Owen Bonheimer & Paul Supple, UNAUTHORIZED PRACTICE OF LAW BY U.S. LAWYERS IN U.S.‑MEXICO PRACTICE, Georgetown Journal of Legal Ethics (Summer 2002).

INTRODUCTION

While the media often reports on Mexicans laboring in the United States (U.S.) without work authorization, little is said of the possibility that private lawyers licensed in the U.S. are engaged in U.S.‑Mexico legal practice without authorization to practice law in Mexico. Yet just as U.S. demand for migrant labor grows, so does demand for legal services across the Rio Grande. In the decade prior to 1993, annual U.S.‑Mexico trade in legal services had grown twenty‑fold, to $19 million. [FN1] Trade and investment between the U.S. and Mexico continues to grow as the North American Free Trade Agreement (NAFTA) is further implemented and the Free Trade Area of the Americas (FTAA) is negotiated. [FN2] Annual trade between the two countries increased twenty‑six percent in 2000, to a record $248 billion. [FN3] Annual U.S. direct investment in Mexico grew forty‑seven percent in the three years before the turn of the century, to $35 billion. [FN4] Global law firms in the U.S. have responded by expanding their Mexican operations. [FN5] At least fifteen U.S.‑based global firms have established foreign offices in Mexico. [FN6] As international legal scholars have observed, "the era of the multinational law firm has clearly arrived." [FN7]

The era of transnational legal ethics has not yet arrived in North America. U.S. and Mexican regulation of transnational legal services is neither integrated nor harmonized. Unlike transnational European lawyers, U.S. lawyers engaged in U.S.‑Mexico practice have no regional code of ethics upon which to rely. [FN8] While NAFTA provides only limited guidance on issues of professional conduct, [FN9] international regulation provides even less. The International Code of Ethics for the Legal Profession, adopted in 1956 and amended in 1988 by the International Bar Association (IBA), has "not been widely‑cited or accorded the force of law." Thus the U.S. lawyer engaged in U.S.‑Mexico practice operates in a tangled web of U.S. and Mexican national norms prohibiting the unauthorized practice of law (UPL). [FN11] Puzzled as to exactly how UPL norms of the two countries interrelate, [FN12] many U.S. lawyers may raise the specter of UPL in their transnational practices. [FN13]

This Note will explore how U.S. and Mexican UPL norms interrelate to prohibit UPL by U.S. lawyers engaged in U.S.‑Mexico practice. The issue of UPL in U.S.‑ Mexico practice by U.S. lawyers is only beginning to emerge onto the agenda of regulators and may not appear on the radar of U.S. or Mexican disciplinary authorities for many years. Part I will discuss U.S. and Mexican UPL norms governing U.S. lawyers engaged in U.S.‑Mexico practice, including recent developments in the evolution of these norms. Part II will discuss the possibility of enforcement of these norms by disciplinary authorities in Mexico and the U.S. Part III will discuss recent developments in UPL case law in the U.S. and their implications for the regulation of UPL in U.S.‑Mexico practice.

I. U.S. AND MEXICAN NORMS RELATING TO TRANSNATIONAL UPL

The U.S. lawyer engaged in U.S.‑Mexico practice works on matters connected with both countries and must therefore understand the operation of both the U.S. and Mexican UPL norms. Model Rule 5.5 provides the basic prototype for U.S. UPL norms. Mexican UPL norms are not as harmonized.

A. MODEL RULE 5.5(A) AND THE U.S. NORM AGAINST UPL IN A FOREIGN JURISDICTION

Model Rule 5.5(a) states that the U.S. lawyer shall not practice law "in a jurisdiction where doing so violates the regulation of the legal profession in that jurisdiction." [FN14] Under this provision, violation of Mexican UPL norms would appear to trigger a reciprocal violation of the Model Rule. Yet the precise implications of Model Rule 5.5(a) for the U.S. lawyer engaged in U.S.‑ Mexico practice depend upon whether Model Rule 5.5(a) applies to transnational practice at all, and, if so, what Model Rule 5.5(a) means by practice "in" a foreign jurisdiction. [FN15] Neither the text of the Model Rules nor recent ABA proposals to amend them provide definitive answers to these questions.

