News and Information
October 25, 2007

Council to Review Proposed Foreign Legal Consultant Rule 1A:7

Additional Info view proposed changes to Rule 1:A7 (pdf)

On March 1, 2008, the Virginia State Bar Council (“Bar Council???) will meet at the Omni Hotel in Richmond to consider a proposed rule that will allow a non-U.S. attorney to practice in Virginia as a Foreign Legal Consultant (“FLC???). The proposed rule is work product of the Virginia State Bar’s Task Force on Multi-jurisdictional Practice (“MJP Task Force???). It is a revised version of the FLC Rule presented to and approved by Bar Council in February 2005 and which was then submitted to the Virginia Supreme Court for review and approval. While under the Court’s review certain necessary revisions were identified and on February 13, 2007, the Virginia State Bar withdrew its petition for approval of this rule. The MJP Task Force reconvened in April and September 2007 to make these revisions and produced the current proposed FLC Rule.

The MJP Task Force revised paragraph (d) to clarify the scope of practice of a FLC and add a definition of “international law;??? added paragraph (e)(2)(ii) to allow a FLC to be employed as in-house counsel under Part II of Rule 1A:5 Rules of the Virginia Supreme Court; and revised paragraph (g) to give the Virginia Board of Bar Examiners authority to set the application and renewal fees for FLC status.

The need for and importance of Virginia’s adoption of the FLC Rule has only increased since the Rule was first proposed in 2004. Currently twenty eight (28) jurisdictions have adopted a foreign legal consultant rule. Bilateral agreements are being negotiated between individual states and some foreign countries. In this global economy, business transactions increasingly require the involvement of U.S. and non-U.S. lawyers. All but five states annually export billions of dollars of merchandise; even the five smallest exporters ship hundreds of millions of dollars of merchandise to other countries. (See http://www.ita.doc.gov/td/industry/otea/state/2005_year_end_dollar_value_05.html for a state-by-state listing of exports over the last five years.) To appreciate the magnitude of these exports, Illinois, which ranked 6th highest in exports, exports $26 billion dollars annually. Rhode Island, which is ranked 45th in the country, exports over $1 billion annually. Virginia is ranked 23rd, with a total of over $12 billion annually. In addition to these exports, every state in the country has significant foreign investment or imports. Clients who are engaged in this inbound and outbound trade undoubtedly want to (and probably do) rely on the expertise of both U.S. and non-U.S. lawyers.

Furthermore, because of its location on the Atlantic seaboard and its proximity to Washington, D.C., Virginia has become an attractive location for international business. Many companies with either parents or divisions overseas have established sales and service offices or headquarters in Virginia. In fact, more Fortune 500 companies are located in Virginia than in each of 40 other states. See Fifty Years of the Fortune 500 (April 5, 2004). According to the Virginia Economic Development Partnership, nearly 800 Virginia corporations have overseas operations, and thus have potential need for the expertise of foreign lawyers. Today in Virginia foreign-owned firms are present from more than 40 countries, account for more than 130,000 Virginia jobs, and represent more than 5 billion dollars in investment in the Commonwealth. See Virginia International Trade Alliance: http://www.vitalforva.org/task_forces/existing_international_companies.htm.

Authorizing foreign lawyers to be regulated as FLCs (and allowing U.S. lawyers to hire and partner these FLCs) can also benefit residents of Virginia who were born in another country. Every U.S. jurisdiction has a significant number of residents who were born in other countries, many of whom probably still have connections in their country of origin. Based on the 2000 census, Virginia increased its foreign-born population by 83% between 1999 and 2000 and 35.7% between 2000 and 2006 and is ranked 11 out of the 50 states and the District of Columbia. See Migration Information Source at http://www.migrationinformation.org/USFocus/statemap.cfm#.

The proposed FLC rule is in the best interests of clients because it provides access to foreign law expertise with accountability; FLCs will be subject to the ethics rules and discipline system in Virginia. Many of the clients in Virginia that are engaged in import or export activities will need advice about foreign law. The proposed FLC rule serves the interests of clients because it makes it more likely that these clients could remain in the U.S. and find foreign law expertise. In addition, the foreign-born residents in Virginia will be better served if they have access not just to U.S. lawyers who can advise on domestic law, but FLC’s who can advise them on the law of a foreign country. Without the proposed FLC rule, foreign-born citizens and clients needing professional advice on the law of a foreign country would have to look for FLCs in another state where they are authorized to practice. This translates to lost revenue and business opportunities for Virginia.

The public, as well as individual clients, benefit by having foreign lawyers accessible and accountable. The proposed FLC rule acknowledges and addresses the economic realities, in which there is significant inbound and outbound foreign trade (and foreign lawyers who work on that trade). Without foreign lawyer participation, much of this economic reality could not occur. The proposed FLC rule therefore facilitates the participation of regulated, accountable foreign lawyers.

Adoption of the FLC rule will help Virginia lawyers as well. Experience has shown that in a global economy, when jurisdictions close their borders to foreign lawyers, global businesses move to another jurisdiction where foreign lawyers are available. By recognizing the rights of foreign lawyers to practice in a limited fashion in the U.S. temporarily and with accountability, the proposed FLC rule makes it more likely that multinational clients will continue to rely on Virginia lawyers (rather than UK or Canadian lawyers) for their legal work. While a solo practitioner or small firm is less likely to represent multinational corporations, chances are good that many of their clients will in the future have legal issues involving foreign law.

Finally, the FLC rule is in the best interest of Virginia and other U.S. lawyers who practice overseas. U.S. foreign lawyers are among the most active participants in the globalized world economy. According to the National Law Journal, the number of lawyers working in foreign offices jumped from 800 in 1982 to 10,493 in 2004.1 U. S. lawyers have responded to clients’ needs by opening offices in more than 30 foreign countries, with an estimated 1,000 lawyers. In addition, probably tens of thousands of U.S. lawyers regularly travel abroad to perform services on a temporary basis in foreign countries, assisting their U.S. clients with their foreign interests or representing foreign companies doing business with U.S. firms and individuals. Commerce Department statistics indicate that U.S. lawyers have earned well in excess of $3 billion in the last calendar year through their “export??? of legal services. The actual figures may be substantially greater. Adoption of this rule will facilitate the work of U.S. lawyers engaged in international work because it will make it clear that foreign lawyers can receive a license to practice their Home State law and can work with U.S. lawyers and law firms.

The proposed FLC rule carves out a rather limited role for the foreign legal consultant. A FLC will be permitted to render any legal services only with regard to matters involving the law of the foreign nation(s) in which the person is admitted to practice, or international law. They cannot appear before any court. Finally, a FLC cannot hold him/herself out as a member of the Virginia State Bar.

Inspection and Comment

The proposed rule may be inspected at the office of the Virginia State Bar, 707 East Main Street, Suite 1500, Richmond, Virginia 23219-2800, between the hours of 9:00 a.m. and 4:30 p.m., Monday through Friday. Copies of the proposed rule can be obtained from the offices of the Virginia State Bar by contacting the Office of Ethics Counsel at 804-775-0557, or can be found at the Virginia State Bar's Web Page at http://www.vsb.org. Any individual, business or other entity may file or submit written comments in support of, or in opposition to, the advisory opinion by filing ten copies with Thomas A. Edmonds, the Executive Director of the Virginia State Bar, not later than January 4, 2008.

 


 

Footnotes

1 David Hechler, As Economy Slows, So Does Firms’ Global Reach, THE NATIONAL LAW JOURNAL (November 15, 2004) at S10.

Updated: Oct 25, 2007