Pennsylvania Inquiry 98-85

LAWYERS' WEB PAGES:
DISCIPLINARY AUTHORITY, CHOICE OF LAW
AND JURISDICTION

July 24, 1998
Kevin M. French
PBA Committee on Legal Ethics
And Professional Responsibility

CAVEAT: THIS IS NOT AN OFFICIAL OPINION OF THE DISCIPLINARY BOARD OF THE SUPREME COURT OF PENNSYLVANIA AND ANY OPINION RENDERED WILL BE AFFORDED ONLY AS MUCH WEIGHT AS THE REVIEWING AUTHORITY MAY CHOOSE TO GIVE IT. MOREOVER, THIS IS THE OPINION OF ONLY ONE MEMBER OF THE COMMITTEE AND IT IS NOT A FORMAL OPINION OF THE FULL COMMITTEE.

The global nature of the Internet and the jurisdictional limitations on the practice of law following geographical boundaries raise troubling issues for lawyers of regulatory compliance, jurisdiction and choice of law. The Internet is a global network of connected computer systems. It is not limited by geographical or jurisdictional boundaries. Anyone, anywhere in the world with a computer, modem and Internet connection can access World Wide Web pages through the medium of the Internet. In contrast, the practice of law in the United States is, in large part, regulated on a state-by-state basis. Regulation of the legal profession, reflected principally through admission requirements and ethic rules, varies from state to state. In Pennsylvania, the regulation of the practice of law is vested with the Pennsylvania Supreme Court under the Pennsylvania Constitution. In re: Shigon, 462 Pa. 1, 12 n. 14 329 A.2d 235, 240 (1974).

In Pennsylvania Bar Association Informal Opinion 96-17 (May 3, 1996), it was concluded that Web pages by lawyers constituted lawyer advertising subject to the Pennsylvania Rules of Professional Conduct if they contained communications about the lawyer or the lawyer's services. The question was left open, however, whether a lawyer's Web site might subject a lawyer to the jurisdiction of another state. With respect to the rules governing lawyer advertising, some states have adopted the ABA Model Rules of Professional Conduct, others have adopted modified versions of the ABA Model Rules, and others are still working under the Model Code of Professional Responsibility. Pennsylvania has adopted a significantly amended version of the ABA Model Rules of Professional Conduct. These different sets of rules establish different and often conflicting standards of conduct.

What ethics rules apply to a lawyer's or law firm's Web site? How does a lawyer ensure that the lawyer's Web site complies with the rules governing lawyer advertising? Is a lawyer's Web site subject to the ethics requirements of some or all of the 50 states? If a lawyer's Web site runs afoul of the advertising requirements of another state, should the lawyer expect to be subject to some type of disciplinary enforcement proceeding by that state? Can a lawyer's Web site expose a lawyer to charges of unauthorized practice of law in another state? How are jurisdictional and choice of law issues to be resolved? These are not merely hypothetical questions. The Florida Bar has recently issued a notice on its Web site, FLABAR ONLINE, that lawyers, whether or not admitted to practice law in Florida, who solicit or advertise for legal employment in Florida, or who target solicitations or advertisements for legal employment at Florida residents, are engaging in the practice of law in Florida and are, therefore, subject to the rules regulating members ofthe Florida Bar. See http://www.flabar.org/flabar/information/news/whatsnew/adrules/html.

The rules currently in force provide little guidance for resolving these questions because they are premised on a geographical jurisdictional model that the Internet does not follow. Courts, especially the federal courts, in recent years have only just begun to struggle with the questions of jurisdiction and venue created by the Internet, primarily in the context of claims involving business torts, intellectual property disputes, contracts and securities violations. These cases provide a helpful basis for evaluating the circumstances under which a lawyer may be subject to the jurisdiction of state in which a lawyer is not admitted to practice, especially with respect to unauthorized practice issues.

Lawyers' Web pages take many forms. Some provide only the most basic information concerning a lawyer or law firm, such as name, address, telephone and fax numbers. Others are more sophisticated and provide biographical sketches, descriptions of areas of practice,and hyper-text links to copies of articles or newsletters published by the lawyer or law firm. Others are yet even more sophisticated, providing not only e-mail addresses of the lawyers, but also registration forms that can be filled out for information requests and electronic bulletin boards where questions and answers can be posted in an on-going virtual discussion. The ethical and jurisdictional issues become more complex with a higher degree of interactivity at a Web site, and based upon developing case law, the characterization of a lawyer's Web site, especially with respect to the nature and degree of interactivity the Website affords, may be a critical determinant in the resolution of jurisdictional issues.

