Regional, national and even global practices are no longer unusual. As a result of increased competition in the legal industry, coupled with rapidly developing technology, many law firms and attorneys have practices that reach beyond the borders of their physical locations. Perhaps more importantly, their clients are often located in multiple states or other countries.
Although practices that cross state lines are common, they can create some additional risks. Indeed, multistate practices may be more likely to receive claims for potential unauthorized practice of law or other claims under the tort and contract laws of multiple states. It can also be difficult to navigate sometimes-inconsistent ethics rules in various states.
One of the biggest risks for lawyers with multistate practices is that they could be subject to the jurisdiction of another state. In addition, the law practice (and the attorneys involved) could be forced to defend themselves in a location where they maintain no physical presence, subject to rules and laws regarding professionalism and malpractice that are new and different from those where the law practice operates.
This is what happened recently to a firm that represented a client in an employment dispute in Washington, D.C. In Xie v. Sklover & Co., LLC, 2017 U.S. Dist. LEXIS 77766, 2017 WL 2266767 (D.D.C. May 23, 2017), a D.C.-based client retained a New York employment law firm to represent her in a dispute with her employer, whose headquarters were located in the district. The New York firm had no office in the district, and the partners (who were not admitted in Washington) never traveled to the district during their representation of the client.
But when the representation went awry, the client filed a malpractice suit in the U.S. District Court for the District of Columbia against the law firm's successor and two partners, among others. The defendants moved to dismiss, arguing that the court lacked personal jurisdiction. The court, however, denied the motion. The judge reasoned that, because the partners (and the predecessor firm) had agreed to represent the client in a matter with a "substantial connection" to the district, there were equitable grounds for hearing the malpractice claims arising from that representation.
Under this holding, law firms and their attorneys may be subject to the jurisdiction of a state (or district) in which a client is located, even if the firm has no physical presence there and the attorneys never step foot in that jurisdiction.
What is more, assessing personal jurisdiction varies from one state to the next. For example, Florida courts look at whether a tortious act was committed in the state or a tortious act arising out of an act or omission occurring outside the state caused injury to a person or property inside the state. If established, due process is assessed. The Supreme Court of Mississippi has similarly held that a single act targeted at Mississippi is sufficient to confer specific personal jurisdiction if that act gives rise to the claim at issue. New York also exercises long-arm personal jurisdiction if there is a sufficient nexus between the defendant's contacts with the state and the legal dispute at issue.
Other states apply different standards. In Texas, the defendant attorneys must have intended the harm at issue, or the court will likely conclude that the exercise of personal jurisdiction runs afoul of their due process. The Court of Appeals of Texas has explained that the foreseeability of the injury occurring in Texas and an impact on that state alone is insufficient to sustain personal jurisdiction. Furthermore, that court has separately noted that the interests of the state of Texas in protecting its citizens against torts is not sufficient in and of itself to invoke personal jurisdiction against an out-of-state attorney who allegedly committed a tort outside of the state, even if that tort was intentional.
The risk of uncertainty regarding jurisdiction is not limited to the United States. Attorneys often have clients located around the world. Accordingly, the risk of being subject to a foreign jurisdiction can extend to other countries.
For example, the province of Ontario, Canada, generally considers an attorney to be practicing law if the attorney gives legal advice on the laws of Ontario or the laws of Canada applicable to Ontario. Thus, an attorney could be practicing law in Ontario without ever physically entering that province. Conduct that may be construed as practicing law includes giving legal advice regarding Ontario law by telephone, email or other written correspondence that crosses provincial or international borders.
However, this is not to say that attorneys could not or should not develop robust multistate practices. In fact, in most jurisdictions, an attorney is deemed to be practicing law in the jurisdiction in which they are located, reducing the risk of an allegation of unauthorized practice of law. Although most representations across jurisdictional lines are entirely proper, attorneys with practices that cross domestic and international borders can consider various options, out of an abundance of caution, to help avoid even meritless claims.
First, attorneys can associate with local counsel or directly employ attorneys licensed in the other state. Second, if the law practice anticipates ongoing relationships with clients in the other state, it can ask existing attorneys to become members of the bar in that state, which in many cases may simply involve submitting a waiver application for admission. Finally, law firms can utilize disclaimers that exclude a reliance on state specific facts or interpretation of another jurisdiction's law from the scope of the services rendered. Of course, law firms may need to consider whether such disclaimers undermine the overall value of their legal opinions.
Before entering into an attorney-client relationship, it is helpful to consider carefully the risks that the laws of another jurisdiction might apply and then decide whether to assume those risks. If so, attorneys may need to familiarize themselves with the relevant rules of professional conduct and the risks of legal malpractice in the other state and be prepared to defend themselves there.