ABA Ethics Rules on Choice of Law in Multi-Jurisdiction Practice

Starting a law firm that operates in multiple jurisdictions can be lucrative, but also confusing with multiple, competing ethics rules.  In March 2023, the ABA issued Formal Opinion 540 to provide guidance to lawyers who practice in. more than one jurisdiction.

Model Rule 8.5 Offers Guidance for Lawyers Running a Firm in Multiple Jurisdictions

Formal Opinion 540 relies on ABA Model Rule 8.5 which outlines how lawyers should determine which jurisdiction’s ethics rules to follow.  As a general matter, Model Rule 8.5 provides that:

  • For matters pending before a tribunal, lawyers must comply with the ethics rules of the jurisdiction in which the tribunal sits.
  • For all other conduct, lawyers must comply with the ethics rules of the jurisdiction in which the conduct occurs, unless the predominant effect of the lawyer’s conduct is in a different jurisdiction.

Formal Opinion 540 offers guidance on how to determine the “predominant effect” of a lawyer’s conduct, suggesting factors such as the client’s location, the location of the lawyer’s office, and the jurisdiction with the greatest interest in the lawyer’s conduct.  But what’s more helpful than just a theoretical discussion are the five scenarios that Formal Opinion 540 discusses.

Fee Agreements Are Generally Governed by the Ethics Rules of Jurisdiction Where Executed

For fee agreements, Formal Opinion 540 instructs the lawyer to adhere to the ethics rules of the jurisdiction in which the fee agreement is executed and the predominant effect of the agreement occurs.  To remove any doubt, lawyers can include a clause in their engagement agreement specifying which jurisdiction’s ethics rules govern.

Law Firm Ownership Structure Governed by State Where Firm Is Located 

Law firm ownership, specifically the situation where a lawyer from a state that allows nonlawyer partners in law firms seeks to appear pro hac vice in a state that does not allow nonlawyer partners, would still be governed by the state where the firm is located and not the state where admission is sought.  This is because a lawyer’s firm structure is not “conduct in connection with a matter pending before a tribunal” and therefore the ethics rules of the lawyer’s home state apply.

Professional Misconduct Governed by the State Where the Incident Occurred

What state rules govern reports of misconduct? Formal Opinion concludes that the lawyer would be subject to the ethics rules of the state in which the misconduct occurred.

Confidentiality Is Governed by State Where Disclosure Would Have Predominant Effect

Confidentiality duties – specifically the situation where a lawyer is licensed in two states with conflicting rules on disclosing information to prevent harm – are governed by the rules of the jurisdiction where the “predominant effect” of the lawyer’s conduct occurs.

Lateral Hires

The final scenario addressed by Formal Opinion 540 deals with lateral law firm hires who may have a conflict of interest.  Here, the choice of law analysis depends on whether the conflict involves litigation or a transactional matter.

As remote practice becomes more common, the number of lawyers practicing in two or more jurisdictions is likely to increase.  Formal Opinion 540 is therefore a timely discussion of an issue that affects many lawyers.