Considering the length of the pending bankruptcy legislation, and the length of time it has been pending, it would seem that there should be little left to deal with. But, regardless of what happens with the current bill (and, as I write, there is still no clear answer as to its fate), there are other matters that government counsel believe need to be addressed. My relatively modest proposals don't have the high profile of consumer bankruptcy issues, won't attract any campaign contributions, and produce the dreaded MEGO ("my eyes glaze over") syndrome when raised with Congressional staff.

Yet, as boring as they seem, they would make a significant difference for government counsel in being able to represent the state's citizens in an efficient and cost-effective manner. They would be helpful for others as well, but for now I limit my arguments to government counsel, which hopefully removes some of the potential controversies that might be raised if made generally applicable. If they work out well in that limited context, it would be reasonable to consider expanding the program to all counsel later.

So what am I suggesting? That's simple—national admissions to bankruptcy court and a removal of the mandatory requirement for use of local counsel.

The national admissions/local counsel provisions were dealt with by the National Bankruptcy Review Commission (see pp. 883-888 of its report), which recommended that a national admissions provision be implemented generally, but made no proposal on the more controversial topic of local counsel requirements. During the Commission discussions, Judge Edith Jones expressed concerns about the national admissions proposal, which I take as a starting point for analyzing the merits of this issue. As discussed below, Ibelieve her concerns, and those of others who might oppose this provision, miss the mark and can be readily resolved by the structure of the particular proposal being made.

Judge Jones in particular argued that providing for national admissions would give a "special benefit" to bankruptcy practitioners. In fact, though, it merely removes the unique difficulties that bankruptcy filings impose on other parties to the case. Because the venue provisions of the Code give a debtor great leeway to set the locale of the case, he can easily create a situation where his creditors must leave their local courts and appear in a jurisdiction to which they otherwise never could have been brought. Not only will those creditors now face significantly greater burdens in bringing their evidence and their witnesses to a distant forum, but on top of that they are told they must take additional burdensome steps just to appear. When creditors' lawyers are forced to seek admission to a foreign court, they are not voluntarily swarming into other states to expand their practices, they are there because the debtor has forced them to come. It adds insult to injury to suggest they are receiving a "special benefit" just to be allowed to continue representing their own clients.

If this were the inevitable result of all federal litigation, then Judge Jones's comment might be correct. But in fact, the result is exactly the opposite in the most closely analogous form of complex federal litigation, namely multidistrict litigation. Cases before the Judicial Panel on Multidistrict Litigation have many similarities to bankruptcy cases; there, too, for reasons of convenience, multiple parties may be forced to leave their home courts and litigate their issues in a common forum that may be distant from their location. In such litigation, though, they need not suffer the difficulties inherent in bankruptcy litigation; instead, Multidistrict Rule 6 provides exactly what I am arguing for:

Every member in good standing of the bar of any district court of the United States is entitled without condition to practice before the Judicial Panel on Multidistrict Litigation. Any attorney of record...may continue to represent his or her client in any district court of the United States to which such action is transferred. Parties to any action transferred under ß1407 are not required to obtain local counsel in the district to which such action is transferred.

If this is appropriate in multidistrict litigation, why not equally so in bankruptcy?

The need to obtain admission to the local court and local counsel is particularly onerous in light of the speed at which bankruptcy moves. "First-day" orders routinely decide issues of great significance in the case, and out-of-state parties are severely hampered if they must first jump through procedural hoops and obtain local counsel before they can say a word. When bankruptcy matters often proceed on expedited schedules, and statutes of limitations are compressed to a few months, procedural barriers that might otherwise be manageable become major problems.

State and local governmental counsel are particularly disadvantaged in this regard. Most governmental debts are incurred involuntarily so there is less ability for the government to dictate a choice of laws, or to control where their debtors may live or hold their collateral. Moreover, unlike the federal government, which has offices and staff nationwide, states and localities will normally have no one working in other states. Yet, local rules on admissions and local counsel generally exempt only federal employees from their coverage, but not employees of other governmental entities. Nor are states and localities like a large business with offices all over the country that may already have counsel under contract in each area. Instead, they normally handle all legal work through their own staff. In some cases, there even may be legal restrictions on hiring outside counsel; even if not, it will undoubtedly be a more complex and burdensome contracting process than for private businesses. Indeed, states have found themselves embroiled in significant political controversy merely arising out of the decision as to whom to hire as outside counsel, which is another reason why they generally find it to be preferable to use their own staff.

The burden of moving for admission and securing local counsel is further exacerbated by the lack of any uniformity in the requirements in various local rules. The differences from state to state and, indeed, from district to district, are startling. In some, one can appear immediately and let the paperwork follow as it may; in others, one may not do anything until the paperwork has been formally approved by the judge. Similarly, some courts require little more than that a party obtain a signature by a local counsel on an initial pro hac vice motion; others require local counsel to personally attend every hearing in the case even if the primary counsel is there, thus doubling the cost the client must bear. The disparity of the rules ensures that this is yet one more time-wasting research project for the lawyer—as well as a good indication that courts can function quite well with far less stringent requirements than the most burdensome districts impose.

Congress has already authorized national admission for counsel for domestic support creditors, and the attorneys general believe, and have repeatedly urged, that it should do no less for other agencies of state and local government when they must appear on behalf of their other citizens. Some would argue (as did the Commission) that a national admissions provision, standing alone, is enough. I suggest that an admissions policy, without relief from burdensome local counsel rules, provides little meaningful relief for governmental entities.

