NY Judiciary Law §470 has been introduced, which would repeal the law which states:
"Judiciary Law § 470 requires an attorney admitted to practice in New York who is not a New York resident to maintain an office in this state for the practice of law (see Kinder Morgan Energy Partners, LP v Ace Am. Ins. Co., 51 AD3d 580 [2008]; Lichtenstein v Emerson, 251 AD2d 64 [1998]). Failure of counsel to maintain a local office requires striking of a pleading served by such attorney, without prejudice (see Kinder Morgan, 51 AD3d at 580; Neal v Energy Transp. Group, 296 AD2d 339 [2002])."
In a world of internet access and pandemics, it makes sense to look at repealing this law, which may happen in the near future. A bill has been introduced in the State Assembly in May 2020 to do just that.
It's time.
Betsy Combier,
betsy.combier@gmail.com
Editor, ADVOCATZ.com
Editor, NYC Rubber Room Reporter
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A bill introduced this week in the state Assembly would repeal Judiciary Law Section 470, which requires lawyers admitted to practice in New York – but residing in other states – to maintain a physical law office in New York State.
Assemblyman David Weprin has sponsored the legislation that was introduced in the Assembly’s Judiciary Committee. A similar bill was introduced last year by State Senate Judiciary Committee Chair Brad Hoylman.
Nearly 25 percent of NYSBA members reside or practice outside the state of New York.
“In a digital era where attorneys across the street and around the world are just a click away on their computer or smart phone, an antiquated rule from over a century ago requiring a physical office in the state no longer serves any purpose,” said NYSBA President Hank Greenberg. “That is now more clear than ever with so many lawyers working remotely in the midst of the coronavirus pandemic.”
In January 2019, NYSBA’s House of Delegates approved a resolution calling for the outright repeal of the law and the report and recommendations of its Working Group on Judiciary Law §470, which was appointed in 2016 to address concerns from members.
The law was enacted in 1909 because the New York State Legislature believed at the time that a nonresident attorney without an office in New York would not be amenable to service of process.
In 2009, Ekaterina Schoenefeld, a New Jersey resident who was admitted to practice both in New York and New Jersey, challenged the constitutionality of the law in federal district court.
In Schoenefeld v. State of New York, the U.S. District Court of the Northern District of New York ruled in 2011 that Section 470 violates the Privileges and Immunities Clause of the U.S. Constitution. The state Attorney General appealed and during the appeal process in 2014, the U.S. Court of Appeals for the Second Circuit asked the state Court of Appeals to clarify the meaning of Section 470.
In a 2015 opinion written by then-Chief Judge Jonathan Lippman, the state Court of Appeals replied, “We hold that the statute requires nonresident attorneys to maintain a physical office in New York.”
By 2016, the Second Circuit upheld Section 470, holding that the statute did not violate the Privileges and Immunities Clause. Schoenefeld filed a petition for certiorari to the U.S. Supreme Court, which was denied in 2017.
A ruling in the NY Court of Appeals in February 2019 gave a new perspective:
No Office, No Problem: Court of Appeals Holds that Violation of Judiciary Law § 470’s “Physical Office” Requirement Does Not Render Action a Nullity, But Could Subject Attorney to Discipline
In a unanimous decision authored by Judge Michael Garcia, the Court of Appeals today resolved an important issue of first impression implicating multi-state practice in New York—“whether an action, such as filing a complaint, taken by a lawyer duly admitted to the bar of this State but without the required New York office is a nullity.”
The Court, however, clarified that a Judiciary Law § 470 violation is not without consequences. The attorney who violates section 470 by practicing in the State without a physical office could face discipline. The court held that “[w]here further relief is warranted, the trial court has discretion to consider any resulting prejudice and fashion an appropriate remedy and the individual attorney may face disciplinary action for failure to comply with the statute.” “This approach,” the court concluded, “ensures that violations are appropriately addressed without disproportionately punishing an unwitting client for an attorney’s failure to comply with section 470.”
Important Practice Tip
Beyond clarifying the effect of a nonresident attorney’s violation of the physical office requirement in Judiciary Law § 470, the Court’s decision in Arrowhead includes a notable practice point that should not be overlooked.
In its motion for leave to appeal, Arrowhead limited its appeal “to the extent that the Appellate Division failed to reverse and remand the Order and Judgment of Supreme Court dismissing [its] Complaint as a ‘nullity’” for the Judiciary Law § 470 violation. The Judiciary Law § 470 dismissal, however, only related to the breach of contract and fiduciary duty claims that survived Defendant’s first motion to dismiss. By limiting its appeal to the distinct Judiciary Law § 470 issue, and not appealing the dismissal of its other claims, Arrowhead precluded the Court from reviewing the propriety of Defendant’s first motion to dismiss (see Quain v Buzzetta Constr. Corp, 69 NY2d 376, 380 [1987]). Thus, the Court granted defendant’s motion to strike the portion of Arrowhead’s brief addressed to defendant’s first motion to dismiss.
It is unclear whether Arrowhead’s decision to limit the appeal was strategic. Certainly, crystalizing an issue of first impression doesn’t hurt a party’s chances of having its motion for leave to appeal granted. But, by limiting the appeal, you give up other issues that could have otherwise been raised. Attorneys should be wary of the Court’s rule in Quain and only limit their appeals if they are willing to relinquish their rights to challenge other issues in the case.
And one more thing. The Court would do well to explain the practical impacts of its decisions to the parties and the bar in general in as plain of terms as possible. Here, the Court’s decretal paragraph reads:
To aid the parties and trial court, adding a clarifying clause to the decretal saying expressly that only the claims dismissed for the Judiciary Law § 470 violation remain to be litigated on remand would go a long way. Although this may appear straightforward in this case, many times the Court’s decisions on jurisdiction and reviewability leave parties scratching their heads about what to do next to fix the issues. The Court should try to help address those issues in its decisions to the best it can.
The Court of Appeals’ opinion can be found here.