1. APPLICABILITY OF MODEL RULE 5.5(A) TO TRANSNATIONAL PRACTICE

Other Model Rules and their interpretation suggest that Model Rule 5.5(a) is international in scope. Had the ABA House of Delegates meant to limit the scope of Model Rule 5.5(a) to national practice, it could have done so, as it did for Model Rule 8.5. [FN16] Yet, the ABA House of Delegates did not adopt any comments limiting application of Model Rule 5.5 to the domestic context. [FN17] Moreover, the ABA Committee on Ethics and Professional Responsibility has said that neither the Model Rules nor their legislative history suggest that the term "jurisdiction," as used in the Model Rules, excludes jurisdictions outside the U.S. [FN18] Therefore, Model Rule 5.5(a) appears to apply to U.S.‑Mexico practice by U.S. lawyers. The issue cannot be definitively resolved, though, unless Rule 5.5 is amended or a disciplinary authority issues a directly relevant definition. [FN19]

It is also unclear what it means to practice "in" a jurisdiction under Model Rule 5.5(a). The Model Rules do not define this term, perhaps to ensure deference to the foreign jurisdiction's own authority to define what it means to practice in the foreign jurisdiction. However intentional, this ambiguity in Model Rule 5.5(a) has led to inconsistent interpretations of the phrase "in a jurisdiction" by U.S. states. Interpretations have ranged from the lawyer's physical presence in the foreign jurisdiction to mere communication with a client in the foreign jurisdiction. [FN20] The Maryland Bar has even suggested that Internet advertising could constitute practicing in a jurisdiction. [FN21] If so, then almost every U.S. lawyer engaged in U.S.‑ Mexico practice (and even many U.S. lawyers who are not practicing in this area but whom maintain a website accessible from Mexico) could be construed as practicing "in" Mexico. A comment articulating the meaning of the phrase "in a jurisdiction" as used in Model Rule 5.5(a) is necessary.

2. RECENTLY PROPOSED AMENDMENTS TO MODEL RULE 5.5

The ABA Commission on Multijurisdictional Practice (MJP Commission) and the ABA Ethics 2000 Commission have both recently proposed amendments to Model Rule 5.5, which are slated for consideration by the ABA House of Delegates in late 2002. [FN22] In addition, an independent coalition of bar associations has offered an alternative version of Model Rule 5.5: the Common Sense Proposal for Multijurisdictional Practice. [FN23] None of these proposed amendments clarify what constitutes practice "in" a foreign jurisdiction under Model Rule 5.5.

The MJP Commission has proposed an exception to Model Rule 5.5(a) for the out‑of‑state lawyer providing temporary in‑state legal services that "draw upon the lawyer's recognized expertise developed through the regular practice of law on behalf of clients in matters involving a particular body of ... foreign, or international law." [FN24] The MJP Commission does not propose safe harbors for in‑state lawyers practicing in other countries. [FN25] Thus amendments proposed by the MJP Commission would not eliminate the possibility that violation of Mexican UPL norms by the U.S. lawyer could trigger a violation of Model Rule 5.5(a) in the U.S. lawyer's home state. [FN26] The amendments proposed by the ABA Ethics 2000 Commission have not even included a safe harbor for out‑of‑state lawyers engaged in temporary in‑state practice governed by international law or the laws of a foreign nation. [FN27] Of course, the Ethics 2000 Commission recommendations may be revised in light of the MJP Commission Final Report. [FN28]

Thus none of the proposed amendments to Model Rule 5.5(a) would affect the norm against UPL by in‑state lawyers in foreign countries. Practice by U.S. lawyers in Mexico in violation of Mexican UPL norms could still trigger a reciprocal violation of Model Rule 5.5(a), suggesting that the U.S. lawyer engaged in U.S.‑Mexico practice must comply with Mexican UPL norms.

B. STRATEGIES FOR COMPLIANCE WITH MEXICAN UPL NORMS

The U.S. lawyer engaged in U.S.‑Mexico practice could seek to comply with Mexican UPL norms in four ways: (1) earning a Mexican law degree; (2) obtaining a foreign legal consultant license (an FLC license); (3) engaging in work characterized as something other than the practice of law; and (4) hiring correspondent counsel.

1. EARNING A MEXICAN LAW DEGREE

The U.S. lawyer can become authorized to practice law in Mexico by earning a Mexican law degree (licenciado en derecho), which requires a course of study at a Mexican law school that usually lasts five years. A legal education in one Mexican state functions as a license to practice law throughout Mexico under Article 121(V) of the Mexican Constitution. [FN29] Recognition formally occurs when the Mexican Bureau of Professions of the Ministry of Education (Direccion General de Profesiones) issues a practice certificate (cedula professional) to the degree holder. [FN30] In Mexico there is no bar exam and bar associations (colegios de abogados), whose membership is strictly voluntary, do "not play a significant role in the ordinary attorney's professional life. Only a small percentage of practicing [Mexican] lawyers belong to [a bar] association." [FN31] The U.S. lawyer engaged in U.S.‑ Mexico practice, however, might not view earning a Mexican law degree as a realistic compliance strategy. After seven years of postsecondary education to become licensed in the U.S., very few U.S. lawyers would have the time or resources for an additional five years of study at a Mexican law school. [FN32]

2. OBTAINING THE FOREIGN LEGAL CONSULTANT LICENSE IN MEXICO

In theory, the U.S. lawyer should be able to secure a more limited right to practice in Mexico by obtaining an FLC license from the Mexican Bureau of Professions, [FN33] which must establish standards for granting FLC licenses to foreign lawyers pursuant to NAFTA. [FN34] The difficulty with this compliance strategy is that Mexico has not issued any FLC licenses and does not appear to be considering any procedure for their issuance. [FN35] Further, there is little possibility for public or private enforcement of the

NAFTA FLC license obligation.

