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2009/SOM2/GOS/WKSP/004

The Role of Commercial Lawyersin the Profession

Submitted by: Southwestern Law School

/ APEC Legal Services Initiative Workshop
Singapore
30-31 July 2009

“The Role of Commercial Lawyers in the Profession”

Prof. Robert E. Lutz

Chair, ABA Task Force on International Trade in Legal Services*

and

Professor of Law

Southwestern LawSchool

Los Angeles, California, USA

(213) 738-6758

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at

Workshop of Asia-Pacific Economic Cooperation on the APEC Legal Services Initiative

30 July 2009

Singapore

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  1. INTRODUCTION
  1. Applaud the APEC Legal Services Initiative and this Workshop as a significant transparency step
  2. Although ABA develops model rules regarding various aspects of foreign lawyer access, the matter of the transparency of U.S. practice rules is a bit complicated, given 50+ jurisdictions over which the ABA has NO regulatory control. (States in the U.S. regulate the admission and practice of lawyers by rules adopted by State Supreme Courts or State Legislatures, which are usually implemented through disciplinary systems operated by State Bar Associations). Nonetheless, in cooperation with various groups, U.S. admission rules for foreign lawyers are annually summarized. See NAT’L CONFERENCE OF BAR EXAM’RS & ABA SECTION OF LEGAL EDUC. & ADMISSIONS TO THE BAR, COMPREHENSIVE GUIDE TO BAR ADMISSIONS REQUIREMENTS, Chart X, 30-34 (Erica Moeser & Margaret Fuller Corneille eds. 2008), available at . For a summary of U.S. State adoption of FLC and FIFO model rules, see Laurel S. Terry, Summary of State Action on ABA MJP Recommendatons 8 & 9 (Oct. 13, 2008),
  3. Ease of mobility for lawyers engaged in transborder work is essential; the 100 year-old platform from which the legal profession is regulated is largely obsolete because of at least three major factors: economics, globalization and technology.
  1. Economics:

Exports (2008)—U.S. exported $1.8 trillion of goods and services;

Imports (2008)---U.S. imported $2.5 trillion in goods and services (every state, except Hawaii, exported more that $1 billion in 2008, Texas was #1 with $192 billion);

Investments in U.S. (2007)=$20 trillion; and

U.S. Investments Abroad (2007)=$18 trillion

Conclusion—trillions of dollars in exported and imported goods and services, and investments=many transactions that involved both U.S. and foreign lawyers. See generally, U.S. Int’l Trade Commission, RECENT TRENDS IN U.S. SERVICES TRADE , Ch. 6 “Legal Services” (2009).

  1. Globalization

Foreign-born residents—all U.S. states combined had a 19% increase between 1990 and 2000 census; excluding 5 states, all states combined had a 30% increase in foreign-born populations; and 19 states had a 100% increase.Conclusion—Relations, including business and family relationships continue with the countries of origins undoubtedly requiring legal services.

*Disclaimer: My presentation is a composition of my own opinion and evaluation of facts and trends, and does not necessarily represent the positions of either the U.S Government or the American Bar Association.

  1. Technology

Profound impacts on the way and location at which the practice of law occurs. Legal technologies that have disrupted traditional legal services include: automated document assembly, relentless connectivity, the electronic legal marketplace, e-learning, online legal guidance, legal open-sourcing, closed legal communities, workflow and project management, embedded legal knowledge, and online dispute resolution.

Clients insist on most efficient methods for delivering legal services. Size no longer necessarily matters as small firms can compete with large law firms in any type or size of litigation; size does not affect the ability to access legal resources via the internet. Technology allows lawyers to share files and work on documents without leaving the office. Combined with outsourcing and co-sourcing, law firms can network with entities throughout the world. See Richard Susskind, THE END OF LAWYERS? Rethinking the Nature of Legal Services (2008), TRANSFORMING THE LAW—Essays on Technology, Justice and the Legal Marketplace (2000), and THE FUTURE OF LAW—Facing the Challenges of Information Technology (1996).

Conclusion—borderless world, except that under existing lawyer regulatory regimes, unauthorized practiced of law (UPL) may be claimed.

  1. IMPACTS ON THE LEGAL PROFESSION (especially for the Commercial Lawyer).

The impacts of these factors/forces on the legal profession will be most significantly felt by the: service providers/suppliers (lawyers and law firms); service consumers; service regulators (courts, bar associations and law societies, legislatures); and legal educators.

  1. Service Providers/Suppliers (lawyers, transnational law firms)
  1. Professional=core values such as: competence, independence, conflicts, etc.
  2. Business=new ownership models; business forms suggest reductions in partnerships; mobility is key.

International community via GATS, FTAs, BITs and other instruments is treating legal services along with other services for purposes of regulation, analysis, etc.

