Reprinted with permission by the Nassau County Bar Association
Even before the onset of the pandemic in early 2020, an increasing number of New York lawyers and law firms were beginning to provide legal services to clients online, while physically located at home or in other states and jurisdictions. The pandemic exacerbated the situation, as professionals in all endeavors were forced to work remotely. Many lawyers, whether residing in New York or contiguous states, discovered that it was no longer necessary to commute to an office to perform their work effectively. Some, so determined to avoid the grind of a daily commute, resigned from positions to pursue other opportunities. Others took the opportunity to relocate to states with warmer climes, such as Florida or North Carolina, fully intending to continue their practices “virtually.” Still other attorneys chose to retire but given technological advances hoped to keep a toe in the water and generate income for themselves through referrals and fee-sharing arrangements.
Although in most professions, working virtually may not pose ethical or compliance issues, lawyers and law firms need to be aware that their ability to engage in such virtual practices is circumscribed by rule and statute. Among the most significant of the rules bearing on virtual practice is Judiciary Law §470, which provides, as follows:
A person, regularly admitted to practice as an attorney and counsellor, in the courts of record of this state, whose office for the transaction of law business is within the state, may practice as such attorney or counsellor, although he resides in an adjoining state (italics added).
Significantly, Judiciary Law §470 is on the cusp of being repealed. In 2021, the New York State Senate passed a bill repealing §470 with nearly unanimous support. The bill, however, did not get a vote in the Assembly before the session ended and was, thus, never presented to the Governor. On February 15, 2022, the Senate once again passed the bill, and, as of this writing, it is again awaiting action in the Assembly. Despite the momentum toward its repeal, Judiciary Law §470 remains the law in New York, and lawyers are cautioned to continue to heed its requirements.
Constitutionality of Judiciary Law §470
Judiciary Law §470 was enacted over a century ago (in 1909), at a time when only a New York resident could practice law in New York. In 1979, the Court of Appeals struck down as unconstitutional the requirement that all New York attorneys must reside in the State.[1] Since that time, New York courts have consistently interpreted the statute to apply to all nonresident members of the New York bar and make no distinction between non-resident attorneys residing in adjoining states and non-resident attorneys in general.[2] However, despite case law modifying the reach of Judiciary Law §470, the statute has remained on the books, as written, including the requirement that nonresident attorneys who wish to practice law in New York must maintain an “office for the transaction of law business within the state.”
In 2015, as part of a federal case directly challenging the constitutionality of Judiciary Law §470 under the Privileges and Immunities Clause of the United States Constitution brought by a New Jersey resident, Ekaterina Schoenefeld, the NY Court of Appeals was asked by the Second Circuit Court of Appeals what constituted an “office for the transaction of law business” for purposes of the statute. The NY Court of Appeals responded by stating that the statute required nonresident attorneys to, at a minimum, maintain a “physical office” in New York.[3] Despite the vagueness and imprecision of the Court of Appeals’ reference to a “physical office,” the Second Circuit held that §470 was constitutional.[4] The question of what constitutes a “physical office” under §470 has, however, still not been definitively answered.
So, what does it mean to have a “physical office” and how does this affect the legions of New York attorneys who currently reside out-of-state or plan to do so in the future?
Physical Office
The existence or nonexistence of a physical law office is an issue of fact in each instance. In Schoenefeld v. State , the Court of Appeals suggested that compliance with §470 requires more than just an address or the designation of an agent for the receipt of service. In Chupak v. Gomez,[5] the court found a nonresident attorney to have made a sufficient showing of a New York law office under the statute where, among other things, he had access to one of the offices located on the second floor of a small building in Brooklyn whenever needed; there was a desk, telephone, fax machine, and computer available to him; and where the other tenant of the building was able to accept service of process of his behalf, immediately notify him of any calls, service of documents, or mailings, and promptly forward documents to him via email and post to his residence in California.