DISCIPLINARY AUTHORITY AND CHOICE OF LAW

The Pennsylvania Rules of Professional Conduct contain provisions, modeled on the ABA Model Rules, addressing how potential conflicts may be resolved between differing ethical obligations that may be imposed by different jurisdictions. Rule 8.5(a) states the fundamental rule that, "A lawyer admitted to practice in this jurisdiction is subject to the disciplinary authority of this jurisdiction, regardless of where the lawyer's conduct occurs." Rule 8.5(a) also recognizes that a lawyer may be subject to the disciplinary authority of more than one jurisdiction: "A lawyer may be subject to the disciplinary authority of both this jurisdiction and another jurisdiction where the lawyer is admitted for the same conduct." The recognition that a lawyer may be subject to the disciplinary authority of more than one jurisdiction creates the possibility of conflicting ethical standards and obligations. Subsection (b) of Rule 8.5 is intended to resolve potential conflicts between differing disciplinary authorities and differing ethical obligations.

In resolving these potential conflicts, the Rule distinguishes between: (1) conduct that takes place in connection with a proceeding in a court or agency before which a lawyer has been admitted to practice, and (2) any other conduct. Rule 8.5(b)(1) provides that, "For conduct in connection with a proceeding in a court or agency before which the lawyer has been admitted to practice (either generally or for purposes of that proceeding), the rules to be applied shall be the rules of the jurisdiction in which the court or agency sits, unless the rules of the court or agency provide otherwise."

For any other conduct, if a lawyer is licensed to practice only in Pennsylvania, under Rule 8.5(b)(2)(i), the lawyer is subject only to the Rules of Professional Conduct in Pennsylvania. In the case of a lawyer licensed to practice in Pennsylvania and another jurisdiction, the rules to be applied are the rules of the admitting jurisdiction in which the lawyer principally practices. Rule 8.5(b)(2)(ii). This is, however, subject to an exception: "If a particular conduct clearly has its predominant effect in another jurisdiction in which the lawyer is licensed to practice, the rules of that jurisdiction shall be applied to that conduct." Rule 8.5(b)(2)(ii).

If the lawyer is a solo practitioner, or in the case of a law firm where all the lawyers are admitted only in Pennsylvania, the application of Rule 8.5 is relatively straight-forward. Where, however, the lawyer is admitted in more than one state, or is a member of a law firm with lawyers admitted in more than one state, the application of Rule 8.5 becomes more complex. Rule 8.5 suggests that the resolution of conflicting ethical obligations under these circumstances is determined by the rules of the admitting jurisdiction where the lawyer "principally practices," unless the conduct has its predominant effect in another jurisdiction where the lawyer is admitted. Where does a lawyer's Web site have its "predominant effect?" Is it where a prospective client or client who views the Web site is located? Does it depend upon whether the lawyer has communicated with the prospective client through the Web site, for example, by means of an e-mail hypertext link? Does it depend on the subject matter of the communication, for example, whether the lawyer is giving advice regarding the laws of another state? The Rules of Professional Conduct are silent on these issues. Prudence suggests that under these circumstances a lawyer or law firm take a "least common denominator" approach in complying with differing and even conflicting ethical requirements. This should, however, not be necessary in the case of a lawyer or law firm with lawyers admitted only in a single state.

Rule 8.5 recognizes that a lawyer may be subject to the disciplinary authority where a lawyer is "admitted to practice" either generally or for a particular matter, such as pro hac vice. There is no express provision, however, nor does the rule suggest by implication, that a lawyer may be subject to the disciplinary authority of a jurisdiction where a lawyer is not admitted to practice. This interpretation is consistent with the territorial based jurisdictional system governing the practice of law in the United States. By what authority could a state where a lawyer is not admitted to practice exercise disciplinary authority over that lawyer? Under the present jurisdictional system, any disciplinary action would appear, of necessity, to need to be referred to the state(s) which has issued the lawyer's license to practice. The Florida Bar appears to have taken the unique position that lawyers, whether or not admitted to practice law in Florida and who disseminate advertisements within Florida, including "computer-accessed communications" (defined to include World Wide Web sites) are subject to the lawyer advertising rules and procedures promulgated by the Supreme Court of Florida. Whether this assertion of authority withstands the inevitable court challenge remains to be seen.

