Never-Never Land Revisited: NYSBA Again Addresses Partnerships With Non-Lawyers

Readers of this column with long memories may recall an earlier article titled Legal Ethics ‘Through the Looking Glass’, NYLJ (Sept. 15, 2015). There, following an even earlier article, Lawyer Regulation: Walking Backwards Into the Future, The Legal Services Act in 2007, NYLJ (May 5, 2014), p. 3), we discussed the series of ethics opinions that established the unflinchingly negative attitude of the New York State Bar Association to the changes in the regulation of lawyers in England and Wales intended to permit greater competition in the delivery and improvement of the public’s access to legal services. The centerpiece of those reforms was the new freedom for lawyers to share fees and enter into partnership with non-lawyers. We dredge up this ancient (but continuing) history because the New York State Bar Association Committee on Professional Ethics has returned to this scene with yet another Opinion. The new opinion (N.Y. Eth Op. 1246) (which also addresses several issues not covered in this article), is titled Partnership With Non-U.S. Lawyer; Partner Who Is Also A Member Of A Firm With Non-Lawyer Ownership Or Management; Whether Business Management And Strategy May Be The Practice Of Law; Affiliation Of Law Firms; Co-Naming Of Law Firms; Billing For Services Of Another Law Firm. Opinion 1246 is important because, without withdrawing any of the earlier opinions that limit the ability of New York lawyers to become partners of non-lawyers, even overseas, except in narrow circumstances where the New York lawyer practices outside New York, the new opinion cautiously opens the door to some such arrangements.

The abbreviated facts on which the Committee opines are that a New York lawyer wishes to join a Delaware LLP that will be registered in New York as a foreign LLP (the New York Firm). The New York Firm “will have a majority partner (“S” or “Solicitor”) who is a solicitor in England and Wales but not admitted in New [York] and who is based in, and practices law solely from, the United Kingdom (“U.K.”). S’s role in the New York firm would involve matters of strategy, business and general management, but S will not practice English or any other law from the New York firm. The complicating factor is that simultaneously “S is also the managing partner of, and has a controlling interest in, a law firm in the U.K. that is in the form of an Alternative Business Structure (“ABS”), and other members of the UK ABS Firm will be corporations with non-lawyer ownership. The inquirer is not admitted in England, will not be a member of the UK ABS Firm, and will practice solely in New York for clients of the New York Firm. Structurally, the New York Firm and the UK ABS Firm would be separate, independent and distinct legal (sic)…although S would have an ownership interest in each. The Opinion notes that the two firms “would not share partnership profits, although the inquirer states that compensation of lawyer members or partners across the two firms might consider, among other factors, the aggregate profits of the two law firms.”… The two firms “would be co-branded.”