The U.S. might seek to compel Mexico to offer the FLC license by petitioning a NAFTA Panel. [FN36] A court may not grant this petition if Mexico argues that the FLC license provision in the NAFTA Annex is superseded or circumscribed by another provision in the same annex explicitly permitting local knowledge requirements. [FN37]

In addition, private parties could try to compel issuance of the FLC license in an amparo proceeding in Mexican court against the Bureau of Professions. Similar to a writ of mandamus, the Mexican writ of amparo can compel a non‑ judicial government official to comply with the law. [FN38] Although a Mexican license to practice law was awarded in an amparo proceeding to a Spanish lawyer more than fifty years ago, there have been no reported attempts by U.S. lawyers to obtain the FLC license this way and the amparo is not generally used to regulate foreign law degrees. [FN39]

The General Agreement on Trade in Services (GATS) is even less likely to compel issuance of the FLC license because Mexico is only bound to GATS commitments with respect to services Mexico lists on its GATS Schedule. [FN40] Legal services are not on Mexico's original GATS Schedule or any of its three amendments. [FN41]

Even if the Mexican GATS Schedule did include legal services, Mexico could still argue that U.S. lawyers already receive national treatment under GATS or that U.S. and Mexican legal services are not "like services" under GATS. [FN42] First, Mexico already allows U.S. lawyers to earn the Mexican law degree, which is the same practice qualification imposed upon Mexican nationals. [FN43] Thus Mexico arguably treats U.S. lawyers as well as it treats Mexican nationals.

Second, GATS obligations only apply to like services. [FN44] The services U.S. lawyers provide are not like those of Mexican lawyers. U.S. lawyers practice in a common law system while Mexican lawyers practice in a civil law system. [FN45] Civil law practice is based upon application of the civil code, rather than the analogical application of case law used in a common law tradition. Civil law lawyers "'see' and 'feel' the law differently." [FN46] Unlike U.S. lawyers' common law training, Mexican civil law lawyers learn the law in isolation, at a distance from facts and particulars; they learn through the lecture format instead of the Socratic method; they study law as an undergraduate focus, rather than in a separate graduate school; and they learn and practice the law in Spanish, rather than in English. [FN47] Mexican lawyers are trained differently, acquire different skills, inhabit different legal systems, and speak different languages than their U.S. counterparts. While any one of these factors taken in isolation may not indicate that Mexican and U.S. legal services are not "like services," when combined they suggest that the services Mexican lawyers provide may not be

sufficiently like the services U.S. lawyers provide to implicate a national treatment obligation. Of course, if Mexico were to include legal services on its GATS schedule issue the FLC license to foreign lawyers from a country other than the U.S., then the GATS most‑favored‑nation (MFN) treatment obligation, which requires that Mexico not discriminate between its treatment of like services from different foreign countries, could be invoked by the U.S. to compel the issuance of the FLC license to U.S. lawyers. [FN48]

In any event, until Mexico actually issues the FLC license, whether voluntarily or by compulsion, U.S. lawyers practicing in Mexico without a Mexican law degree will continue to in a regulatory vacuum. This vacuum is filled only with stop‑gap measures, such as inclusion of the language "foreign law specialist" on the U.S. lawyer's non‑resident work visa. [FN49]

3. ENGAGING IN NON‑COURTROOM PRACTICE

Some practitioners have suggested an alternative approach to compliance with Mexican UPL norms: practicing outside the Mexican courtroom and characterizing services as non‑legal. For example, U.S. lawyers might characterize their Mexican transactional practices as a consulting business. [FN50] A prominent Mexican attorney has advocated this strategy arguing that under Mexican custom, "the practice of the law strictly defined is the practice of the law in a court or other judicial proceeding." [FN51] While such a narrow definition of the practice of law does not appear to be codified in Mexican law, accepted principles of customary practice are valid sources of professional conduct norms in Mexico. [FN52] Another Mexican attorney explains that in Mexico, "[c]ontracts are drafted by accountants very often ... and it is not considered [the] practice of law." [FN53] Even still, there is no consensus that the Mexican definition of practice of law is limited to courtroom practice. For example, another Mexican attorney argues that the practice of law in Mexico includes such non‑courtroom activities as investigation, teaching, consultation, and public service, for which students are prepared in Mexican law schools. [FN54] Another likely problem with unauthorized practice outside of the courtroom is that certain types of non‑ courtroom practice in Mexico are the province of the public notary (notario publico). [FN55]