A lawyer may still, however, be subject to the civil and criminal laws of a state where the lawyer is not licensed provided there are sufficient contacts for the exercise of jurisdiction over the out-of-state lawyer that comports with federal constitutional due process. This raises the question of what contacts based upon an Internet Web site may be sufficient for the exercise of jurisdiction.

JURISDICTION

Before a court may exercise personal jurisdiction over a person, the due process clause of the United States Constitution requires that there be "minimum contacts" between the person and the forum "such that maintenance of the suit does not offend traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S.310, 316 (1945). Moreover, the person's "conduct and connection with the forum state must be such that he should reasonably anticipate being haled into court there." World-Wide Volkswagon Corp. v. Woodson, 444 U.S. 286, 297 (1980); see also Hanson v. Denckla, 357U.S. 235, 253 (1958) (There must be "some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.")

In order to establish personal jurisdiction over a non-resident consistent with federal constitutional due process, the non-resident must either have (1) a "substantial, continuous and systematic" presence in the forum state which would give the court general jurisdiction over the person, or (2) certain "minimum contacts" with the forum state such that maintenance of the suit does not offend "traditional notions of fair play and substantial justice." The former confers general jurisdiction: the latter specific jurisdiction. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-73 (1985). In Burger King, the United States Supreme Court stated that jurisdiction could not be avoided because "the defendant did not physically enter the forum state." Burger King, 471 U.S., at 476. The Court noted: "[I]t is an inescapable fact of modern commercial life that a substantial amount of commercial business is transacted solely by mail and wire communications across state lines, thus obviating the need for physical presence within a state in which business is conducted." Id.

In recent years, there have been a number of federal court decisions which have considered the question of the circumstances which permit a forum state to exercise personal jurisdiction over an out-of-state defendant based upon the defendant's contacts with the forum state through the medium of an Internet Web site. See Inset Systems, Inc. v. Instruction Set,Inc., 937 F. Supp. 161 (D. Conn. 1996); Compuserve, Inc. v. Patterson, 89 F.3d 1257 (6thCir. 1996); Maritz, Inc. v. Cybergold, Inc., 947 F. Supp. 1328 (E.D. Mo. 1996); Zippo Mfg.Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997); Cybersell, Inc. v.Cybersell, Inc., 130 F.3d 414 (9th Cir. 1997); Weber v. Jolly Hotels, 977 F. Supp. 327(D.N.J. 1997); Bensusan Restaurant Corp. v. King, 126 F.3d 25 (2nd Cir. 1997). These cases are beginning to give shape to a body of law that applies well-established personal jurisdiction principles to the Internet.

While there are no cases as yet that expressly address the assertion of personal jurisdiction over a non-resident lawyer based upon contacts made through the Internet, this body of developing case law should apply with equal force to such cases when they do arise. In the recent California Supreme Court case, Birbrower, Montalbano, Condon & Frank,P.C., v. The Superior Court of Santa Clara County, 1998 Cal. LEXIS 2, (Jan. 5, 1998), in which the California Supreme Court voided part of the defendant law firm's fee agreement with a California based client because it engaged in the unauthorized practice of law in that state, the Court stated:

Our definition [of unauthorized practice] does not necessarily depend on or require the unlicensed lawyer's physical presence in the state. Physical presence here is one factor we may consider...but it is by no means exclusive. For example, one may practice law in the state in violation of section 5125 although not physically present here by advising a California client on California law in connection with a California legal dispute by telephone, fax, computer or other modern technological means.

Birbrower shows that courts are beginning to consider computer-based access and contacts in the context of unauthorized practice claims.

