Is there a 'federal law only' exception to the Oregon bar examination?
By George Riemer
the current talk going on about various aspects of the multijurisdictional
practice of law, it seems appropriate to analyze whether out-of-state
lawyers can come to Oregon and set up 'federal practices' without
having to take and pass the Oregon bar examination. Several recent cases
strongly suggest that such a practice is not permissible though there
is some contrary authority available on this question. This article reviews
a number of recent cases on this topic and offers the author's observations
UNLAWFUL PRACTICE OF LAW PROHIBITION
9.700(2) is used by the bar in determining whether to investigate and
pursue unlawful practice of law complaints in court.
AGAINST A 'FEDERAL PRACTICE' EXCEPTION TO THE OREGON BAR EXAMINATION
In re Desilets, 247 B.R. 660 (Bankr. W.D. Mich. 2000), affirmed, Rittenhouse
v. Delta Home Improvement, Inc., 255 B.R. 294 (W.D. Mich. 2000). Allan
J. Rittenhouse was a lawyer admitted to practice law in Texas. He established
an office for the practice of bankruptcy law in upper Michigan without
obtaining admission to practice law in Michigan. He did obtain admission
to practice before the U.S. District Court for the Western District of
Michigan, including the U.S. Bankruptcy Court in that district.
represented Ernest Desilets in a Chapter 7 bankruptcy proceeding in the
U.S. Bankruptcy Court for the Western District of Michigan. A creditor
of Desilets, Delta Home Improvement Inc., filed a motion in Desilets's
bankruptcy case seeking an order of the bankruptcy court that Rittenhouse
be suspended from practicing before the court until he was licensed to
practice law in Michigan. Rittenhouse opposed the motion on a number of
grounds, including that he was properly admitted to practice before the
court based on his admission to practice law in Texas.
judge of the bankruptcy court determined that Rittenhouse was required
to be admitted to practice law in Michigan to engage in the general practice
of law in Michigan from an office in Michigan even if Rittenhouse claimed
he limited his practice to federal law only. The judge determined that
Rittenhouse was a bankruptcy petition preparer under bankruptcy law and
had violated various rules applicable to bankruptcy petition preparers
in handling Desilets' bankruptcy and the bankruptcy of another individual
as well. The judge imposed fines for those violations, ordered Rittenhouse
to disgorge the fees he had been paid for handling those matters, and
entered a declaratory judgment that 'the local rules of this court
do not authorize Rittenhouse to engage in the general practice of law
in Michigan.' The judge referred the issue of Rittenhouse's possible
suspension from practice before the court to all the bankruptcy judges
in the district, pursuant to the rules of the court.
appealed this judgment to the U.S. District Court for the Western District
of Michigan. That court affirmed the decision of the chief judge of the
bankruptcy court. The district court judge agreed with the chief judge
of the bankruptcy court that Rittenhouse had engaged in the unlawful practice
of law by virtue of having maintained a permanent, not temporary, office
for the practice of law in Michigan and by regularly, and not just occasionally,
engaging in the practice of law in that state in relation to his bankruptcy
also In re Desilets, 2000 Bankr. LEXIS 1599 (Bankr. W.D. Mich.).
The U.S. Bankruptcy Court for the Western District of Michigan considered
en banc whether to suspend Texas lawyer Rittenhouse from the practice
of law before that court (see preceding case for further details). Rittenhouse
agreed to settle the matter by consenting to the entry of a judgment which
suspended him from the practice of law before the bankruptcy court indefinitely
and which also permanently enjoined him from practicing law in any manner
whatsoever arising in, under, or relating to any bankruptcy case in the
district. The stipulated judgment included a provision that Rittenhouse
could move the bankruptcy court to reconsider the terms and conditions
of the court's judgment if the U.S. District Court for the Western District
of Michigan reversed the chief judge's prior declaratory judgment (it
did not; see preceding case above) or if the United States Court of Appeals
for the Sixth Circuit reversed that judgment.
case worthy of review is In re Lite Ray Realty Corp., 2001 Bankr.