Even if the strategy of characterizing services as non‑legal were deemed compliant with Mexican UPL norms and thus with Model Rule 5.5(a), other Model Rules would still regulate the conduct of a lawyer engaged in this strategy. Model Rule 1.1 would still require the U.S. lawyer to conduct the representation with competence, with the purpose of protecting the public from incompetent representation. [FN56] Also, Model Rule 1.4 requires the lawyer provide the client with information necessary to make an informed decision. [FN57] Model Rule 1.4 would be violated if the U.S. lawyer tells a client that his services are not legal in nature knowing that the services are of a legal nature. [FN58] In addition, the claim that the lawyer's services in Mexico are not legal in nature could violate Model Rule 7.1, which states that the lawyer "shall not make a ... misleading communication about the lawyer or the lawyer's services." [FN59] A client could be mislead by such a claim because the client might not understand the subtle and perhaps improper distinction between services which are legal and non‑legal in nature. In all, trying to characterize services rendered in Mexico but outside the Mexican courtroom as non‑legal is a strategy that is novel at best, and dangerous at worst.

4. HIRING FOREIGN COUNSEL

The first three compliance strategies examined here are fraught with difficulty. Earning a Mexican law degree is time consuming. Obtaining the FLC license is not yet possible. The strategy of avoiding the courtroom and characterizing services as non‑legal is of untested legal and ethical validity. Therefore, most often the U.S. lawyer will simply hire foreign counsel. [FN60] Even when working inside Mexican borders, the prudent U.S. lawyer hires Mexican counsel to advise on Mexican law. [FN61]

Engaging foreign counsel still requires careful attention to ethical concerns. [FN62] First, it is a violation of Model Rule 5.5(b) to hire as foreign counsel someone who is not authorized in the foreign jurisdiction to practice as a foreign lawyer. [FN63] Moreover, a lawyer who refers a client with an issue of foreign law to someone not licensed to give advice on foreign law may be aiding and abetting a UPL violation. [FN64] To avoid such a charge, the U.S. lawyer should verify Mexican counsel's authorization to practice in Mexico by obtaining a copy of the lawyer's cedula profesional or confirming with the Ministry of Education that the lawyer holds a Mexican law degree. [FN65] If the Ministry confirms the degree has been conferred, then the U.S. lawyer can make the referral or draw upon the foreign lawyer's advice when advising the client on issues of foreign law. [FN66] The U.S. lawyer still remains responsible for advice provided by Mexican counsel the U.S. lawyer channels to his client. [FN67] Finally, in working with foreign counsel, U.S. lawyers must still take care to avoid violation of UPL norms in the foreign counsel's licensing jurisdiction, and violation of Model Rule 5.5(a). [FN68]

II. POSSIBILITY FOR ENFORCEMENT OF MEXICAN UPL NORMS AGAINST THE U.S. LAWYER

A U.S. lawyer engaged in U.S.‑Mexico practice in violation of Mexican UPL norms might not be deterred by the mere existence of these norms. Deterrence may depend on more vigorous enforcement of the norms. Yet there are no known cases, either in Mexico or the U.S., applying sanctions to the U.S. lawyer for

violation of Mexican UPL norms. Thus it is only possible to speculate on the possibility for the enforcement of UPL norms against U.S. lawyers engaged in U.S‑Mexico practice.

A. ENFORCEMENT BY MEXICAN DISCIPLINARY AUTHORITIES

Two key elements of any UPL action brought by a Mexican disciplinary authority against a U.S. lawyer are jurisdiction and sanctions. The international legal principle of territoriality jurisdiction enables nations to regulate the conduct of individuals who act within the national territory or whose actions have an effect in the national territory. [FN69] The issue of sanctions is more complex and merits further discussion.

At least four sources of Mexican law could provide grounds for sanctions against the U.S. lawyer for violation of Mexican UPL norms. First, some of the state‑level Mexican Professions Laws (Leyes de Profesiones) could permit confiscation of the professional identity card by the state Supreme Court, with notice of the sanction published in an official gazette. [FN70] Second, the Mexican Civil Code (Codigo Civil) voids fees charged for services provided by unaccredited professionals where accreditation is required to provide the services. [FN71] Third, the Mexican Criminal Code (Codigo Penal) allows for criminal sanctions against attorneys in certain cases. [FN72] Fourth, codes of ethics of Mexican bar associations permit revocation of membership. [FN73]

