Which Rule Rules? Rule 8.5 and the Choice of Law

If you are a Delaware attorney or a non-Delaware attorney admitted pro hac vice with an agreement to be bound by the Delaware Rules, your conduct is clearly regulated by the Delaware Lawyers’ Rules of Professional Conduct. But it is not that simple in pre-litigation and multi-jurisdictional practice.

Rule 8.5, titled “Disciplinary Authority: Choice of Law,” provides that a lawyer admitted to practice in this jurisdiction is subject to the disciplinary authority of this jurisdiction for issues arising from cases in Delaware courts regardless of where the lawyers conduct occurs. A lawyer not admitted in this jurisdiction is also subject to the disciplinary authority of this jurisdiction if the lawyer provides or offers to provide any legal services in this jurisdiction. The Rule goes on to state that a lawyer may be subject to the disciplinary authority of more than one jurisdiction.

The Rule distinguishes between conduct occurring in litigation for which the rules of the jurisdiction in which the tribunal sits apply and all other conduct to which the rules of the jurisdiction in which the conduct occurred or the predominant effect of the conduct applies. The Rule goes on to provide cryptically that a lawyer shall not be subject to discipline if the lawyer’s conduct conforms to the rules of a jurisdiction in which the lawyer reasonably believes the predominant effect of the lawyer’s conduct will occur.

Delaware has a history of disciplining non-Delaware attorneys. Attorneys f rom neighboring states have been sanctioned for the unauthorized practice of law in Delaware. Each was found to have violated the Rule 5.5 permissible scope of multi-jurisdictional practice by establishing a regular and systematic presence in Delaware for the practice of law. Two received suspensions and the third a public reprimand for representing Delaware personal injury clients. The Supreme Court rejected their arguments that negotiating settlements of the claims prior to referring the matter to Delaware counsel for litigation fell within the Rule 5.5 safe harbor. The Court cited the number of cases handled and the fact that the attorneys regularly came to Delaware in the course of their representation. The Court also rejected the argument that the attorneys’ conduct (and prosecution) should have been governed by the Unauthorized Practice Rules rather than the Professional Conduct Rules. Rule 8.5 was interpreted to provide a prosecutorial choice. Matter of Nadel , Del. Supr., 82

A.3rd 716 (2013); Matter of Edelstein , Del. Supr. No. 262 (2013); Matter of Brager, Del. Supr. No. 181 (2015).

Delaware has even sanctioned a nonDelaware attorney for conduct that did not occur in Delaware unrelated to any current litigation and without a specific finding of a predominant effect here. Attorney Stephen G. Schulman, who was jailed for racketeering and conspiracy in employing paid plaintiffs, was disbarred by consent in Delaware based on the fact that he had previously been admitted pro hac vice in Delaware.

Choice of law has been a long-simmering issue in Delaware. The U.S. District Court for the District of Delaware opted out of the Delaware Professional Conduct Rules in 2001 adopting in its place the American Bar Association Model Rules. Although the Delaware Rules mostly track the Model Rules and Rule 8.5 suggests that the Model Rules would apply to conduct occurring during litigation in those courts, enforcement remains an open question.

The Federal District Court Rules outline a separate disciplinary procedure. Misconduct occurring in connection with a Federal Court matter in Delaware can be referred to a federally appointed prosecutor and hearing committee. In practice, the Delaware Federal Courts may or may not defer to the Supreme Court for prosecution of misconduct.

T his choice of law issue (as well as Federal pre-emption considerations) can give rise to very interesting situations.

A Delaware attorney employed a suspended lawyer as an assistant in a Federal District Court case. The District Court was aware of the suspended attorney’s status and permitted the participation. The Delaware Supreme Court nevertheless sanctioned the Delaware attorney for assisting in the other attorney’s unauthorized practice of law and violation of the suspension order. The suspended attorney who was permitted to assist in the federal case was also sanctioned.

Much of the uncertainty in applying Rule 8.5 was recently addressed by the American Bar Association Standing Committee on Ethics and Professional Responsibility in Formal Opinion 504, which was released on March 1, 2023. That Opinion notes that Rule 8.5 does not provide lawyers guidance on what factors to consider when determining where the predominant effect of their conduct occurs. The Committee recommended consideration of the following factors:

▪ the client’s location, residence, and/or principal place of business

▪ where the transaction may occur

▪ which jurisdiction’s substantive law applies to the transaction

▪ the location of the lawyer’s principal office

▪ where the lawyer is admitted

▪ the location of the opposing party and other relevant third parties

▪ the jurisdiction with the greatest interest in the lawyer’s conduct

The Opinion notes Comment [5] to Model Rule 8.5, which states:

When a lawyer’s conduct involves significant contacts with more than one jurisdiction, it may not be clear whether the predominant effect of the lawyers conduct will occur in a jurisdiction other than the one in which the conduct occurred. So long as the lawyer’s conduct conforms to the rules of a jurisdic- tion in which the lawyer reasonably believes the predominant effect will occur, the lawyer shall not be subject to discipline under this Rule.

The Comment goes on to add a provision not found in the Delaware Professional Conduct Rules. “With respect to conflicts of interest in determining a lawyer’s reasonable belief under paragraph (b)( 2), a written agreement between the lawyer and client that reasonably specifies a particular jurisdiction as within the scope of that paragraph may be considered if the agreement was obtained with the client’s informed consent confirmed in the agreement.”

The Committee opines on five scenarios involving choice of law:

Scenario One deals with fee agreements and presents the hypothetical in which a lawyer is admitted in one state and enters into an attorney-client relationship with a client residing in the same state for a matter that will be litigated in a different state. The question presented is which jurisdiction’s rules of professional conduct apply?

The Committee notes that rule 8.5(b)(1) applies the rules of the jurisdiction where the matter will be tried. But Comment [4] to that Rule provides that conduct in anticipation of a proceeding (emphasis added) subjects the lawyer to the rules of the jurisdiction in which the lawyer’s conduct occurred or where the predominant effect of the conduct will be. The committee concluded that securing a fee agreement is conduct in anticipation of a proceeding not yet pending before a tribunal and that therefore, that Rule 8.5(b)(2) applies.

Scenario Two deals with law firm ownership. In the hypothetical, State A permits non-lawyer partners while State B does not. Lawyer is admitted only in State A and employed with a law firm formed in State A which has a non-lawyer partner. Lawyer A seeks to appear pro hac vice in a matter in State B which neither permits non-lawyer partners nor the sharing of fees with non-lawyers.

The Committee concluded that the Model Rules on pro hac vice admissions trump the professional conduct rules permitting the State A attorney to be admitted to practice in State B notwithstanding the conflicting rules on nonattorney partners. The Opinion notes that there is nothing in the Model Pro Hac Vice Admission Rules which require a tribunal to inquire into the lawyer’s business model, particularly when that model is not prohibited by the lawyers home licensing jurisdiction.

In Scenario Three the committee dealt with the Rule 8.3 Duty to Report professional misconduct. In the hypothetical, State A requires a lawyer to report professional misconduct even if doing so requires the lawyer to disclose information relating to the representation without the consent of the client. State B follows Model Rule 8.3 which prohibits a lawyer from reporting misconduct if the client does not consent to the disclosure. Lawyer is admitted to practice law in states A and B and has an office located in State B. Client resides in State A and retains lawyer to litigate a matter in State A.

The Committee concluded that because the lawyer is representing a client in State A and that work is in connection with a matter pending before a t ribunal in State A, Rule 8.5(b)(1) requires the