First, as noted above, hiring such counsel can be extremely burdensome and expensive, and will usually be in addition to, not in lieu of, the use of staff counsel. Strict requirements for the bidding process make it difficult to obtain private counsel on an expedited basis and the cost factor militates against their use. Thus, the state will usually seek assistance from the local attorney general's office, not from outside hired counsel, at least in the opening phases of the case and if the matter is not overly complex. In short, with or without local counsel requirements, government claimants are unlikely to provide a large market for services from the local bar—thus eliminating an important (if not always conceded) reason for imposing local counsel requirements.

Second, abolishing requirements for local counsel does not mean they will no longer be used. Prudence dictates that the states will normally consult with the local attorney general's office—indeed, the National Association of Attorneys General (NAAG) maintains a directory of state bankruptcy counsel for this purpose. And if there is to be substantial involvement in a distant case, states do not need a local rule to tell them that it makes sense to have someone who can devote the significant time that is necessary, which probably does mean eventually hiring private counsel. But mandating such involvement in every case, particularly to the point of requiring that local counsel sign all pleadings and appear at all hearings, is highly burdensome, disruptive of the work of the local office and likely to dissuade them from being willing to assist their out-of-state compatriots at all.

Third, because of bankruptcy's unique jurisdiction, local counsel may often have no knowledge of the relevant substantive issues. What can local Tennessee counsel in a Tennessee bankruptcy court, for instance, really add to a discussion of New York state tax issues by a New York state attorney? If his only real purpose is to initiate out-of-state counsel into the critical arcana of how the local court wants its pleadings to look, it is overkill to put a lawyer on that job, since the lawyers usually just leave such matters up to their secretaries and paralegals anyway.

A fourth policy reason often raised—and one that is explicit in many of the rules dealing with local counsel—is that they are necessary to ensure that the court can move quickly in an emergency or because they require that there be someone with whom, as many rules read, the other side can "communicate readily." While that may sound reasonable on its face, the argument does not bear close scrutiny. To begin with, in this era of fax machines and e-mail (not to mention the old-fashioned telephone), getting notice to someone across the country takes no longer than to someone across the street. Nor is there reason to believe that local counsel are sitting magically waiting and poised in their office, ready to appear at a moment's notice on some case for which they do not even bear primary responsibility. Certainly, I am unaware of any evidence that would suggest that one is more likely to be successful in catching in-town lawyers at their desk than out-of-town counsel. Nor is it likely that most local counsel are really ready to step in and handle a hearing without notice unless the court is one that requires the creditor to pay for keeping two lawyers fully conversant with the case. Such rules are truly oppressive and ultimately suggest that parties cannot be trusted to have the good sense to decide whether there is so much work in a particular case that it makes practical and financial sense to turn the matter over to the local lawyer.

A final reason for treating governmental counsel separately is that they have no pecuniary interest in appearing out-of-state or obtaining additional work there. They are forced into those foreign courts by the debtor's choice, not their own, and they work only for the state. Thus, there is no likelihood that they will attempt to use these rules as a way of increasing their own practice or to avoid the control of the courts in which they practice. Government counsel also may be less likely to raise concerns that the court will lose its ability to control their conduct. In the first place, as our proposal below suggests, the discipline question can be relatively easily addressed in the structure of the admissions process. In addition, government counsel do work in a formal employment structure and are answerable to their superiors, which gives a court a responsible official with whom it may lodge its complaints.

In short, for all of these reasons, I suggest it is worth bringing this issue back to the forefront. I was pleasantly surprised to learn that this issue is also being studied by the American Bar Association in its re-examination of the Rules of Professional Conduct. Although it takes a different tack, it too recognizes that the growing nationalization of law strongly argues for a greater ability of counsel to work across state lines. That rationale is obviously highly pertinent to bankruptcy practice, which is, by definition, national in scope and subject to a uniform national law. What better place to start the experiment with a uniform national admissions practice? My suggested language follows:

111. Admission to Practice and Local Counsel Requirements

(a) An attorney employed by a governmental unit who is admitted to practice before any bankruptcy court of the United States and is a member in good standing in all jurisdictions in which he or she is a member of the bar shall be entitled to practice in one or more cases in any bankruptcy court of the United States on the following conditions:

(1) On or before the first time the attorney appears in court or files a pleading, he or she files with the clerk of the court a Certificate of Admissibility in a form to be prescribed by the director of the Administrative Office for the U.S. Courts, signed under penalty of perjury, that attests to his or her compliance with the requirements of this paragraph and his or her affirmation that he or she has read and is subject to all local rules of the court;
(2) Appearance in the bankruptcy court will subject the attorney to the disciplinary authority of the court to the same extent as if the attorney had been admitted on a motion pro hac vice; and
(3) Notwithstanding the foregoing, nothing herein will preclude a bankruptcy court from requiring that counsel who reside, have an office in, or appear regularly and substantially in multiple cases within the bankruptcy district be admitted to the local bar before being allowed to practice in the bankruptcy court.

(b) Any attorney who is admitted to the bankruptcy court under these provisions shall also be entitled to appear in the district court under the same conditions in appeals of any decisions rendered by the bankruptcy court, or in matters withdrawn from the bankruptcy court, by filing an updated Certificate of Admissibility with or before his or her first such appearance or filing of a pleading in the district court.
(c) Any attorney regularly employed by a governmental unit shall not be subject to any local counsel requirements prescribed in local rules of the bankruptcy or district courts when appearing on behalf of that governmental unit in the circumstances described in paragraphs (a) and (b).