These multiple grounds for sanctions would seem to deter violation of Mexican UPL norms by the U.S. lawyer. Yet practitioners report that these norms are rarely, if ever, enforced in Mexico, even against Mexican attorneys. [FN74] One possible explanation for the lax enforcement Mexico is the absence of a regulatory body in Mexico that has the sole responsibility of regulating the conduct of lawyers. In fact, Mexican judges' calls for creation of a national commission to regulate lawyer conduct (La Comision Nacional de Etica Profesional) have fallen on deaf ears. [FN75]

B. ENFORCEMENT BY U.S. DISCIPLINARY AUTHORITIES

With little enforcement of Mexican UPL norms by Mexican authorities, a U.S. disciplinary authority might seem a more likely enforcer of Mexican UPL norms against U.S. lawyers. Yet state UPL norms based upon Model Rule 5.5(a), have not been enforced for out‑of‑state practice for violations arising from practice abroad.

1. NON‑ENFORCEMENT OF MODEL RULE 5.5(A)

U.S. state bar disciplinary authorities are not bringing disciplinary actions for UPL violations abroad. [FN76] U.S. disciplinary authorities may not know when violations in foreign countries occur, either because violations are not

prosecuted or because foreign disciplinary authorities are not informing U.S. disciplinary authorities of their UPL prosecutions. [FN77] Even if foreign countries' UPL prosecution and information sharing between U.S. and foreign disciplinary authorities improved, a U.S. disciplinary authority still may not be sufficiently concerned with conduct in a foreign country to bring reciprocal disciplinary action. To the extent that the impact of an out‑of‑ state UPL norm violation is felt principally abroad, a U.S. disciplinary authority may decline to prosecute such a violation because the U.S. disciplinary authority is not clearly duty‑bound to protect the public abroad. [FN78] Of course, as the U.S. and Mexican economies grow more integrated, international media attention or diplomatic intervention could cause U.S. disciplinary authorities to take Mexican UPL norm violations by U.S. lawyers more seriously. [FN79]

2. THRESHOLD ISSUES IN AN ENFORCEMENT ACTION: JURISDICTION AND CHOICE OF LAW

The Model Rules and the Restatement provide jurisdictional grounds for enforcing Model Rule 5.5 against a U.S. lawyer working abroad. Under Model Rule 8.5(a), a lawyer subject to the jurisdiction of the lawyer's home state, "regardless of where the lawyer's conduct occurs." [FN80] In addition, the international legal principle of nationality jurisdiction enables a nation to regulate the conduct of its citizens in other nations. [FN81] Thus, nationality jurisdiction and Model Rule 8.5 each grant jurisdictional authority to a U.S. disciplinary authority over conduct of a U.S. lawyer in Mexico.

Enforcing Model Rule 5.5(a) against the U.S. lawyer for violation of Mexican UPL norms would also require the U.S. disciplinary authority to determine which Mexican UPL norm applies. Comment 6 to Model Rule 8.5 calls for the choice of law to be made by reference to appropriate international law and agreements between jurisdictions. [FN82] Yet there is no international code of ethics and neither NAFTA nor GATS would compel issuance of the FLC license. [FN83]

International law thus fails to guide the choice of law determination. More concrete guidance on choice of law in disciplinary actions for transnational conduct may come if Model Rule 8.5 is amended. In its final report, the ABA Ethics 2000 Commission recommends amending Model Rule 8.5 so that the domestic "choice of law provisions [in the body of Model Rule 8.5] would now apply to lawyers engaged in transnational practice, unless international law, treaties or other agreements between competent regulatory authorities in the affected jurisdictions provide otherwise." [FN84] The amended Model Rule 8.5 would provide an improved roadmap for choice of law between UPL norms in transnational practice. Rather than excepting international practice from the scope of Rule 8.5 under Comment 6, the amendment would apply Model Rule 8.5 to transnational practice unless international law is clear and on point. The ABA House of Delegates will begin debate on the amendment to Model Rule 8.5 once the MJP Commission issues its final report. [FN85]

III. Recent Domestic U.S. Case Law with Implications for U.S.‑Mexico Practice:

Birbrower and its Progeny

As already observed, there has been no known disciplinary action brought in the U.S. against lawyers for UPL in a foreign country. Until recently, the same could be said of sanctions against lawyers for UPL in another U.S. state. U.S. lawyers were not too concerned with UPL enforcement against them in state jurisdictions other than their own. That is, until the controversial 1998 California Supreme Court decision Birbrower, Montolbano, Condon & Frank v. Superior Court of Santa Clara County. [FN86]

