauthorized practice of law.

5.5(a) prohibits the practice of law "in violation of the regulation of the legal profession in that jurisdiction." As far as New York is concerned, the rules of the foreign jurisdiction determine if New York's professional rules are offended. In the example above, the rules and regulations governing the practice of law in New Jersey come into play.

New Jersey has a special rule that applies in our situation:

The New Jersey Rules of Professional Conduct

Rule 5.5(b)(3)(ii):

(b) A lawyer not admitted to the Bar of this State who is admitted to practice law before the highest court of any other state, territory of the United States, Puerto Rico, or the District of Columbia (hereinafter a United States jurisdiction) may engage in the lawful practice of law in New Jersey only if:

(3) under any of the following circumstances:

(ii) the lawyer engages in representation of a party to a dispute by participating in arbitration, mediation or other alternate or complementary dispute resolution program and the services arise out of or are reasonably related to the lawyer's practice in a jurisdiction in which the lawyer is admitted to practice and are not services for which pro hac vice admission pursuant to R. 1:21-2 (N.J. Court Rules, R. 1:21-2) is required … .

New Jersey is not alone. Connecticut, Massachusetts, New York, Pennsylvania and Vermont, states sharing borders with New York, have rules that are for the most part identical. These rules are all patterned after the American Bar Associations Model Rules of Professional Conduct, Rule 5.5 (c)(3). These rules make sense following a public policy that recognizes arbitration to be a private arrangement allowing party control over terms for resolving disputes. One can easily appreciate a party's desire to have the lawyer most familiar with the history of the negotiations and the reasons for the underlying contract terms, directly involved should a dispute arise. In a private arrangement having minimal contact and reliance on the state and/or the judicial system, why shouldn't a party be entitled to an attorney of that party's own choosing? As Judge Edward Weinfeld of the Southern District of New York famously observed in Williamson, P.A. v. John D. Quinn Constr.,  537 F. Supp. 613 (1982), "… an arbitration tribunal is not a court of record; its rules of evidence and procedures differ from those of courts of record: its fact finding process is not equivalent to judicial fact finding; it has no provision for the admission pro hac vice of local or out-of-state attorneys."

Digging deeper, these rules have a number of elements that must be satisfied.

1. The out of state attorney must be admitted before the highest court of another state.

2. The lawyer must be in good standing in the state where admitted.

3. The representation in state must be in an arbitration, mediation or other alternate or complementary dispute resolution program.

4. The services provided must be reasonably related to the lawyer's practice in the state where admitted.

5. The service must be of a nature that pro hac vice admission isn't required.

Of the five requirements, the one most likely to create the greatest concern is number 4, "The services provided must be reasonably related to the lawyer's practice in the state where admitted." The language in the Rule suggests two problems you should resolve before you agree to take on representation.

The Federal Arbitration Act and the arbitration statutes adopted in the six states cited above in this article don't speak to issues involving the unauthorized practice of law and arbitration. The statutes adopted in Massachusetts, Pennsylvania, New Jersey, Pennsylvania and Vermont provide a party may be represented by a lawyer; but there is no mention of the need for the attorney to be licensed or admitted pro hac vice. None of these laws define what services are "reasonably related to" an out of state lawyer's practice back in his or her home state. The American Bar Association (ABA) has provided some guidance (Model Rules of Professional Conduct, Rule 5.5, Comment 14) on what the requirement probably means:

A variety of factors [that] evidence such a relationship and is satisfied where the practice focuses on matters involving a particular body of federal, nationally uniform law(s), or foreign or international law … . In addition, the services may draw on the lawyer's recognized expertise developed through the regular practice of law on behalf of clients in matters involving a particular body of federal, nationally-uniform, foreign, or international law.

