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Electronically Filed
Supreme Court
SCAP-XX-XXXXXXX
18-MAR-2019
07:57 AM
IN THE SUPREME COURT OF THE STATE OF HAWAII
---oOo---
________________________________________________________________
STEPHANIE SHEVELAND, Plaintiff-Appellant,
vs.
WELLS FARGO BANK, N.A., Defendant-Appellee,
and
MASOOD M. FOADI; FAHI S. FOADI; MORTGAGE ELECTRONIC REGISTRATION
SYSTEMS, INC.; CIT BANK, N.A., formerly known as
ONEWEST BANK, FSB; OWB REO LLC, and DOE DEFENDANTS 1-50,
Defendants-Appellees.
________________________________________________________________
SCAP-XX-XXXXXXX
APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT
(CAAP-XX-XXXXXXX; CIV. NO. 16-1-0262(1))
MARCH 18, 2019
RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.
OPINION OF THE COURT BY McKENNA, J.
I. Introduction
Dentons represents itself as the world’s largest law firm.
Dentons US LLP maintains offices throughout the United States,
including, as of July 2018, an office in Hawaiʻi comprising the
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former partners (and other employees) of the former Hawaiʻi law
firm Alston Hunt Floyd & Ing (“AHFI”). Prior to joining Dentons
US LLP as partners, the AHFI partners incorporated themselves
into separate lawyers’ professional business organizations. See
Declaration of Paul Alston (“[T]he lawyers who were to become
partners in Dentons US LLP form[ed] their own individual law
corporations and ha[d] those corporations become partners in
Dentons.”).
Dentons US LLP represents Defendant-Appellee CIT Bank in
this appeal, through two former AHFI partners who are Hawaiʻi-
licensed. During the course of the appeal, Dentons US LLP,
through these two partners, filed a motion for admission pro hac
vice of a California attorney with a different law firm.
Counsel for Plaintiff-Appellant Stephanie Sheveland
(“Sheveland”) opposed the motion, alleging that Dentons US LLP,
as a firm, was engaged in the unauthorized practice of law in
Hawaiʻi, in violation of Hawaiʻi Revised Statutes (“HRS”) § 605-
14 (2016), which provides the following, in relevant part:
It shall be unlawful for any person, firm, association, or
corporation to engage in or to attempt to engage in or to
offer to engage in the practice of law, or to do or attempt
to do or offer to do any act constituting the practice of
law, except and to the extent that the person, firm, or
association is licensed or authorized so to do by an
appropriate court, agency, or office or by a statute of the
State or of the United States. . . .
This court is the “appropriate court” authorizing the practice
of law in this state. See Haw. Const. art. VI, § 7 (“The
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supreme court shall have power to promulgate rules and
regulations in all civil and criminal cases for all courts
relating to process, practice, procedure and appeals, which
shall have the force and effect of law.”).
The specific court rule governing the organized practice of
law in Hawaiʻi is Rule 6 of the Rules of the Supreme Court of
Hawaiʻi (“RSCH”), titled “Lawyer’s Professional Business
Organizations,” which provides, in relevant part, as follows:
(a) Compliance with this rule and applicable
statutes. Any person or persons seeking to practice law as
a corporation, a company, an association, in partnership,
or in some other lawful organizational form (hereafter,
lawyers’ professional business organization) shall comply
with the provisions of this rule and[,] if applicable[,]
statutes.
. . . .
(d) Shares; ownership and transfer.
(1) Shares or interests in a lawyers’ professional
business organization may be owned only by a lawyers’
professional business organization or by one or more
persons licensed to practice law in this state by this
court. . . .
. . . .
(e) Directors. Notwithstanding any statutory
provisions, each director of a lawyers’ professional
business organization shall be licensed to practice law in
this state by this court. . . .
(f) Officers. Notwithstanding statutory provisions,
each officer of a lawyers’ professional business
organization shall be licensed to practice law in this
state by this court. . . .
