New York Seeks To Modernize Remote Practice Policies; Questions Remain
8.6.2024
Technology, the pandemic and shifting social norms have transformed the business world. Studies indicate that even years after the pandemic shutdowns, as many as 1 in every 5 workers are working either hybrid or fully remote.[1]
The practice of law is no exception to this trend. New York law and policymakers have supported initiatives to align the state’s regulatory scheme with modern practice. Reforms to regulation of remote and interstate practice have been spurred forward by the courts, bar associations and the state Legislature. While these initiatives endeavor to align regulation with modern practice, the vestige of the prior regulatory scheme leaves some practical questions unanswered.
Work From Home
It should not come as a surprise that only attorneys who are admitted to practice in New York may practice New York law, but it has not always been obvious how this rule should be extrapolated.[2] This general prohibition on the unauthorized practice of law does not explain whether an attorney who practices another state’s law while physically present in New York would be in violation of the rule.
Prior to the COVID-19 pandemic, the Rules of the Court of Appeals provided, “a lawyer who is not admitted to practice in [New York] shall not . . . establish an office or other systematic and continuous presence in [New York] for the practice of law [or] hold out to the public or otherwise represent that the lawyer is admitted to practice law in [New York].”[3] Conversely, lawyers who are not admitted to practice in New York are permitted to “provide legal services on a temporary basis” [4] in New York, provided they meet certain requirements, including being admitted to practice in another qualifying jurisdiction,[5] being in good standing in every jurisdiction where admitted[6] and that “the temporary legal services provided by the lawyer could be provided in a jurisdiction where the lawyer is admitted or authorized to practice and may generally be provided by a lawyer admitted to practice in [New York].”[7]
These rules did not offer total clarity. First, it is not specified what degree of practice would cross the line into a “systematic and continuous presence.” Also, the requirement that temporary legal services “may generally be provided by a [New York] lawyer” provide little guidance for attorneys practicing the law of other states while physically present in New York, because a New York attorney who is not licensed in another jurisdiction would not be able to provide such services.
On Dec. 7, 2022, the Court of Appeals significantly clarified these ambiguities by adopting 22 N.Y.C.R.R Section 523.5 with the caption, “Working From Home.” The newly adopted rule affirms that a lawyer admitted in a foreign jurisdiction but not in New York may practice from a “temporary or permanent location” in New York including their home – subject to several requirements.[8] For example, foreign lawyers must not (1) practice New York law; (2) hold themselves out as practicing New York law or maintaining a New York law office; (3) solicit or accept clients who primarily require advice pertaining to New York law; nor (4) regularly conduct in-person meetings in New York.[9] Lawyers must also make diligent efforts to correct any misunderstanding as to their jurisdictional practice.[10]
Although this rule change did much to clarify the parameters of working from home, there are still ambiguities, both in the text of the rule itself and in its application in New York’s broader attorney regulatory scheme.
In particular, the requirement that that foreign lawyers “not regularly conduct in-person meetings with clients in New York” remains murky.[11] A lawyer who wishes to determine whether in-person meetings are conducted “regularly” must consider, as with the old rule, whether such meetings constitute a “systematic and continuous presence” in New York and whether such practice meets the preexisting requirements for temporary practice.[12]
Another issue arises for foreign attorneys who practice through a professional corporation or professional limited liability company from their home in New York. For a foreign corporation or PLLC to conduct business in New York it should obtain a certificate of authority to conduct such business from the New York Department of State.[13] However, the Department of State will not issue a certificate of authority to a PLLC law firm without obtaining a certificate of good standing issued by the Appellate Division for a member of the firm.[14] It is unclear whether working from home pursuant to Section 523.5 of the Rules of the Court of Appeals would constitute doing business in New York and would require obtaining a certificate of authority.
Finally, these rules only apply to attorneys who are not admitted to practice in New York. New York cannot provide full guidance for New York attorneys who wish to practice New York law while living or physically present in other states. It is crucial that attorneys be thoroughly familiar with the rules of the jurisdiction in which they live or physically practice, ensuring they are not running afoul of its rules.
Physical Office Requirement
Although New York cannot opine on whether other states would view the practice of New York law from within their borders as unauthorized practice, it does place its own restrictions on New York lawyers’ ability to practice from out of state.
Judiciary Law Section 470 provides:
A person, regularly admitted to practice as an attorney and counsellor, in the courts of record of this state, whose office for the transaction of law business is within the state, may practice as such attorney counsellor, although he resides in an adjoining state.
