Proposal to Amend Part 522 Regarding In House Counsel Registration
SUMMARY
The Professional Responsibility Committee proposed amendments to the New York Court of Appeals Part 522 (“Rules for the Registration of In-House Counsel”) in order to expand the grace period for filing of an application, to clarify that there is not a residency requirement and also to permit attorneys who are not “full time” in New York to register under the program. To encourage in-house counsel who are already delinquent under the current Part 522 to register, the Committee also proposes the announcement and provision of a cure period of 90 days in connection with announcing the changes. Finally, the Committee will proposes amendments to the foreign lawyer registration provisions of Part 522 in order to eliminate the reciprocity requirement for foreign lawyers and to permit foreign lawyers working in-house, under certain circumstances, to apply using an affidavit. The Committee explains its reasoning for the proposal in the letter: “We strongly support the in-house counsel registration program described in Part 522 because we believe it promotes accountability for applicants and awareness by courts. Before the program, in-house lawyers not admitted in New York faced a kind of limbo in which it was not clear whether their legal work, performed entirely within and for their New York employer organizations, nonetheless could be viewed as engaging in the unauthorized practice of law in New York. We believe that a few simple revisions could further the benefits of the program. Moreover, we believe that amendments clarifying admission requirements for foreign lawyers working in New York as in-house counsel will help to preserve New York’s position as the world’s preeminent center for the practice of law and international business.”
RULE INFORMATION
Proposed Amendment to Part 522 Rules for the Registration of In-House Counsel (22 NYCRR Part 522)
REPORT
REPORT BY THE PROFESSIONAL RESPONSIBILITY COMMITTEE
PROPOSED AMENDMENT TO NEW YORK COURT OF APPEALS PART 522
RULES FOR THE REGISTRATION OF IN-HOUSE COUNSEL[1]
SUMMARY
The Professional Responsibility Committee of the New York City Bar Association proposes amendments to the New York Court of Appeals Part 522 (“Rules for the Registration of In-House Counsel”) in order to expand the grace period for filing of an application, to clarify that there is not a residency requirement and also to permit attorneys who are not “full time” in New York to register under the program. To encourage in-house counsel who are already delinquent under the current Part 522 to register, we also propose the announcement and provision of a cure period of 90 days in connection with announcing the changes.[2] Finally, we propose amendments to the foreign lawyer registration provisions of Part 522 in order to eliminate the reciprocity requirement for foreign lawyers and to permit foreign lawyers working in-house, under certain circumstances, to apply using an affidavit.
RATIONALE FOR THE PROPOSAL
We strongly support the in-house counsel registration program described in Part 522 because we believe it promotes accountability for applicants and awareness by courts. Before the program, in-house lawyers not admitted in New York faced a kind of limbo in which it was not clear whether their legal work, performed entirely within and for their New York employer organizations, nonetheless could be viewed as engaging in the unauthorized practice of law in New York. We believe that a few simple revisions could further the benefits of the program. Moreover, we believe that amendments clarifying admission requirements for foreign lawyers working in New York as in-house counsel will help to preserve New York’s position as the world’s preeminent center for the practice of law and international business.
Expand Grace Period from 30 to 90 Days
In-house counsel who move to the State from other jurisdictions may not learn about Part 522 until after they have begun work in New York, particularly in instances where their employers give them short notice that they will need to relocate to New York. Moreover, satisfying the requirement for certificates of good standing from foreign jurisdictions (where applicable) may cause delay. For these reasons, we suggest providing more of a cushion. While leniency may be granted to those who apply on their 31st day (a day late), those who miss this deadline may in some cases decide simply not to apply out of the fear that applying late will result in a penalty or discipline. We see only upside to increasing the current grace period from 30 to 90 days. New York’s 30-day application period is the shortest in the country among jurisdictions that specify a time period for registration of foreign in-house counsel.[3]
Clarify that There Is No Residency Requirement
We understand, anecdotally, that some clerks who review these applications have been reading a residence requirement into Part 522, even though there is no language supporting such a requirement. Thus, if an applicant were to list a home address outside of New York or the tri-state area, the applicant might not be permitted to register. We do not believe that the policy underlying the program is furthered when a residence requirement is imposed, as it necessarily excludes foreign lawyers working in-house in New York but who reside outside the tri-state area and thus permits fewer foreign lawyers working in some capacity as in-house counsel in the State to register.