RSCH Rule 6 (2001). Sheveland contends that the language of
RSCH Rule 6 requires every partner of Dentons US LLP to be
Hawaiʻi-licensed. Sheveland argues that, without such a
requirement, non-Hawaiʻi-licensed attorneys could direct the
activities of Hawaiʻi-licensed attorneys in a Hawaiʻi firm
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without regulation or oversight by this court or the Office of
Disciplinary Counsel. She asserts that Dentons US LLP is
“majority owned by persons not licensed to practice law in
Hawaiʻi,” in violation of the rule. Sheveland asserts that the
Hawaiʻi-licensed attorneys appearing in this appeal “should be
barred from stating or representing that they are practicing or
appearing as part of ‘Dentons US LLP.’”
CIT Bank counter-argues that Sheveland’s interpretation of
RSCH Rule 6 contradicts the rule’s plain text, purpose, and
history. As to Rule 6(d)(1)’s plain language, CIT Bank asserts
that shares or interests in a law firm can be owned either by
another lawyer’s professional business organization or by one or
more Hawaiʻi-licensed attorneys:
(d) Shares; ownership and transfer.
(1) Shares or interests in a lawyers’ professional
business organization may be owned only by a lawyers’
professional business organization or by one or more
persons licensed to practice law in this state by this
court. . . .
CIT Bank points out that the “one or more persons” language
allows a Hawaiʻi law firm to be owned by non-Hawaiʻi-licensed
attorneys and a minimum of one Hawaiʻi-licensed attorney. Were
the rule to require that only Hawaiʻi-licensed attorneys could
own law firms practicing in Hawaiʻi, CIT Bank argues, the phrase
“one or more” would have to be omitted from the rule.
CIT Bank next turns to the history of RSCH Rule 6. CIT
Bank argues that when the rule was first promulgated, there were
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no express jurisdictional limitations contained in the statutes
the rule referenced (namely, HRS Chapter 416, the Hawaiʻi
Professional Corporation Law, and Chapter 605, the chapter
governing attorney licensure in Hawaiʻi). Instead, CIT Bank
argues, the statutes “reflected an intent only to limit
management and control of professional corporations to licensed
individuals.” CIT Bank also points out that the rule was not
updated after the repeal of the Hawaiʻi Professional Corporation
Law in 1987 and its replacement with the Professional
Corporation Act. The Professional Corporation Act expressly
provided that corporate shares could be owned by anyone in the
United States, its territories, and the District of Columbia.
CIT Bank further argues that Sheveland’s interpretation is
inconsistent with other court rules that contemplate multi-
jurisdictional law firm practice in Hawaiʻi. CIT Bank cites to
RSCH 11(b) (2016), which requires firms composed “in whole or in
part” by Hawaiʻi-licensed attorneys to participate in the IOLTA
program. It also notes that Hawaiʻi Rules of Professional
Conduct (“HRPC”) Rule 7.5 (2014) similarly permits multi-
jurisdictional law firm practice, as it requires Hawaiʻi law firm
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letterheads to indicate which attorneys are not licensed to
practice in Hawaiʻi.1
CIT Bank also points out that this court’s ethical rules
once prohibited Hawaiʻi law partnerships from including any
person not licensed to practice law in Hawaiʻi. See Hawaiʻi Code
of Professional Responsibility (“HCPR”) Disciplinary Rule (“DR”)
2-102(D) (“A partnership shall not include any person not
licensed to practice law in the courts of the State of
Hawaii.”); see also HCPR Ethical Consideration (“EC”) 2-11 (“No
partnership for the practice of law in the State of Hawaii may
include a member who is not admitted to practice in the courts
of the State of Hawaii.”). Over 30 years ago, however, those
rules were deleted. Lastly, CIT Bank asserts that statutes on
similar subject matter, namely the licensure of Hawaiʻi
professionals organized into corporations, do not limit
ownership of corporate shares to just Hawaiʻi-licensed
individuals. See HRS § 415A-9(a) (2004) (“A professional
corporation may issue shares . . . only to individuals
authorized by law in this State or in any other state or
territory of the United States or the District of Columbia to
1
CIT Bank also argues that Sheveland’s interpretation of RSCH Rule 6
renders the rule unconstitutional under the United States Constitution’s
Commerce Clause and Privileges and Immunities Clause. As we dispose of the
RSCH Rule 6 challenge using canons of interpretation, we do not address the
constitutional issues.
