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NJ’s Bonafide Office Rule Would Have Me Doubled Over With Laughter Except That It Will Double the Cost of Legal Services

by Carolyn Elefant on March 31, 2010 · 25 comments

in Client Service, Legal Profession Trends, Office Options

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I wish that I hadn’t chosen April Fools’ Day to post about ACPE 718/CAA 41, the joint opinion by two New Jersey judicial advisory committees ruling that virtual office arrangements, outsourced or shared receptionist services and even working outside of the office for more than a few hours violate New Jersey’s “bonafide office requirement.”  Because the New Jersey ruling is simply so moronic that it could readily be mistaken for a joke.

By way of New Jersey’s bonafide office rule, Rule 1:21:

For the purpose of this section, a bona fide office is a place where clients are met, files are kept, the telephone is answered, mail is received and the attorney or a responsible person acting on the attorney’s behalf can be reached in person and by telephone during normal business hours to answer questions posed by the courts, clients or adversaries and to ensure that competent advice from the attorney can be obtained within a reasonable period of time. For the purpose of this section, a bona fide office may be located in this or any other state, territory of the United States, Puerto Rico, or the District of Columbia (hereinafter “a United States jurisdiction”).

The New Jersey advisory committees concluded that “virtual offices” – where lawyers can rent space part time to meet clients or use as a mail drop – are not a bona-fide office within the meaning of Rule 1:21 because lawyers use the space part time — they do not keep files on site or employ staff who can assist walk-in client.  Here’s a quick run down of what’s wrong with the ruling:

1.  Apparently, the authors of the New Jersey decision not familiar with the concept of email or texting or voice mail.  If they were, they’d have realized that these tools afford a far quicker, not to mention, less expensive way to contact a lawyer to obtain a response or advice within a reasonable amount of time than a receptionist and physical office space.

2.  Likewise, many lawyers don’t keep physical files in their office, but instead house them in the cloud while storing paper files off site.  Does keeping files in the cloud mean that a law office is not “bonafide” within the meaning of New Jersey’s rules.

3.   Many lawyers, even those with full time space, like to spend time outside of the office.  Back in the day when I had full time space, I often worked at the library, on site at one of my client’s offices and occasionally from home.  This too, would have violated the bonafide office rule unless I had someone babysitting the office, since the opinion states that: “If the attorney is regularly out of the office during normal business hours, then a responsible person must be present at the office.”

4.   Essentially, the New Jersey ruling requires full time office space and a full time receptionist.  Assuming $500 a month for space, and $20,000 for staff, that’s $26,000 per year compared to the $3000-$5000 cost of a virtual office.  It’s clients who will absorb that cost.

5.  Moreover, the added cost of complying with the bonafide office rule is even higher if a lawyer has children.  There, the lawyer will have to pay for child care so she can spend time at her physical location.  And while the New Jersey ruling does allow a home office to meet the “bonafide office” requirement, most lawyers (particularly women) who work from home are loathe to use that address for security reasons, a point I made in this article.

Throwing up barriers to the burgeoning number of unemployed lawyers who may want to rent a virtual office to test the waters of starting a law firm doesn’t make any sense.  Nor does increasing the cost of running a law firm at a time when consumers are struggling to hire lawyers and are so fearful of holding down a job that they’d do anything to avoid taking time off to meet lawyers during business hours.  In short, few clients have the desire, let alone the luxury of meeting a lawyer during business hours – and appreciate the flexibility that meetings by phone or via internet can afford.

If you practice from a virtual office – no matter your location – or if you’re otherwise adversely impacted by this rule, I urge you to contact the New Jersey authorities with your story.  Let’s bring the New Jersey bar into the 21st century.

For others who’ve covered this story, see Josh King’s post at the Avvo Blog, George Conk, Otherwise: Blackstone Today.