In recent years, the concept of what constitutes a law office in the United States has evolved because of technological advances and the proliferation of “virtual law offices.” In one Maryland case, the Court stated that, at a minimum, some physical presence sufficient to assure accountability of the attorney to clients and the court is required.[6] In 2013, New Jersey’s Rules were amended to eliminate the requirement that attorneys maintain a “bona fide” office at a fixed physical location and, instead, require them to structure their practices to assure prompt and reliable communication with and accessibility by clients, other counsel, and judicial and administrative authorities, as well as to designate a more fixed physical location for file storage, mail receipt, and service of process relating to their practices.[7]
While the same practical and technological advances have led to the anticipated repeal of Judiciary Law §470, until it is ultimately repealed, the statute remains the law in New York. Thus, the requirement that nonresident attorneys wishing to practice here maintain “an office for the practice of law business” persists, as does the lack of guidance over what constitutes a “physical office.” Indeed, the Committees on Professional Ethics of both the New York State Bar Association and the City Bar Association of New York have repeatedly declined to render opinions on the “legal question” of what constitutes a physical office under the statute.[8]
“Virtual Law Offices”
In what may be the closest thing to a stamp of approval on the use of “virtual law offices” by nonresident attorneys, the NYSBA Ethics Committee opined in its Opinion 1025 (2014) that attorneys are permitted under the advertising rules contained in the Rules of Professional Conduct (“RPC”)[9] to designate the street address of a “virtual law office” as their “principal law office address,” but only if the virtual law office qualifies as an “office for the transaction of law business” under Judiciary Law §470. Paramount among the RPC’s advertising rules and a recurring theme throughout the RPC, generally, is the admonition to avoid dishonest, deceitful, and misleading conduct.[10] Therefore, out-of-state attorneys who wish to maintain a virtual law office to establish a physical presence in New York must ensure that they are not misleading their clients, the courts, or the public about their circumstances. In Marina District Development Co., LLC v. Toledano,[11] the court rejected a nonresident attorney’s claim that his membership at a “virtual office” at the New York City Bar Association (offering telephone message service and meeting rooms, if needed) qualified as an office under Judiciary Law §470, as there was no evidence that the lawyer ever used the available facilities and, in fact, by his actions, affirmatively steered all correspondence and clients to his Philadelphia office. The court dismissed the action brought by the lawyer without prejudice.
Compliance with Judiciary Law §470 frequently becomes an issue in litigated matters where an attorney of record is sought to be disqualified due to the lack of a physical office in this state.[12] The Court of Appeals has held that a violation of Judiciary Law §470, does not render the actions taken by the offending attorney in a case a nullity.[13] Rather, the client may cure the violation with the appearance of compliant New York counsel or by the offending attorney applying for admission pro hac vice.[14] This permissive approach toward curing a §470 violation promotes the goal of permitting clients to be represented by attorneys of their choosing and avoids punishing unwitting clients for an attorney’s failure to comply with the statute.[15]
Attorney Registration and Fee Implications
Another rule impacting non-resident attorneys who wish to practice New York law virtually, particularly bearing on the issue of entitlement to receive fees, is the requirement that attorneys register with the Office of Court Administration (“OCA”) under Judiciary Law §468-a and 22 NYCRR 118.1. These provisions require all New York attorneys, resident or nonresident, and even those certified as “retired,” to register with OCA biennially. Attorneys who have ceased practicing, whether residing in New York or elsewhere, must be aware of the limitations registering as “retired” will have on their ability to continue to practice law or charge or share fees with practicing attorneys. While attorneys who certify to OCA that they are “retired” are exempt from paying the biennial registration fee and from compliance with mandatory CLE requirements, such “retired” attorneys may only perform legal services without compensation. In effect, a “retired” lawyer is deemed, for all intents and purposes, a nonlawyer, and with few exceptions, practicing lawyers and law firms may not share legal fees with a non-lawyer.[16] Thus, if you are considering retirement and/or relocating, you should consider whether certifying to OCA that you are “retired” is right for your circumstances.
Significantly, there is nothing in either Judiciary Law 468-a and 22 NYCRR 118.1 that requires a nonresident attorney to register a New York office address to comply with Judiciary Law §470. All that is required is that the attorney list an office address, which can be the attorney’s principal out-of-state address. However, merely because there is no correlation between the attorney registration requirements and Judiciary Law §470 does not mean that compliance with §470 is unnecessary. The attorney must still maintain a “physical office” if he or she wants to work on New York legal matters or share fees with a New York attorney.
To that end, if a non-resident New York attorney, properly registered with OCA and possessed of a valid physical office in this state, wishes to share fees with another attorney, the attorneys must still comply with the rules on fee sharing.[17] Essentially, RPC, rule 1.5(g) states that lawyers cannot share fees with lawyers who are not associated in a firm unless each performs services on the matter or each assumes joint responsibility for the matter, and the client agrees to the arrangement in writing. This is the case regardless of where the attorneys are physically located. RPC, rule 1.5(g) provides a roadmap for fee sharing arrangements, and attorneys should strive to comply with its mandates to avoid fee disputes with clients and colleagues.
