Many practitioners who appear before the Finan-cial Industry Regulatory Authority (FINRA)handle arbitrations and mediations which are venued in states in which they are not admitted to practice law. FINRA rules permit a party to an arbitration to be represented by a non-lawyer, or by a lawyer admitted in any state.1 Organizations staffed by non-lawyers, such as Stock Market Recovery Consultants Inc., advertise for and represent claimants in FINRA arbitrations in some jurisdictions.2 Some law firms and corporate law departments maintain national practices, representing parties in FINRA arbitrations, sometimes in jurisdictions in which the individual attorney of record is not admitted to practice law. Still other firms eschew brick and mortar offices altogether, and purport to practice law in cyberspace.3
But compliance with FINRA rules is not a free pass with state regulators. The practice of law is defined by the individual states, which grant plenary law licenses to and police the conduct of attorneys who appear and practice in their jurisdictions. Several states have held that an out-of-state lawyer who appears at an arbitration in the forum state is engaged in the unauthorized practice of law.4 And while attorney discipline by state bar counsel or grievance committees for unauthorized practice of law (UPL) is rare, unhappy clients have successfully avoided fees in cases in which their counsel made unauthorized appearances in arbitrations in jurisdictions in which they were not admitted. Moreover, some jurisdictions have successfully sued out-of-state practitioners to enjoin advertising for and representing clients in the forum state, even in alternative dispute resolution (ADR) proceedings.
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