Comments on rules issued by the ABA have no legal effect. The final determination is up to the courts in every state. It's hard to find a reason why a court would reject the ABA's reasoning. An attorney engaged in an active arbitration practice focused on commercial contract disputes, retained as arbitration counsel, would appear to meet the requirement regardless as whether the arbitration agreement is subject to the Federal Arbitration Act, any of the six state statutes or any of the Rules of Professional Conduct adopted in these six states.

Returning to the problem at hand, it turns out that to date there are no New Jersey cases on point. However, in 1994 the New Jersey Supreme Court's Committee on the Unauthorized Practice of Law, issued Opinion #28, 3 N.J.L 2459. The Committee found "… an out of state attorney's representation of a party in an arbitration proceeding conducted under the auspices of the AAA in New Jersey does not constitute the unauthorized practice of law." Because of the dearth of case law on point, the Committee relied on opinions issued by bar association ethics authorities interpreting and applying the New York rules. The Committee cited with approval the 1975 Report of the Committee on Professional Ethics of the Association of the Bar of the City of New York ("…representation of a party in an arbitration proceeding by a non-lawyer or a lawyer from another jurisdiction is not the unauthorized practice of law."). Record of the Association of the Bar of the City of New York, Vol. 30, No. 5/6 (1975). In 1991, the same committee of the Bar Association of the City of New York revisited and affirmed its prior opinion; stating that its "position is consistent with that of the American Bar Association" (Record of the Association of the Bar of the City of New York, Vol. 49, No.1 (1991) (emphasis added)) and acknowledged that "… the most prominent organizations in the field of arbitration expressly recognize the parties' right to be represented by whomever they choose." Given the positive connection between the New York rule and the position of the American Bar Association, there is good reason to expect courts everywhere will accept the guidance of the American Bar Association.

The Committee also cited favorably an opinion of the Virginia Committee on Legal Ethics and the Unauthorized Practice of Law (UPL Op. No 92 (May 2, 1986)): "… it is not the unauthorized practice of law for a non-Virginia-licensed attorney to present evidence and argue matters of law before an arbitration panel of the American Arbitration Association in Virginia.

As one of the few courts to discuss the issue observed:

In New Jersey, an out-of-state attorney representing a party in an arbitration proceeding does not constitute the unauthorized practice of law. N.J. Comm. Unauth. Prac. Op. 28, 1994 WL 719208 (1994). New Jersey's Committee on Unauthorized Practice aligned itself with a New York report concluding that "representation of a party in an arbitration proceeding by a non-lawyer or a lawyer from another jurisdiction is not the unauthorized practice of law." (quoting a 1975 report by the Committee on Professional Ethics of the Association of the Bar of the City of New York). Johnson v. Nextel Communications, Inc., 2009 U.S. Dist. LEXIS 35137, at 27-28 (J. G.B. Daniels, S.D.N.Y.)

To date, no court in New York, New Jersey or any other state sharing a border with New York, has declared an unadmitted attorney to have violated a local rule of professional conduct simply because the contract being administered in an arbitration requires application of laws of a state where the attorney isn't admitted.

Conclusion

Three guiding principles govern when an attorney appears in an arbitration in a state where the attorney isn't admitted.

1. Arbitration is unique, being an alternative to litigation and not a substitute.

2. Arbitration proceedings held in New York, New Jersey or the other states sharing a border with New York, are conducted without a mandate for attorneys from out-of-state to apply for pro hac vice admission.

3. Clients are entitled to be represented by whomever they want.

These principles are deeply engrained in the traditions and practices that have supported the exceptions provided for in state rules for professional conduct. Any attorney concerned about taking on a matter involving an arbitration in a jurisdiction where he or she is not admitted needs to carefully review the rules for professional conduct then in effect in that state. If those rules contain a provision patterned after the ABA Model Rules, Rule 5.5(c)(3), there should be no cause for concern.

Paul Bennett Marrow is an attorney and arbitrator. He is a member of numerous panels, including the commercial panel and complex case panel at the American Arbitration Association, and teaches domestic arbitration at New York Law School. He can be reached at [email protected].