You are here

New York lawyers cannot work for out-of-state firms owned by non-lawyers, state Bar’s ethics committee says

22 March 2012

Add comment

By Manju Manglani, Editor (@ManjuManglani)

The New York State Bar’s Committee on Professional Ethics has determined that a lawyer who primarily practices in New York cannot be an employee of an out-of-state or foreign firm owned or managed by non-lawyers, even if non-lawyer ownership is permitted where the firm is established.

The opinion, issued 14 March, cited Rule 5.4 (a) of the New York Rules of Professional Conduct, “which forbids a lawyer from sharing fees with a non-lawyer, and Rule 5.4(d), which forbids a lawyer from practicing law for profit with an entity that includes a non-lawyer owner or member.”

The ruling affects law firms in such countries as the United Kingdom and Australia, which permit ownership by non-lawyer investors, and the District of Columbia, where non-lawyer employees can have an equity interest in law firms.

New York and 49 other states currently prohibit non-lawyer ownership of law firms. However, the Commission on Ethics 20/20 of the American Bar Association (ABA) is considering whether the prohibition should be dropped. 

It is seeking comments on a measure that would allow non-lawyers who work at a law firm to own a limited, non-controlling share of the firm. Many law firms employ investigators, accountants, nurses, engineers, social workers and other professionals to assist attorneys.

To review the state Bar’s historical opposition to outside ownership, President Vincent E. Doyle III of Buffalo (Connors & Vilardo) has created a taskforce on non-lawyer ownership.

“The New York State Bar Association remains opposed to non-lawyer ownership of law firms,” Doyle told the Ethics 20/20 Commission in February.

He said he recognised that the measure under consideration is more restrictive than a proposal defeated by the ABA House of Delegates in 2000. The earlier proposal would have authorised the formation of multi-practice firms that could provide legal and non-legal services, such as accounting, financial planning and investment banking.

The Commission on Ethics 20/20 is gathering reactions to its 2 December 2011 discussion paper on non-lawyer ownership. Any formal proposal would be considered by the ABA House of Delegates no sooner than February 2013.

Categorised in:

Business development & Strategy