ALBANY – A New York statute requiring out-of-state attorneys to maintain a physical presence in the state in order to practice law has been ruled unconstitutional by a federal judge in Albany.

Northern District Judge Lawrence E. Kahn held in Schoenefeld v. State of New York, 09-cv-00504, that the state’s rule under Judiciary Law §470 violates the privileges and immunities’ clause of the U.S. Constitution.

While New York has a legitimate interest in regulating the attorneys serving in its courts, “there are less restrictive means of furthering that interest than denial of admission to the bar” based on their maintenance of an office in New York, said Judge Kahn, citing Matter of Gordon, 48 NY2d 274 (1979).

The case was brought by Ekaterina Schoenefeld, a Princeton, N.J.-based solo practitioner who argued that requiring her to maintain a presence in New York would be unconstitutional. The suit named 37 defendants, including the members of the Appellate Division, Third Department, and its Committee on Professional Standards for denying her the right to practice in New York. (Read Ms. Schonefeld’s filing in the case.)

Ms. Schoenefeld pointed out that while the rules require that out-of-state lawyers have an office here, New York attorneys do not need to maintain an in-state office to practice.

In a memorandum of law supporting dismissal of the complaint, former Assistant Attorney General Christiana L. Roberts-Ryba argued that the statute does not violate the privileges and immunity clause because it bears a “substantial relationship” to the goal of requiring lawyers to be “amenable” to providing legal services to New Yorkers.

Ms. Roberts-Ryba argued that §470 serves the purpose of requiring attorneys to have some sort of physical presence that would make them accountable to their clients.

She noted that similar residency rules have been upheld by federal appeals courts in West Virginia and New Jersey. The rule makes sense, she claimed, because litigation counsel should be in close proximity to their clients.

“Implicit in the requirements of the statute is the expectation that adversaries and others dealing with the attorney will be able to serve legal notices at the New York address,” Ms. Roberts-Ryba contended.

“Whether §470 could have been ‘better’ drafted or more finely tuned is not the issue, nor is it the role of the Court to decide whether it would have drafted it in the exact same way,” she wrote. “Since it cannot be said that §470 is ‘wholly irrational’…plaintiff’s facial challenge to §470 must be dismissed.”

But in finding for Ms. Schoenefeld, Judge Kahn ruled that §470 “discriminates against nonresident attorneys by requiring them to maintain offices in-state even though resident attorneys are not required to do the same.”

Under §470, he said, “non-resident attorneys bear a significant competitive cost that resident attorneys do not: whereas ‘New York resident attorneys may practice law out of their basements, ‘non residents are required to rent offices in New York (no matter how few in number their New York clients may be) in addition to maintaining offices and residences in their home states.”‘

Judge Kahn said it is illogical to believe that convenience to legal clients plays a part in New York’s rules about where lawyers are situated. An attorney based in northern New Jersey, for instance, is much better able to service a client in downstate New York than is an attorney based in Syracuse or Buffalo, he said.

Section 470 of the Judiciary Law was adopted originally in 1862 and amended several times, the last time most substantially in the 1940s.

Initially, it restricted the practice of law in New York only to New York resident-lawyers. It was later amended to allow practice by those who live in a “state adjoining the state of New York,” provided those attorneys maintained a presence in New York at which they could be served with legal papers.

Ms. Schoenefeld did not respond to several calls for comment.

Ms. Roberts-Ryba, who is now with Nixon Peabody in Albany, declined to comment.

Sarah Jo Hamilton, chairwoman of the New York State Bar Association’s Committee on Professional Discipline, said Judge Kahn’s ruling recognizes the realities of increasingly computerized work places.

“There is a general move, an unstoppable move to office-less presences,” Ms. Hamilton, of Scalise & Hamilton in Scarsdale, said yesterday. “The courts, for instance are permitting e-filing, they are even mandating it. It is clearly the trend.”

According to the state bar, about 25 percent of its 77,000 members are out-of-state.

The attorney general’s office had no immediate comment.