The Unauthorized Practice of Law in Michigan ADR – A Journey

This article was first published in the Oakland County Legal News on May 7, 2024.

Introduction

In 2023 I was appointed to arbitrate a matter in which an out-of-state resident was a party to the proceedings.  The parties had agreed by contract to arbitrate here in Michigan and that Michigan law would control.  Both parties had counsel but the lawyer for the out of state party was not licensed in Michigan, which raised an issue as to the lawyer’s ability to appear and represent his client in the proceedings.  I was unsure of the answer and did some research. What I discovered is shared here. 

In short, when arbitration or mediation proceedings are court ordered, the answer is plain – as a prerequisite to the ability to represent a party in the matter, the out-of-state lawyer must first be granted temporary admission via the court’s pro hac vice procedures. But where, as in this case, it is a non-court-annexed proceeding, the necessary process, or whether one is even required, is less clear.   Nevertheless, the law, as well as ethical and practical considerations, suggest that pro hac vice admission is still required, and that in the absence of a judge, the assigned mediator or arbitrator is the appropriate body to review and pass upon any such requests.  To clear up any confusion, rule amendments and a developed procedure for addressing possible unauthorized practice of law by out-of-state lawyers in Michigan non-court-annexed mediations and arbitrations would be helpful to arbitrators, mediators, and advocates alike.

The Statute and Court Rule

Michigan statute, MCL 600.916, provides that a person shall not practice law in Michigan unless licensed and authorized to practice law in Michigan, with certain limited exceptions:

  1. 1. A person shall not practice law or engage in the law business, shall not in any manner whatsoever lead others to believe that he or she is authorized to practice law or to engage in the law business, and shall not in any manner whatsoever represent or designate himself or herself as an attorney and counselor, attorney at law, or lawyer, unless the person is regularly licensed and authorized to practice law in this state… This section does not apply to a person who is duly licensed and authorized to practice law in another state while temporarily in this state and engaged in a particular matter.

The final sentence of Section (1) is the rub.  It provides that a person properly licensed to practice law in another state may practice law in Michigan “temporarily”. 

Is participation by counsel in an arbitration or mediation the practice of law? The court in Dressel v Ameribank 468 Mich 557 (2003) provides guidance. The court states at page 566:

We agree and reiterate that a person engages in the practice of law when he counsels or assists another in matters that require the use of legal discretion and profound legal knowledge.

It would seem then that assisting a client in a mediation or arbitration, assessing the strength and weaknesses of legal positions, applying facts to law, drafting mediation and arbitration statements, appearing at a mediation, appearing at an arbitration and participating in the hearing including advocating a legal position and handling the evidentiary portion of a hearing, fits within the Dressel definition of “practicing law”.  Indeed, Michigan Court Rule 8.126 (A), contains a process for obtaining temporary admission and provides that an out of state lawyer participating in an arbitration:

…may be permitted to appear and practice in a specific case in a court, before an administrative tribunal or agency, or in a specific arbitration proceeding in this state when associated with and on motion of an active member of the State Bar of Michigan who appears of record in the case. 

Note that at present the Rule does not mention “mediation” and does not distinguish between a court-annexed arbitration and an arbitration commenced independent of a court proceeding.

MCR 8.126 (B) Waiver describes the circumstances under which an out of state lawyer may obtain a waiver of the requirement to associate with local counsel.  The waiver opportunity appears to apply only to a “court” proceeding and not to an arbitration.  See, for example MCR 8.126 (A)(1) where a motion for temporary admission must be submitted to the “court…or arbitrator”. But a waiver may be obtained from the court, at its discretion, for limited exceptions when the out of state lawyer produces an affidavit verifying the attorney is in good standing in all jurisdictions in which they are licensed to practice, not suspended or disbarred and is familiar with the Michigan Court Rules and Rules of Evidence. MCR 8.126 (B).

