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Attorneys Defending Bar Requirements Say that Lawyer Must Violate Them To Bring a Challenge

by Carolyn Elefant on February 15, 2010 · 15 comments

in Celebrating Solos, Encouragement, Ethics & Malpractice Issues

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Princeton, New Jersey based solo, Ekaterina Schoenefeld did what every good lawyer is supposed to do:  she abided her state bar’s ethics rules even though doing so cost her financially.   Though duly licensed in New York, Schoenefeld couldn’t practice there.  That’s because New York Judiciary Code section 470 requires non-resident, New York barred lawyers like Schoenfeld to maintain a New York office to serve New York clients.  The office requirement applies only to non-resident, New York barred lawyers; those who reside in New York are not subject to the office requirement.

Lacking a New York office, Schoenefeld dutifully turned down business from prospective New York clients to comply with bar rules.  But because Schoenfeld was paying $350 a year to maintain a bar license that she couldn’t use, she challenged New York’s law in federal court, arguing that it violated the Privileges and Immunities Clause, the Fourteenth Amendment Equal Protection Clause and the Commerce Clause of the United States Constitution.

But no good deed goes unpunished.  Instead of getting praise from the Committee on Professional Responsibility and judiciary for complying with an unfair law, they moved to dismiss Schoenefeld’s challenge, arguing that  because Schoenefeld hadn’t actually violated the law, the case wasn’t ripe for review.  As such, the defendants characterized Schoenfeld’s case as a mere “academic exercise.”

I realize that in litigation, lawyers frequently raise procedural arguments for strategic reasons.  Even so, here, there’s a difference.  In my view, it’s simply inappropriate for a bar ethics committee to adopt a position — even for the sake of litigation — that attorneys must violate the law as a prerequisite to challenging it.

Let’s consider what would have happened had Schoenefeld decided to engage in a little civil disobedience.  According to the New York Law Journal, the state attorney general can bring misdemeanor charges for violations of §470 as well as seek treble damages, such as triple the fees that an out-of-state lawyer may have charged while practicing law in New York without having an office.  Furthermore, we all know that once lawyers violate the law, they’re vulnerable to ethics charges for unprofessional conduct.  Thus, even if Schoenefeld was prosecuted for violating the law, but successfully challenged §470 as a defense, her law license might still be in jeopardy for having violated the statute to begin with.  Yet, that’s precisely the route that the New York Disciplinary Committee preferred Schoenefeld to take.

My criticism of the defendants’ position isn’t limited to procedural matters, though.  At a time when thousands of large firm lawyers have been laid off, you’d think that the New York ethics authorities would want to do away with an archaic, protectionist law that makes it more difficult for displaced lawyers to start a practice.  Many New York licensed, former biglaw attorneys never lived in New York to begin with or may have moved out of state since their layoffs to save money.  Yet New York’s current law would prevent these lawyers from working  from home or even permanent offices space in adjacent jurisdictions – even though if they lived in New York, the same requirement wouldn’t apply.  As numerous commenters on this ABA news story point out, the New York rules don’t protect consumers from ne’er do wells.  A fly by night lawyer from Buffalo located six hours from New York City can represent a clients there without an office, while a New Jersey lawyer with a physical office just across the river in Newark (but without space in New York) and a short train ride from most New York courts could not.

It’s bad enough that New York already has draconian unemployment laws, under which a laid off lawyer earning a couple of bucks from a blog or potentially, from starting a practice is deemed ineligible for unemployment compensation.  But New York’s office space requirements for out of state residents presents another barrier for laid off lawyers determined to put their New York law degrees to good use.

Happily, Northern District Court judge Laurence Kahn concluded that Schoenfeld didn’t need to violate Section 470 to challenge it.  Kahn found that Schoenfeld’s loss of business and desire to abide by the law gave rise to a real controversy ripe for review by the court.  Meanwhile, Kahn also denied Defendants’ motion to dismiss Schoenefeld’s privileges and immunities claim, which means that her case will move forward.

Congrats to Ekaterina Schoenefeld for doing the right thing and obeying the law, even if the Disciplinary Committee would have had you do otherwise.  And good luck in the next phase of the case – MyShingle is rooting for you!  As we like to say here, Go, Solo, Go!!

  • http://www.brucegodfrey.com Bruce

    The only legitimate non-protectionist reason I can see for the law is to allow New York courts easily to exercise personal jurisdiction over the person of an attorney through physical presence for not only disciplinary matters but also civil matters (e.g. malpractice). A simple rule requiring all NY-barred lawyers to appoint, say, Bar Counsel or someone similar as resident agent for service of process for them would suffice.
    I agree totally that ethics committees should not require attorneys to commit an actual violation of the law to challenge that law; while there is some very limited room in some state bar rules for attorneys to advise clients to violate statutes in good faith beliefs that those laws are illegal, that’s a pretty narrow window through which to crawl and ethics committees should not be forcing lawyers to jam through that general sort of window.
    A lawyer’s commercial free speech is impugned by this rule and there is good case law holding that state residency requirements for attorneys are unconstitutional. I think Plaintiff actually has a pretty solid chance of prevailing.

  • http://www.brucegodfrey.com Bruce

    The only legitimate non-protectionist reason I can see for the law is to allow New York courts easily to exercise personal jurisdiction over the person of an attorney through physical presence for not only disciplinary matters but also civil matters (e.g. malpractice). A simple rule requiring all NY-barred lawyers to appoint, say, Bar Counsel or someone similar as resident agent for service of process for them would suffice.
    I agree totally that ethics committees should not require attorneys to commit an actual violation of the law to challenge that law; while there is some very limited room in some state bar rules for attorneys to advise clients to violate statutes in good faith beliefs that those laws are illegal, that’s a pretty narrow window through which to crawl and ethics committees should not be forcing lawyers to jam through that general sort of window.
    A lawyer’s commercial free speech is impugned by this rule and there is good case law holding that state residency requirements for attorneys are unconstitutional. I think Plaintiff actually has a pretty solid chance of prevailing.

