New York's In-State Office Requirement Is Unconstitutional, Federal Court Rules

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A New York statute requiring all lawyers licensed in New York to keep an office in the state if they wish to practice there violates the Constitution's privileges and immunities clause, the U.S. District Court for the Northern District of New York declared Sept. 7 (Schoenefeld v. New York, N.D.N.Y., No. 1:09-CV-0504 (LEK/RFT), 9/7/11, further proceedings in 26 Law. Man. Prof. Conduct 124).

The in-state office mandate discriminates against nonresident lawyers and infringes on their right to practice law without advancing a substantial state interest, Judge Lawrence E. Kahn found.

Constitutional Challenge.

Ekaterina Schoenefeld is licensed to practice in California, New Jersey, and New York but works exclusively from her Princeton, N.J., office.

In 2007, she sued New York and several courts and officials, alleging that Section 470 of the state's Judiciary Law--which blocks nonresident, New York-licensed lawyers from practicing law in New York unless they keep an in-state office--is unconstitutional.

Schoenefeld mounted a three-pronged challenge, claiming that the statute violates the U.S. Constitution's

• privileges and immunities clause, by infringing on a nonresident lawyer's right to practice law;

• equal protection clause, because the statute does not require that resident attorneys abide by the same in-state office rule; and

• commerce clause, by placing unconstitutional burdens on interstate trade.

Although the law has not been enforced against her, Schoenefeld claimed that she purposely refrains from taking any cases that might require her to appear before a New York tribunal. She asked for declaratory and injunctive relief under 42 U.S.C. §1983.

In February, Kahn granted the defendants' motion to dismiss Schoenefeld's equal protection and commerce clause claims, but allowed her to go forward on her privileges and immunities claim. See 26 Law. Man. Prof. Conduct 124.

In the present ruling, Kahn granted Schoenefeld's motion for summary judgment on the remaining cause of action, finding as a matter of law that the office requirement is unconstitutional.

Unfair to Nonresidents.

The privileges and immunities clause is implicated if a state uses residence within its borders to infringe on a fundamental right or privilege that promotes interstate harmony, Kahn observed. The right to practice law has long been considered a fundamental right, Kahn said, and the New York law interferes with that right.

Kahn rebuffed the defendants' argument that Section 470 is not a residency requirement but rather a more benign “office requirement.” The statute for all intents and purposes acts as a residency requirement, he said, because it forces nonresidents to bear a significant competitive cost not imposed on residents.

Bar Admission Cases Cited as Support

Among the authorities he relied upon to support his ruling on New York's in-state office law, Judge Kahn cited three Supreme Court decisions that narrowed states' authority to place limits on admission to the bar.

In New Hampshire Supreme Court v. Piper, 470 U.S. 274 (1985), the court struck down a New Hampshire rule that limited bar admission to state residents, reasoning that there was no substantial relationship between the rule and a valid state objective.

Barnard v. Thorstenn, 489 U.S 546 (1989), held that a rule requiring bar applicants to have been resident in the Virgin Islands for one year prior to application and to show an intention to live and practice there after admission violated the privileges and immunities clause.

And in Frazier v. Heebe, 482 U.S. 641 (1987), the court used its supervisory power to strike down a “bona fide office” rule adopted by a Louisiana federal district court.

Resident lawyers may practice out of their homes, he observed. Nonresidents, on the other hand, must shoulder the extra expense of renting or buying an in-state office.

“New York resident attorneys may practice law out of their basements,” Kahn noted, quoting from Schoenefeld's brief. But nonresidents must rent offices in New York on top of maintaining offices and residences in their home states, he added.

No Substantial State Interest.

A statute may withstand a privileges and immunities challenge if the state can prove that it has a substantial reason for engaging in disparate treatment and that there is a substantial relationship between that objective and the discriminatory practice, Kahn continued. The defendants failed to make either showing, he said.

Kahn conceded the defendants' argument that New York has an interest in monitoring and disciplining nonresident lawyers, to ensure both that they are accessible to their New York clients, courts, and other parties and that the remedy of attachment is available against nonresidents.

But those interests, he added, are not substantially served by requiring out-of-state residents to maintain an in-state office.

For instance, Kahn noted, there is no guarantee that the in-state lawyer will be more accessible than an out-of-state counterpart. An attorney based in New Jersey is likely more available to clients in downtown New York than is an attorney based in Syracuse or Buffalo, he said.

Moreover, Kahn said, state disciplinary authorities may sanction lawyers licensed in New York no matter where they reside. He also pointed out that lawyers can satisfy the office requirement by maintaining an “of counsel” relationship in the state, which he said renders almost useless the remedy of attachment.

There are far less restrictive means to achieve the state's goals, Kahn said. Courts could require that nonresident lawyers appoint an agent for service of process in New York or compel them to affiliate local counsel to be available on short notice, he stated.

Assistant Attorney General Christina L. Roberts-Ryba, Albany, N.Y., represented the defendants. Schoenefeld, of Princeton, N.J., represented herself.

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