What Exit, New Jersey Ethics Regulators? The Last Century
If one were to ask New Jersey’s ethics regulators the popular native question, what exit?, the response would be ”the one that lets out at the turn of the century. The twentieth century, that is. Because what I can tell from the various New Jersey ethics advisory committees, regulators have their eyes planted firmly on the rearview mirror, equally oblivious to changing scenery around them and the horizon ahead.
Take a look at Garden State’s track record. First, New Jersey attempted to ban lawyers from mentioning a listing in Super Lawyers in their advertising, finding that it violated regulations barring use of superlatives in advertising. Yet, New Jersey had no problem with lawyers touting their mysterious Martindale Hubbell AV or CV ratings, since these wouldn’t have much recognition among members of the public anyway. It took three and a half years, but New Jersey eventually reversed its position. By the time the reversal came, ratings sites, from Avvo to Yelp were gaining traction, and New Jersey lawyers had to play catch up.
New Jersey took the same backwards approach with its bonafide office rule. In 2010 – a decade into the 21st century, New Jersey regulators proclaimed that all lawyers must have a physical office, with access to physical files and a full time receptionist in order to practice. Again, three years later, New Jersey relented.
So what’s my beef with my home state now? (that’s right, I’m a Jersey Girl) This time, it’s New Jersey’s position on lawyer provision of ancillary services, described in Minding Your Own Business, by Marc Garfinkle. Garfinkle writes that law firms may not offer ancillary services – i.e., those services that support traditional legal services but need not be provided by lawyers – such as surveying, bond services or compliance training – unless they are “part and parcel” of the practice of law. And even where lawyers provide ancillary services separately, New Jersey requires:
that lawyers must keep their law practices entirely separate from their business enterprises. Consequently, lawyers must operate their practices and businesses in physically distinct locations, refrain from joint advertising or marketing of the two, and avoid any other demonstration of a relationship between them.
As Garfinkle points out, in an age of social media and on line presence, it’s difficult for lawyers to keep their law firm and business entities separate and potential clients are likely to discover that the business entity is lawyer-owned anyway. In fact, clients are more likely to wonder why their lawyer tried to conceal the relationship.
Moreover, as I’ve written previously, the ability of law firms to own ancillary businesses gives us a powerful competitive edge over #altlaw providers:
Legal Zoom can advertise that it provides expert service while most lawyers — even seasoned attorneys with 40 years of practice under their belt — can’t call themselves experts. But as lawyers, we also have an edge that non-lawyer providers don’t: we can own them, but they can’t own us. What that means is that we can offer the LZ type services and full service law practice without running into UPL issues. We can, alone or in combination with other solos, purchase secure server space to store testamentary documents and bundle it as a component of legal service without worrying about fee splitting (because we own the company and provide it as a service) while the transaction won’t work the other way around (e.g., online vault wants to sell bundled product of storage and legal service directly to client). Plus, our lawyer-owned services come with a guarantee of added confidentiality and malpractice insurance. In short, in spite of the hurdles, we lawyers still have a competitive edge in these markets if we position ourselves correctly.
So once again, New Jersey, thanks for making it even tougher for solos and small law firms to compete and to innovate new ways to deliver services for clients. Your name Garden State is well-deserved since New Jersey is fine for the kind of garden-variety, work-a-day solos and smalls at risk in today’s world. For innovating lawyers, the message is clear: if you practice in New Jersey, run to the nearest exit before the regulators run you off the road.