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render a professional service permitted by the corporation’s
articles of incorporation.”) (emphasis added).
Amicus Curiae Federal National Mortgage Association
(“FNMA”) filed a substantive joinder to CIT Bank’s reply brief.
FNMA is represented by Carlsmith Ball, a multi-jurisdictional
law firm with offices in Hawaiʻi and California (and, in the
past, Guam). FNMA points out an inconsistency within RSCH Rule
6: amendments to the rule to expressly include law partnerships
inadvertently retained jurisdictional limitations initially
intended for law corporations. FNMA submits that Carlsmith Ball
was properly formed as a law partnership before this change to
RSCH Rule 6 occurred. FNMA posits that the rule change
“inadvertently divested properly formed partnerships like
Carlsmith Ball, which had partners licensed in other
jurisdictions, of their legitimate business interests,” in
violation of the due process clause of the Fourteenth Amendment
to the United States Constitution. FNMA adds that it was
“highly doubtful” that this court would have amended RSCH Rule 6
in a manner exposing it to constitutional challenge.
This court issued an order granting Dentons US LLP’s motion
for pro hac vice admission and stating that an opinion on the
RSCH Rule 6 issue would be forthcoming. This opinion now
addresses the issue. We hold that the following underlined
portions of RSCH Rule 6 have been superseded, by implication, by
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other rules of this court that permit law firms composed of
Hawaiʻi-licensed and non-Hawaiʻi-licensed attorneys to practice
law in Hawaiʻi, to mean “in this state or in any other state or
territory of the United States or the District of Columbia”:
(e) Directors. Notwithstanding any statutory provisions,
each director of a lawyers’ professional business
organization shall be licensed to practice law in this
state by this court. A lawyers’ professional business
organization that has only one shareholder need have only
one director who shall be such shareholder.
(f) Officers. Notwithstanding statutory provisions, each
officer of a lawyers’ professional business organization
shall be licensed to practice law in this state by this
court, except as provided in this subsection (f). If a
lawyers’ professional business organization is incorporated
with a single shareholder and a single director after July
1, 1987, or if a lawyers’ professional business
organization converts to having a single shareholder and a
single director after that date, the person or persons
holding the offices of secretary and treasurer need not be
licensed. If a lawyers’ professional business organization
had a single shareholder and single director prior to July
1, 1987, the person or persons holding the offices of vice-
president and secretary need not be licensed, in which
event the offices of president and treasurer shall be held
by the sole shareholder as previously required by this
rule. An unlicensed person, even if permitted to serve as
an officer pursuant to this rule, shall in no event serve
as a director or be a shareholder of a lawyers’
professional business organization.2
II. Discussion
Upon closer inspection, the above-identified portions of
RSCH Rule 6 have been impliedly superseded by other court rules
governing the organized practice of law to mean “in this state
or in any other state or territory of the United States or the
2
The continued need for the remainder of RSCH Rule 6 is not addressed at
this time.
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District of Columbia.” As will be discussed in further detail
below, when the rule was first promulgated, it was clear that
only Hawaiʻi-licensed attorneys could serve as partners or
shareholders in Hawaiʻi law corporations. Two years later,
however, this court’s ethical rules governing the practice of
law changed dramatically, to eliminate the requirement that only
Hawaiʻi-licensed attorneys could serve as partners in Hawaiʻi law
firms. RSCH Rule 6, however, remained the same in all material
respects. This court went further to promulgate new rules that
seemed to allow law firms practicing in Hawaiʻi to have non-
Hawaiʻi-licensed members, as long as these firms noted the
jurisdictional limitations of these attorneys on their
letterheads and firm listings (HRCP Rule 7.5) and contributed to
the IOLTA program (RSCH Rule 11(b)). (Even when related
statutes changed to allow non-Hawaiʻi-licensed individuals to
serve as shareholders, officers, directors, and partners within
Hawaiʻi professional corporations and partnerships, RSCH Rule 6
still remained materially unchanged.) Thus, the above-
identified portions of RSCH Rule 6, which prohibit non-Hawaiʻi-
licensed attorneys from serving as directors or officers of
Hawaiʻi law firms with a multi-jurisdictional presence, were
repealed by implication by these related court rules. As such,
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RSCH Rule 6 does not prohibit Dentons US LLP from practicing law
in Hawaiʻi through its Hawaiʻi-licensed attorneys.
