Jacoby & Meyers Files Response in Non-Lawyer Investment Case

August 29th, 2011

From the NY Law Journal:

On the heels of an American Bar Association commission vote to permit non-lawyers to hold a minority ownership role in law firms, Jacoby & Meyers on Friday fired broadside at a New York court rule barring firms from accepting outside investments.

The firm’s memorandum, which was submitted to the U.S. District Court for the Southern District, comes in response to a motion filed earlier this summer by Attorney General Eric T. Schneiderman.

Mr. Schneiderman is seeking dismissal of a suit Jacoby & Meyers lodged against the four presiding justices of the Appellate Division departments seeking to topple a court rule prohibiting non-lawyers from owning an equity interest in a law firm (NYLJ, May 20). The rule is designed to insulate attorneys and their firms from the explicit or implicit influence of non-lawyer investors.

In the weeks since Mr. Schneiderman filed a motion arguing that the Jacoby & Meyers’ suit “border[s] on frivolous” and that elimination of Rule 5.4 undermine attorney independence and loyalty to clients (NYLJ, July 26), the ABA Ethics 20/20 Commission circulated a proposed rule change to model Rule 5.4, on which New York’s court rule is based. The ABA panel would allow some “alternative business structures,” which are now barred in every U.S. jurisdiction outside the District of Columbia, and permit partial non-lawyer ownership of law firms.

In its filing Friday, Jacoby & Meyers contends the rule violates a host of constitutional provisions, is outmoded and ultimately harms law firms and its clients.

Yep, they argue the rule violates the void for vagueness doctrine, the dormant commerce clause, the due process clause, the equal protection clause, the takings clause, and the first amendment.

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