Permit Attorneys Who Are Not Employed “Full Time” in New York to Register under the Program
We propose amending Part 522 to permit attorneys who practice as in-house counsel in New York on a part time basis to register under the rule. The current rule permits registration only by attorneys who are employed as in-house counsel full time in the State. “Part-time” applicants would include, for example, lawyers with childcare responsibilities or transitioning back into the workforce and in-house counsel who are not employed 100% of the year in New York (or perhaps do not know whether that will be the case) but nevertheless will be working here on a permanent and recurring basis. We see no reason why such lawyers should not be permitted to register and enjoy the legitimacy, accountability and safe harbor in-house counsel registration represents.
Provide a One-Time Cure Period of Three Months in Connection with Announcing the Changes
Announcement of the proposed changes would be a natural time to announce a one-time cure period for in-house counsel who are eligible but have not yet registered under Part 522. Encouraging such lawyers to register furthers the policy objectives of an in-house counsel registration requirement by fostering accountability on the part of foreign in-house counsel and awareness on the part of courts and the public. Furthermore, under this proposed amendment, part-time in-house counsel would be eligible to register. A cure period will give part-time in-house counsel already practicing in New York, but who have not yet registered, an opportunity to do so.
Limit the Reciprocity Requirement to Lawyers Registered in Other U.S. Jurisdictions
We propose limiting the reciprocity requirement in Part 522.1(b)(2) to apply only to lawyers registered and in good standing in another jurisdiction within the United States. Of the twenty-three (23) U.S. jurisdictions that permit foreign lawyers to practice as in-house counsel, New York is the only state that requires reciprocity from foreign jurisdictions as a condition for permitting in-house counsel to practice. New York’s reciprocity requirement makes compliance with the Rule impossible for in-house counsel from the many jurisdictions that do not permit in-house counsel to be members of their local bars or to maintain professional licenses during their employment as in-house counsel.[4] At the same time, because membership in the local bar is not permitted in these jurisdictions, and is not required in a number of other jurisdictions even where it is permitted, New York lawyers may be employed as in-house counsel in many if not all of these jurisdictions and so the goal of a reciprocity requirement (ensuring that New York lawyers will not be precluded from working abroad) will be satisfied without imposing a formal requirement.[5] Moreover, many international transactions are governed by New York law and so there is a demand for New York lawyers outside the United States. The opposite, however, cannot be said to be true. For example, if a Norwegian lawyer were to work as in-house counsel in New York and could only advise on Norwegian law, that in-house counsel would likely be of little utility. By limiting the reciprocity requirement to lawyers registered outside of New York, but inside of the United States, Part 522 will no longer prevent admission of otherwise qualified lawyers who have come from foreign jurisdictions to work and practice law in New York. Their emigration to serve as in-house counsel in New York supports New York’s efforts to both maintain and promote strength and diversity in its international business and legal practices.[6]
Amend the Requirement that Foreign Lawyers Remain Active Members of the Bar in Their Home Jurisdictions Where Laws in Those Jurisdiction Prevent It
In a number of jurisdictions in Europe—France, Italy, Sweden and Belgium, for instance—in-house counsel are not considered sufficiently independent to be members of the bar. In these countries, lawyers who are members of the bar must suspend their bar memberships while practicing in-house. Ultimately, if they have kept up with the various training and continuing education requirements for bar membership in these foreign jurisdictions, in-house lawyers are able to enter or reenter the bar as active members in good standing upon entering or returning to private practice. Accordingly, we believe that foreign lawyers in this position should not be barred from registration in New York. These lawyers should be equally qualified to practice in-house in New York as lawyers who can remain active members of the bar in their home jurisdictions. We also believe that these lawyers could be subject to effective discipline by New York should they fail to follow the New York Rules of Professional Conduct: they could be prevented from practicing in New York and sanctions here would no doubt impede their ability to practice as in-house counsel in foreign countries and to be admitted or readmitted to the bar in foreign countries.