A. RSCH Rule 6’s History
RSCH 6 (initially numbered RSCH Rule 24) originated in a
per curiam opinion of this court, Petition of the Bar
Association of Hawaii, 55 Haw. 121, 516 P.2d 1267 (1973) (per
curiam). In that matter, the Hawaiʻi State Bar Association
petitioned this court to allow the incorporation of attorneys
under the newly enacted Professional Corporation Act, then HRS
§§ 416-141 through 154. 55 Haw. at 121, 516 P.2d at 1267-68.
This court was aware that attorneys sought to establish law
corporations to benefit from federal tax advantages, but it was
concerned that the Bar Association’s proposed rule would limit
malpractice liability of incorporated attorneys, contrary to the
Uniform Partnership Act, the HCPR, and a state statute
forbidding abridgment of the substantive rights of client-
litigants. 55 Haw. at 122, 516 P.2d at 1268. This court
therefore adopted the rule, then numbered RSCH Rule 24,
governing Professional Corporations, which read, in relevant
part, as follows:
(b) Requirements for Issuance of Certificate of
Registration. The clerk shall issue a Certificate of
Registration to such corporation if its application shows
that:
(1) The applicant is organized and exists pursuant
to Professional Corporation Law, HRS, Sections 416-
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141 through 416-154, and is a professional
corporation within the meaning of said law and
complies with all the requirements of said law and
this rule.
(2) Each shareholder, director and officer of the
applicant is licensed to practice law in this state
by this court. . . .
(c) Shares; Ownership and Transfer.
(1) Shares in a law corporation may be owned only by
the corporation or by one or more persons licensed to
practice law in this state by this court.
. . . .
(j) Compliance with Law and Rules of Court. A law
corporation’s affairs shall be conducted in compliance with
law and with the rules of this court. It shall be subject
to the applicable rules and regulations adopted by, and the
disciplinary powers of, this court. Nothing in this rule
shall affect or impair the disciplinary powers of this
court over any law corporation or over any person licensed
to practice in this state by this court.
RSCH Rule 24 (1979) (emphases added). RSCH Rule 24 thus
prohibited non-Hawaiʻi-licensed attorneys from serving as
shareholders, directors, or officers of Hawaiʻi law corporations.
Contemporaneous provisions of the HCPR and the HRS provide
a fuller picture of the jurisdictional limitations on organized
law practice at that time. Between 1970 and 1981, HCPR DR 2-
102(D) stated, “A partnership shall not include any person not
licensed to practice law in the courts of the State of Hawaii.”
EC 2-11 likewise provided, “No partnership for the practice of
law in the State of Hawaii may include a member who is not
admitted to practice in the courts of the State of Hawaii.”
Similarly, HRS § 416-146 (1976) required that “[s]hares of
capital in a professional corporation . . . be issued only to a
licensed person. . . .” with “licensed person” referring to the
attorney licensing provisions in HRS Chapter 605, which
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pertained only to Hawaiʻi licensure by this court. Thus, it
seems clear that at that time, all law partners, shareholders,
officers, and directors had to have been Hawaiʻi-licensed
attorneys.
B. RSCH Rule 6’s Inconsistency with Related Court Rules and
Statutes
Just two years following RSCH Rule 24’s adoption, however,
inconsistencies between the rule and other court rules appeared.