Considering that lawyers continue to practice in states where they are not licensed, those lawyers "have relied on a combination of custom and the infrequency of challenges to permit continuation of their practices." [FN87] If sanctions are brought against an out‑of‑state lawyer, sanctions usually include criminal punishment or an injunction, with the lawyer usually subject to sanctions in his home state. [FN88] Birbrower announced the newest sanction for UPL: denial of recovery of attorney's fees for services that constituted UPL in the state where rendered. [FN89] Thus, considering that out‑of‑state UPL is not rigorously enforced in most states, the likely way that such out‑of‑state UPL could become an issue is in a lawyer's claim against a client to recover attorney fees, where the client cites UPL as a defense. [FN90]

This Section details the Birbrower decision and its ramifications for U.S. lawyers engaged in U.S.‑Mexico practice. To provide additional color to the holding, this Section also considers two cases where courts have distinguished Birbrower and permitted lawyers to collect attorney's fees from out‑of‑state clients. The Birbrower holding is significant to the U.S. lawyer engaged in U.S.‑Mexico practice because while no case has been brought against a U.S. lawyer for practicing in a foreign country, UPL could be raised as a defense when such lawyers seek to collect attorneys fees.

A. THE BIRBROWER DECISION

In Birbrower, the California Supreme Court cancelled one million in fees for services provided in California by lawyers in a New York firm who were not licensed to practice law in California. [FN91] Birbrower, Montalbano, Condon & Frank, P.C. (Birbrower) is a professional law corporation from New York. During 1992 and 1993, Birbrower attorneys performed substantial work in California relating to the law firm's representation of ESQ Business Services, Inc. (ESQ). Birbrower attorneys had never been licensed to practice law in California. [FN92]

The parties entered into an agreement in 1992, in New York, providing that Birbrower would carry out a number of legal services for ESQ. [FN93] Birbrower was to assist ESQ, a California company, in settling a contract dispute with another California company and possibly represent the corporation in arbitration. The parties settled the claim before arbitration took place. ESQ then brought an action against Birbrower for malpractice, and Birbrower counter‑claimed for recovery of legal fees. [FN94]

The California Court first examined the nature of UPL in California. California Business and Professional Code ' 6125 provides: "No person shall practice law in California unless the person is an active member of the State Bar." [FN95] The Court said that the prohibition against UPL is within the state's police power and is designed to ensure that those performing legal services do so competently. The Court further held that no one may recover compensation for attorney's fees unless the attorney was, at the time the services were performed, a member of the California bar. [FN96] The Court concluded that the Birbrower attorneys were not authorized to practice law within the state.

The more interesting assertion, however, concerning the out‑of‑state attorneys was the court's definition of practicing law in the state of California. The Court took a broad view as to how much Birbrower had practiced in California. In the California Court's opinion, practice was considered in the state if the practice:

entails sufficient contact with the California client to render the nature of the legal service a clear legal representation. In addition to a quantitative analysis, we must consider the nature of the unlicensed lawyer's activities in the state. Mere fortuitous or attenuated contacts will not sustain a finding that the unlicensed lawyer practiced law "in California." [FN97]

Thus, the Court stated that the most important issue is whether the attorney had engaged in "sufficient activities" in the state. [FN98] The court then held that physical presence in the state was not dispositive in determining whether an out‑of‑state attorney had practiced law in the state:

For example, one may practice law in the state in violation of section 6125 although not physically present here by advising a California client on California law in connection with a California legal dispute by telephone, fax, computer, or other modern technological means. [FN99]

Extending the definition to include activities by e‑mail, telephone and fax, and not limiting UPL to physical presence, puts a substantial burden on the out‑of‑state attorney. [FN100] However, the court did restore some leeway when it held that a person would not automatically practice law, by the court's definition, in California whenever the attorney practices California law outside of the state, or enters the state through phone, fax, or e‑mail. Thus, the court stated that Birbrower could recover fees for services conducted in the New York office. [FN102]

The implications of this decision scare practitioners because the dicta concerning physical presence has potentially serious consequences. The court asserted that it was merely trying to protect citizens from incompetent practice by requiring attorneys to be licensed in the state; [FN103] however, the likely effect of the holding will be to scare off multi‑state attorneys who are capable of researching and counseling California clients on California law. [FN104]

Most articles discussing the decision are sharply critical of the opinion; in fact, one scholar argues that the decision sets back the legal profession by twenty‑five years. [FN105] Critics appear most worried about the scope of the decision in that lawyers could be liable for unauthorized practice and lose fees even when they have never stepped in the other state's territory. [FN106]

On the other hand, at least one critic does not think that the holding is so drastic. [FN107] John D'Attomo argues that the court was justified because of the state statute's asserted purpose of protecting California citizens from the unauthorized practice of law. Further, he contends that the case would only prohibit out‑of‑state attorneys from representing California citizens in California courts on matters of California law. [FN108] Attorneys would not be prohibited from representing out‑of‑state clients in matters of California law because such an action would not be practicing law "in California." [FN109] It is important to note that the firm in this case was not a large, multi‑state firm; rather, it was from a small town in New York specializing mostly in trusts and estates and personal injury claims. Therefore, many large law firms might be able to work their way around the decision.

