The presentation discusses the complexities and challenges of legal malpractice in cross-border transactions, emphasizing that such deals are often more intricate and require specialized skills. It explores the rising potential for lawyers to make serious errors as international commerce expands, and highlights issues related to jurisdiction, insurance claims, and management practices within law firms. Ultimately, it concludes that as cross-border activities increase, so too does the likelihood of legal malpractice incidents.

1. International (Cross-Border) Legal Malpractice: Not Only Will The Dog Bark, It Will Also Bite Ethan S. Burger, Esq. Adjunct Professor, Georgetown University Law Center, Washington, D.C. & Scholar-in-Residence, School of International Service, American University, Washington, D.C.

2. This Presentation’s Roadmap (A) Cross-Border transactions are more complex and often of greater value than so-called “purely” domestic ones. (B) As business deals become more complicated, the possibility that lawyers commit serious errors increases. (C) Lawyers having cross-border legal practices require a special “skill set.” (D) As international commerce grows, so should the frequency of legal malpractice.

3. Thinking (Reading) “Global” Internet Search Using Certain Terms: US Yahoo.Com: Globalization Law -- about 668,000 “hits.” UK Yahoo.Com: Globalisation Law – about 2,860,000 “hits.” US Amazon.Com: Globalization Law – 2,426 “items.” UK Amazon.Com: Globalisation Law – 4,774 books.

5. The Economic Center of the World Moves Greece, Rome, China/India, the Islamic World, London, New York . . . Asia again? Numerous Hypotheses: cultural, education level, geography, natural resources, population size, sociology, weather, etc. Innovation, assimilation of technology, and the rule of law may be the most compelling factors.

6. Theories of Legal Malpractice Contract claim? Tort claim? Code of Conduct claim? Some Key Issues: (i) Which courts/countries have jurisdiction (note cases of bankruptcy, intellectual property)? (ii) Practical and legal consequences of the use of expatriate vs. local lawyers.

7. Number of Insurance Claims by Area of Law ABA 2000-3 Profile of Legal Malpractice Claims Personal Injury 30% Real Estate 16% All Other 13+% Family Law 10% Trusts & Estates 9% Bankruptcy 8% Corporate 6% Criminal 4% Transactions 3% International 1-%

8. Can the Data be Correct? Determining applicable law and resolving substantive law issues (need to prove “the case within the case” in legal malpractice claims). Divergence between official norms and practice. By what standards are lawyers judged? Where is the law firm retained? Where are legal services provided? Where does the client provides services or sells goods? Are there problems with insurance claim categorizations?

9. Possible Explanations for the Data? Effective management systems, competent personnel, and avoiding new practice areas means international legal malpractice has remained low; or Legal malpractice remains below the “radar” because clients are not pursuing potential claims ( see infra.) .

10. Can Lawyers Limit their Liability? Does organizing as limited liability entities offer protection against vicarious liability (remember one is always liable for their own malpractice)? Common law: multi-layered structure may offer protection (but what about the unitary actor theory or the view that all liability which is “vicarious” is also “direct”). Civil law: parent liability for subsidiary’s assets inadequate to pay the claim of a subsidiary’s creditor.

11. ABA [D.C.] Rule 1.1 -- Competence (a) A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation. (b) A lawyer shall serve a client with skill and care commensurate with that generally afforded to clients by other lawyers in similar matters.

12. Model [D.C.] Rule 2.1 - Advisor In representing a client, a lawyer shall exercise independent professional judgment and render candid advice. In rendering advice, a lawyer may refer not only to law but to other considerations such as moral, economic, social, and political factors, that may be relevant to the client's situation.

13. Access to Justice Issues & Holding Lawyers Accountable Are third parties allowed to “fund” litigation? What are the consequences of the losing party paying the winning party’s legal fees with respect to malpractice claims? What is the impact on a plaintiff’s ability to prevail on a legal malpractice claim if there is little or no discovery permitted? Will choice of law rules be dispositive over the above questions?

14. The Role of Lawyers in a Global Economy Cross-border transactions (one-time or on-going). Problem of over-reliance on “standardized forms.” Customs, trade regulation and intellectual property problems are often concerns. Foreign Direct Investment – life-cycle issues: registration, licensing and regulatory matters (environmental and labor matters can be particularly vexing) . Disputes – with private party or government? Is there a need to preserve relationship or reputation? Informal vs. formal dispute resolution is situation specific.

15. Why the Data May be Inaccurate Insurance companies’ data are proprietary and ABA Data based on a misleading sample of insurers. Self-insurance, fear of making claim and insurer denying coverage, importance of relationships, and fear of officer or director liability. Cases are often mediated or arbitrated (one motive: fear of shareholder lawsuits, corporate disruption, etc.).

16. Certain Law Firm Management Issues As law firms get larger, management gets more difficult – lack of information is a major problem. As law firms develop multiple offices, exercising control and quality control become more difficult. Multi-national/cultural firms present special problems.

17. Making Law Firm Management Effective Identify and acknowledge the risks of legal malpractice; Develop a culture of regulatory compliance; Separate operational from oversight activities; and Assess management procedures repeatedly.

18. In-House - Outside Counsel Relationship (i) Company’s traditional counsel. (ii) Where in-house counsel has worked. (iii) Where in-house counsel may want to work. (iv) The “safe choice” to avoid criticism. QUERY : Can outside counsel inoculate itself itself through hiring of competent local counsel?

19. Are there More Legal Malpractice Cases in the Bankruptcy Context? In such instances, many of the considerations discouraging the bringing of claims are not present (e.g., future relationships, personnel connections, etc.). Problem : in many jurisdictions legal malpractice claims are not assignable. Cross-border bankruptcies are complex.

20. Miscellaneous Veras Hedge Fund sues Akin Gump for $4.4 billion in a malpractice claim involving advice on “late trading.” The first international law firm, Coudert Brothers broke-up in part due to large number of malpractice claims. Refco in connection with its bankruptcy has brought legal malpractice claims against the mega law firms Meyer Brown LLP and Weil Gotshal & Manges LLP, as well as various bank and auditing firms.

21. Conclusion (A) Cross-Border transactions are more complex and often of greater value than so-called “purely” domestic ones. (B) As business deals become more complicated, the possibility that lawyers commit serious errors increases. (C) Lawyers having cross-border legal practices require a special “skill set.” (D) As international commerce grows, so should the frequency of legal malpractice. 21