On June 18, 2020, New York regulators revised an onerous ethics rule that broadly banned law firms from advertising services under trade names. The revised version of Rule 7.5 (available here because the online rules don’t appear to have been updated) allow trade names so long as they are not “deceptive, false or misleading.” The changes bring New York’s rule into general conformity with ABA Model Rule 7.5 on trade names and a majority of jurisdictions (to date, I’ve found that Nevada, Ohio and Indiana ban trade names, as does Texas though that may change).
New York’s original rule was wildly expansive and showed no sign of changing with the times. As recently as January 2020, regulators continued to interpret it to prohibit a New York lawyer from working for an out-of-state firm seeking to open up shop in New York that operated under a trade name that was permitted in its home state. See NYSBA Ethics Opinion 1179.
As I’ve written before, New York’s ban on trade names places lawyers at a competitive disadvantage against Legal Zoom or Rocket Lawyer which both offer legal services but are not law firms and therefore can go by whatever name they want. And the rule was hypocritical besides – allowing established big law institutions like Cravath or Skadden to operate under the surnames of deceased founders which is more deceptive to potential clients (who might assume that they can meet Mr. Skadden) as a solo going by the trade name of Triangle Personal Injury.
Sad to say, New York’s changes weren’t motivated by logic, newfound recognition that today’s consumers are not idiots, or even fealty to constitutional principles like the First Amendment or Commerce Clause. A self-dubbed “lawtech firm” Law HQ, headquartered in Utah and seeking to establish a national presence filed suit against New York regulators in federal court, challenging its antiquated rule on First Amendment grounds. Here’s the money quote from the Complaint:
New York’s trade-name ban serves no valid purpose. Nobody could claim that consumers would be better protected if trade names were prohibited in other industries—if the law required Facebook, for example, to be called Mark Zuckerberg & Associates or Apple to be called Jobs & Wozniak. Law firms are no different. On the contrary, prohibiting firms from using
trade names, if anything, makes their names more misleading by replacing memorable and easily distinguishable firm names with the names of partners who are often retired, deceased, or unlicensed in the state.
What’s also unfortunate is that regulators haven’t done a very good job of getting the word out to New York attorneys. In fact, this post was prompted by comments that I came across over the past two weeks in different online forums posted by three different lawyers who are well-informed and smart – but who all shared the same impression that New York still banned trade names. Regulators are certainly capable of communicating with bar members when it comes to collecting dues; they must do a better job of keeping lawyers apprised of changes to ethics rules governing lawyers’ conduct.
While New York deserves modest kudos for finally revising Rule 7.5, it shouldn’t take a lawsuit to bring change. Hopefully, the pandemic has given regulators a chance to think long and hard about which ethics rules make sense and which ones we have now learned we can do without.