  • Jeff

    I agree with Carolyn wholeheartedly. The law is unfair and discriminatory. I also disagree with Bruce. Personal jurisdiction attaches so long as she conducts business in the state per NY’s Long Arm statute so there’s no reason to require her to associate with local counsel. I would guess though that they could require her to appoint a service of process agent with the secretary of state for service issues which is required of non-domestic businesses and would not be unfair.

  • Jeff

    I agree with Carolyn wholeheartedly. The law is unfair and discriminatory. I also disagree with Bruce. Personal jurisdiction attaches so long as she conducts business in the state per NY’s Long Arm statute so there’s no reason to require her to associate with local counsel. I would guess though that they could require her to appoint a service of process agent with the secretary of state for service issues which is required of non-domestic businesses and would not be unfair.

  • http://keanotes.solopracticeuniversity.com/ Margaret Keavney

    I’m in NJ, and facing a similar problem with a NJ rule that is the opposite of the NY prohibition: A lawyer with an office in NY (or any other state) who is licensed in NJ can represent NJ clients. But a person who lives in NJ cannot represent clients in NJ without a full time physical office with full time employees.
    Good luck Ms.Schoenefeld!

  • http://keanotes.solopracticeuniversity.com/ Margaret Keavney

    I’m in NJ, and facing a similar problem with a NJ rule that is the opposite of the NY prohibition: A lawyer with an office in NY (or any other state) who is licensed in NJ can represent NJ clients. But a person who lives in NJ cannot represent clients in NJ without a full time physical office with full time employees.
    Good luck Ms.Schoenefeld!

  • Jeff

    I agree with Carolyn wholeheartedly. The law is unfair and discriminatory. I also disagree with Bruce. Personal jurisdiction attaches so long as she conducts business in the state per NY’s Long Arm statute so there’s no reason to require her to associate with local counsel. I would guess though that they could require her to appoint a service of process agent with the secretary of state for service issues which is required of non-domestic businesses and would not be unfair.

  • Jeff

    I agree with Carolyn wholeheartedly. The law is unfair and discriminatory. I also disagree with Bruce. Personal jurisdiction attaches so long as she conducts business in the state per NY’s Long Arm statute so there’s no reason to require her to associate with local counsel. I would guess though that they could require her to appoint a service of process agent with the secretary of state for service issues which is required of non-domestic businesses and would not be unfair.

  • http://www.brucegodfrey.com Bruce

    I think Jeff and I agree in substance but are using the term “jurisdiction” in different senses.

  • http://www.brucegodfrey.com Bruce

    I think Jeff and I agree in substance but are using the term “jurisdiction” in different senses.

  • Jimmy Whales

    I think its uncompetitive that these restrictions are in place. This is obviously a means to restrict competition from NJ Attorneys and others, who have been NY barred.

  • Jimmy Whales

    I think its uncompetitive that these restrictions are in place. This is obviously a means to restrict competition from NJ Attorneys and others, who have been NY barred.

  • Pingback: Residency Requirements and the Virtual Law Practice « Virtual Law Practice

  • Thisisthetruth

    April 15, 2011 Decision: Judge Fried Rules to Dismiss Bruce Baldinger’s (NJ Lawyer) Lawsuit Sua Sponte for violating 470. June 15, 2011 Motion for Sanctions for allegedly violating that order. On April 15, 2011 NY State Supreme Court Judge, Honorable Bernard Fried [dismissed] a $10,000,000 (presumably frivolous) complaint that Bruce Baldinger (NJ atty) brought in the Supreme Court of the State of NY, County of New York (Case # 650945-11) on the grounds that Bruce Baldinger was in violation of NY Judiciary Law 470 which states: New York Judiciary – Article 15 – § 470 Attorneys Having Offices in This State May Reside in Adjoining State § 470. Attorneys having offices in this state may reside in adjoining state. 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. Further, in Rosenshein v. Ernstoff I found: “It is the policy of the State of New York to foster the availability of a wide range of professional services by lawyers qualified to render them” ( New York Criminal & Civ. Cts. Bar Assn. v Jacoby, 61 NY2d 130, 136). To this end, residents of adjoining States may appear as attorneys in New York courts if they are duly admitted to the New York bar and if they maintain an “office for the transaction of law business… within the [S]tate [of New York]” (Judiciary Law § 470; see, Rosenshein v Ernstoff, 176 AD2d 686). Despite Judge Fried’s April 15, 2011 Order, Bruce Baldinger presumably ignored it and attempted to obtain a Default Judgment in favor of $10,000,000 for his client. As a result of the alleged fraud upon the court there, on June 15, 2011 the attorney for the Defendant, Michael Sprei, Esq. made a formal Motion to Sanction Bruce Baldinger for his blatant disregard of the Judge’s Order in that instant.

  • Bbaldinger

    How ironic is the posting by Thisisthetruth.  Bruce Baldinger, admitted in New York in 1984 and having a residence and office in the city, remained in the case and in fact prevailed in obtaining a judgment in favor of his clients.  On the other hand, Michael Sprei’ s license in NJ was revoked and his NY licence is suspended pending hearing for invasion of client’s funds. Surprisingly, Thisisthetruth has not updated his/her comments with “the truth.”

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