Legal malpractice, broadly defined, can be a tort in the form of professional negligence, such as a failure to file a document or to advise on a requirement under local law. Legal malpractice can also be alleged if an attorney fails to live up to contractual obligations set out in a retainer letter or representation agreement. Both tort and breach of contract could be considered violations of ethical duties under the American Bar Association's Model Rules, adopted in most states, or the ABA Model Code, as could failures to zealously represent a client, failures to address conflicts of interest or other mistakes that most lawyers should know enough to avoid. Accusations of malpractice could also arise when a lawyer breaches fiduciary duties to a client. Perhaps even a mistake or miscalculation leading to a wasting of assets could lead a client to point a finger back at a legal adviser and demand recompense.
Add another potential pitfall for the unwary legal professional: the unauthorized practice of law in a jurisdiction where he or she may not have ever realized he or she had practiced law. A simple off hand remark about the procedures, regulations and laws of another country that includes actual advice to a client could lead to an enormous amount of trouble.
Noted columnist Thomas Friedman informed us that "The World Is Flat." Every business and news journal, not to mention even the most weighty tomes directed to legal professionals, have focused on some aspect of globalization. By all measures, lawyers are not exempt from the phenomenon of intersections between the laws of many nations. More and more, attorneys are asked to deal with issues restricted not merely to the law of the state where they are licensed to practice, but fall under the laws of several states of the Union, if not the laws of several countries.
Lawyers rarely respond with answers like "I don't know," or "I'm not qualified to answer that question" when responding to inquiries from clients or potential clients. Lawyers happily embrace the roles of "counselor" as well as "advisor" as set forth in ABA Model Rule 2.1 and often counsel and advise broadly. Naturally, most corporate lawyers, when posed with questions about divorce and family law, criminal law or problems with speeding tickets generally dump these queries off on law school buddies who actually practice courthouse law and would know how to respond. An attorney focusing his practice on corporate law issues, even a broad range of corporate law issues, knows that he is not qualified, and generally not interested, in doing this kind of work.
Attorneys practicing with firms featuring multiple practice areas are also likely to shift intellectual property or tax or employment matters off to colleagues specializing in these and other areas.
What happens if the client inquiry focuses on a field of law in the practitioner's area of specialty, such as a question about taxation issues for a tax attorney or patents for a patent attorney, but the country where the law might apply is not the lawyer's own? In most cases, if the client were to say, "I have a question about German or Japanese or Brazilian law," most lawyers would know to respond that they were not licensed to practice in Germany, Japan or Brazil. More likely, however, is the situation where a question about U.S. law leads into a discussion of similar problems in other countries. For instance, a discussion about a multinational workforce and the employment law issues for the U.S. workers could easily lead to additional discussions about the employees based in Canada, Mexico, South America or elsewhere.
Rule 8.5 of the American Bar Association's Model Rules of Professional Conduct makes clear that the discipline and conduct rules of both the lawyer's home jurisdiction and the jurisdiction where the lawyer happens to be practicing may be applied. This rule makes sense when a lawyer licensed to practice law in Ohio tries a case in Texas. Most likely the rule would also have application if a lawyer sitting in New York City opined on a question of Florida environmental law.
If the attorney opines upon the trademark laws in Canada or Europe or the maritime laws of Australia, the question of the application of disciplinary rules becomes a bit more murky. Which law would apply if the client later decided the advice had adversely impacted an important business deal and turned to the lawyer expecting not only a refund and apology, but compensation as well? For a variety of reasons, the notion that businesses naturally take risks and then accept the results, good or bad, has been replaced with the concept of "blame the lawyers." When the blame does get shifted and a malpractice charge is made, one must ask what the lawyer's insurance carrier will have to say if the question revolves around advice gone bad in a country where the lawyer is not licensed to practice law.
Sadly, in some parts of the world, knowing the local law is not enough. One must know the lawmakers and those who execute the laws. In some countries the rule of law merely serves as a standard to which rulers vaguely aspire to achieve at some date in the future. If an American lawyer ends up giving "practical" advice, as opposed to legal advice, the malpractice implications could be devastating, especially if the "practical" advice both fails to meet U.S. standards of legality and/or fails to bring the desired result. It is the second failure that could lead a lawyer to have to defend giving such advice to more than just a disgruntled client. The discussion could end up involving a state bar or even criminal investigators and prosecutors.
One obvious technique to prevent accusations of malpractice in a country where a lawyer is not licensed to practice is to engage the services of local associate counsel, just as one would engage local counsel on complex litigation in a different part of the United States. The temptation for a U.S. attorney remains, however, to take the reports and recommendations from a colleague and add some additional spin to show the client that he participated in the process and is not simply serving as functionary, passing papers from the people doing the "real" work on the ground. The temptation may increase when dealing with issues in other English-speaking, common law based jurisdictions such as Australia, the United Kingdom or Canada. Our northern neighbor's laws must be considered with care, just as the individual U.S. states have their own laws and procedures; Canada too is a federation and includes one well-populated and commercially important province, Quebec, whose laws are based on a civil system.
Another temptation arises for lawyers in large, multinational law firms with offices in more than one country. If an attorney refers a matter to a colleague in his or her Paris or Tokyo office, yet continues to participate in the discussions with the client, is the attorney liable for the errors of the colleague overseas? If the attorney does not participate at all, has he or she breached a duty of loyalty to the client? The client is not likely to turn to a legal advisor across an ocean if a problem arises; the client will turn to the person at hand, the U.S. lawyer located on the same continent, if not in the same area code.
The European Union, with its many jurisdictions, faces the problem of lawyers providing advice on the laws of nations where they have no license on a daily basis. To that end, the Council of Bars and Law Societies of Europe ("CCBE") adopted and subsequently revised a Code of Conduct for Lawyers in the European Union. All 25 members of the EU have ratified and accepted the CCBE Code and are responsible for enforcing its provisions through their own regulations. Although groups such as the ABA and the International Bar Association have focused on the problem of cross border legal practices, both by multinational law firms and individuals, no federal or state laws in the U.S. have addressed the situation.
One development which may lead to changes in the way that lawyers handling matters for clients with international issues are regulated could be the possible future adoption of the General Agreement on Trade in Services ("GATS"). Just as the General Agreement on Trade and Tariffs ("GATT") attempts to impose some sort of order to the trade of goods across borders, GATS would do the same for services. GATS would govern how the World Trade Organization's member nations, including the United States, regulate service providers, including lawyers. The idea, of course, is to make it easy for regulated professionals such as lawyers to carry their practices across borders. Accountants already are subject to an agreement reached in 1998, the Disciplines for the Accountancy Sector. Some of the discussions at the WTO level have contemplated extending the Accounting Disciplines to the legal sector.
Passage and adoption of GATS should not be considered imminent, however. The wary practitioner should continue to think twice when giving advice that might involve the laws of another country.
Thomas W. Brooke is a Partner in the Washington, DC office of Holland & Knight LLP, where he practices in the firm's Intellectual Property Practice Group. He has spoken on legal ethics issues at seminars sponsored by a number of groups, including the ABA Section of Intellectual Property Law (ABA-IPL), the International Trademark Association (INTA) and the Intellectual Property Institute of Canada (IPIC). He can be reached at (202) 663-7271.