  • Steve

    This opinion seems to be driven by two factors — a desire to restrict the growing number of solo practitioners and out-of-state attorneys opening offices in New Jersey and a desire to boost the floundering real estate market.
    The idea that an individual, even a client, can walk into a law firm without an appointment and immediately speak to their attorney is a quaint fiction. Virtually all meetings with an attorney are by appointment only these days.
    Moreover, the concern that a client might disclose privileged information to a receptionist or require information about their representation that the receptionist at a virtual office is not equiped to provide is ill-founded. The receptionists at major law firms are no more acquainted with an individual client’s case than a receptionist at a virtual office. Further, if the arrangement includes email and phone call forwarding, then the receptionist will not be speaking with the client in the first place.
    Given the frequency of court appearances, client meetings, and client development activities, many attorneys are not available at their office during most of the day. The idea that an attorney with a physical space is somehow more available than an attorney with a virtual office sounds more like an opinion in search of a reason rather than a reason in support of an opinion.
    Finally, what about the “campus” office or “cubby” office? If this opinion is meant to ensure attorney availability, then it doesn’t go far enough. Suppose an attorney rents a kiosk and locker at an office, stops in there when he or she is not in court or with clients, and has mail and phone calls forwarded to a home address. Is this also forbidden by the bona fide office requirement, or does the locked locker make this a bona fide office?
    At the end of the day, this opinion helps big law firms that have had to compete with experienced, senior attorneys who either left or were laid off over the past few years, especially where those attorneys are able to offer clients lower priced legal services because of their reduced overhead. This opinion also helps the many New Jersey realtors desparate to fill their unleased office space. The one group this opinion doesn’t seem to help are the people who actually use attorneys’ services and have an interest in higher quality services at a lower price. You would think the New Jersey Ethics Committee would have been most concerned about them.

  • Steve

    This opinion seems to be driven by two factors — a desire to restrict the growing number of solo practitioners and out-of-state attorneys opening offices in New Jersey and a desire to boost the floundering real estate market.
    The idea that an individual, even a client, can walk into a law firm without an appointment and immediately speak to their attorney is a quaint fiction. Virtually all meetings with an attorney are by appointment only these days.
    Moreover, the concern that a client might disclose privileged information to a receptionist or require information about their representation that the receptionist at a virtual office is not equiped to provide is ill-founded. The receptionists at major law firms are no more acquainted with an individual client’s case than a receptionist at a virtual office. Further, if the arrangement includes email and phone call forwarding, then the receptionist will not be speaking with the client in the first place.
    Given the frequency of court appearances, client meetings, and client development activities, many attorneys are not available at their office during most of the day. The idea that an attorney with a physical space is somehow more available than an attorney with a virtual office sounds more like an opinion in search of a reason rather than a reason in support of an opinion.
    Finally, what about the “campus” office or “cubby” office? If this opinion is meant to ensure attorney availability, then it doesn’t go far enough. Suppose an attorney rents a kiosk and locker at an office, stops in there when he or she is not in court or with clients, and has mail and phone calls forwarded to a home address. Is this also forbidden by the bona fide office requirement, or does the locked locker make this a bona fide office?
    At the end of the day, this opinion helps big law firms that have had to compete with experienced, senior attorneys who either left or were laid off over the past few years, especially where those attorneys are able to offer clients lower priced legal services because of their reduced overhead. This opinion also helps the many New Jersey realtors desparate to fill their unleased office space. The one group this opinion doesn’t seem to help are the people who actually use attorneys’ services and have an interest in higher quality services at a lower price. You would think the New Jersey Ethics Committee would have been most concerned about them.

  • http://www.wiestlaw.com Edward Wiest

    Google news articles from the past few years about reaction to any proposed changes in the NJ “bona fide office” rule. It is not a pretty picture.
    IMHO (as a NJ-admitted lawyer who got the ticket to work at my NY firm’s bona-fide NJ branch office), New Jersey’s ethics rules have been designed to make it as difficult as possible for NYC/Philadelphia based lawyers to assist NJ clients on in-state matters and to protect incumbent solo and small firm practitioners (ahem) against competition. The Bar can continue to fight the introduction of new law practice business models (like the one I’ve used in Massachusetts for 10 years). The price it will pay is to see the scope of services once considered to be the unauthorized practice of law shrink rapidly. Which alternative is better for lawyers of all kinds in the long run?

