Questions on Office for Nonresident Lawyers Certified

Questions on Office for Nonresident Lawyers Certified

The issue of whether nonresident attorneys must maintain an office in New York state in order to practice here is headed for the New York Court of Appeals.

The U.S. Court of Appeals for the Second Circuit has certified a question asking the state’s highest court to wrestle with Judiciary Law §470, which requires nonresident attorneys to maintain an “office for the transaction of law business” as the price of practicing here.

The case arrived at the circuit on appeal from the Northern District, where Judge Lawrence Kahn (See Profile) held in 2011 that §470 violates the Privileges and Immunities Clause of Article IV, § 2, of the U.S. Constitution.

Ekaterina Schoenefeld, an attorney in Princeton, N.J., launched the challenge, arguing it was unfair to put out-of-state lawyers to the extra expense of maintaining an office.

Kahn granted summary judgment for Schoenefeld, holding that the requirement implicates the fundamental right to practice law and that New York “failed to establish either a substantial state interest advanced” by the statute “or a substantial relationship between the statute and that interest” (NYLJ, Sept. 9, 2011).

Kahn said that even if the law did not amount to a residency requirement, which the U.S. Supreme Court has held is unconstitutional, it violates “a plainly fundamental right” by placing “an additional threshold cost” on practicing in New York. The judge had previously dismissed Schoenefeld’s claims that the law also violates the equal protection and commerce clauses.

New York state appealed and circuit judges Reena Raggi (See Profile), Peter Hall (See Profile) and Susan Carney (See Profile) heard oral arguments on Oct. 3, 2012.

Schoenefeld, who argued her case, was supported in her position by a number of amici, including the New Jersey State Bar Association. She contended that she has turned down legal business because of §470 (NYLJ, April 5, 2012).

Assistant Solicitor General Laura Etlinger argued for the state, which in its brief said the law only requires “a fairly minimal presence” in New York and called it “an incidental burden on the ability of nonresident attorneys to practice in New York courts.”

One state interest advanced by the regulation concerned the service of legal papers and the courts’ ability to adjudicate service-related disputes.

The brief also acknowledged that the phrase “office for the transaction of law business” could mean only having an address for accepting personal service and that provision “might” be satisfied by designating an in-state agent to receive service.

Hall, who wrote the circuit’s opinion in Schoenefeld v. State of New York, 11-4283-cv, said the law does not specifically require that in-state attorneys practicing in New York maintain an office and, “a New York attorney, therefore, may set up her ‘office’ on the kitchen table in her studio apartment and not run afoul of the law.”

But nonresidents, he said, “shoulder the additional obligation to maintain some sort of separate office premises within the state,” and New York courts, including the Court of Appeals, have “never interpreted Section 470′s office requirement to be satisfied by something less than the maintenance of physical office space in New York state.”

For example, in Lichtenstein v. Emerson, 656 N.Y.S.2d 180, (N.Y.Sup. Ct. 1997), the court held an attorney failed to comply with §470 because he maintained an office in the basement of a restaurant of which he was a shareholder.

“This additional obligation carries with it significant expense— rents, insurance, staff, equipment inter alia—all of which is in addition to the expense of the attorney’s out-of-state office, assuming she has one,” Hall wrote.

And the term “office,” he said, “although not exactly pellucid, implies more than just an address or an agent appointed to receive process.”

So the question certified to the New York Court of Appeals is “what are the minimum requirements” to satisfy the law.

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