Bar News - December 17, 2014
Avoiding the Risks of Local Counsel Engagement in Federal Court
By: Daniel Deane
Local counsel in New Hampshire must be served with all process, notices, and other papers, sign all filings, and attend all proceedings, unless excused by the court.
Serving as local counsel offers many rewards. It can provide an introduction to new clients, foster new relationships with out-of-state lawyers, and provide a vehicle to develop substantive expertise in new areas of the law. At a minimum, it gives the local lawyer another chance to practice in his or her local courts.
But while there are many benefits to a local counsel engagement, there are also several pitfalls that are often overlooked. These risks can be mitigated by understanding the true role of local counsel. In the District of New Hampshire, that role is not merely administrative or clerical. Rather, local counsel is legally and ethically bound to “actively associate” in the action and to provide particularized advice relating to local practice.
Local Rule 83.2(b)
The first and foremost function of local counsel is to facilitate the pro hac vice admission of the client’s out-of-state lead counsel. In the District of New Hampshire, pro hac vice admission is governed by Local Rule 83.2(b), which allows for the limited admission in a particular case of any attorney admitted to practice in any other jurisdiction, so long as certain criteria are met.
Most importantly, a member of the bar of the District of New Hampshire (local counsel) must sponsor the out-of-state applicant through a motion for pro hac vice admission representing that local counsel will “at all times” be “actively associated” with pro hac vice counsel in that particular action. The local rule gives some examples of what “active associations” means – local counsel must be served with “all process, notices, and other papers,” must “sign all filings submitted to the court,” and must attend “all proceedings, unless excused by the court.”
Rule 83.2(b) places more responsibility upon local counsel than the local rules in many other federal courts. For example, the analog rule in the District of Massachusetts does not require local counsel to sign all pleadings. Additionally, the Massachusetts rule requires pro hac vice counsel to be “familiar with the Local Rules.” Compare District of New Hampshire Local Rule 83.2(b) with District of Massachusetts Local Rule 83.5.3(b). The omission of a similar requirement in the New Hampshire rule underscores the court’s expectation that local counsel will actively assist pro hac vice counsel in navigating the intricacies of local practice.
With such heightened obligations comes heightened risk.
Pitfalls to Avoid
New Hampshire attorneys should be aware of the following potential pitfalls when accepting a local counsel engagement:
Do not forget conflicts. The Rules of Professional Conduct draw no distinction between lead counsel and local counsel. Thus, attorneys should perform a conflict check at the outset of a new engagement and local counsel should think twice about accepting an engagement that might create adversity with a potential future client. Ethical rules prevent attorneys from dropping an existing client when they later realize that representation of an adverse party in another matter would be more lucrative.
Vouching for out-of-state counsel. Because the pro hac vice application is made on motion by local counsel, it follows that local counsel is vouching for the out-of-state attorney and representing that the applicant’s affidavit is made in good faith. To the extent the opportunity for a local counsel engagement comes from an unknown lawyer, there can be risk here. As in life generally, lawyers should remember that they are judged by their associations. An engagement with an unreasonably aggressive or uncivil pro hac vice counsel could tarnish the reputation of local counsel.
District of New Hampshire judges have publicly rebuked out-of-state and local counsel in cases where sharp litigation tactics and gamesmanship did not accord with local practice. On multiple occasions, this District has adopted the NH Bar Association Litigation Guidelines as a standing pretrial order and has explicitly instructed local counsel to direct their co-counsel “along a safer path... more consistent with this Bar’s traditions of genuine candor, civility and professionalism.” Nault’s Auto. Sales v. Am. Honda Motor Co., (D.N.H. 1993); Aoki Technical Lab., Inc. v. FMT Corp. Inc. (D.N.H., 1999).
Vouching for filings. Because local counsel’s signature is required on all filings, local counsel must be cognizant of Rule 11 of the Federal Rules of Civil Procedure. An attorney’s signature means that the attorney is certifying to the best of his or her “knowledge, information, and belief, formed after an inquiry reasonable under the circumstances” that: (i) the filing is not submitted for any improper purpose, (ii) all legal assertions are supported by existing law or a non-frivolous legal argument, and (iii) all factual assertions or denials have evidentiary support or are likely to have support after reasonable investigation.
Rule 11 can cause anxiety for local counsel who receives a substantial pleading without time to review before filing. The signature obligation can also cause tension with clients who ordinarily prefer to avoid duplication of billable work.
Malpractice and sanctions. While there are no reported decisions in the District of New Hampshire on the topic, other district courts have held local counsel responsible for malpractice even when their role in the representation was limited by agreement. Courts have also held local counsel responsible for litigation misconduct. See, e.g., Horizon Unlimited Inc. v. Silva (E.D. Pa. 2000) (sanctioning local counsel for violating a protective order at lead counsel’s instructions); Ingemi v. Pelino & Lentz (D.N.J. 1994) (finding local counsel was properly named as a defendant in a malpractice action despite local counsel’s merely ministerial role).
Strategies for a Successful Local Counsel Engagement
The above-noted risks can be mitigated through planning, research, and open communication at the start of the engagement. The first step is getting comfortable with lead counsel. Local counsel should perform reasonable due diligence on lead counsel, particularly when the out-of-state lawyer is unknown.
In the digital age, it is quite easy to find information on other attorneys through a simple Google search. Additionally, almost all state bar associations provide information online concerning the status of licensed attorneys and any pending disciplinary proceedings. But the best method for gaining comfort with an unknown attorney remains to simply talk to him or her and ask direct questions. Early conversations with lead counsel will also afford an early important opportunity to set expectations concerning the scope of local counsel’s role.
Indeed, the best method for avoiding pitfalls in a local counsel representation is to have open and candid communication with both lead counsel and the client from the start of the engagement.
Because the Rules of Professional Conduct apply with equal vigor to local counsel, it is imperative to memorialize the scope of local counsel’s role in an engagement letter with the client as well as in written correspondence with lead counsel. To prevent duplication of effort (and duplicative billing), a lawyer “may limit the scope of representation if the limitation is reasonable under the circumstances and the client gives informed consent.” NH Rules of Prof. Conduct, R. 1.2(c). But remember that informed consent can only be given by the client, not by lead counsel, and the limitation must be reasonable.
In light of New Hampshire’s relatively stringent pro hac vice rule, it is likely not reasonable to limit local counsel’s role to something less than set forth in Local Rule 83.2(b). Rather, local counsel should retain the duty to be the expert on matters of local practice.
The engagement letter not only provides the opportunity to spell out the precise contours of local counsel’s role, it also allows local counsel to address other issues such as potential future conflicts and how local counsel’s bills will be paid. Setting these ground rules early in the engagement will prevent misunderstandings and frustrated expectations down the road.
Dan Deane is a litigator in the Manchester office of Nixon Peabody. His practice focuses on resolving complex business disputes and government investigations for clients in health care, insurance, hospitality, and financial services.