At the time of its passage in 1909, the law functioned as a residency requirement – requiring that New York attorneys reside in New York or an adjoining state – and as a requirement that all practicing New York attorneys must maintain an office within the state. The residency requirement was imposed in conjunction with CPLR 9406(2), which required that an applicant for admission to practice in New York must be a resident of the State of New York but could later move to an adjoining state and continue their New York practice. In November of 1979, New York’s Court of Appeals held that this residency requirement violated the privileges and immunities clause of the United States Constitution.[15] Thereafter, Judiciary Law Section 470 was construed as only requiring a physical office in the state of New York for non-residents in both adjoining states and non-adjoining states.[16]
It was later argued that even the requirement for a physical office in the state was unconstitutional; however, this argument was rejected by the New York Court of Appeals after the question was certified by the Second Circuit.[17] Despite its constitutionality, this rarely enforced requirement led to increasing ambiguities in a modern world. There is little instruction on what constitutes a physical office sufficient to meet the requirements of Judiciary Law Section 470. There is no authoritative guidance on whether a law firm must have a continuous presence in its New York location or if a virtual law office is sufficient. Bar associations have abstained from deciding whether virtual offices meet the requirements of Judiciary Law Section 470.[18] However, the New York City Bar Association offers a virtual law office service to its members.[19]
Following a substantial push by the various New York bar associations for the repeal of Judiciary Law Section 470,[20] a bill repealing the law passed both houses of the New York Legislature in 2023. However, the bill was ultimately not signed into law by Governor Hochul.[21] For the time being, the law is still on the books, and questions remain as to its application.
Conclusion
There is a clear appetite from various actors to reform the regulations of the practice of law in New York to align more practically with modern practice. Courts, bar associations and lawmakers will now have to contend with the questions remaining as to these new policies’ scope and interpretation.
Randall Tesser is an associate attorney at Tesser, Ryan & Rochman LLP in White Plains, New York, where he manages the firm’s professional responsibility and ethics practice and advises a wide range of professionals on matters of ethics, professionalism and disciplinary matters. Randall is the recipient of the American Bar Association’s 2024 Rosner & Rosner Young Lawyer Professionalism Award. He recently joined One on One as co-editor. This article appears in the current issue of One on One, the publication of the General Practice Section. For more information, please visit NYSBA.ORG/GEN.
Endnotes
[1] See Tim Smart, Remote Work Has Radically Changed the Economy and It’s Here To Stay, U.S. News & World Report, Jan. 25, 2024, https://www.usnews.com/news/economy/articles/2024-01-25/remote-work-has-radically-changed-the-economy-and-its-here-to-stay.
[2] N.Y. Jud. Law § 478.
[3] Rules of the Court of Appeals § 523.1.
[4] Rules of the Court of Appeals § 523.2(a) (emphasis added).
[5] See Rules of the Court of Appeals § 523.2(1).
[6] See Rules of the Court of Appeals § 523.2(2).
[7] Rules of the Court of Appeals § 523.2(a)(3). The Rules additionally require that the temporary legal services: (i) are undertaken in association with a lawyer admitted to practice in this state who actively participates in, and assumes joint responsibility for, the matter; (ii) are in or reasonably related to a pending or potential proceeding before a tribunal in this or another jurisdiction, if the lawyer or a person the lawyer is assisting is authorized by law or order to appear in such proceeding or reasonably expects to be so authorized; (iii) are in or reasonably related to a pending or potential arbitration, mediation or other alternative dispute resolution proceeding held or to be held in this or another jurisdiction, if the services are not services for which the forum requires pro hac vice admission; or (iv) are not within paragraph (3)(ii) or (3)(iii) and arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted or authorized to practice. Id.
[8] See Rules of the Court of Appeals § 523.5.
[9] See Rules of the Court of Appeals § 523.5(a-d).
[10] See Rules of the Court of Appeals § 523.5(e).
[11] See Rules of the Court of Appeals § 523.5(d).
[12] See supra at n 9.
[13] See N.Y. BCL § 1304; N.Y. LLC § 1306.
[14] See Application for Authority (professional service) Foreign Limited Liability Companies, NYS Dep’t of State, https://dos.ny.gov/application-authority-professional-service-foreign-limited-liability-companies.
[15] See Matter of Gordon, 48 N.Y.2d 266, 267 (1979).
[16] See White River Paper Co., Ltd. v. Ashmont Tissue, Inc., 110 Misc. 2d 373, 376 (Civil Ct., Bronx Co. 1981).
[17] Schoenefeld v. State, 25 N.Y.3d 22 (2015).
[18] See NYSBA Comm. on Professional Ethics, Formal Op. 1223 (2021); NYCBA Comm. on Professional Ethics, Formal Op. 2019-2.
[19] See Virtual Law Firm Program, NYCBA, https://www.nycbar.org/member-committee-career-services/small-law-firm-center-overview/virtual-law-firm-program-virtual-law-office/.
[20] See, e.g., Report of the NYSBA Working Group on Judiciary Law § 470, NYSBA, Oct. 8 2018, https://nysba.org/app/uploads/2020/02/Sub-report-page-470-report-agenda-item-11.pdf.
[21] See Rebecca Melnitsky, New York State Bar Association Is Disappointed That Out-Of-State Lawyers Are Still Beholden to Century-Old Office Requirement, NYSBA, Dec. 26, 2023, https://nysba.org/new-york-state-bar-association-is-disappointed-that-out-of-state-lawyers-are-still-beholden-to-century-old-office-requirement.
