Pro Hac Vice Pro or Con
The Latin term pro hac vice translates to "for this turn." As that phrase implies, admission before a court pro hac vice is temporary and specific to the particular case or proceeding for which admission was sought. The federal courts have historically taken a liberal view of temporary admission of non-resident lawyers, which perhaps dates back to the Supreme Court's decision in Selling v. Radford, 243 U.S. 46 (1917).1 Notwithstanding this liberal view, a non-resident lawyer's ability to obtain temporary admission to appear in court is a privilege and not a right, and granting that privilege rests within the sound discretion of the presiding judge.2
Because neither the Bankruptcy Code nor the Federal Rules of Bankruptcy Procedure provide any guidance regarding the rules and standards for pro hac vice admissions, local rules adopted by bankruptcy courts largely govern this practice.3 With the ever-increasing multi-jurisdictional aspect to bankruptcy practice, bankruptcy professionals must review the applicable local rules and court decisions governing pro hac vice practice before venturing out of their home states. The issues that will be discussed in this article include when pro hac vice admission is necessary, the life span of a pro hac vice admission and the frequency with which an attorney can seek pro hac vice admission, and whether retention of local counsel is necessary.
When Is It Necessary to File a Motion to Appear Pro Hac Vice?
Bankruptcy proceedings are unique in that there are a number of tasks that a lawyer may perform for a client that are more administrative than legal in nature. Certain of these tasks do not require the attorney to obtain permission to appear pro hac vice.4 For example, an attorney who merely wishes to file a proof of claim for a creditor will not be required to seek pro hac vice admission, according to some local bankruptcy rules.5 Local bankruptcy rules in many districts also provide that filing a general request for service will not require pro hac vice admission.6 Even where the applicable local rules are silent on requests for service, courts are likely to take the same view of such an act. In In re Buck, 219 B.R. 996 (W.D. Tenn. 1998), for example, the chapter 13 debtor's attorney filed a motion to strike service requests filed by certain non-resident attorneys because the attorneys were not admitted to practice in Tennessee, had not obtained permission to appear pro hac vice and therefore had engaged in the unauthorized practice of law. The bankruptcy court gave some credence to this theory, suggesting that the only reason to file a request for service is so the attorneys could "exercise their legal training and judgment concerning the impact of bankruptcy pleadings upon the creditor."7 In the end, however, the bankruptcy court, relying on §107(a) of the Bankruptcy Code, which provides that "a paper filed in a case under this title and the dockets of a bankruptcy court are public records and open to examination by an entity at reasonable times without change," found that pro hac vice admission was unnecessary.8 As the bankruptcy court noted, under this "public records" doctrine, anyone, whether or not they are admitted attorneys, can travel to the courthouse to review pleadings, and therefore filing a request for service of pleadings should not be viewed as a substantively different activity.
Similarly, bankruptcy courts have almost uniformly found that the representing creditor at a §341 creditors' meeting does not constitute the practice of law and, therefore, can be accomplished by a non-resident attorney.9 These courts base their holdings on the fact that a §341 meeting is an administrative, rather than judicial, proceeding. This is supported by the fact that §341(c) of the Bankruptcy Code provides that "[t]he court may not preside at, and may not attend, any meeting under this section."10 One court, however, has held that the representing debtor at a §341 meeting does constitute the practice of law. In Duncan v. Garrett (In re Tanksley), 174 B.R. 434 (Bankr. W.D. Va. 1994), the bankruptcy court noted that the Commonwealth of Virginia defines the practice of law as including the representation of another before "any tribunal—judicial, administrative or executive," and further found that an appearance at a §341 meeting constituted an appearance before a "tribunal."11
Two courts have addressed whether negotiating a reaffirmation agreement for a creditor constitutes practicing law and have come to opposite conclusions. The Fifth Circuit Court of Appeals held that negotiating a reaffirmation agreement is one of those activities that "have long been recognized by the bankruptcy courts as administrative functions that can be performed by authorized non-lawyer agents."12 Thus, at least with respect to cases in the Fifth Circuit, a non-resident lawyer can feel comfortable negotiating a reaffirmation agreement for a creditor without obtaining pro hac vice admission. Not so in California, however. In In re Carlos, 227 B.R. 535 (Bankr. C.D. Cal. 1998), the bankruptcy court held that negotiating a reaffirmation agreement does constitute the practice of law. While the Carlos court noted that California does not require contracts to be negotiated by attorneys, "when a client hires an attorney to perform such services...the representation of the client's interests normally constitutes the practice of law."13
In addition to local rules and case law on the subject, case-management orders, if entered, may provide some guidance as to whether non-resident practitioners need to seek admission pro hac vice. Recently, it has become more common in large chapter 11 cases for bankruptcy courts to enter so-called "case management orders" authorizing non-resident, licensed attorneys to practice before the court without the need to obtain pro hac vice admission.14
How Long Will It Last and How Often Can It Be Done?