HCPR DR 2-102(D) and EC 2-11 were amended to delete the
requirement that every partner in a law firm be licensed to
practice law in Hawaiʻi. The 1981 amendment to HCPR DR 2-102(D)
stated the following, which allowed, with conditions, Hawaiʻi law
firm ownership by Hawaiʻi-licensed and non-Hawaiʻi-licensed
attorneys:
A law firm shall not be formed or continued between or
among lawyers licensed in different jurisdictions unless
all enumerations of the partners, associates, and “of
counsel” lawyers of the firm on its letterhead and in other
permissible listings make clear the jurisdictional
limitations on those partners, associates, and “of counsel”
lawyers of the firm not licensed to practice in all listed
jurisdictions.
(Emphasis added.)3 Likewise, the 1981 amendment to EC 2-11
deleted the sentence, “No partnership for the practice of law in
3
In 1994, the HCPR was replaced by the Hawaiʻi Rules of Professional
Conduct (“HRPC”); Rule 2-102(D) was replaced with the “identical” HRPC Rule
7.5(e), which provided the following, which, again, allowed, with conditions,
law firms to be owned by non-Hawaiʻi-licensed and Hawaiʻi-licensed attorneys
practicing in Hawaiʻi:
(continued. . .)
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the State of Hawaii may include a member who is not admitted to
practice in the courts of the State of Hawaii.” These changes
to court rules are clearly inconsistent with the prohibitions
within RSCH Rule 6 against non-Hawaiʻi-licensed attorneys serving
as directors or officers within Hawaiʻi law firms that have a
multi-jurisdictional presence. Where court rules conflict in
this way, the later rules prevail. See, e.g., Bank of America
v. Reyes-Toledo, 143 Hawaiʻi 249, 257, 428 P.3d 761, 769 (2018)
(“[W]hen interpreting rules promulgated by the court, principles
of statutory construction apply.”) (citations omitted); HRS § 1-
9 (2009) (“The repeal of a law is . . . implied when the new law
contains provisions contrary to, or irreconcilable with, those
of the former law.”); Wahiawa Sugar Co. v. Waialua Agric. Co.,
13 Haw. 109, 110, 1900 WL 2519, 1 (Haw. Terr. 1900)
(acknowledging that “repeals by implication are not favored,”
but, as between two versions of a statute that conflict, the
latter must prevail over the former). Although repeal or
supersession of rules by implication is not favored, in this
(continued. . .)
A law firm shall not be formed or continued between or
among lawyers licensed in different jurisdictions unless
all enumerations of the partners, associates, and “of
counsel” lawyers of the firm on its letterhead and in other
permissible listings make clear the jurisdictional
limitations on those partners, associates, and “of counsel”
lawyers of the firm not licensed to practice in all listed
jurisdictions.
(Emphasis added.)
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case, the inconsistency between the changes to court rules and
the relevant portions of RSCH Rule 6 is so clear, and there is
no rational basis for harmonizing the inconsistencies, that
supersession by implication exists. See Fuentes v. Workers’
Comp. Appeals Bd., 16 Cal.3d 1, 7, 547 P.2d 449, 453 (1976)
(“Repeals by implication are not favored, and are recognized
only when there is no rational basis for harmonizing two
potentially conflicting laws.”).
RSCH Rule 6(e) and (f)4 also became inconsistent with
related statutes governing professional corporations. The
Legislature replaced HRS Chapter 416 with Chapter 415A in 1985.
1985 Haw. Sess. Laws Act 259 at 495-504. Section 9(a) of the
newly enacted chapter provided that non-Hawaiʻi-licensed
professionals could own shares in Hawaiʻi professional
corporations or serve as partners alongside Hawaiʻi-licensed
professionals:
A professional corporation may issues shares, fractional
shares, and rights or options to purchase shares only to:
(1) Natural persons who are authorized by law in this
State or in any other state or territory of the United
States or the District of Columbia to render a
professional service permitted by the articles of
incorporation of the corporation; and
(2) General partnerships in which all the partners are
qualified persons with respect to such professional
corporation and in which at least one partner is
authorized by law in this State to render a
professional service permitted by the articles of
incorporation of the corporation.
