February 12, 2018 Articles

The Uncertain Future of Virtual Law Practice in the Wake of Schoenefeld

How will Schoenefeld and other similarly situated nonresident New York-barred attorneys proceed in the face of the enduring roadblock of New York Judiciary Law Section 470?

By Kaitlin J. Kline and Jacqueline M. Pasek

On April 17, 2017, the U.S. Supreme Court denied Ekaterina Schoenefeld’s petition for a writ of certiorari, ending a nearly decade-long legal battle against New York Judiciary Law Section 470. Schoenefeld v. Schneiderman, 137 S. Ct. 1580 (2017). Schoenefeld’s crusade has been the subject of prior articles. See also Schoenefeld’s firm website, complete with section detailing the case and providing links to briefs and opinions.

As our readers may recall, the law at issue states that "[a] person, regularly admitted to practice as an attorney and counselor, 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 or counselor, although he resides in an adjoining state." N.Y. Jud. Law § 470 (2016). As written, the law requires a nonresident New York-barred attorney to maintain an “office for the transaction of law business within the state.” Schoenefeld (who is both a New Jersey- and New York-barred attorney) maintains her home and office in New Jersey. In 2008, after hearing about section 470’s requirements for out-of-state attorneys during a New York CLE program, she filed a complaint in federal court challenging the constitutionality of the law. Her argument was simple: By requiring nonresident New York-barred lawyers to maintain a brick-and-mortar office in the state of New York but not requiring the same of those residing within the state, the law violates the Privileges and Immunities Clause of the U.S. Constitution.

Although Schoenefeld initially won the battle in 2011, when the Northern District of New York declared the law unconstitutional, she ultimately lost the war. In 2016, after certifying the question of the law’s scope to the New York Court of Appeals, the Second Circuit determined in a 2–1 split opinion that section 470’s requirement that nonresident attorneys maintain a physical office within the state did not violate the Privileges and Immunities Clause of the U.S. Constitution because it was not enacted for the protectionist purpose of favoring New York residents in practicing law. Schoenefeld v. Schneiderman, 821 F.3d 273 (2d Cir. 2016), rev'g Schoenefeld v. New York, 907 F. Supp. 2d 252 (N.D.N.Y. 2011).

On April 17, 2017, the U.S. Supreme Court denied Schoenefeld’s petition for a writ of certiorari. Schoenefeld v. Schneiderman, 137 S. Ct. 1580 (2017). Now that the U.S. Supreme Court has declined to weigh in on the matter, the question remains: How will Schoenefeld and other similarly situated nonresident New York-barred attorneys proceed in the face of the enduring roadblock of New York Judiciary Law Section 470? The impact of section 470 is undoubtedly felt most strongly by out-of-state solo or small-firm practitioners who, like Schoenefeld, lack the availability of a New York office.

[A]t a time when office space has never been less important, the Schoenefeld ruling elevates the significance of office space by making it a requirement for non-resident New York lawyers who want to handle cases in the state. As a result, at a time when larger firms can cut costs by getting by with less space, solos like Schoenefeld who seek to serve clients in New York from an adjacent space must take on additional costs.

Carolyn Elefant, “The Long Tail of New York’s Bonafide Office Rule—And What It Means For The Future of Solos,” Above the Law (Apr. 25, 2017).

Section 470’s antiquated physical-office requirement stands in sharp contrast to the current trend among other states toward more lenient regulations, consistent with the realities of modern-day legal practice. But, despite the judiciary’s resistance to strike down the law’s rigid mandate, New York may be moving in the right direction. In the wake of Schoenefeld, the New York State Bar has announced that it will examine section 470 and the issues raised by the case  to determine if changes are necessary. Former state bar president Claire P. Gutekunst reported, “Now that the legal case has been concluded, a working group comprising State Bar members who reside both in and outside the state will review the issues involved and consider possible recommendations for changes in New York Judiciary Law Section 470.” Christina Couto, Post-Schoenefeld, “State Bar considers recommendations,” 59 NYSBA State Bar News, May/June 2017, at 4. Updates to the law seem likely, as approximately one-third of the New York Bar Association’s members are nonresident attorneys.

With changes to section 470 on the horizon, although she did not succeed in the courts, Schoenefeld’s long and persistent fight might result in a victory of sorts after all. But the delay in seeing that victory come to fruition may mean it is too little, too late for many practitioners.

Unfortunately, by the time the [New York State Bar] committee releases its report—five years hence—out-of-state practitioners like Schoenefeld who hoped to conveniently provide clients just over the New York border with advice and counsel on New York laws will either have given up their New York practices, or hiked their rates so much that they’re no longer able to offer cost competitive services for their clients. Yet another example of how the legal profession is killing its own.

Elefant.

As nonresident New York lawyers eagerly await the New York State Bar committee’s recommendation to the legislature, only time will tell if—and when—New York will join the rising tide toward a greater acceptance of virtual law practice.


Jacqueline M. Pasek and Kaitlin J. Kline are associates in the Cleveland, Ohio, office of Jones Day.


Copyright © 2018, 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).