There are two ways for an attorney's pro hac vice admission to terminate: expiration and revocation. First, because most local bankruptcy rules provide that pro hac vice admission is specific to the particular case or proceeding for which such admission is sought, as soon as the particular case or proceeding has concluded, the pro hac vice admission expires.15 In Schwinn Bicycle Co., the court had approved the admission pro hac vice of an out-of-state attorney in order to allow him to appear and represent a defendant in an adversary proceeding. After the bankruptcy court entered a default judgment against the defendant and closed the adversary proceeding, the attorney filed numerous motions, including motions for sanctions against various parties. The bankruptcy court ordered that all the motions be stricken because the attorney's pro hac vice had expired, and thus, the attorney could no longer participate in the bankruptcy proceeding.16
The second way for an out-of-state attorney to lose his pro hac vice admission is to have it revoked. The requirements for pro hac vice admission are similar to those for admission generally and typically include the same professional responsibilities and ethical standards as required of regular counsel.17 Local bankruptcy rules often require attorneys to certify that they are members of the bar in good standing in every jurisdiction in which they are admitted and that they are not subject to any pending disciplinary proceedings.18 When a non-resident attorney engages in misconduct, revocation is an available sanction.19
Many local bankruptcy rules place conditions or limitations on the number of times an attorney may appear before courts in a certain district pro hac vice. For example, the local bankruptcy rules in Massachusetts provide that an attorney seeking admission pro hac vice more frequently than twice in any 12-month period shall disclose the extent of his efforts to gain admission to the bar of the district or why such efforts have not been undertaken.20 These local rules codify a general principle prevalent in pro hac vice practice that such admission is meant to occur on rare occasions, and any attorney who practices in a district regularly must seek regular admission.21
Is Local Counsel Required?
Perhaps more significant for non-resident bankruptcy attorneys and their clients than the need to take the relatively simple step of seeking pro hac vice admission is the requirement found in many local rules that such attorneys affiliate with local counsel. The local counsel requirement is said to derive from the courts' interest in having at least one representing lawyer who is a member of the bar, who is subject to the courts' general control, and who can be held accountable for any improper or unprofessional conduct that occurs.22 Case law also indicates that local counsel is needed in order to have a local attorney available with whom other parties may "communicate readily."23
Strategically, local counsel may prove to be an invaluable resource. Local counsel are often familiar with the judges and other professionals in the case, as well as courthouse personnel and courtroom procedures. Employing capable local counsel will often make a substantive difference in developing the strategy for the case. When representing smaller debtors or unsecured creditors, however, retaining local counsel may prove to be an inefficient or expensive requirement.24 This concern is particularly acute in bankruptcy practice because of the flexible venue provisions in the Bankruptcy Code, which often result in creditors finding themselves forced to participate in distant bankruptcy proceedings when they had assumed the debtor with which they were doing business was a local company. In addition to the expense involved, retaining local counsel before becoming active in a bankruptcy case may be problematic because such cases often move very quickly, especially in the first few days when first-day orders often determine matters of great significance. When events are extremely fast-moving, it may be difficult for an out-of-state creditor to retain local counsel in time to protect its rights.
Local bankruptcy rules vary in the degree of participation required of local counsel. Certain local bankruptcy rules require that local counsel have extensive involvement in the case, including signing all papers filed with the bankruptcy court and appearing at hearings.25 Others require local counsel, but impose fewer responsibilities on local counsel or are silent on the issue.26 Still others provide that it is unnecessary to affiliate with local counsel at all,27 or simply are silent on the issue.28
Even when local counsel affiliation is required, there are usually some limited exceptions to this rule. As one example, local rules often contain a provision allowing the court to waive the local counsel requirement in cases of "hardship" or "for cause."29 Where the local rules contain such a provision, if a debtor does not want to retain a second law firm, its lead counsel might be able to argue persuasively that waiver of the local counsel requirement would be justified in the interest of minimizing costs to the bankruptcy estate, although no published decision where this particular argument prevailed could be located.30 This would be consistent with the power of bankruptcy judges to issue orders "prescribing such limitations and conditions as the court deems appropriate to ensure that the case is handled expeditiously and economically." 11 U.S.C. §105(d)(2) (emphasis added).31 Bankruptcy courts have also waived the local counsel requirement when there is the potential that the party's involvement in the bankruptcy proceeding may be very limited or short-lived. Thus, for example, in Urbatek Systems Inc. v. Lochrie, 78 B.R. 257 (B.A.P. 9th Cir. 1987), the Bankruptcy Appellate Panel affirmed a bankruptcy court's order allowing a non-resident lawyer to file a motion for summary judgment without associating with local counsel. Finally, in large chapter 11 cases, bankruptcy courts often will enter case-management orders waiving generally the local counsel requirement other than in very active contested matters and adversary proceedings.32
With more and more bankruptcy practitioners finding themselves participating in cases outside of their home state, the rules governing pro hac vice admission and local counsel affiliation have taken on a heightened relevancy. While there have been proposals to nationalize and simplify the rules regarding pro hac vice admission and affiliation with local counsel, this has not yet come to fruition.33 As such, before embarking on an out-of-state representation, an understanding of the rules that govern this area in the relevant jurisdiction will allow the non-resident bankruptcy practitioner to provide appropriate service to clients.
