Jacoby & Meyers is the name of multiple separate law firms in the U.S. Andrew Finkelstein, managing partner in the personal injury firm Jacoby & Meyers LLP in New York, a separate entity from the bankruptcy firm, said the general public may not understand the distinction.
Jacoby & Meyers is the name of multiple separate law firms in the U.S. Andrew Finkelstein, managing partner in the personal injury firm Jacoby & Meyers LLP in New York, a separate entity from the bankruptcy firm, said the general public may not understand the distinction. ()

Although Jacoby & Meyers has dropped its New Jersey lawsuit, the firm continues to pursue its battle to overturn bans on nonlawyer investments in law firms through federal litigation in New York, said Andrew Finkelstein, who leads the regional personal injury firm.

Jacoby & Meyers on Monday voluntarily dismissed its suit challenging New Jersey’s ban on law firm ownership by non-attorneys, after declining to follow a federal judge’s instruction to bring the issue before a committee of the New Jersey Supreme Court.

Finkelstein told the New York Law Journal that there were “tremendous procedural roadblocks” to getting a decision on the merits in New Jersey.

In November 2012, the U.S. Court of Appeals for the Second Circuit vacated Southern District Judge Lewis Kaplan’s dismissal of the firm’s challenge to Rule 5.4 of New York’s Rules of Professional Conduct on standing grounds. The suit names as defendants the presiding justices of the four departments of the Appellate Division, who are responsible for enforcing the rules of professional conduct.

The circuit remanded the case back to Kaplan. Jacoby amended its complaint and added as a defendant Attorney General Eric Schneiderman.

The Attorney General’s Office again moved to dismiss and the parties are awaiting a decision by Kaplan.

Finkelstein said that if Kaplan doesn’t rule in Jacoby’s favor, the firm will appeal.

“The state of New Jersey and [its] court system was making it procedurally burdensome to get a decision on the merits, and rather than continue with what seemed to be a procedural hot potato, we chose to withdraw the action and rely upon Judge Kaplan’s decision and possible appeal,” Finkelstein said.

He added that whatever happens in New York will be binding in New Jersey, as “our entire action is based on federal constitutional grounds.” A suit in Connecticut is also pending.

In New Jersey, U.S. District Judge Peter Sheridan in March 2012 denied the state’s motion to dismiss the case. Sheridan said Jacoby’s bid to legitimize an “alternate business structure” should be referred to the New Jersey Supreme Court for review and analysis. He retained jurisdiction over the federal constitutional issues but ordered the case stayed until a party sought reopening.

In mid-July 2014, after conducting a status conference, Sheridan said in an order that Jacoby & Meyers had indicated it is still contemplating whether to seek an opinion from the Supreme Court’s Advisory Committee on Professional Ethics.

On Monday, Jacoby & Meyers’ attorney, Kenneth Fromson of Finkelstein & Partners in Newburgh, New York, notified the court that his client was voluntarily dismissing the case without prejudice.

In New York, Jacoby is represented by Finkelstein, Blankinship, Frei-Pearson & Garber, where Andrew Finkelstein is also managing partner.

In Jacoby & Meyers LLP v. Schneiderman, 11-cv-3387, the firm has argued that critical sources of funding are unavailable to lawyers, which dramatically impedes access to legal services for those unable to afford lawyers.

“New York’s prohibition on non-lawyer investment substantially burdens the fundamental right of legal service providers to free speech through corporate expenditure, the right to associate with others, and the right to speak for clients,” the firm claims.

Jacoby has said it wishes to expand its operations, hire more attorneys and staff and improve its infrastructure to better serve clients.

Because of Rule 5.4 and state law, Jacoby has been unable to entertain the “numerous offers it has received” from potential non-lawyer investors who are prepared to invest capital in exchange for owning an interest in Jacoby, the firm said in court papers.

In its dismissal motion, the attorney general said centuries of authority have established that New York is not constitutionally obligated to allow every corporate form it statutorily authorizes to engage in the practice of law. It also said Jacoby’s claims fail on lack of standing and lack of jurisdiction.

“Plaintiffs’ rhetoric regarding their service to the community is designed to obscure what is really being sought here. Plaintiffs are asking the court to make far-reaching and novel rulings regarding the facial constitutionality of several state statutes and rules—rulings whose effect could have a significant impact upon the ability of the states to regulate their bars and the future of the practice of law,” the state said.