LEXIS 11 (Bankr. S.D.N.Y.). The debtor in possession moved to retain the
Law Offices of Shmuel Klein, P.C. as its attorney. Klein, the sole member
of the firm, was admitted to practice law in New York, but had been suspended
for misconduct for five years commencing July 20, 1997. He was nevertheless
a member of the bar of the U.S. District Court for the Southern District
of New York. The question before the bankruptcy court was whether Klein's
firm should be allowed to represent the debtor in its bankruptcy proceeding.
found that Klein maintained a bankruptcy law practice in New York notwithstanding
the suspension of his license to practice law there. The court noted that
the order suspending Klein from the practice of law in New York stated
that 'during the period of his suspension, he must desist and refrain
from practicing law, appearing in court as an attorney, giving legal advice
or opinions or holding himself out in any way as an attorney and counselor-at-law.'
(citation omitted). The court then considered the question whether he
was permitted to represent the debtor because, notwithstanding his suspension
from practice in New York, he was admitted to practice before the U.S.
District Court for the Southern District of New York. 'We may take
as a given that if he is retained in this case, he will engage in the
unauthorized practice of law unless his admission to practice in the Southern
District insulates him from that charge.'
on the case of Spanos v. Skouras Theatres Corp., 364 F.2d 161 (2d
Cir.), cert. den., 385 U.S. 987, 17 L.Ed.2d 448, 87 S.Ct. 597 (1966),
the court concluded that while a lawyer suspended in one jurisdiction,
but admitted in another could perhaps appear in a case pro hac vice,
he could not take up the general practice of law in a state he was not
admitted in. 'His federal court admission may permit him to appear
in a specific case in the type of situation described in Spanos, but it
does not permit him to open a local office and practice generally, even
if his practice is limited to bankruptcy.' (footnote omitted).
court denied the debtor's application to be represented by Klein's law
firm. 'To repeat what has been said, the federal court determines
who may practice before it, but that doesn't mean, as Klein implies, that
his state suspension does not affect his ability to practice bankruptcy
law or appear in this Court. At most, he may only appear in collaboration
with a licensed attorney, but he cannot practice law - even bankruptcy
law - generally. The debtor's application to retain him stretches the
definition of 'attorney' too far, and accordingly, it must be
And at the
state court level, consider Chandris, S.A. v. Yanakakis, 668 So.2d
180 (Fla. 1996) (Sperry [see discussion below] did not permit an
out-of-state lawyer who resided in Florida to contract to represent an
injured seaman in a federal Jones Act case in Florida; there was no general
federal law exception to Florida's bar admission procedures).
IN FAVOR OF A 'FEDERAL PRACTICE' EXCEPTION TO THE OREGON BAR
be noted that the U.S. Supreme Court in the Sperry case indicated
that 'We do not question the determination that under Florida law
the preparation and prosecution of patent applications for others constitutes
the practice of law.' 373 U.S. at 383. The Court's holding was rather
that Florida's UPL prohibition could not interfere with a person's right
to perform functions authorized by federal law. Under the Supremacy Clause
of the U.S. Constitution, the federal statute which authorized qualified
nonlawyers to practice before the U.S. Patent Office was superior to and
could not be hindered or obstructed by Florida's unlawful practice of
law statute. Lawyer X would need to review the Internal Revenue Code and
IRS regulations to determine if his federal tax practice was explicitly
covered by authorizing language similar to the federal patent office statutes
discussed in Sperry.
recent 9th Circuit cases arguably support the contention that a lawyer
can also practice law before federal courts on a recurring basis in a
state in which he is not admitted to practice.
Brown v. Smith, 222 F.3d 618 (9th Cir. 2000). Mary Poole, a debtor,
filed a voluntary Chapter 13 bankruptcy petition in 1997 in the U.S. Bankruptcy
Court for the District of Arizona. She was represented by Smith who listed
his place of business as Scottsdale, Arizona. Smith was a member of the
Illinois Bar and was admitted to practice law before the U.S. District
Court of Arizona as a non-resident lawyer. He was not a member of the
Arizona State Bar.
objected to Poole's plan because he believed that since Smith was not
licensed to practice law in Arizona, he was not an attorney for purposes
of federal bankruptcy law and therefore could not be paid the attorney's
fees set forth in the plan. Both the bankruptcy court and the Bankruptcy
Appellate Panel ruled against the trustee. The trustee appealed to the
U.S. Circuit Court of Appeals for the 9th Circuit.