In their analysis of Internet based jurisdictional issues, the courts have created a sliding scale analysis that looks to the nature and scope of the activity conducted over the Internet. Acknowledging that the development of case law concerning these issues was in its infancy, in Zippo, District Court Judge Sean J. McLaughlin of the United States District Court for the Western District of Pennsylvania stated:

Our review of the available cases and materials reveals that the likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet. This sliding scale is consistent with well-developed personal jurisdiction principles. At one end of the spectrum are situations where a defendant clearly does business over the Internet. If the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper. E.g., CompuServe, Inc. v. Patterson, 89 F.3d 1257 (6th Cir. 1996). At the opposite end are situations where a defendant has simply posted information on an Internet Web site which is accessible to users in foreign jurisdictions. A passive Web site that does little more than make information available to those who are interested in it is not grounds for the exercise of personal jurisdiction. E.g., Bensusan Restaurant Corp. v. King, 937 F. Supp. 295 (S.D.N.Y. 1996). The middle ground is occupied by interactive Web sites where a user can exchange information with the host computer. In these cases, the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the Web site. E.g. Maritz, Inc. v. Cybergold, Inc., 947 F. Supp. 1328 (E.D. Mo. 1996).

Zippo, 952 F. Supp., at 1124.

The federal courts have identified three general categories of contact in evaluating whether a forum state may properly exercise personal jurisdiction over a non-resident based upon Internet related activity. The first type of contact is when a party clearly does business over the Internet, such as entering into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet. Here,courts have concluded that personal jurisdiction exists. See Zippo; Compuserve. The second type of contact occurs when a user can exchange information with the host computer. In these cases, the exercise of personal jurisdiction is determined by examining the level of inter-activity and commercial nature of the exchange that occurs through the Web site. See Maritz. The third type of contact merely involves the posting of information or advertisements on a Web site that is accessible to users in foreign jurisdictions. See Bensusan; Cybersell; Weber. In this latter case, federal courts have held that personal jurisdiction is not properly exercised in these circumstances because "a finding of jurisdiction. . . based on an Internet web site would mean that there would be nationwide (indeed, worldwide) personal jurisdiction of anyone and everyone who establishes an Internet website. Such nationwide jurisdiction is not consistent with traditional personal jurisdiction caselaw. . . " Weber, 977 F. Supp., at 333 (quoting Hurst Corp. v. Goldberger, 197 W.L.97097, at *1 (S.D.N.Y. February 27, 1997)).

In Inset Systems, a Connecticut corporation sued a Massachusetts corporation in the District Court of Connecticut for trademark infringement based on the use of an Internet domain name. The Massachusetts corporation's contacts with the forum state, Connecticut,consisted solely of the posting of a Web site that was accessible to approximately 10,000 Connecticut residents who had Internet connections and maintaining a toll free number. The Connecticut District Court concluded that advertising on the Internet constituted the purposeful doing of business in Connecticut because "unlike television and radio advertising,the advertisement is available to any Internet user." Inset Systems, 937 F. Supp., at 165. The District Court decided, therefore, that the exercise of personal jurisdiction was proper. If the Connecticut District Court's rationale were accepted, the concepts of jurisdiction and constitutional due process in the context of Internet Web sites would cease to have any meaning.

In Bensusan, the District Court for the Southern District of New York, applying New York's long-arm statute, reached an opposite conclusion based upon a similar set of facts. The operator of a New York jazz club sued the operator of a Missouri jazz club for trademark infringement. The Missouri jazz club's Web site contained general information about the club, a calendar of events and ticket information. The Web site was not, however,interactive. To obtain tickets to the club, a user would have to call or visit a ticket outlet and then pick up the tickets at the club on the night of the show. The District Court concluded that the Missouri jazz club's activity was not a tortious act within the state of New York, and thus it was not subject to personal jurisdiction in New York.

In Cybersell, the Ninth Circuit held that although creating a Web site may be felt nationwide or even worldwide, without more it is not an act purposefully directed toward a particular forum. In Cybersell, an Arizona corporation that advertised for commercial services over the Internet under the service mark "Cybersell" filed an infringement action in Arizona District Court against Cybersell, Inc., a Florida corporation that offered Web page construction services over the Internet. There was very limited interactivity between the Florida defendant and Arizona Internet users, which included receiving the browser's name and address as well as an indication of interest. Those who were interested in getting on the World Wide Web were encouraged to e-mail the defendant to learn how. Signing up for the Cybersell service in Arizona, however, was not an option, nor did anyone from Arizona do so. The District Court observed that Cybersell did not encourage people in Arizona to access its site, it entered into no contracts in Arizona, made no sales calls in Arizona,received no telephone calls from Arizona, earned no income from Arizona, sent no message over the Internet to Arizona, and that no money changed hands on the Internet from or through Arizona. The Ninth Circuit concluded that Cybersell's contacts with Arizona were insufficient to establish "purposeful availment."

