For bankruptcy professionals, particularly transactional attorneys, the ability to practice nationwide without the fear of breaking ethical and legal standards is surprisingly not a given. While litigators can be granted temporary pro hac vice admission, there is no equivalent safe harbor for the transactional bankruptcy attorney. Fewer than fifteen states have adopted any rule allowing for transactional practice on a temporary basis. Thus, unauthorized practice of law violations are not easy to avoid, and they are difficult to define because of anachronistic rules. Cases interpreting these rules are murky and contradictory both to other decisional law and to common sense. Consequently, the rules are often ignored by both practitioners and courts. The tension between the law as it is and the law as it is practiced should be resolved in favor of more liberal rules for bankruptcy practitioners, whose unique specialty provides a strong rationale for change.
This Comment explains the conflict between requirements for admission to state and federal courts and illustrates the general shortcomings of state admissions requirements, particularly with respect to bankruptcy practice. It also explains how the case law defines unauthorized practice of law, in conjunction with the ABA Model Rules of Professional Conduct as recently reworked and adopted and the Restatement (Third) of the Law Governing Lawyers. It also examines enforcement mechanisms for these restrictions. Finally, the Comment asserts that arguments for restricting multijurisdictional practice are unpersuasive, especially in the bankruptcy context. Such arguments smack of anticompetitive rather than consumer protection aspirations. Moreover, the restrictions are economically inefficient, serving form over function in a very specialized arena where there is absolutely no room for waste. We argue that widespread state reform is required, in the form of the new ABA Model Rule 5.5 or legislation such as Michigan's recent exemption rule. Such reform would replace the apparent indifference that currently exists so that practitioners can represent clients legally, effectively, and with confidence.