of the 9th Circuit Court of Appeals ruled that Smith had authority to
practice before the U.S. District Court of Arizona and the U.S. Bankruptcy
Court for that district as a non-resident lawyer. The appellate court
affirmed the lower court rulings, indicating that 'The only appropriate
method of challenging Smith's right to practice before the United States
Bankruptcy Courts in Arizona is to seek his suspension or disbarment from
practice before the District Court of Arizona using procedures that comport
with Due Process. The trustee cannot employ a collateral attack based
on state law to prevent Smith from practicing federal bankruptcy law in
Arizona. The bankruptcy court and the Bankruptcy Appellate Panel were
entirely correct in reaching a similar conclusion.'
court noted that the U.S. District Court of Arizona's rules had changed
since the trustee challenged Smith's authority in the instant case. Smith
prevailed because at the time out-of-state lawyers could also be admitted
to practice law before the federal courts in the District of Arizona so
long as they did not reside or maintain an office in Arizona. The then
applicable rule (U.S. District Court of Arizona Local Rule 1.5(c)) provided
that '[i]f the applicant becomes an Arizona resident and/or intends
to maintain a principal office or practice in Arizona, he or she must
reapply under paragraph (b) of this Rule.'
District Court of Arizona changed its admission rules effective Sept.
15, 1999. They now restrict regular admission to lawyers who are members
of the Arizona State Bar. Lawyers in private practice who are not admitted
to practice law in Arizona and who are admitted to practice before another
U.S. District Court can seek pro hac vice admission to practice
before the U.S. District Court of Arizona, but such admissions are subject
to the following restrictions: 'Unless authorized by the Constitution
of the United States or an Act of Congress, an attorney is not eligible
to practice pursuant to this subparagraph (b)(3) if any one or more of
the following apply: (i) the attorney resides in Arizona, (ii) the attorney
is regularly employed in Arizona, or (iii) the attorney is regularly engaged
in the practice of law in Arizona.' See U.S. District Court of Arizona
Local Rule 1.5(b)(3). Smith might not have qualified for pro hac vice
admission under this standard if it had been in place at the time
of his representation of Poole. As indicated, effective Sept. 15, 1999,
regular admission to practice law in the U.S. District Court of Arizona
has been restricted to active members in good standing of State Bar of
also In re Mendez, 231 B.R. 86 (B.A.P. 9th Cir. 1999), aff'd, 230
F.3d 1367 (9th Cir. 2000). A bankrupt's trustee objected to the attorney
fees contained in the debtor's Chapter 13 bankruptcy plan. The trustee
sought an order directing the lawyer to disgorge those fees. Relying on
In re Peterson, 163 B.R. 665 (Bankrtcy D. Conn. 1994), the trustee
argued that since Mr. Smith, the lawyer, was not admitted to practice
law in Arizona, he could not be considered an attorney for purposes of
an award of attorney fees under the applicable U.S. District Court of
Arizona bankruptcy court rules. The bankruptcy court ruled in favor of
the trustee initially, considered the matter further, and then ruled in
favor of the lawyer. The trustee appealed the bankruptcy court's ruling
in favor of the lawyer to the United States Bankruptcy Appellate Panel
of the 9th Circuit. That panel affirmed the bankruptcy court's ruling
in favor of the lawyer.
issue in the case was whether Mr. Smith, the lawyer, should be required
to disgorge the fees he was entitled to receive under the Chapter 13 bankruptcy
plan he prepared for his client, Mr. Mendez. The trustee asserted that
Smith's activities in Arizona were essentially comparable to those the
Peterson court found to constitute the unlawful practice of law.
The trustee asserted that Smith maintained offices both in Illinois, where
he was licensed to practice law, and Arizona, where he was not licensed.
The trustee contended that Smith was required to be a member of the State
Bar of Arizona under Arizona law to practice law in Arizona, including
in federal court in Arizona. Smith asserted that his primary residence,
primary practice and staff where in Illinois, that he went to Arizona
as needed to see clients and hold meetings from a location he rented on
an hourly basis and that the only services performed by his office in
Arizona for Arizona clients was the forwarding of telephone messages and
mail to his office in Illinois. He stated that he maintained a toll free
telephone number for Arizona clients to contact him or his staff in Illinois.
