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Lewis and Roca v. State Bar of Nevada

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JANUARY 2009
NEVADA LAWYER
LE WIS
AND
V.
BY VON S. HEINZ, ESQ.
ROCA
STATE
BAR OF NE VADA
Today, there are dozens of out-of-state law firms with offices in Nevada. Many of these firms are readily recognizable by the names they share with regional, national or international firms. It is difficult to imagine that the influx of out-of-state firms to Nevada could have been possible if these firms were forbidden to practice here under their own names. That, however, was precisely the case until Lewis and Roca LLP brought a lawsuit against the State Bar of Nevada that eventually led to the Nevada Supreme Court changing the ethical rules on law firm names. The rest, as they say, is history. As part of Nevada Lawyer’s recognition of the 80th anniversary of the Nevada bar, I was asked to share my recollection of the events that forever altered Nevada’s legal landscape.
REGIONAL AND NATIONAL FIRMS COME TO NEVADA
Lewis and Roca Opens in Las Vegas
On May 3, 1999, Lewis and Roca LLP, an Arizona law firm with approximately 120 lawyers, opened its practice in Las Vegas with three Nevada-licensed lawyers: founding partners Marti Ashcraft and Von Heinz, and associate Jim Berchtold. The firm opened in Las Vegas under its own name, the name that it had used for nearly a half-century in Arizona – Lewis and Roca LLP, and had letterhead, business cards and announcements printed with the Lewis and Roca name. Three weeks later, bar counsel to the State Bar of Nevada sent a cease and desist letter to Ashcraft, Heinz and Berchtold, advising them that “it is unprofessional conduct to use a firm name for a law firm unless each and every person whose name is used therein is a member of the State Bar in good standing and a bona fide member of the firm.” At the time, Nevada Supreme Court Rule 199 stated: “It shall be unprofessional conduct to use a firm name for a law firm unless each and every person whose name is used is a member of the state bar [of Nevada] in good standing and a bona fide member of the firm. However, the name of a deceased or retired member of the firm may continue to be used in the firm name of a law firm if the deceased or retired member of the firm was a member of the state bar [of Nevada] in good
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standing and a bona fide member of the firm at the time of his or her death or retirement from the practice of law.” A firm like Lewis and Roca had no hope of satisfying Rule 199: Orme Lewis died in 1994 and Paul Roca in 1978. Neither was a member of the Nevada bar. Thus, Rule 199 forever prohibited Lewis and Roca from opening a Nevada office under its own name. In order to avoid disciplinary action, the firm changed its name to Ashcraft and Heinz, LLP. The firm also made the decision to take whatever legal action would be necessary to be able to be known as and to do business under the Lewis and Roca name in Nevada.
Lewis and Roca Takes on the Nevada bar
and constituted an unconstitutional burden on interstate commerce. After reviewing the committee’s findings, the Board of Governors echoed the committee’s conclusion that “Rule 199, as it presently stands, is unconstitutional.” The state bar then responded to the referral by petitioning the Supreme Court to eliminate the rule. On November 8, 1996, however, despite the state bar’s recommendation, the Nevada Supreme Court declined to change the rule, and, instead, instructed the state bar “to take any action necessary to enforce the terms of the rules with respect to law firms maintaining a law office or practicing law within the State of Nevada.”