Ethical Considerations

Michigan Rules of Professional Conduct Rule 5.5 discusses the unauthorized practice of law and multi-jurisdictional practice. Rule 5.5 (a) provides that a lawyer may not practice law in violation of the regulations of the jurisdiction in which they intend to practice.  Rule 5.5 (b) states  a lawyer not licensed in Michigan shall not practice law in Michigan unless authorized by an exception provided later in the rules.  Rules 5.5 (c), (d) and (e) provide the exceptions.  Rule 5.5 (d) and (e) speak to in-house corporate lawyers, government lawyers and to multi-jurisdictional issues and a lawyer licensed in another jurisdiction but residing in Michigan. These issues are beyond the scope of this article.

Focusing on MRPC 5.5(c), a lawyer admitted in another jurisdiction of the United States and not suspended or disbarred, may provide temporary legal services” (providing guidance as to the meaning of “temporarily” in MCL 600.916), if 

(c)(1) The out of state lawyer is associated with a local lawyer;

(c)(2) The representation is related to a pending or potential pending proceeding before a “tribunal” if the out of state lawyer is authorized to appear in such proceeding or reasonably expects to be so authorized; 

c(3) The legal services relate ”to a pending or potential arbitration, mediation, or other alternative dispute resolution proceeding in this or another jurisdiction, if the services arise out of the lawyer’s practice in a jurisdiction in which the lawyer is admitted and are not services for which the forum requires pro hac vice admission”; or

(c)(4) “Not covered by c(2) and c(3) and arise out of or reasonably related to the lawyer’s practice in the jurisdiction where the lawyer is admitted to practice.”

The Comments to MRPC 5.5(c)(3) explain that an out of state lawyer may appear in a Michigan mediation or arbitration but “must obtain admission pro hac vice under MCR 8.126 in the case of a court-annexed arbitration or mediation, or otherwise if required by court rule or law”.   So, what if the mediation or arbitration are not “court-annexed”.  The Michigan Court Rules, current version, and as recently proposed, do not make a distinction between court-annexed arbitration and non-annexed arbitration but the proposed amendments do make a distinction between court-annexed mediation and non-court-annexed mediation. See below.

The Standing Committee on Professional Ethics has weighed in on the unauthorized practice of law in arbitrations.  It issued an informal opinion, RI-382 (2021), that discusses the unauthorized practice of law, the duty of a lawyer to report the unauthorized practice of law, and temporary legal services under MRPC 5.5(c)(3).  

Specifically, the informal opinion concludes:

  1. 1. Attorneys and judges have a duty to report the unauthorized practice of law to the State Bar of Michigan when they have actual knowledge of such activity.
  2. 2. Only the legislature and courts can determine whether specific conduct constitutes the unauthorized practice of law.
  3. 3. MRPC 5.5 provides that, absent meeting the exceptions contained in this section, an out of state attorney may not practice law in Michigan. 
  4. 4. MRPC 5.5(c)(3) is one of the four “scenarios” where an out of state attorney may practice in Michigan. This scenario relates specifically to ADR. 

RI-382 concludes:

“Pro hac vice admission is required in matters arbitrated in Michigan”. relying on MCR 8.126.” No distinction is made between court-annexed and non-court-annexed arbitrations. However, other adr proceedings (such as a mediation) must comply with one of the exceptions in MRPC 5.5.

Proposed Amendments to MCR 8.126

ADR providers and advocates should take note that the Michigan Supreme Court recently (March 27, 2024) published for comment proposed amendments to MCR 8.126.  See ADM File No. 2022-10. The comment period ends July 1, 2024. The staff comments reflect that the proposed amendments would “clarify and streamline” the pro hac vice process.

Currently, when an out of state attorney wants to participate in a Michigan arbitration, they must comply with MCR 8.126.  In addition to obtaining a sponsoring attorney, the out of state attorney must file a motion before the court or arbitrator seeking temporary admission and provide required information.