3 The vast majority of bankruptcy courts' local rules provide procedures by which non-resident practitioners may seek admission pro hac vice. A study done by the Federal Judicial Center found that 90 out of 94 (96 percent) of the federal districts permit pro hac vice appearances in the federal district courts. The four remaining districts (D. Ariz., E.D. Mich., W.D. Pa. and E.D. Wis.) have adopted alternative admissions procedures that make pro hac vice provisions unnecessary. See National Bankruptcy Review Commission Service to the Estate and Ethics Proposal #3: Nationwide Admission to Practice (citing Cordisco, "Eligibility Requirements for, and Restrictions on, Practice Before the Federal District Courts," Federal Judicial Center (Nov. 7, 1995)). Return to article
4 See State Unauthorized Practice of Law Committee v. Paul Mason & Associates, 46 F.3d 469 (5th Cir. 1995) (discussing tasks that are administrative in nature). Return to article
5 See, e.g., District of Massachusetts Local Bankruptcy Rule 9010-1(d) (pro hac vice admission not necessary to file a request for service or a proof of claim); Middle District of Florida Local Bankruptcy Rule 2090-1(b) (pro hac vice admission not necessary to file a notice of appearance and request for service of notices, to file proof of claim, to attend and participate at §341 meeting, or to represent creditor at a hearing noticed to all creditors generally, but not in a contested matter or adversary proceeding). Return to article
9 See Paul Mason & Associates, supra n. 4; In re Maloney, 249 B.R. 71 (M.D. Pa. 2000); In re Clemmons, 151 B.R. 860 (Bankr. M.D. Tenn. 1993); In re Kincaid, 146 B.R. 387 (Bankr. W.D. Tenn. 1992); In re Messier, 144 B.R. 617 (Bankr. D. R.I. 1992); In re Gravitt, 1991 WL 497770 (Bankr. E.D. Ky. 1991). Return to article
11 In re Tanksley, 174 B.R. at 437. It is unclear whether the Tanksley decision is intended to cover representing creditors at §341 meetings as well. It is likely that the court intended its holding to apply only to counsel for the debtor because the bankruptcy court distinguished certain cases such as Clemmons, supra n. 9, on the basis that those decisions addressed only creditor representation. On the other hand, the bankruptcy court made broad pronouncements that a §341 meeting is a "tribunal" and that an appearance at such a meeting on behalf of a "client" constituted the practice of law in Virginia, suggesting the possibility of a broader holding. See Id. at 437, 438. Return to article
13 In re Carlos, 227 B.R. at 538. The Carlos decision may be explained in part by the fact that it was issued in the wake of, and in fact cited, the California Supreme Court's decision in Birbrower, Montalbano, Condon & Frank P.C. v. Superior Court, 17 Cal. 4th 119 (1998). In Birbrower, the California Supreme Court held that a New York law firm's activities in California on behalf of a client, namely advising the client, making preliminary arbitration arrangements, and engaging in negotiations with an adverse party that resulted in a settlement agreement, constituted the unauthorized practice of law. The Birbrower decision took many lawyers whose practice reaches beyond their home states by surprise and has prompted a great deal of scholarly debate over its ramifications. See, e.g., Barker, "Extrajurisdictional Practice by Lawyers," 56 The Business Lawyer 1501 (August 2001). Return to article
14 For example, the Order Establishing Case Management Procedures and Hearing Schedule entered in In re Crown Vantage Inc., Case No. 00-41584-N (Bankr. N.D. Cal.), provides a blanket approval for any non-resident, licensed attorney to practice before the bankruptcy court in that particular case. See infra, n. 33. Return to article
15 See, e.g., Schwinn Bicycle Co. v. AFS Cycle & Co., 249 B.R. 760 (Bankr. N.D. Ill. 2000) (citing Northern District of Illinois Local Bankruptcy Rule 602, which provides that "[a] member in good standing of the bar of the highest court of any state or of any U.S. District Court may, upon motion, be permitted to argue or try a particular case in whole or in part.") (emphasis in opinion). Return to article
18 See, e.g., Central District of California Local Bankruptcy Rule 2090-1(b)(5) (requiring statement of good standing and disclosures regarding any disciplinary actions taken against applicant); District of Delaware Local Bankruptcy Rule 9010-1(b) (incorporating district court local rule, which requires a statement that the applicant is in good standing in another jurisdiction and that the applicant does not reside, is not regularly employed or engaged in business in Delaware). Return to article