  • http://www.wiestlaw.com Edward Wiest

    Google news articles from the past few years about reaction to any proposed changes in the NJ “bona fide office” rule. It is not a pretty picture.
    IMHO (as a NJ-admitted lawyer who got the ticket to work at my NY firm’s bona-fide NJ branch office), New Jersey’s ethics rules have been designed to make it as difficult as possible for NYC/Philadelphia based lawyers to assist NJ clients on in-state matters and to protect incumbent solo and small firm practitioners (ahem) against competition. The Bar can continue to fight the introduction of new law practice business models (like the one I’ve used in Massachusetts for 10 years). The price it will pay is to see the scope of services once considered to be the unauthorized practice of law shrink rapidly. Which alternative is better for lawyers of all kinds in the long run?

  • http://www.fplegal.com Mike Pisauro

    I think this opinion misses the reality of law practice for most solo and even small firm attorneys. It will force some solo attorneys from practicing because the choice will be to let everyone know where they live or to spend too much money on office space.
    For those attorneys who decide to get an office the costs will be considerable (I think the $500 for office space in NJ is way low) and that will have to result in either the lawyer earning less or increasing fees they charge clients. Then who gets hurt? The client gets hurt because they will now have to pay more for a layer who they most likely will not be able to just drop in and see.
    I wonder if the opinion wasn’t really issued not to protect clients but to protect big law from competition.

  • http://www.fplegal.com Mike Pisauro

    I think this opinion misses the reality of law practice for most solo and even small firm attorneys. It will force some solo attorneys from practicing because the choice will be to let everyone know where they live or to spend too much money on office space.
    For those attorneys who decide to get an office the costs will be considerable (I think the $500 for office space in NJ is way low) and that will have to result in either the lawyer earning less or increasing fees they charge clients. Then who gets hurt? The client gets hurt because they will now have to pay more for a layer who they most likely will not be able to just drop in and see.
    I wonder if the opinion wasn’t really issued not to protect clients but to protect big law from competition.

  • Jeffrey Rosenberg

    Mr. Wiest’s comment sums up New Jersey’s protectionist history quite well (see also, the NJ CLE requirements, which are not really “continuing” at all, but rather a prescribed course of study to be completed within 3 years of admission). It took years for the bar to remove the requirement that the bona-fide office be in-state, and, no doubt, it will take the bar some time to come around to a realistic definition of “bona fide.” I am admitted in both NY and NJ, but could not practice in NJ until they removed the in-state requirement, despite the fact that 3 of the 4 attorneys in my NY office at the time resided in NJ.
    The irony of it all is that my current office in Manhattan, with 3 full-time attorneys, a full-time paralegal and receptionist and a part-time secretary and office manager, would pass muster as a “bona-fide” office, without a second look. However, because of the nature of the practice, there are weeks when none of the attorneys are in the office for more than a few “business” hours. The support staff, while quite helpful internally, typically cannot answer questions posed by clients or judges, and, even in situations where they may be familiar enough to do so, are not allowed to without first speaking with one of the attorneys. Further in the opinion, there is a discussion about clients appearing in the office “unannounced.” As a general rule, we see clients by appointment only. Despite clearly being a bona-fide, “brick and mortar” office, ours may not qualify under the opinion as “bona fide.”
    One wonders how much good could be done for the profession, in NJ and elsewhere, if the man-hours that went into this opinion were spent on finding ways to say “yes” instead of “no.”

  • Jeffrey Rosenberg

    Mr. Wiest’s comment sums up New Jersey’s protectionist history quite well (see also, the NJ CLE requirements, which are not really “continuing” at all, but rather a prescribed course of study to be completed within 3 years of admission). It took years for the bar to remove the requirement that the bona-fide office be in-state, and, no doubt, it will take the bar some time to come around to a realistic definition of “bona fide.” I am admitted in both NY and NJ, but could not practice in NJ until they removed the in-state requirement, despite the fact that 3 of the 4 attorneys in my NY office at the time resided in NJ.
    The irony of it all is that my current office in Manhattan, with 3 full-time attorneys, a full-time paralegal and receptionist and a part-time secretary and office manager, would pass muster as a “bona-fide” office, without a second look. However, because of the nature of the practice, there are weeks when none of the attorneys are in the office for more than a few “business” hours. The support staff, while quite helpful internally, typically cannot answer questions posed by clients or judges, and, even in situations where they may be familiar enough to do so, are not allowed to without first speaking with one of the attorneys. Further in the opinion, there is a discussion about clients appearing in the office “unannounced.” As a general rule, we see clients by appointment only. Despite clearly being a bona-fide, “brick and mortar” office, ours may not qualify under the opinion as “bona fide.”
    One wonders how much good could be done for the profession, in NJ and elsewhere, if the man-hours that went into this opinion were spent on finding ways to say “yes” instead of “no.”