  1. Interested in serving as counselor, consultant, advisor, arbitrator via private contract; not a court participant
  2. New employment trends re: local lawyers trained in multiple jurisdictions (“glocalization”)
  3. Re-evaluation of legal services delivery (business model used)--
  1. How to manage it? Bespoke (customize, tailor), standardize (drawing upon precedents, process or previous work), systematize (reduce and apply to automated systems), package (systematized services exported to clients), and commoditized (packaged services that are commonplace and have little market value). This re-thinking, coupled with market pressures, has led to multi-sourcing such as: in-sourcing, de-lawyering, relocating, offshoring, outsourcing, subcontracting, co-sourcing, leasing, home-sourcing, open-sourcing, computerizing and no-sourcing. Susskind, supra.
  2. How to price? Billable hour being re-assessed from consumer and producer ends; commodization of increasing interest; performance-based.
  3. Interest in association with local law firms and strategic alliances.
  1. Service Consumers
  1. In transnational transactions, generally sophisticated consumer lacking need for “consumer protection.”
  2. International investment promotion by Asian countries to attract foreign investors and by developed countries to expand economic bases, plus policies of international organizations promoting economic development of Asia, legal work by transnational transactional lawyers is in high demand.
  3. Demand also comes from increase in international trade generally, and growth of movement (migration and settlement) of persons in locations not their birth places.
  4. Has resulted in a rapid expansion of primarily British and U.S. law firms in foreign countries to serve clients.
  5. In recessionary times, clients seek lower-cost legal services, quicker resolutions, and enforceability of agreements/judgments/awards. These needs push legal representatives to find outside sources for some process and documentary analyses, and to use private processes of mediation and arbitration to resolve disputes.
  6. Require sensitive legal- and cross-cultural intermediaries and translators.
  7. Greater concerns by consumers for multi-disciplinary services and multijurisdictional lawyering skills that provide one-stop service.
  8. Clients recognize that transborder lawyering often requires hiring local counsel expert in local law and licensed to practice in local courts.
  1. Legal Services Regulators (Courts, Law Societies/Bar Associations, Legislatures)
  1. Who needs regulating and why? Concern re: over-regulation. Recognize that in transborder legal services, clients are generally sophisticated consumers without need of “protection”. Have there been instances of abuse by foreign lawyers?
  2. What are the objectives for regulation? Is there a “public protection” goal? Is it defined? Is there value for the economy just in knowing which foreign lawyers are present in a jurisdiction and what they are doing? Is there an accountability need? liability concerns that can be addressed by insurance ? professional responsibility compliance that needs monitoring?
  3. Local protectionist concerns that big foreign law firms (“Big Law”) will “steal” business of local lawyers/law firms is contradicted by facts that transnational lawyers generate business that employs local lawyers/law firms.
  4. Technology and knowhow transfers from transnational practices to local lawyers and law firms, and often are among the conditions for admission/access.
  5. Some law services of a transnational transaction nature may be supplied electronically from foreign locations (GATS Mode #1) and difficult to regulate, if not impossible.
  6. FIFO practice can be regulated by immigration via visas, etc., but to what objective?
  7. To provide comfort to regulators, the public and others, reciprocal disciplinary regimes may be structured on a bilateral basis. Poses difficulties in the U.S. because of multiple jurisdictions, but Model Rule 22 has been adopted and employed with respect to U.S. interstate disciplinary issues.
  8. Use of the following structures are prominently used by jurisdictions (in the U.S. and elsewhere) to provide for foreign lawyer practice: Foreign Legal Consultant (FLC); temporary practice rule (sometimes referred to as “fly in, fly out” or FIFO); pro hac vice (for temporary admission to jurisdiction’s courts); in-house counsel rule; limited or special admission requirements; mutual recognition; etc.
  9. Changes in the regulatory regimes: UK; Australia.
  1. Legal Services Education/Training for Qualification/Certification
  1. Special subject knowledge (i.e. curriculum) for foreign lawyer qualification to practice (e.g., constitutional law; professional responsibility).
  2. Cross-cultural knowledge/instruction
  3. Should foreign lawyers be limited to a limited scope of practice, unless educated in and successfully graduated from a domestic law school ?
  4. Could there be mutual recognition agreements on the basis of equivalency of curriculum? Accreditation processes?
  5. What about phased qualification? Or phased scope of practice, which overtime can expand to a scope any fully qualified lawyer can practice?
  6. Legal Education Responses to Demand from and on Behalf of Foreign Lawyers: Bologna Process; Study Abroad Programs; LLM Programs; Distance Learning.
  1. DEVELOPING A FRAMEWORK FOR “BEST PRACTICES”
  1. Inventory of Current “Best Practices”, Models and Sources
  2. Mechanism for Information-Gathering and Exchange
  3. Regulatory Objectives (e.g. Law Society of England and Wales).
  4. Forms of Practice Allowed Without Special Qualification Procedures
  1. FLC (e.g., ABA Model FLC Rule)
  2. FIFO (e.g., ABA Model Temporary Practice Rule)
  3. “Driver’s License” model
  1. Admissions
  1. Model Admissions Rule (currently under discussion at ABA Section of Legal Education)
  2. Admission on Motion (ABA Model Rule re: U.S. interstate admission by motion)
  3. Pro hac vice (temporary court admission)
  4. Mutual Recognition
  1. Accreditation and/or Equivalency Determinations
  1. Standard-setting
  2. Common Law to Common Law; Civil Law to Civil Law; Hybrid Systems?
  1. Other Issues
  1. Continuing Legal Education
  2. Discipline (reciprocal)—e.g. ABA Model Rule 22
  3. Choice of Professional Responsibility obligations—e.g. problems with ABA Rule 8.5.
  4. Conflict of Interest
  5. Outsourcing
  6. Malpractice
  7. Role of Legal Education in Educating, Certifying, harmonizing curriculum, etc.
  1. WHAT’S THE FUTURE FOR TRANSNATIONAL LEGAL PRACTICE IN THE APEC REGION?