Ezel / Ethics Opinions / NYSBA
NYSBA March 5, 2003

How far must a New York firm supervise its partners, associates, and staff who are licensed abroad but not admitted in New York?

Short answer: The opinion concludes a New York firm must make reasonable efforts to ensure lawyers subject to the New York Code comply with it, and must supervise foreign-licensed lawyers (treated as nonlawyers under DR 1-104(C)) so their compliance with foreign rules does not compromise the firm's adherence to the New York Code.

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This page answers the general question as of 2003. Ezel answers yours: whether it's allowed on your facts, under the current New York Rules of Professional Conduct, with citations.

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Plain-English summary

The inquirer was a New York lawyer at a firm with offices in New York and a foreign country whose partners and associates included lawyers licensed abroad but not admitted anywhere in the United States. The question was how far the New York firm and its supervising lawyers must supervise those foreign-licensed lawyers.

The committee first identified the firms covered. DR 1-104(A) and (C) impose duties on "law firms," and although the Code does not define which firms are subject to its firm-level rules, the committee concluded that, at a minimum, the firm-specific Disciplinary Rules apply to a firm with a New York office and at least one affiliated New York lawyer (a "New York firm"). On compliance supervision, the committee read DR 1-104(A) and (B) not to require the firm to make foreign-licensed lawyers follow the New York Code; those lawyers are not subject to it. Rather, the firm and its supervising New York lawyers must make reasonable efforts to ensure that lawyers who are subject to the New York Code comply with it. New York lawyers may partner with lawyers bound by other ethics regimes (DR 2-102(D); N.Y. State 646), so the duty runs only to those within the Code's reach.

The committee located the real obligation in DR 1-104(C)'s general supervisory duty, which expressly covers "non-lawyers." For this purpose, foreign-licensed lawyers are treated as nonlawyers, so the New York firm must have systems for conflicts checking (DR 5-105(E)), accurate billing, recordkeeping, retainer agreements, and segregation of client funds, and must take reasonable steps to ensure foreign lawyers' conduct does not expose the firm or its New York lawyers to a Code violation. The committee stressed confidentiality (DR 4-101(B) and (D)): the firm must sensitize foreign lawyers, whose confidentiality rules may differ, to New York's duty. The committee's central example: if a foreign country's rules require a lawyer to reveal a client's past fraud, but New York forbids revealing that confidence (DR 7-102(B)(1); DR 4-101), the firm must take reasonable steps, such as keeping the information away from the foreign lawyer, and if that is impossible the partnership itself may be unethical. Supervision of foreign lawyers should be by lawyers familiar with the New York Code, and the firm should explain to a client when a matter handled abroad will receive less confidentiality protection than in New York.

In practice

Under the Code as it stood in 2003, the opinion concluded that a New York firm and its managing or supervising New York lawyers must make reasonable efforts to ensure that firm lawyers who are subject to the New York Code comply with it, but are not obligated to make foreign-licensed lawyers (who are not subject to the Code) follow it. The opinion held that "reasonable efforts" scale with firm size and structure, from informal supervision in a small office to written policies in a multi-office firm.

The opinion concluded that the firm's broader duty under DR 1-104(C) treats foreign-licensed lawyers as nonlawyers and requires systems (conflicts, billing, records, retainers, fund segregation) plus active steps so that a foreign lawyer's compliance with foreign rules does not compromise the firm's adherence to the New York Code, with confidentiality the leading concern.

Common questions

Q: Does a New York firm have to make its foreign-licensed lawyers follow the New York ethics rules?

A: No. The opinion concludes DR 1-104(A) and (B) require reasonable efforts to ensure compliance only by lawyers who are subject to the New York Code; foreign-licensed lawyers not subject to it are not bound to follow it.

Q: How does the firm's duty toward foreign-licensed lawyers arise then?

A: Through DR 1-104(C)'s general supervisory duty. The opinion treats foreign-licensed lawyers as nonlawyers, so the firm must supervise them so their conduct does not cause the firm or its New York lawyers to violate the New York Code.

Q: What if a foreign rule requires disclosing something New York treats as confidential?

A: The opinion holds the firm must take reasonable steps so the New York lawyers are not pulled into a Code violation, for example by keeping the confidential information away from the foreign lawyer; if that is impossible, the partnership itself may be unethical.

Q: Who should supervise the foreign-licensed lawyers?

A: A lawyer or lawyers familiar with the New York Code. The opinion also says the firm should tell a client when a matter handled abroad will get less confidentiality protection than in New York.

Background and rules framework

The opinion interprets New York's former Code of Professional Responsibility: DR 1-104 (firm and lawyer supervisory duties), DR 1-105 (who is subject to New York's disciplinary authority), DR 4-101 (confidentiality), DR 6-101 (competence), and DR 5-105(E) (conflict-checking systems), with EC 1-8. The Model Rules analogues are Rule 5.1 (responsibilities of partners and supervisory lawyers), Rule 5.3 (responsibilities regarding nonlawyer assistance), Rule 8.5 (disciplinary authority; choice of law), Rule 1.6 (confidentiality), and Rule 1.1 (competence). New York replaced this Code with the Rules of Professional Conduct in 2009; the DR numbers cited here are historical.

Citations and references

Rules of Professional Conduct:

  • MR 5.1 (partners and supervisory lawyers)
  • MR 5.3 (supervision of nonlawyer assistance)
  • MR 8.5 (disciplinary authority; choice of law)
  • MR 1.6 (confidentiality); MR 1.1 (competence)
  • NY DR 1-104, DR 1-105, DR 4-101, DR 6-101, DR 5-105(E)

Cases:

  • Dresser Industries v. Digges, 1989 WL 139234 (D. Md. 1989), partners liable for lack of a compliance system

Other opinions cited:

  • N.Y. State 646; N.Y. State 658 (1994): New York lawyers partnering with foreign-licensed lawyers
  • ABA Formal Op. 423 (2001): differing ethical standards in foreign practice

See also

Source

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