  • http://www.wiestlaw.com Edward Wiest

    As reported in today’s New Jersey Bar Journal:
    The president of the New Jersey State Bar Association said on Wednesday he agrees with the state judiciary’s advisory opinion warning lawyers they violate New Jersey’s bona fide office rule when they list and advertise space rented on a periodic basis as their primary place of business.
    “I don’t think that’s sufficient,” Bar chief Allen Etish says about offices lawyers rent by appointment only, with phones that are answered by receptionists shared among multiple tenants.
    No further comment required.
    HT: Bentley Tolk ( @bentleytolk /Twitter )

  • http://www.wiestlaw.com Edward Wiest

    As reported in today’s New Jersey Bar Journal:
    The president of the New Jersey State Bar Association said on Wednesday he agrees with the state judiciary’s advisory opinion warning lawyers they violate New Jersey’s bona fide office rule when they list and advertise space rented on a periodic basis as their primary place of business.
    “I don’t think that’s sufficient,” Bar chief Allen Etish says about offices lawyers rent by appointment only, with phones that are answered by receptionists shared among multiple tenants.
    No further comment required.
    HT: Bentley Tolk ( @bentleytolk /Twitter )

  • Venkat

    This is a bad (and dumb) rule, which is going to stunt the growth of the legal profession in New Jersey.
    Happy to sign on to any letters.

  • Venkat

    This is a bad (and dumb) rule, which is going to stunt the growth of the legal profession in New Jersey.
    Happy to sign on to any letters.

  • Bruce

    I am curious how New Jersey would handle office-sharing outside of the commercial virtual office structure. How many hours a week do you have to be in your own office to clear this rule – are part-time desk- and office-sharers safe?

  • Bruce

    I am curious how New Jersey would handle office-sharing outside of the commercial virtual office structure. How many hours a week do you have to be in your own office to clear this rule – are part-time desk- and office-sharers safe?

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    I didn't know virtual office before, but if I understand well that you say it 's all the advantages without the drawbacks of a real office. it is a really good idea. Thanks for your post

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  • Gvdepaul

    Thanks for this piece. I live in Jersey and want to practice solo in Jersey, but I can’t fathom how to do it, considering this rule. I will likely have to move to New York as a result.

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  • vanderlt

    So, as a newly minted NJ lawyer I plan to start a solo practice. I live in PA. Are there any ideas / options on how to get started in NJ? I will not be moving to NJ. Is the rule so draconian that I must hire a f/t staff and rent a storefront? By the way… what are “normal office hours”?

  • vanderlt

    I am a little confused. The rule as stated does allow an out-of-stater to practice law in NJ. “For the purpose of this section, a bona fide office is a place where clients are met, files are kept, the telephone is answered, mail is received and the attorney or a responsible person acting on the attorney’s behalf can be reached in person and by telephone during normal business hours to answer questions posed by the courts, clients or adversaries and to ensure that competent advice from the attorney can be obtained within a reasonable period of time. For the purpose of this section, a bona fide office may be located in this or any other state, territory of the United States, Puerto Rico, or the District of Columbia (hereinafter “a United States jurisdiction”). An attorney who practices law in this state and fails to maintain a bona fide office shall be deemed to be in violation of RPC 5.5(a). An attorney who is not domiciled in this State and does not have a bona fide office in this State, but who meets all the qualifications for the practice of law set forth herein must designate the Clerk of the Supreme Court as agent upon whom service of process may be made for all actions, including disciplinary actions, that may arise out of the practice of law and activities related thereto, in the event that service cannot otherwise be effectuated pursuant to the appropriate Rules of Court. The designation of the Clerk as agent shall be made on a form approved by the Supreme Court.” So, as long as I have an office (could be at my home) and designate the Clerk of the Supreme Court as my agent I am good to practice. Am I not reading the rule correctly?

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