Importantly, the proposed amended rule makes a mediator “who conducts a facilitation or mediation” a “tribunal” in non-court related mediations. Hence, the mediator is the person to whom a motion for temporary admission is directed. And, significantly, in the proposed amended rule, an out of state lawyer participating in a Michigan mediation must obtain a sponsoring attorney and temporary admission from the mediator.  It would seem then that RI-382 would then arguably support the position that out of state lawyers participating in a Michigan mediation must be admitted pro hac vice. 

In the proposed rule, the court, the arbitrator, and mediator (in a non-court related mediation) may waive the sponsoring attorney requirement. In the current rule, the “court”, only, has the authority to waive the sponsoring attorney requirement.  

Practical Considerations

There are good reasons to take an unauthorized practice of law question seriously, especially in an arbitration.

First, as lawyers we have a duty to report professional misconduct. See MRPC 8.3(a) and RI-382, supra.  Lawyers have a duty to comply with MRPC 5.5.  Another lawyer who does not seek temporary admission when the law requires, will be in violation of the Michigan Rules of Professional Conduct MRPC 8.5 and likely in violation of the Rules of Professional conduct in the jurisdiction in which they are licensed.

Second, the failure to address an unauthorized issue of law issue could impair the validity of an arbitration award.  Less we think this cannot happen and who would make such a claim, a few cases actually have addressed such a claim.  In Lawshawn Hines v Everest Institute, Case Number 2:13-cv-15219, (2014) ED Mich, the plaintiff filed a motion to vacate an arbitration award. The claim failed because the court found no conduct fitting within the bases for vacatur under FAA, 9 U.S.C. Sec. 10(a).  The court found that plaintiff’s claim best fit under the category of “fraud or undue means”. (The Michigan Uniform Arbitration Act, MCL691.1681 et seq addresses vacatur at MCL 691.1703 and also contains, as a basis for vacatur, an award “…procured by corruption, fraud, or other undue means”).

The court also discussed the “manifest disregard for the law” basis to vacate an award.  The court denied plaintiff’s motion because none of the allegations satisfied the bases for vacatur.  Specifically, the court denied the motion based on the claim that defendant’s attorneys practiced law without a license. However, even if true, the court found no evidence the arbitrator’s decision was influenced by the alleged unauthorized practice of law. There was no evidence the alleged unauthorized practice of law was an attempt to commit a fraud on plaintiff or the arbitrator. See also Superradio Ltd P’ship v Winstar Radio Productions, LLC 844 NE 2d 246 (Mass.2006).

Could a clever lawyer under the right set of facts argue that an award should be vacated because the winning lawyer engaged in the unauthorized practice of law? There is no reason to run the risks described above if the parties and/or the arbitrator are aware of facts that a lawyer from a foreign jurisdiction involved in a Michigan arbitration has not obtained temporary admission to practice law in Michigan.

Conclusion and Lessons Learned.

  1. 1. The unauthorized practice of law is not permitted. And it violates the Michigan Rules of Professional Conduct.
  2. 2. A lawyer licensed in Michigan who has knowledge that an out of state lawyer may be engaged in the unauthorized practice of law should report same to the State Bar of Michigan.
  3. 3. Participation by a lawyer advising a client in a mediation and arbitration certainly appears to be the practice of law.
  4. 4. An out of state lawyer may participate temporarily in an arbitration or mediation.
  5. 5. The procedure for seeking temporary admission to participate in an arbitration in Michigan is found in MCR 8.126. When and if amended, an out of state lawyer participating in a non-court annexed mediation must seek temporary admission from the mediator under MCR 8.126.
  6. 6. Whether an out of state lawyer participating in a Michigan mediation must seek temporary admission under current MCR 8.126 is an open question.

It would be very helpful if the Michigan Supreme Court provided clarity to assist  lawyers, both those licensed in Michigan and out of state lawyers, in addressing unauthorized practice of law questions in ADR.

author

Mike Leib

Mike Leib is a valued arbitrator and mediator, located in Southeast Michigan. While he mediates and arbitrates cases primarily located in the Detroit Metropolitan area, he is able to service a much larger area through remote platforms.

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