By Anna Louie Sussman

Feb 6(Reuters) - The policy-making body of the American Bar Association plans to tackle the contentious issue of registering foreign in-house counsel at its annual February midyear meeting, which starts today in Dallas, said a co-chair of the ethics commission.

Four proposals making it easier for foreign lawyers to register as in-house counsel will be introduced by the Commission on Ethics 20/20. To be presented on Feb. 11 to the ABA's policy body, the 560-member House of Delegates, the proposals will amend current model rules to allow foreign in-house counsel to handle some matters in the United States and to provide judges with guidelines on admitting foreign lawyers into court on specific cases, said Michael Traynor, co-chair of the ethics commission.

With the number of foreign companies operating in the United States growing, there are already foreign-trained lawyers working as in-house counsel, according to Traynor. Currently they operate with little oversight, an ABA report notes, and the new rules would help identify and regulate them.

The proposals "respond to the need to facilitate commerce and transactions, but yet have it be supervised," said Traynor.

Opponents, however, argue that the resolutions could pave the way for legal malpractice and that lawyers with little to no education on the intricacies of U.S. law will fall short of their professional and ethical responsibilities. Foreign lawyers, for example, could file tax returns improperly, mishandle contracts and misunderstand domestic regulations, said Larry Fox, a lecturer at Yale Law School and former chair of the ABA Standing Committee on Ethics and Professional Responsibility, a different body than the commission.

"Even the lawyers who have a good education engage in malpractice every day," said Fox. "Why should we add to the malpractice by adding to our profession people who by definition don't have an education in these matters?"

It is an issue Fox has written several commentaries about that he circulated among delegates as well as debated over the past year at meetings and round tables. He is expected to speak at the ABA meeting to once again express his concerns.

EASIER IN SEVEN STATES

Traynor, the commission co-chair, said that global companies were unlikely to hire or assign inexperienced foreign lawyers to complex domestic legal matters.

"I think (Fox's) whole approach is exaggerated," he said.

The resolutions, he said, include several provisos designed to safeguard clients and limit the scope of foreign lawyers' practice. For example, they prohibit foreign lawyers from advising on U.S. law except on the basis of advice from an American lawyer licensed to practice in the relevant jurisdiction.

A report issued by the ethics commission said the existing practice of foreign lawyers has not given rise to any known adverse consequences to date, Traynor said.

The ethics commission has been meeting for three years, he said, throughout which it has held over a dozen open meetings on the issue and reviewed more than 400 comment submissions.

Seven states already have made it easier for foreign lawyers to work as in-house counsel.

Starting in 2004, as part of Georgia's strategy to attract more foreign corporations, the Georgia State Supreme Court has adopted a number of resolutions making it easier for in-house foreign counsel to work in the state.

Last December, a task force established by the Texas Supreme Court recommended making it easier for foreign legal consultants and foreign lawyers to work in the state as a way to attract foreign investment. It also said in its report that the state would benefit if more foreign lawyers were to sit for the Texas bar exam.

After the ABA's ethics commission introduces the resolutions, delegates will debate them. There will then be a voice vote on whether to adopt them as part of the ABA's model policy for professional conduct. A simple majority will win.

If the proposals are approved, a separate implementation group will work with state bar associations to encourage their adoption state by state. Lawyers are regulated at the state level while the ABA is a national and voluntary professional association.

(This post has been corrected. A previous version erroneously described Lawrence Fox as a professor and a former chair of the ethics commission.)

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