The Federal Lawsuit
On June 15, 1999, Lewis and Roca sued the state bar in federal district court in Las Vegas. According to Lewis and Roca, Rule 199 was an unconstitutional violation of their commercial speech, equal protection, due process and other rights guaranteed under the United States Constitution. Lewis and Roca felt confident about the arguments it made in challenging the constitutionality of Rule 199. The firm noted that even the State Bar of Nevada itself had previously taken the position – on more than one occasion – that Rule 199 was unconstitutional. As originally adopted, Rule 199 did not permit even Nevada firms to continue using the names of a retired or deceased partner. In 1990, to accommodate existing Nevada firms, the Nevada Supreme Court amended Rule 199 to allow firms to use the names of deceased or retired partners if they were members of the State Bar of Nevada. Between 1990 and 1994, the Nevada Supreme Court received numerous requests to amend Rule 199 on the basis that the rule was unconstitutional. On June 10, 1994, then-Nevada Supreme Court Chief Justice Robert Rose filed a petition to amend Rule 199. The petition acknowledged that Nevada was the only jurisdiction in the country with a rule that effectively banned out-of-state law firms. The petition concluded that a further review of the rule was required, and referred the matter to the State Bar of Nevada for review and comment. On September 15, 1994, a state bar committee concluded that Rule 199 infringed on the constitutional rights of any out-of-state law firm which desired to practice law in the state of Nevada through members who are duly licensed Nevada attorneys,
In the federal district court proceedings, the state bar argued that it would be inherently “deceptive” for Lewis and Roca to do business in Nevada under its own name, asserting that the use of the name “Lewis and Roca” would “deceive the public into believing that it is the Arizona law firm of Lewis and Roca LLP that is practicing in Nevada
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Prior History of Rule 199
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NEVADA LAWYER
LEWIS AND ROCA V. STATE BAR OF NEVADA
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when in fact only the law firm of Ashcraft and Heinz LLP can practice law in Nevada. According to the bar, the function of Rule 199 was to assure that persons who came into contact with the name of a Nevada law firm knew that the name, goodwill and reputation associated with that law firm had been developed by past and/or present Nevada lawyers qualified to practice Nevada law. Lewis and Roca responded that the bar’s “deception” argument was circular, and that the only deception was by the bar: No separate firm of Ashcraft and Heinz even existed. Lewis and Roca emphasized that Rule 199, in effect, mandated that a person seeking legal counsel be deceived, as he must discover in his telephone directory, for example, that there existed a firm of Ashcraft and Heinz, which was merely affiliated with the regional firm of Lewis and Roca. The fact that there was no separate or independent firm of Ashcraft and Heinz in existence, in Nevada or elsewhere, would be kept secret. According to Lewis and Roca, the central question of 12/1/08 9:59 AM Page 1 FC_NVLawyerAd_1108.qxd the case was whether Nevada can
require that the person seeking legal services be given false information as to who is supplying the services and require that Lewis and Roca use a name other than its own. Neither the First Amendment nor the Commerce Clause would tolerate the compelled deception, the firm argued.
The United States District Court Preliminarily Enjoins the Bar from Enforcing Rule 199
Judge Johnnie B. Rawlinson, then a United States District Court judge, heard oral argument on Lewis and Roca’s motion for preliminary injunction on April 11, 2000. Rawlinson granted injunctive relief to Lewis and Roca, finding the bar’s argument “illusory” that Lewis and Roca could not practice law in Nevada because it was not a Nevada firm. Rawlinson declared the “real issue” to be whether Nevada lawyers may lawfully form partnerships or associations with out-ofstate lawyers. Because it was lawful for Nevada lawyers to associate and share fees with non-Nevada lawyers, this issue was resolved in Lewis and Roca’s favor. Regarding the First Amendment, the court observed that the use of the trade name “Lewis and Roca” was not inherently misleading. “The bar merely speculates that using the name Lewis and Roca would be misleading because it does not inform the public that Ms. Ashcraft, Mr. Heinz and Mr. Berchtold are the source of the competence and good will for practicing law in Nevada. Despite the bar’s speculation, all the evidence presently before the court is to the contrary.” Reciting the history of the Nevada Supreme Court and the State Bar of Nevada’s consideration of an amendment to Rule 199, Rawlinson observed that even though a Nevada Supreme Court committee and the bar were aware that Nevada was the only state with a prohibition similar to Rule 199, “neither cited any examples where the public was deceived by a multi-state law firm’s use of a name which included attorneys’ names who were not licensed to practice in a State after opening an office in that State.” The court found unconvincing Rule 199’s permissive use of the name of a deceased Nevada lawyer’s name in a law firm name, but not that of a lawyer who was never a member of the Nevada bar. Having shown that they had demonstrated probable success on the merits of their claim that Rule 199 infringed on their right to freedom of speech under the First Amendment, the court concluded that the Lewis and Roca lawyers were entitled to a preliminary injunction.
