A Local Counsel’s Duties and Responsibilities
Are there potential pitfalls in accepting a role as a “mailbox”, or a local counsel whose role is to merely facilitate an out-of-state lawyer’s working on a pro hac vice basis in your jurisdiction? Upon being retained, most lawyers asked to serve as local counsel will advise national counsel that they will do as much or as little as national counsel requires. Are there instances, however, when doing too little is not doing enough? Local counsel’s duties and responsibilities are governed by (1) first and foremost, referring out-of-state counsel’s requirements (2) local counsel’s obligation to the court and (3) the Model Rules of Professional Conduct. In most circumstances, local counsel has no difficulty navigating among these various interests. There are times, however, when out-of-state counsel’s directions to local counsel may place local counsel at risk of violating the court rules or ethical standards.
For example, out-of-state counsel’s litigation guidelines may provide that local counsel is not required to review pleadings and court papers prepared by out-of-state counsel, but to which local counsel is asked to sign her name. The litigation guidelines may further provide that the client will not pay for local counsel’s time reviewing such pleadings and court papers. Nonetheless, according to New York City Bar Association (“NYCBA”) Formal Opinion 2015-4, local counsel will remain bound by the court rules and potentially subject to sanctions if she signs her name to a frivolous complaint or a pleading containing counts not supported by the facts alleged in the complaint. A client can give an “informed consent” to limiting the scope of local counsel’s representation, but even with a written “informed consent”, a lawyer serving as local counsel may not be completely out of the woods. According to the NYCBA opinion, a limited scope representation may effectively reduce the potential professional liability of local counsel by limiting expectations concerning the task to be undertaken. However, an attorney cannot contractually limit her liability nor contract away her ethical duties.
What is probably every local counsel’s nightmare became reality In Macawber Engineering, Inc. v. Robson & Miller, 47 F.3d 253 (8th Circuit 1995). In the underlying case, Macawber, a seller of industrial equipment, was sued in a commercial dispute in federal district court in Minnesota. Macawber retained Robson & Miller, a New York law firm, to defend the suit. Robson & Miller retained the law firm of Abdo & Abdo to serve as local counsel. Thereafter, the plaintiff served Macawber with a set of 130 requests for admissions, which New York counsel inexplicably ignored and failed to timely respond to. Subsequently, the district court deemed the requests for admissions admitted and granted partial summary judgment in favor of plaintiff.
Thereafter, Macawber sued both its New York law firm and Minnesota local counsel for legal malpractice. Remarkably, the Eighth Circuit affirmed the district court’s order granting Abdo & Abdo summary judgment despite that firm’s failure to consult with the client about the limited scope of its representation as local counsel. The appeals court held that local counsel did not have a duty to monitor lead counsel’s handling of the requests for admissions. The court reasoned that “[w]ere the law otherwise, the costs involved in retaining local counsel would increase substantially…Out-of-state litigants would be forced to pay a local lawyer to review lead counsel’s work” which would result in “skyrocketing costs of litigation”.
Apart from these public policy considerations of the cost of litigation, there were some mitigating facts that no doubt influenced the court’s decision to let local counsel off the hook. First, the plaintiff in the underlying suit did not serve local counsel with the requests for admissions at issue or the motion for summary judgment that followed on the heels of Macawber’s failure to timely respond. (We sometimes forget that in the pre-Internet era a lawyer needed to place a stamp on an envelope to serve legal papers). Second, in reviewing local counsel’s invoices to Macawber, the court determined that local counsel had hardly billed any time to the matter. Third, Macawber’s CEO testified that he relied on New York counsel to handle the litigation and direct the activities of local counsel Finally, it was not disputed by New York counsel that local counsel’s role was limited.
In my view, Macawber presents the minority view. Increasingly, the trend is away from the view that some counsel have only limited responsibility and represent a client in court in a limited capacity, or that the local counsel is somewhat less the attorney for the client than is lead counsel. As the New Jersey district court discussed in Ingemi v. Pelino & Lentz, 866 F. Supp. 156 (D.N.J. 1994), the Federal Rules of Civil Procedure and the Local Rules for District of New Jersey do not recognize any lawyers, including local counsel with limited responsibilities, as less than full advocates for their clients. It is the expectation of federal judges in New Jersey that local counsel play more than a de minimis role in matters where they are retained by out-of-state counsel. In Ingemi, the court stated:
First, members of our Bar are familiar with the rules and customs of this Court and are expected to both educate pro hac vice attorneys on, and enforce, those rules and customs. Second, members of the Bar of this Court are more readily available than pro hac vice attorneys for conferences or other matters which arise in the course of litigation. Third, the Court looks to members of its Bar to serve as liaison between it and pro hac vice attorneys and to ensure effective communication between the Court and pro hac vice attorneys.
The District of New Jersey’s admonition to members of the New Jersey bar who agree to act as local counsel for out-of-state lawyers is echoed in Curb Records v. Adams & Reese L.L.P., 203 F.3d 828 (5th Cir. 1999)(per curiam). In that case, Adams & Reese, serving as local counsel, was specifically instructed by national counsel not to deal directly with the client. Further, national counsel specifically instructed the law firm that its role was limited to filing and forwarding pleadings, discovery and orders. Subsequently, national counsel’s failure to respond to a series of the adversary’s discovery requests resulted in the client’s affirmative defenses being stricken. An unfavorable settlement followed and the client brought suit.
In reversing the district court’s dismissal of the claim against Adams & Reese, the Fifth Circuit held that “local counsel has an inherent and nondelegable duty to report directly to its client any known instances of malfeasance and misfeasance on the part of lead counsel that an objectively reasonable lawyer in the locality would conclude are seriously prejudicial to the client’s interests.” Although the court recognized that local counsel’s obligations to the client are substantially lessened when it is clear that national counsel has been vested with the primary obligation for conducting the litigation, a line is crossed in instances, as presented by the facts in Curb Records, where out-of-state counsel’s conduct is outside the “spectrum of norms”. Unlike the situation presented in Macawber where local counsel was not served with either the requests for admissions or the motion for summary judgment that followed, Adams & Reese received the discovery requests at issue and was aware of national counsel’s failure to respond. What is not clear from the Fifth Circuit’s decision is whether Adams & Reese raised “red flags” in a timely manner with national counsel and what discussion, if any, occurred between them concerning the plaintiff’s discovery demands. The courts in both the New Jersey and Louisiana cases appear to be sending the message that out-of-state counsel are welcome to practice in their jurisdictions so long as their in-state local counsel remain cognizant that their duties and responsibilities to both the client and the court remain non-delegable.
Where national counsel is handling multiple related litigations for a large corporate client nationwide, local counsel may not even know who in the corporate legal department has primary responsibility for the litigation. If local counsel has not had any direct “client” communication, it may not be clear who local counsel should call when national counsel’s conduct crosses beyond the “spectrum of norms”. If local counsel is dealing primarily with a junior lawyer at the national counsel’s firm, the first step would be to communicate directly with the partner at the firm who has direct responsibility for the litigation.
There is no question that being asked to serve as local counsel to a major out-of-state law firm serving as national counsel to a corporate client in a series of high profile cases can be a plum assignment. However, depending upon the terms of local counsel’s retention and the scope of work local counsel is asked to perform, the opportunity may not be worth the stress and potential liability.
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