Update: SJC sidesteps out-of-state practice issue

UPDATE: In my rush to read the case below, I overlooked a second SJC decision yesterday that addresses this question in more detail: Superadio Limited Partnership v. Winstar Radio Productions. In a case involving out-of-state practice in an AAA commercial arbitration, the SJC notes that the ABA Model Rules of Professional Conduct now expressly permit multijurisdictional practice in arbitration and that the Massachusetts rules committee is currently weighing adoption of that rule. The court then says:

“We need not decide in this case whether an out-of-State attorney’s representation of a party at a Massachusetts arbitration proceeding constitutes the unauthorized practice of law. In view of the current study of ABA Model Rule 5.5 (c) (3), by our standing advisory committee, prudence dictates that this question await the committee’s report and our action thereon. We conclude that, even assuming that the representation might constitute the unauthorized practice of law, the conduct would not provide a basis to vacate the award.”

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ORIGINAL POST: Would an out-of-state attorney’s representation of a party in a Massachusetts arbitration proceeding constitute the unauthorized practice of law? The Massachusetts Supreme Judicial Court yesterday left lawyers wondering when it sidestepped an answer to the question.

The case, Mscisz v. Kashner Davidson Securities Corp., involved a securities arbitration. (Note: I am a member of the NASD arbitration panel.) The demand for arbitration was filed by New York lawyers in the NASD’s New York office, but because the respondents were Massachusetts residents, NASD selected Boston as the hearing location. The respondents then filed a motion with the arbitration panel to disqualify the New York lawyers because they were not licensed in Massachusetts.

When the panel denied the request, the respondents took their request for declaratory relief to a single justice of the state Appeals Court. The single justice denied the request, ruling that the lawyers would not be engaging in the unauthorized practice of law. The arbitration went forward.

On appeal to the SJC, the court said that, even if the lawyers’ appearance had been unauthorized practice, that would not provide a basis to vacate the arbitration award. In so doing, it left open the possibility that, had it confronted the question directly, it might have disagreed with the single justice:

“[E]ven if an out-of-State attorney’s representation of a party at an arbitration proceeding in Massachusetts might constitute the practice of law, this conduct does not provide a basis to vacate the arbitration award, and, as such, the plaintiffs are not entitled to relief.”