4
RSCH Rule 24 was renumbered RSCH Rule 6 in 1984.
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1985 Haw. Sess. Laws Act 259 § 9 at 497-98 (emphases added).5, 6
In September 1987, prompted by the repeal of HRS Chapter
416 (the Hawaiʻi Professional Corporation Law) and its
replacement by HRS Chapter 415A (the Hawaiʻi Professional
Corporation Act), RSCH Rule 6 was extensively amended, more
closely resembling, sub-section by sub-section, the rule in
place today:
(a) Compliance with this Rule and the Hawaii
Professional Corporation Act. Any person or persons
seeking to practice law as a corporation shall comply with
the provisions of this rule and the Hawaii Professional
Corporation Act, HRS Chapter 415A.
. . . .
5
Very shortly afterward, the first provision was amended to allow
corporations to issue shares, fractional shares, and rights of options
to purchase shares only to “individuals,” instead of “natural persons,”
“authorized by law in this State or in any other state or territory of
the United States or the District of Columbia to render a professional
service permitted by the corporation’s articles of incorporation.”
1987 Haw. Sess. Laws Act 135, § 115 at 271. The legislature deleted
the second provision regarding general partnerships owning shares where
at least one partner is authorized by law in this State. Id.
6
Section 9(b) of the newly enacted chapter also provided, however, that
a “licensing authority for any profession,” such as this court over the legal
profession, can “further restrict, condition, or abridge the authority of
professional corporations to issue shares” where it is deemed “necessary . .
. to prevent violations of the ethical standards of such profession. . . .”
1985 Haw. Sess. Laws Act 259 § 9 at 498. As such, this provision, codified
as HRS § 415A-9(b), recognizes the inherent authority of this court to
regulate the practice of law. See In re Ellis, 53 Haw. 23, 25 n.1, 487 P.2d
286, 287 n.1 (1971) (“This court has inherent power to regulate matters
before it regarding the practice of law.”) (quoting Hawaiʻi Constitution,
article V, section 1, which vests judicial power in the courts). Thus,
section 9(b) does not purport to affect this court’s authority to prohibit
non-Hawaiʻi-licensed attorneys from serving as directors or officers of
Hawaiʻi law firms with a multi-jurisdictional presence. As we have already
noted, however, it appears that this court’s later-enacted rules
contemplating multi-jurisdictional law practice in Hawaiʻi repealed, by
implication, those parts of RSCH Rule 6(e) and (f) prohibiting non-Hawaiʻi-
licensed attorneys from serving as officers and directors of Hawaiʻi law
firms.
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(d) Shares; Ownership and Transfer.
(1) Shares in a law corporation may be owned
only by the corporation or by one or more persons licensed
to practice law in this state by this court. . . .
. . . .
(e) Directors. Notwithstanding the provisions of HRS
§ 415A-14, each director of a law corporation shall be
licensed to practice law in this state by this court. . . .
. . . .
(f) Officers. Notwithstanding the provisions of HRS
§ 415A-14, each officer of a law corporation shall be
licensed to practice law in this state by this court. . . .
. . . .
(h) Compliance with Law and Rules of Court. A law
corporation’s affairs shall be conducted in compliance with
law and with the rules of this court. It shall be subject
to the applicable rules and regulations adopted by, and all
the disciplinary powers of, this court. Nothing in this
rule shall affect or impair the disciplinary powers of this
court over any law corporation or over any person licensed
to practice in this state by this court.
RSCH Rule 6 (1987).
As argued by CIT Bank, the plain language of RSCH Rule 6(d)
appears to allow Dentons to practice law in Hawaiʻi as a lawyers’
professional business organization. RSCH Rule 6(d)(1) states,
in relevant part, “Shares or interests in a lawyers’
professional business organization may be owned only by a
lawyers’ professional business organization or by one or more
persons licensed to practice law in this state by this court. .