Smith also indicated that he was admitted as a nonresident lawyer to practice
law before the U.S. District Court of Arizona and that that admission
permitted him to practice law in bankruptcy court in the U.S. District
Court of Arizona as well.
panel affirmed the bankruptcy court's order overruling the trustee's objections
to the attorney fee provision in the debtor's bankruptcy plan, allowing
compensation to Smith, and denying the trustee's motion to require Smith
to disgorge the fees awarded to him.
case should be considered. See Attorney Grievance Commission of Maryland
v. Bridges, 360 Md. 489, 759 A.2d 233 (2000). Bridges was a lawyer
licensed to practice law in Ohio, Pennsylvania and the U.S. District Court
of Maryland, among other bars. He was not licensed to practice law in
Maryland until June 20, 1995.
Grievance Commission of Maryland (AGC) received complaints about the conduct
of one Albert Carter from Kaibeh Johnson in August and September 1995.
The complaints related to legal services Johnson allegedly sought and
paid for from Carter in 1994. Part of what the AGC received from Johnson
was a letter Bridges had apparently prepared for Carter which indicated
that Bridges had employed Carter for a period of time as an 'Independent
Paralegal/Assistant Appellate Counsel.' The AGC subsequently sought
information from Bridges about his purported letter on behalf of Carter.
This inquiry led to the AGC charging Bridges with several ethics violations,
one of which was the practice of law in Maryland without being a member
of the Maryland bar.
Court of Appeals dismissed the charge of unlawful practice of law against
Bridges (Bridges was reprimanded on other charges) on the basis that his
limited activities representing clients in federal cases from a home office
in Maryland was permitted under the authority of the U.S. Supreme Court's
decision in Sperry v. Florida, 373 U.S. 379, 83 S.Ct. 1322, 10
L.Ed.2d 428 (1963) and its own decision in Kennedy v. Bar Association
of Montgomery County, 316 Md. 646, 561 A.2d 200 (1989). The court
court appears to have approved a licensing exception in Maryland based
on the Kennedy case. The exception involves out-of-state lawyers
who practice before the Maryland federal courts from Mayland - so long
as they do not hold themselves out as practicing lawyers in Maryland,
and so long as they focus their practice exclusively on those federal
lawyer's reliance on the foregoing three cases to claim a right to practice
before the federal courts in Oregon from an office in Oregon would not
be prudent. The U.S. District Court of Oregon, including the U.S. Bankruptcy
Court of Oregon, restricts general admission to practice before the court
to lawyers of good moral character who are active members of the Oregon
State Bar. See U.S. District Court of Oregon Local Rule 83.2 (there are
several exceptions to this rule, but they do not apply to the question
Bar of Arizona issued a formal ethics opinion in October 2000 which appears
to acknowledge the ability of out-of-state lawyers to set up federal law
practices in Arizona without taking and passing the Arizona bar examination.
Opinion No. 2000-8 states that it is ethically permissible for an Arizona
law firm to list on its letterhead as 'Of Counsel' lawyers who
are not admitted to the State Bar of Arizona. The letterhead must indicate
that those lawyers are not admitted to practice law in Arizona, identify
that they are admitted only in certain states, and that their practice
in Arizona is limited to federal law matters. The facts of the opinion
indicate that the out-of-state lawyers intended to restrict their Arizona
practice from an office in Arizona to claims against the federal Social
Security Administration and appeals of Social Security cases before the
federal courts in Arizona. As noted above, the out-of-state lawyers would
not appear to be entitled to admission to practice before the U.S. District
Court of Arizona because they would be residing in Arizona, would be regularly
employed in Arizona, or would be regularly engaged in the practice of
law in Arizona.
bar staff has given reactions to lawyers on previous occasions concerning
this question. In January 1996 we indicated that it appeared permissible
under the Sperry case for an out-of-state lawyer to establish an
immigration law practice in Oregon limited to those activities permitted
by applicable federal immigration laws and regulations. The suggestion
was made that the lawyer make a disclosure along the lines of 'Practice
limited to U.S. Immigration Law only; not admitted in Oregon' in
any advertisements and on the lawyer's letterhead.