Disciplinary Issues
Notwithstanding that a violation of Judiciary Law §470 is curable, if a violation is determined to have occurred, the offending lawyer may have to contend with a disciplinary inquiry for the violation of the statute. A lawyer is required to comply with applicable laws, and a violation of the requirements of Judiciary Law §470, applicable to the practice of law, could be seen as a violation of RPC, rule 8.4(b), which proscribes a lawyer from engaging in “illegal conduct that adversely reflects on the lawyer’s honesty, trustworthiness or fitness as lawyer.” RPC, rule 8.4(b) is a catchall rule of professional conduct for otherwise uncategorizable conduct that is “illegal” or in violation of a statute. Each matter is addressed by the disciplinary authorities on its own merits, and an inquiry based on a violation of Judiciary Law §470 may not result in disciplinary charges or the imposition of serious discipline, but it is easily avoidable.
Conclusion
In conclusion, attorneys residing out-of-state or who are considering relocating and/or “retiring” from the practice of law should consider the current state of the law in New York with respect to practicing and maintaining a physical office in this state and the implications of registering as “retired.” Until Judiciary Law §470 is ultimately repealed, it remains in full force in effect.
………………………………….
Mitchell T. Borkowsky provides representation to lawyers being investigated or prosecuted by the state grievance committees for alleged ethical or professional misconduct, and guidance to lawyers and law firms on their ethical obligations. He is the former Chief Counsel to the New York State Grievance Committee for the Tenth Judicial District of the Supreme Court, Appellate Division, Second Department and a member of the New York State and Nassau and Suffolk County Bar Associations’ Committees on Professional Ethics, and the New York State Bar Association’s Task Force on Attorney Well-Being: Public Trust and Ethics Working Group. Mr. Borkowsky can be reached at Mitch@myethicslawyer.com
1. In re Gordon, 48 N.Y.2d 266 (1979).
2. Lichtenstein v. Emerson, 251 A.D.2d 64 (1st Dept. 1998) (Washington D.C.); Parvis v. Rakower, 2019 NY Slip Op. 31885[U] (Sup. Ct., N.Y. Cty 2019) (North Carolina); see, also, Schoenefeld v. State, 25 N.Y.3d 22 (2015) and Barker v. Broxton, 78 N.Y.S.3d 624 (1st Dept. 2018)(making no distinction under §470 between non-resident attorneys residing in adjoining states and non-resident attorneys in general).
3. Schoenefeld v. State, 25 N.Y.3d 22 (2015).
4. Schoenefeld v. Schneiderman, 821 F.3d 273 (2d Cir. 2016).
5. 2016 N.Y. Slip Op. 30051[U] (Sup. Ct., N.Y. Cty. Jan. 8, 2016).
6. NYC Op. 2019-2 (2019)(citing In re Application of Carlton, 708 F.Supp.2d 524 (D. Md. 2010).
7. Id.
8. NYSBA Op. 1236 (2022), 1223 (2021), and 1025 (2014), and NYC Bar Op. 2019-2 (2019).
9. 22 NYCRR 1200, rule 7.1(h).
10. RPC, rules 3.3, 4.1, 7.1, 8.2.
11. 60 Misc.3d 1203(A), 109 N.Y.S.3d 833 (Table) (Sup. Ct., N.Y. Cty. 2018).
12. Arrowhead Capital Fin., Ltd. V. Cheyne Specialty Fin. Fund L.P., 32 NY3d 645, 650 (2019); Stegemann v. Rensselaer County Sheriff’s Off., 153 A.D.3d 1053 (3d Dept. 2017).
13. Id.
14. Arrowhead, 32 NY3d at 650; Parvis v. Rakower Law P.C., 2019 NY Slip Op 31885[U]. (Pro hac vice eligibility requirements are governed by §520.11 of the Rules of the Court of Appeals and require an attorney who is a member of good standing of the bar of another state, territory, district or foreign country to, among other things, associate with an attorney who is a member in good standing of the New York Bar and who will act as the attorney of record in the matter).
15. Parvis, 2019 NY Slip Op. 31885[U].
16. RPC, rule 5.4.
17. RPC, rule 1.5(g)
コメント