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Second Circuit upholds New York’s bonafide office requirement

Stacked3Here is this week's Daily Record column. My past Daily Record articles can be accessed here.

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It’s been a long road for New Jersey attorney Ekaterina Schoenefeld, who has, for years now, sought to practice law in New York without maintaining a physical office in the state. Her attempt to overturn New York’s “bonafide office” rule was, after multiple appeals, proven to be unsuccessful by the Second Circuit Court of Appeal’s decision in Schoenefeld v. Schneiderman,
Docket No. 11‐4283‐cv.

In this decision, which was handed down on April 22nd, the Court rejected her arguments in favor of invalidating the bonafide office rule, concluding that: “§ 470 does not violate the Privileges and Immunities Clause because it was enacted not for a protectionist purpose to favor New York resident attorneys but, rather, to provide a means whereby nonresidents could establish a physical presence in the state akin to that of residents, thereby resolving a service concern while allowing nonresidents to practice law in the state’s courts.” 

According to the Court, the prohibition on allowing nonresident attorneys to practice in New York in the absence of an in-state office, even though resident attorneys can use their home address as their office, was not unduly prohibitive, in part because “New York’s in‐state office requirement for nonresident attorneys admitted to the state’s bar, N.Y. Judiciary Law § 470, was not enacted for a protectionist purpose disfavoring nonresident admitted attorneys but, rather, for the nonprotectionist purpose of affording such attorneys a means to establish a physical presence in the state akin to that of resident attorneys, thereby eliminating a court‐identified service‐of‐process concern.”

In other words, the rule was purportedly enacted—not to discourage nonresident attorneys from practicing in New York—but to grant nonresident lawyers the privilege of establishing costly office space in New York, just as their New York resident counterparts have, even when their New York counterpart’s office consists only of their residence.

However, as Judge Peter Hall—the lone dissenter—points out, the Court’s assertion that this rule was not intended to prevent nonresident attorneys from practicing in New York is disingenuous at best: “It is undisputed that, at the time Section 470 was enacted, it was part of a larger statutory scheme designed to prohibit nonresident attorneys from practicing in New York.  See Richardson v. Brooklyn City & N.R. Co., 22 How. Pr. 368, 370 (N.Y. Sup. Ct. Feb. 1, 1862) (noting that the court “ha[d] always required that an attorney should reside within the state”).” 

He also disputes the validity of one of the main assertions in the majority’s opinion: that the in-state office requirement is necessary to ensure that lawyers can be served with judicial process. “Regarding the issue of service, the Court of Appeals itself observed that, although “service on an out‐of‐state individual presented many more logistical difficulties in 1862, when
[Section 470] was originally enacted,” today there are “adequate measures in place relating to service upon nonresident attorneys,” including the methods of mail, overnight delivery, fax and (where permitted) email, as authorized by the 5 CPLR, and the requirement under 22 N.Y.C.R.R. § 520.13(a) that nonresident 6 attorneys designate an in‐state clerk of court as their agent for service of process in order to be admitted in New York.  Schoenefeld, 25 N.Y.3d at 28, N.Y.S.3d at 8 224–25.”

In other words, the majority’s holding is self serving, and, if nothing else, serves to stifle innovation in the delivery of cost-effective legal services to legal consumers. These consumers who are increasingly unable to afford the high prices charged by traditional law firms who charge such high rates, in part, to recoup the significant overhead costs of running a brick and mortar law firm.

It is indisputable that the legal landscape is changing—especially for transactional lawyers. For these attorneys in particular, virtual law firms offer a feasible alternative to traditional law firms and allow for the provision of affordable legal services. And, with virtual law firms, the lawyer’s physical location is often irrelevant since all communication occurs using technology.

Using convoluted rationales to uphold antiquated rules that prevent lawyers with New York law licenses from providing much-needed legal services to underserved populations does a disservice to New York’s legal consumers and discourages innovation in the delivery of legal services. This disappointing holding is a giant step backward at a time when lawyers facing an increasingly competitive legal landscape should be encouraged to use new tools and office structures in order to improve client service and provide more effective, responsive representation.

Nicole Black is a Rochester, New York attorney and the Legal Technology Evangelist at MyCase, intuitive web-based law practice management software for the modern law firm. She is also the author of the ABA book Cloud Computing for Lawyers, co-authors the ABA book Social Media for Lawyers: the Next Frontier, and co-authors Criminal Law in New York, a West-Thomson treatise. She is the founder of lawtechTalk.com and speaks regularly at conferences regarding the intersection of law and technology. She publishes four legal blogs and can be reached at niki@mycase.com.