19 See, e.g., In the Matter of Rimsat Ltd., 229 B.R. 914 (Bankr. N.D. Ind. 1998) (revoking pro hac vice admission of counsel who engaged in unprofessional conduct, including repeated discovery-related abuses); Macdraw Inc. v. The CIT Group Equipment Financing Inc., 994 F. Supp. 447 (S.D.N.Y. 1997) (in response to misconduct, court revoked pro hac vice admission and ordered transgressing attorneys to provide copy of court's written opinion to any other judge in district to whom they apply for admission pro hac vice in the future). Return to article
20 See District of Massachusetts Local Bankruptcy Rule 9010-1(d); see, also, Central District of California Local Bankruptcy Rule 2090-1(b)(5) (requiring applicant to disclose every instance in the previous three years when applicant has filed for admission pro hac vice in California). Return to article
21 See, e.g., In re Reza, 138 B.R. 190 (Bankr. S.D. Ohio 1992) (in denying pro hac vice admission, the court noted that "admission pro hac vice is temporary and limited in character and is not intended to be requested by a practitioner on a frequent basis [and that r]epeated requests for pro hac vice admission before this court by a practitioner who chooses not to take this examination will not be granted."). Return to article
23 See Smith v. Frank, 15 F.3d 1089, 1994 WL 21902, *3, n.2 (9th Cir. 1994) (noting that the purpose of the local counsel requirement is that the local attorney will be available for service of pleadings and communications from court and opposing counsel). Return to article
24 The concern among bankruptcy professionals and their clients regarding the costs associated in retaining an additional law firm is well documented. See, e.g., In re Frontier Airlines Inc., 74 B.R. 973, 977 (Bankr. D. Colo. 1987) (noting that "utilization of more than one law firm almost without question involves some duplication of legal services."); Eisenberg and LoPucki, "Shopping for Judges: An Empirical Analysis of Venue Choice in Large Chapter 11 Reorganizations," 84 Cornell L. Rev. 967, 996 (May 1999) (reporting preliminary results from a survey of debtor's counsel indicating that debtors retain both lead and local counsel in nearly every bankruptcy case filed in Delaware but only in a small minority of cases filed in New York, and concluding that "the decision to file in Delaware rather than New York is, for all practical purposes, the decision to incur the expenses of another law firm's fees."). Interestingly, courts have even considered the local counsel requirements of jurisdictions and the costs involved in determining venue-transfer motions. See, e.g., Irwin v. Beloit Corp. (In re Harnischfeger Industries Inc.), 246 B.R. 421, 438 (Bankr. N.D. Ala. 2000) (in denying motion to transfer adversary proceeding to Delaware bankruptcy court, the court considered the fact that the debtor would have to incur the significant expense of retaining local counsel); In the Matter of Ocean Properties of Delaware Ltd., 95 B.R. 304 (transferring chapter 11 cases to Florida bankruptcy court, in part because Delaware local rules would require additional expense to the debtors of retaining local counsel). Return to article
25 See, e.g., District of Delaware Local Bankruptcy Rule 9010-1(a) and (c) (incorporating district court local rule that requires local counsel to be served with all notices, orders, pleadings and other papers, to sign all papers filed with the court and attend proceedings before the court; rule is waived with respect to filing a proof of claim or responding to an objection to a proof of claim unless claim litigation will involve extensive discovery or trial time). Return to article
26 See, e.g., Western District of Illinois Local Bankruptcy Rule 603(C) (requiring local counsel to be responsible for receiving service of notices and pleadings, but specifically not requiring local counsel to "take responsibility for any substantive aspects of the litigation or to sign any pleading, motion or other paper"); District of Rhode Island Local Bankruptcy Rule 9010-1(c) (requiring local counsel for representation of debtor or trustee and for representation of any entity in contested matters and adversary proceedings, but silent as to local counsel's role). Return to article
Saturday, December 1, 2001