B. THE IMPACT OF BIRBROWER IN OTHER JURISDICTIONS

One of the main fears regarding the Birbrower decision was that many states would reach similar holdings concerning the unauthorized practice of law in their own state. However, the early results indicate that other states may distinguish Birbrower on the facts of a given case. Recently, the Hawaii Supreme Court did just that in Fought & Co. v. Steel Engineering and Erection. [FN110]

Fought & Co. (Fought) was a steel company subcontracted to help construct an airport in Hawaii. When payment was not made to the contractor, the contractor did not pay Fought, the subcontractor. A suit arose for breach of contract against the Department of Transportation (DOT), and as part of the suit Fought asked for attorney's fees. Because Fought's counsel was the Oregon‑based firm of Kobin & Kobin, the DOT argued that it should not be required to pay for

attorneys who were not authorized to practice law in Hawaii. The Hawaii Court held that the initial question was whether the attorney's fees were incurred for the performance of services that could be considered the practice of law as provided in the relevant statute. [FN111] The Court found that the firm counseled Fought on the appeal, prepared Fought's statement of position in anticipation of mediation, assisted Fought's Hawaii counsel with legal research, and analyzed briefs and papers submitted by other parties to the litigation. [FN112] The Court said such activities did constitute the practice of law, but that determination did not end the inquiry.

The Court stated UPL jurisprudence must "adequately address the tension that exists between interjurisdictional practice and the need to have a state‑ regulated bar." [FN113] The Court then recognized that when a lawyer is licensed to practice law in one state, it is improper for that lawyer to practice elsewhere. [FN114] However, the Court said that demands of business and the mobility of society pose distinct problems in state UPL regulation. Thus, public interest considerations for the legal profession should prevent the court from placing unreasonable burdens upon attorneys who are assisting clients outside their own jurisdiction or on the client's ability to choose its own lawyer to represent it in all matters. [FN115]

The Court then concluded that because both the law firm and its client were located in Oregon, they did not represent a "Hawaii client." [FN116] Furthermore, all of the services rendered by the attorney were performed in Oregon, where the firm's attorneys were licensed. The attorney did not draft or sign any of the papers filed during the appeal, did not appear in court, and did not communicate with counsel for other parties on the client's behalf. Finally, the lawyer's role was strictly one of consultant to the client and the client's Hawaii counsel. While the court said that the out‑of‑state lawyer undoubtedly contributed to the successful completion of the litigation, the court did not hold that the attorney "rendered any legal services 'within the jurisdiction."' [FN117]

Even though the firm was allowed to recover attorney's fees in Fought, it is important to note that the Hawaii court used the Birbrower test to decide whether the lawyer practiced in the state to determine whether the fees should be granted and if Birbrower's holding appears to be persuasive in this case. While Birbrower's holding rested on the fact that the out‑of‑state attorney had practiced law "virtually" in California, the Hawaii court held that the attorney had not. Although the Hawaii Court appears to adopt the California rule, it does not appear willing to go as far as the California Court.

Before Birbrower, the California Court of Appeals held in Condon v. McHenry that a Colorado firm could collect attorney's fees for services performed in California. [FN118] On remand after Birbrower, the Court of Appeals upheld its earlier decision. In Condon, a woman living in California had hired lawyers licensed in Colorado to prepare her will, naming the woman's son, a Colorado resident, and her daughter, a California resident, as co‑executors of their mother's estate. [FN119] The son retained the lawyers to advise him as co‑executor in the probate proceedings. [FN120] The daughter retained counsel in California to represent her as co‑executor in the same proceedings. [FN121] The Colorado attorney did most of his work for the son while in Colorado, communicating by telephone, mail, and fax with the other siblings in California. [FN122] The son filed a petition for his attorney's fees. [FN123] The appellate court held that the son was entitled to those fees because the Colorado attorney had not violated the California statute or the Birbrower decision. [FN124] The court recognized a "tension ... between the right of a party to have counsel of his or her choice and the right of each geopolitical entity to control the activities of those who practice law within its borders." [FN125] Further, because the son was a Colorado resident, and the mother had retained the Colorado firm before her death, the firm was considered to be representing an out‑of‑state client in the state of California ‑ one of the Birbrower exceptions. [FN126] The court also noted that the UPL statute was designed only to protect California residents, and here there were no California residents who needed protection. [FN127] The court further observed that "[s]urely the citizens of states outside of California should not have to retain California lawyers to advise them on California law." [FN128]

While it has always been clear that attorneys licensed to practice in one state could not legally practice law in another state, the importance of recent decisions is that it is possible for attorneys to never even enter the state in which they are not licensed and still be precluded from recovering attorney fees based on the unauthorized practice of law. It also appears that the most likely punishment for attorneys who practice outside of their licensed state is to lose attorney fees. That is a costly scenario, as in the Birbrower decision where the attorneys lost more than one million dollars in fees. Further, even though multistate practice is common, the most likely way that someone would be caught is in litigation concerning the attorney fees.