. .” Contrary to Sheveland’s assertion, the word “only”
modifies the two forms of share ownership that are allowed:
one, by a lawyer’s professional business organization, or two,
by “one or more persons licensed to practice law in this state
by this court. . . .” According to Paul Alston, Dentons US LLP
is owned in part by individual Hawaiʻi-licensed attorneys
formerly from AHFI who have individually incorporated as each’s
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own lawyer’s professional business organization. See
Declaration of Alston (“It was further determined that any
concerns about RSC[H] 6 could also be addressed by having the
lawyers who were to become partners in Dentons US LLP form their
own individual law corporations and have those corporations
become partners in Dentons. In that way, consistent with the
language of RSC[H] 6, the interests in Dentons US LLP (a
“lawyer’s professional business organization”) are owned by
other “lawyers’ professional business organizations” – i.e., our
individual law corporations.”). Thus, Dentons US LLP shares or
interests, owned by each former AHFI partner’s lawyer’s
professional business organization, satisfies RSCH Rule 6(d)(1).
Even if the former AHFI partners who are now Dentons US LLP
partners are viewed as individuals instead of law corporations,
there is still no violation of RSCH Rule 6(d)(1), as Dentons US
LLP would be owned “by one or more persons licensed to practice
law in this state by this court. . . .” This is because shares
or interests in Dentons US LLP are owned by one or more Hawaiʻi-
licensed attorneys: the former AHFI partners. Thus, RSCH Rule
6 is no impediment to the former AHFI partners’ practice of law
in Hawaiʻi as part of Dentons US LLP.7
7
Even after the amendments to court rules authorizing law practice
ownership by non-Hawaiʻi-licensed and Hawaiʻi-licensed attorneys, the
provisions of RSCH Rule 6 currently at issue remained substantively unchanged
for over three decades. During this period, RSCH Rule 6 was amended multiple
(continued. . .)
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C. Concerns about the Conduct of non-Hawaiʻi-Licensed Attorneys
within Hawaiʻi Lawyers’ Professional Business Organizations
Finally, we also address Sheveland’s concern that non-
Hawaiʻi-licensed attorneys, in Hawaiʻi firms with a multi-
jurisdictional presence, may direct the conduct of Hawaiʻi-
licensed attorneys in a manner free from oversight by this court
or the Office of Disciplinary Counsel. For the following
(continued. . .)
times, but never to account for the changing regulatory landscape surrounding
organized law practice in Hawaiʻi. First, in 1995, RSCH Rule 6(a) was amended
to include organized law practice in the form of partnerships, as follows
(with new material underscored):
(a) Compliance With this Rule and Either the Hawaiʻi
Professional Corporation Act or the Hawaiʻi Partnership Act.
Any person or persons seeking to practice law as a
corporation or in partnership shall comply with the
provisions of this rule and either the Hawaiʻi Professional
Corporation Act, HRS Chapter 415A, or the Hawaiʻi
Partnership Act, HRS Chapter 425 or both, if applicable.
(We note that, despite the express addition of “partnership” as an
organizational form for law practice, Rule 6(d)(1), (e), and (f) still
referred to only the corporate concepts of shares, directors, and officers,
and not partnership concepts.)
Second, in 1999, RSCH Rule 6 was amended to introduce the term
“lawyer’s professional business organization” to cover law practiced in the
form of a “corporation, a company, an association,” or a “partnership.” RSCH
Rule 6(a) was also amended to require compliance with the rest of the
provisions of RSCH Rule 6 as well as “any applicable statutes,” instead of
expressly referencing HRS Chapters 415A and 425 (governing corporations and
partnerships, respectively) as it once had.
Lastly, in 2001, RSCH Rule 6(d)(1) was amended slightly to delete the
bracketed “the” and replace it with the underscored “a”, as follows: “Shares
or interests in a lawyer’s professional business organization may be owned
only by [the] a lawyer’s professional business organization or by one or more
persons licensed to practice law in this state by this court. . . .” RSCH
Rule 6 has not changed since this 2001 amendment.
The relevant portions of RSCH Rule 6 (e) and (f) did not appropriately
evolve in response to dramatic changes to related court rules contemplating
the inclusion of non-Hawaiʻi-licensed attorneys in Hawaiʻi lawyers’
professional business organizations with a multi-jurisdictional presence.