1997 a Washington lawyer wrote the bar about whether he could provide
legal services to Oregon clients relating to patent, trademark and copyright
issues. The lawyer was a registered patent agent. The lawyer posed the
question whether he could offer these intellectual property services in
the State of Oregon without being a member of the Oregon State Bar. The
reaction he received from the bar was that he could meet with Oregon residents
in Oregon to discuss their rights under federal law, but could not discuss
their rights under the common law even if attendant to a discussion of
their federal rights. Another proffered possibility was for Oregon residents
to meet with the Washington lawyer in Washington where the lawyer could
review their federal and state law rights, even if the latter were based
on Oregon law. The lawyer would not be physically practicing law in Oregon
and except for perhaps a heightened malpractice concern, it was suggested
this may be permissible. The lawyer was also urged to ensure that any
advertisement of his federal law practice in Oregon media was clear regarding
the limitations on his practice in Oregon so the public was not misled
about his status in Oregon.
2000 bar staff was asked whether a New York lawyer could join a Portland
firm and limit her practice to U.S. immigration and naturalization matters
only. Staff's reaction was that she could practice immigration law and
immigration law only without being a member of the Oregon State Bar. It
was suggested that she be listed on the firm's letterhead and on her business
card as 'Admitted in New York only; practice limited to federal immigration
law only.' Staff also suggested that the New York lawyer, as an associate
of the firm, could not directly counsel, advise or assist clients on any
matters that involved the application and interpretation of Oregon law.
Staff observed that while this restriction would be difficult to follow,
to allow the New York lawyer to resolve state law issues merely because
they were somehow considered pendent to a client's 'federal'
matters would effectively do away with state regulation (licensing) of
lawyers handling 'federal' matters.
review the legal basis for a claim of right to practice 'federal
law.' Is it bankruptcy law, federal tax law, Social Security law,
patent and trademark law, immigration and naturalization law or some other
area of federal law? Each category of a claimed 'federal practice'
has its own set of governing statutes, rules and regulations. If a lawyer
seeks to rely on the holding in Sperry v. Florida, 373 U.S. 379,
10 L.Ed.2d 428, 83 S.Ct. 1322 (1963) to establish a 'federal law'
practice in a state he or she is not licensed in, the lawyer needs to
comply with and stay within the parameters of the applicable federal law,
rules and regulations.
review the courts' rulings in In re Desilets, 247 B.R. 660 (Bankr.
W.D. Mich 2000), aff'd, Rittenhouse v. Delta Home Improvement, Inc.,
255 B.R. 294 (W.D. Mich. 2000). These cases are a strong basis for concluding
that an out-of-state lawyer cannot set up a bankruptcy practice in a state
he is not licensed in even if the lawyer is admitted to the bar of the
federal court in that state.
consideration of any state law issues in a contemplated 'federal
law' practice. As pointed out in the cases cited in 2. above, that
may not be possible. If it is not, the lawyer needs to take and pass the
bar examination in that state. If it is, the lawyer should consider making
full disclosure and obtain each client's consent to this limitation on
the advice and assistance the lawyer intends to provide. The disclosure
should include the recommendation that the client consult a lawyer licensed
in the state in question for advice on any applicable state law issues.
avoid any misleading advertising or other practice identifiers such as
office signs, business cards and letterhead. 'Practice limited to
U.S. Immigration and Naturalization matters only; Licensed to Practice
Law in X State only' is an example of a disclosure that should be
used in all practice advertising and identifiers.
malpractice coverage. As these lawyers are not members of the Oregon State
Bar, they are not subject to malpractice coverage by the Oregon State
Bar Professional Liability Fund. That doesn't mean there aren't a number
of good reasons to obtain and maintain malpractice coverage concerning
the lawyer's 'federal practice.'
Can out-of-state lawyers set up 'federal practices' in Oregon without taking and passing the Oregon bar examination? I am not aware of any clear Oregon answers to this question. This is a touchy subject. Why go into it? Because it is happening more often than most lawyers think. To any lawyer considering this possibility in Oregon or another state, go slow. This is a minefield. Get expert ethics advice and consider the points made above before you decide a course of action. My default reaction to out-of-state lawyers considering establishing 'federal practices' in Oregon: Take the Oregon bar examination. It's worth the peace of mind. +
ABOUT THE AUTHOR
George A. Riemer is deputy director and general counsel of the Oregon State Bar. He can be reached at (503) 620-0222, ext. 405, or by e-mail at griemer@ osbar.org.