January 19, 2016 Articles

New York's Highest Court Clarifies Nonresident Attorney Office Requirement

After Schoenefeld, New York will presumably, albeit grudgingly, move toward acceptance of VLOs, consistent with the realities of practicing law in a digital age.

Kaitlin J. Kline

The New York Court of Appeals, New York’s highest court, recently resolved the central question that may well determine the constitutionality of New York’s nonresident attorney office requirement, New York Judiciary Law section 470. Schoenefeld v. New York, 25 N.Y.3d 22 (N.Y. Mar. 31, 2015). The court of appeals held that, to satisfy section 470’s mandate that nonresident attorneys maintain an office within the state of New York for the transaction of law business, nonresident attorneys must maintain a physical office in New York.

Almost a year earlier, the U.S. Court of Appeals for the Second Circuit requested guidance from the Court of Appeals of New York on the issue of what would minimally satisfy section 470’s nonresident attorney office requirement. The Second Circuit certified the following “controlling question” to the New York Court of Appeals: “Under New York Judiciary Law Section 470, which mandates that a nonresident attorney maintain an ‘office for the transaction of law business’ within the state of New York, what are the minimum requirements necessary to satisfy that mandate?” Schoenefeld v. New York, 748 F.3d 464, 471 (2d Cir. Apr. 8, 2014). 

Both Ms. Schoenefeld, a lawyer admitted to the bar of New York and residing in New Jersey with no office in New York, and the New York attorney general had anticipated in their Second Circuit arguments that the construction of the term “office” would determine the outcome of the case. New York advocated for a broad reading of the term under the doctrine of constitutional avoidance, insisting that section 470 may be interpreted as requiring “nothing more than that nonresident attorneys maintain an address within the State at which they may be served with legal papers on behalf of the clients they represent.” (Appellants’ Brief at 2, Schoenefeld, 748 F.3d 464 (filed Jan. 18, 2012)). As such, appellants argued, the statute either does not implicate the Privileges and Immunities Clause at all, or it imposes only a minimal burden on nonresident attorneys that is directly related to the sufficient state interest of “enabling the New York courts to adjudicate disputes over service of interlocutory legal papers.” Id. at 20–21. Appellants insisted that there was no reason to believe that the New York Court of Appeals would not construe section 470’s nonresident attorney office mandate in this broad manner, suggesting that the Second Circuit should certify this question to New York’s highest court before striking the statute as unconstitutional. Id. at 2, 29. 

Appellee Ekaterina Schoenefeld asserted to the contrary, that, applying the plain meaning rule, the office mandate of section 470 unambiguously requires “nothing less than an actual, physical space where a nonresident attorney is required to be physically present on a regular basis in order to be able to practice law in the state.” (Appellee’s Brief at 18, Schoenefeld, 748 F.3d 464 (filed Apr. 17, 2012). The Second Circuit appeared to lean toward the appellee’s construction of the statute, noting in its opinion that “the term ‘office,’ by itself, although not exactly pellucid, implies more than just an address or an agent appointed to receive process.” Schoenefeld, 748 F.3d at 469. The court went on to point out that the additional phrase “for the transaction of law business” makes the appellants’ broad interpretation of the statutory office requirement much less plausible. Id. The Second Circuit, however, declined to rule definitively on this issue, leaving the interpretation of the statute to New York’s top court.

The New York Court of Appeals answered the certified question head-on, advising that section 470 mandates that nonresident attorneys maintain a physical office in New York. In so holding, the court followed the Second Circuit’s reasoning, applying the plain meaning rule and insisting that interpreting the statute in the manner suggested by the appellants would “take the impermissible step of rewriting the statute.” Schoenefeld, 25 N.Y.3d at 28. The court went on to state that adequate measures appear already to be in place in New York to ensure that service can be readily performed on nonresident attorneys. Id. The court also reasoned that the legislature has the power to take additional action, if necessary, to ensure that personal service on nonresident attorneys can be accomplished. Id. Given its straightforward construction and accompanying reasoning, New York’s highest court presumably considers section 470 constitutionally flawed and expects its interpretation of the term “office” to be the final nail in the coffin for New York’s nonresident attorney office requirement.

The decision of the court of appeals reflects a marked departure from New York’s earlier position on the physical office requirement and is consistent with the changing legal landscape with respect to multijurisdictional practice, in New York and nationally. As anticipated in our earlier Schoenefeld case notes, New York now appears to be prepared to adapt to the emerging trend of virtual law offices, or “VLOs.” Indeed, the incongruity of a physical office requirement in a digital age is underscored by a recent decision by the Manhattan Supreme Court, New York’s trial level court, giving a New York City woman permission to serve divorce papers on her elusive husband via Facebook message. Barbara Ross & Dareh Gregorian, “Judge Says Brooklyn Woman Can Use Facebook to Serve Divorce Papers,” N.Y. Daily News (Apr. 6, 2015).

New York’s growing acceptance of VLOs may also be reflected in a recent opinion of the New York State Bar Association’s Committee on Professional Ethics, addressing the question of whether a lawyer admitted only in New York and Pennsylvania may practice in the federal courts in Virginia and before the Administrative Board of Veterans Affairs from a VLO in Virginia. N.Y. State Bar Ass’n Comm. on Prof’l Ethics, Op. 1054 (Apr. 10, 2015). The New York state bar’s ethics committee advised that if the New York attorney principally practices out of a VLO in Virginia, the lawyer should be subject to Virginia’s ethics rules, in accordance with Virginia’s multijurisdictional practice rule. See id.; “New Yorker’s Virtual Law Practice in Virginia Must Conform to Old Dominion’s Ethics Rules,” Bloomberg Law, May 20, 2015.

Now that New York’s highest court has given an expansive reading to Judiciary Law section 470’s nonresident attorney office requirement, with the likely consequence that the statute will fail constitutional muster in the Second Circuit, New York will presumably, albeit grudgingly, move toward acceptance of VLOs, consistent with the realities of practicing law in a digital age.

Keywords: litigation, ethics, professionalism, nonresident attorney, virtual law office, New York Judiciary Law, section 470, Schoenefeld

Kaitlin J. Kline is an associate in the Cleveland, Ohio, office of Jones Day.


Copyright © 2016, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).