When a company files a lawsuit in another state, its regular attorneys are frequently not licensed to practice law in the other state. As a result, the company must retain a local, out-of-state law firm to serve as "local counsel" in the case.
The company's regular lawyer frequently appears as co-counsel along with the local law firm. All too frequently, the local attorneys take an inactive role in the lawsuit, letting the company's out-of-state lawyers drive the ship. A recent decision from a Delaware state court reminds attorneys that if/when they serve as local counsel, they must be actively involved in the case. In James v. National Financial LLC, Delaware's Court of Chancery provides a stern reminder regarding local counsel's duties, ultimately holding a local law firm liable for monetary and other sanctions due to improper actions by the out-of-state attorneys and their client. According to the court, the local attorneys should have been more involved in the case and, if they had been, the misconduct might have been prevented. Courts and ethics opinions in other states have reached similar conclusions. The old "rubber stamping" days of local counsel are seemingly over. It appears all counsel, including local counsel, are created equal.