CONCLUSION

Global law firms continue to expand into foreign jurisdictions to serve client interests outside the global law firm's home jurisdiction. U.S. lawyers at global firms provide services to clients almost on a daily basis in ways that can constitute UPL. Clients frequently require legal advice in jurisdictions where the lawyer is not licensed to practice. "If the client, a third party, or the subject matter of the representation are in a state other than that of the lawyer's admission, the lawyer has engaged in the multistate practice of law." [FN129]

The problem is not for large global law firms alone. Even firms with one office who have clients only from that jurisdiction may also at risk of UPL because the clients' operations do not generally remain in a single jurisdiction. [FN130] Further, the threat of UPL is a problem for litigation and transactional attorneys alike. Litigators have clients who were injured in a foreign state or country and require advice, analysis, and counseling on laws of a foreign state or nation. Transactional lawyers prepare legal documents, conduct negotiations, and give business advice to clients. All of these activities take place outside the courtroom but are still generally considered the practice of law. [FN131]

Given modern technology such as fax machines, cellular phones with worldwide reach, and e‑mail, an attorney licensed to practice in New York can quickly research California state law and report to a client as to the nature of California's law. Such a lawyer, if conversant in Spanish, may even try to research the laws of Mexico using the Internet. Quite simply, the practice of law has become so complex that it cannot be bound to a single state's jurisdiction. [FN132] Licensed attorneys have exhibited a capability to research and counsel clients, which has caused critics to call for a loosening of UPL standards. [FN133]

Under current rules, services provided by U.S. lawyers engaged in U.S‑Mexico practice that violate Mexican UPL norms also violate Model Rule 5.5(a). U.S. lawyers generally have four possibilities for complying with Mexican UPL norms: (1) earning a Mexican law degree, (2) obtaining the FLC license in Mexico, (3) engaging in work outside Mexican courtrooms and characterizing the work as non‑legal, and (4) hiring Mexican correspondent counsel. Each of these compliance strategies has advantages and disadvantages. Obtaining a Mexican law degree can be costly and time consuming. Obtaining the FLC license may not even be possible, given that none have been issued to date. Practicing outside the courtroom may still be practice of law. Hiring foreign counsel can be costly, and introduces new ethical obligations. To decide which strategy to adopt, the U.S. lawyer must evaluate the needs of the client and the lawyer's tolerance for risk in an uncertain regulatory environment.

UPL norms have never been applied in disciplinary action, either in the U.S. or Mexico, against a U.S. lawyer for engaging in U.S.‑Mexico practice. There do not appear to be any significant legal impediments to bringing such actions, however. International law would enable both the U.S. and Mexican disciplinary authority to gain jurisdiction over the conduct of the U.S. lawyer engaged in U.S.‑Mexico practice. Moreover, Mexican law provides multiple grounds for applying UPL sanctions.

If the lawyer's actions were challenged in a U.S. forum, given the novelty of a case for UPL in a foreign country, sanctions brought for interstate UPL should be considered as precedent. The sanction of forfeiture of attorney's fees merits particular attention to the U.S. lawyer engaged in U.S.‑Mexico practice, in light of the Birbrower decision. However, both the Fought and Condon cases seem to narrow the impact of Birbrower, leaving uncertainty as to what U.S. sanctions a U.S. lawyer could face for violation of Mexican UPL norms.

In all, the UPL framework regulating U.S.‑Mexico practice by U.S. lawyers is in a state of flux, with important implications for the U.S. lawyer engaged in U.S.‑Mexico practice. First, although Model Rule 5.5(a) may be amended by the ABA House of Delegates, no clarification appears forthcoming regarding how the rule applies to transnational practice. Perhaps in the future the Birbrower decision will inform a U.S. court's determination of what constitutes practice "in" a foreign country. Second, Mexico may begin to comply with NAFTA and issue the FLC license to U.S. lawyers. It will be interesting to see what the scope of the FLC license will be. The FLC license could permit practice on Mexican law, though more likely it will restrict the U.S. lawyer to advising on U.S. law. Third, U.S. lawyers that cross the invisible UPL line in their U.S.‑Mexico practice may be placing their ability to recover attorney's fees at risk, depending on whether the Birbrower decision becomes precedent across U.S. jurisdictions. A similar sanction could also be applied in Mexico, under the Civil Code provisions denying recovery of attorney's fees in cases of UPL.