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The Ninth Circuit Affirms
The bar appealed District Judge Rawlinson’s decision to the Ninth Circuit. On September 21, 2000, the Ninth Circuit Court of Appeals affirmed Rawlinson’s decision granting injunctive relief.
The Battle Was Still Not Over
The fight over Rule 199 did not end with the Ninth Circuit’s decision upholding the preliminary injunction. The State Bar of Nevada told the press that it would continue to fight in favor of Rule 199.1 Lewis and Roca’s lawsuit also gathered national attention. The ABA Journal published an article about the “high-stakes draw” between the firm and the State Bar of Nevada.2 Despite the fact that Rawlinson had already issued the preliminary injunction order, “the Nevada bar [had] upped the ante,” by “open[ing] disciplinary investigations” into Lewis and Roca’s Las Vegas lawyers’ “possible unauthorized practice of law” and “ask[ing] the two federal judges to abstain from hearing [them], saying state disciplinary proceedings are outside their jurisdiction.” Ashcraft remarked to the Journal that the bar “warned her and her colleagues that they face ‘intrusive discovery.’” The firm went forward with its lawsuit and the bar proceeded with its disciplinary investigation. Lewis and Roca’s challenge to Rule 199 drew decidedly mixed reactions among the state’s members of the judiciary and the bar. Leading partners of some Nevada law firms were supportive, while others did not
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LEWIS AND ROCA V. STATE BAR OF NEVADA
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hesitate to tell the Lewis and Roca lawyers directly, “you’re ruining this for all of us,” and “you’re going to destroy the practice as we know it.” All the while, Nevada law firms evaluated their own futures, and regional and national firms looked for the right opportunity to enter the local market. Jose A. Cardenas, Lewis and Roca’s then managing partner, told the press, “I don’t know what the impact will be. But we know that other firms have been watching.”3 The battle continued through 2001 and into 2002. During this time, Rawlinson had been elevated to the Ninth Circuit and Judge Kent Dawson was assigned to Lewis and Roca’s civil rights lawsuit. The bar moved to dismiss the complaint and Lewis and Roca filed a combined motion for summary judgment and permanent injunction. Dawson affirmed Lewis and Roca’s choice of the federal forum to challenge Rule 199, and permitted limited discovery. Finally, in 2002, with the federal lawsuit still pending, the Nevada Supreme Court repealed Rule 199, substituting new rules governing the ability of regional and national law firms to practice in Nevada. The battle was over and the legal landscape in Nevada would never be the same.
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VON S. HEINZ is a senior litigation partner of the Nevada offices of Lewis and Roca, resident in its Las Vegas office. Among other things, Mr. Heinz was a Nevada lawyer representative to the United States Court of Appeals for the Ninth Circuit (1998 - 2001); a past officer and program chair of the Howard D. McKibben Inn of Court; and the first Nevada lawyer to serve on the cabinet of the ABA’s Young Lawyers Division, as well as the first Nevada lawyer to chair a YLD national conference, serve as a division director, and chair one of the YLD’s national professional service outreach divisions. He is a Life Fellow of the American Bar Foundation; chaired the 1999 event co-sponsored with the ABA YLD to honor Nevada’s First 100 Women Attorneys; and was co-chair of the gala celebrating the 75th anniversary of the State Bar of Nevada.
1 In Business, September 29, 2000, “Supreme Court: In-State Firms, In-State Lawyers.” 2 ABA Journal, August 2001, “High Stakes Standoff.” 3 In Business, September 29, 2000, “Supreme Court: In-State Firms, In-State Lawyers.”
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