Thus, for the reasons stated in this opinion, RSCH Rule 6 is no impediment to
the former AHFI partners’ practice of law in Hawaiʻi as part of Dentons US
LLP.
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reasons, HRS § 605-14 would still prohibit non-Hawaiʻi-licensed
attorneys from doing so within this jurisdiction.
Fought & Co. v. Steel Eng’g and Erection, Inc., 87 Hawaiʻi
37, 951 P.2d 487 (1998), is instructive on this issue. In that
case, the Department of Transportation withheld payment for a
Kahului Airport construction project from a general contractor,
who, in turn, withheld payment from its subcontractor, who, in
turn, withheld payment from its subcontractor, Fought & Co.
(“Fought”), a company headquartered in Oregon, which employed
Oregon-licensed general counsel. 87 Hawaiʻi at 41-42, 43, 951
P.2d at 491-92, 493. Fought initiated a contract action in
Hawaiʻi through Hawaiʻi-licensed local counsel, who filed all
briefs and made all court appearances in Hawaiʻi courts. 87
Hawaiʻi at 44-45, 48, 951 P.2d at 494-95, 498. Fought’s general
counsel assisted local counsel by preparing the company’s
statement of position in anticipation of mediation, consulting
and strategizing on the appeal, conducting legal research and
reviewing the briefing of local counsel and other parties to the
litigation, and resolving issues pertaining to the posting of
another party’s supersedeas bond. 87 Hawaiʻi at 46, 951 P.2d at
496. While we concluded Fought’s general counsel was indeed
engaged in the practice of law, we held that it was not the
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“unauthorized practice of law” because it did not take place
within this jurisdiction. Id.
We reasoned that Fought’s general counsel represented an
Oregon corporation, rendered all legal services in Oregon, did
not draft or sign any of the court filings, did not appear in
Hawaiʻi courts, and did not communicate with counsel for other
parties on Fought’s behalf. 87 Hawaiʻi at 48, 951 P.2d at 498.
In sum, we concluded that Fought’s general counsel’s “role was
strictly one of consultant to Fought and Fought’s Hawaiʻi
counsel.” Id. We emphasized that “Fought’s Hawaiʻi counsel were
at all times ‘in charge’ of Fought’s representation within the
jurisdiction so as to insure that Hawaiʻi law was correctly
interpreted and applied.” Id. Non-Hawaiʻi-licensed attorneys
within Dentons US LLP must comply with HRS § 605-14 and Fought.
III. Conclusion
We hold that the portions of RSCH Rule 6 identified in
Section I have been superseded by implication to mean “in this
state or in any other state or territory of the United States or
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the District of Columbia” and do not prohibit the former AHFI
partners’ practice of law in Hawaiʻi as part of Dentons US LLP.
James J. Bickerton, /s/ Mark E. Recktenwald
Stanley H. Roehrig, and
Bridget G. Morgan /s/ Paula A. Nakayama
Bickerton Dang, LLLP
/s/ Sabrina S. McKenna
John F. Perkin
Perkin & Faria, LLLC /s/ Richard W. Pollack
Van-Alan H. Shima /s/ Michael D. Wilson
Affinity Law Group, LLLC
for plaintiff-appellant
Stephanie Sheveland
Michael C. Bird and
Summer H. Kaiawe
for defendant-appellee
Wells Fargo Bank, N.A.
Charles A. Price
Koshiba Price & Gruebner
for defendants-appellees
Masood M. Foadi and
Fahi S. Foadi
Judy A. Tanaka,
Pamela W. Bunn, and
Meredith G. Miller
Dentons US LLP
Julie B. Strickland
Stroock & Stroock & Lavan LLP
(admitted pro hac vice)
for defendants-appellees
CIT BANK, N.A., f/k/a
OneWest Bank, FSB, and
OWB REO LLC
Steven M. Egesdal,
Tom E. Roesser, and
Daniel J. Padilla
Carlsmith Ball LLP
for amicus curiae
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