Allow Foreign Lawyers Excluded by the Structure of Legal Oversight in Their Home Jurisdictions to Apply for Admission Via Affidavit
Where qualified foreign lawyers are unable to provide assurances, certifications and/or proof of good standing due to structural constraints within the legal systems of their home jurisdictions, New York should provide these individuals with an alternative mechanism for admission. We believe the best mechanism to accomplish this is to allow for admission using an affidavit, along with supporting documentation sufficient to establish that (a) the lawyer is unable to comply with provisions of Part 522 due to structural constraints within his home jurisdiction; and (b) the lawyer is in good standing in the lawyer’s home jurisdiction, as required by Part 522, or the lawyer’s bar membership has been suspended because the lawyer is working in-house, but may be reinstated upon a showing that the lawyer has an independent legal practice. This practice will help to ensure that foreign lawyers who, in fact, are well-qualified registration applicants are not rejected admission.
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We respectfully urge adoption of these amendments to simplify, clarify and broaden the in-house counsel registration requirement which, in turn, will benefit foreign in-house counsel as well as New York State’s residents and courts.
Professional Responsibility Committee
Wally Larson, Jr., Chair
wllarson@gmail.com
Drafting Subcommittee for amended report (January 2019)
Steven Fink, Chair
David Keyko
Philip Schaeffer
Robin Wilcox
Drafting Subcommittee for original report (May 2018)
Jai Chandrasekhar
Aegis Frumento
Glenn Jones
Richard Maltz
Ron Minkoff
**Please see pdf attachment at top for full Appendix
Footnotes
[1] This report has been reviewed and approved by the Committee on Standards of Attorney Conduct of the New York State Bar Association.
[2] The proposed language of the amendment is set forth in an appendix immediately following this report.
[3] Six jurisdictions provide for 90-day grace periods. See AZ ST S CT r. 38(a)(4) (2017); Connecticut Bar Examining Committee Authorized House Counsel Rule 5, effective Jan. 1, 2008: https://www.jud.ct.gov/CBEC/housecounsel.htm#Forms (citing Conn. Rule of Super. Ct. § 2-15A(b)(1)(D) (2018)); Ill. S. Ct. Rule 716(l) (2018); Iowa Ct. Rule 31.16(1) (2017); Kan. S. Ct. Rule 712(a)(1)(b) (2018). One provides for a 60-day grace period. Wis. S. Ct. Rule 10.03(4)(f) (2018). While the majority of U.S. jurisdictions with registration requirements have not specified grace periods, we have no data on whether they apply one in practice. We believe that specifying a 90-day grace period will serve to encourage compliance with the Rule and is particularly appropriate for non-US lawyers moving to New York, in some instances on short notice. (All websites cited in this letter were last visited on January 31, 2019.)
[4] An informal survey conducted by the Litigation Committee of the ABA Section of International Law of 70 jurisdictions on four continents concluded that in “more than 70% of the researched countries . . . in-house counsel would not be able to obtain a certificate of good standing, because professional licenses and bar membership are prohibited for in-house counsel.” See Report “The Regulation of In-House Counsel Across International Markets,” March 2015. “The data also indicates that many jurisdictions impose comparable education requirements to the US in order for a lawyer to be admitted to the practice of law, and in many instances, in particular in Europe, impose rigorous training requirements for all lawyers.” While the ABA approach is to give the courts discretion in determining whether to permit registration by applicants from jurisdictions that do not provide reciprocity, we believe that a bright-line rule has the advantages of clarity and reducing the burden on the New York courts.
[5] By way of example, Belgian lawyers working as in-house counsel cannot be active members of a Belgian bar association, but they must register with the Instituut voor Bedrijfsjuristen (IBJ)/Institut des juristes d’enteprise (IJE) (the “Institute”) as in-house counsel. March 1, 2000 – Act Creating an Institute of Corporate Jurists Art. 6 § 6 (2000). A New York lawyer is permitted to register with the Institute as in-house counsel and will receive all of the same benefits and oversight as a Belgian member. Id. at Art. 4 § 1(1). Similarly, a New York lawyer working in-house in England and Wales may register as a Registered Foreign Lawyer. Such registration is not required, but registration increases the scope of services that may be provided by such in-house lawyer. See Solicitors Regulation Authority Handbook, Rule 3.4(b) (Scope of Practice) (2017).
[6] Alternatively, if there is not sufficient support to eliminate the reciprocity requirement altogether by way of amendment to the Rule, we propose an amendment that would permit foreign in-house counsel to establish reciprocity by affidavit in instances where their home jurisdiction has not promulgated any law or regulation that may be cited to confirm that New York lawyers may serve as in-house attorneys in that jurisdiction.