Maritz is a case involving a higher degree of interactivity through an Internet Website, in which the Missouri District Court concluded that the exercise of personal jurisdiction was proper. In Maritz, Cybergold had established a Web site promoting its coming Internet service. The service consisted of assigning users an electronic mailbox and forwarding advertisements for products and services that matched the user's interests to those mailboxes. Users were encouraged to add their e-mail address to a mailing list to receive updates about the service. Cybergold argued that it was not subject to the personal jurisdiction of the Missouri District Court arguing that its Web site was a "passive Web site." The District Court rejected this argument and held that Cybergold's activity constituted "active solicitations" and "promotional activities," thus subjecting it to the personal jurisdiction ofthe court.

Compuserve involved yet a higher level of interactivity and involved the transaction of business through the Internet. In Compuserve, the defendant, a Texas resident, entered into a contract to distribute shareware through Compuserve's Internet server located in Ohio. From his computer in Texas, the defendant electronically uploaded thirty-two master software files to Compuserve's server in Ohio. When the defendant threatened to sue Compuserve, Compuserve filed a preemptive action in the Southern District of Ohio. The Texas defendant filed a motion to dismiss for lack of personal jurisdiction. This motion was granted by the District Court. Compuserve appealed. The Sixth Circuit reversed the District Court holding that the defendant had purposefully directed his business activities toward the forum state, Ohio, by knowingly entering into a contract with Compuserve, an Ohio resident,and then transmitting files to Ohio.

Zippo, another case in which a District Court found the exercise of personal jurisdiction to be proper based upon contacts through an Internet Web site, represents an increasingly common form of Web site interactivity. In Zippo, Zippo Manufacturing Corporation, located in Bradford, Pennsylvania, filed a lawsuit against Zippo Dot Com alleging trademark dilution, trademark infringement, and false designation under the Federal Trademark Act. Dot Com is a California corporation with its principal place of business located in Sunnyvale, California. It operated an Internet Web site and an Internet news service and had obtained exclusive rights to use the domain names "zippo.com," "zippo.net" and "zipponews.com" on the Internet. Dot Com's Web site contained information about the company, advertisements and an application for its Internet news service. The news service consisted of three levels of membership. To use the service, a customer was required to fill out an on-line application that asked for a variety of information including the person's name and address. Payment was made by credit card over the Internet or the telephone. After the application was processed and a subscriber assigned a password, the subscriber was permitted to download Internet newsgroup messages stored on Dot Com's server in California.

Dot Com had approximately 3,000 paying subscribers located in Pennsylvania. In addition, Dot Com had entered into agreements with seven Internet access providers in Pennsylvania to permit their subscribers access to Dot Com's news service. Two of the Internet service providers were located in the Western District of Pennsylvania. Based on these contacts, the District Court concluded that he could properly exercise personal jurisdiction over Dot Com and that Zippo's cause of action had arisen out of Dot Com's forum-related conduct in the case.

The foregoing cases indicate that a lawyer or law firm may be subject to the jurisdiction of another state based upon Internet related activities. Assuming sufficient contacts exist for the exercise of personal jurisdiction by a state, a state may take civil or criminal action against a lawyer or law firm for unauthorized practice of law or improper solicitation of prospective clients as defined by that state's laws based solely upon Internet contacts. Presumably this action would be separate and distinct from a disciplinary proceeding for violation of the state's ethics rules. Such action could, however, result in disciplinary proceedings against a lawyer by a state in which the lawyer is admitted to practice.

CONCLUSION

As more lawyers and law firms race to create a presence on the World Wide Web,they should be aware that doing so brings with it the risk that they may be hailed into a foreign jurisdiction to answer charges of improper advertising or solicitation or unauthorized practice of law. For the exercise of personal jurisdiction over an out-of-state lawyer, the lawyer's physical presence in the forum state is not required. Contacts created solely through an Internet Web site may be sufficient. Lawyers should not, however, be subject to disciplinary proceedings in states where they, or members of their firm, are not licensed to practice.