Federal Law Strikes Down New York Law That Requires Out-Of-State Attorneys Licensed in NY to maintain in-state office as violative of Article IV Privileges and Immunities Clause

September 11th, 2011

The ABA Journal has the story:

A federal judge in Albany has agreed with a New Jersey solo practitioner that a New York law is unconstitutional. It requires out-of-state attorneys licensed to practice in New York to maintain an in-state office if they want to represent clients there.

The state argued that the New York office requirement made sense based on concerns that lawyers be available both to their clients and for any required service of process. But U.S. District Judge Lawrence Kahn said there were less restrictive ways to further those interests, the New York Law Journal reports in an article published by New York Lawyer (req. req.).

Granting summary judgment for the plaintiff solo, Kahn found that the Judiciary Law §470 violates the privileges and immunities clause of the federal constitution. New York lawyers who live in the state are not required to maintain offices there in order to practice, putting out-of-state lawyers at a considerable competitive disadvantage, he explained.

From the opinion:

Plaintiff claims that Section 470 infringes on her right to practice law in New York in violation of the Privileges and Immunities Clause. Am. Compl. ¶ 23. Plaintiff claims that Section 470 effectively imposes a residency requirement on nonresident attorneys because it conditions the practice of law in New York on maintaining an office in New York. See id. ¶ 21. Plaintiff further asserts that this requirement serves no substantial state interest and unnecessarily prevents her from practicing law in New York, despite the fact that she meets all of the requirements imposed on attorneys who are New York residents. See id. ¶ 22. Specifically, Plaintiff argues that Defendants can offer no substantial reason for Section 470’s discrimination against nonresident attorneys, that state court decisions have shown no valid purpose for Section 470 and inconsistent interpretations of the statute have resulted, and that Section 470 is an artificial trade barrier for nonresident attorneys admitted to practice law in New York. See Pl. Mem. Supp. S.J at 10-21. Plaintiff seeks the following declaratory and injunctive relief: 1) an order declaring Judiciary Law Section 470 unconstitutional; 2) an order permanently enjoining Defendants from enforcing the law; and 3) an award of costs and reasonable attorneys’ fees. Id.

Defendants argue in their Motion for summary judgment that Section 470 does not impose a residency requirement, and that therefore review under the Privileges and Immunities Clause is not triggered. Defendants’ Memorandum of law in support of Motion for Summary Judgment (“Def. Mem. Supp. S.J.”) (Dkt. No. 62-2) at 4-10. In the alternative, Defendants argue that even if review

under the Privileges and Immunities Clause is triggered, (1) the state has a substantial interest in ensuring that nonresident attorneys are amenable to in-state service of process and available for court proceedings and contact by interested parties; and (2) Section 470 bears a substantial relation to this state interest because it employs the least restrictive means of achieving this interest. Id. at 11-13. …

Similarly, Section 470 places an additional threshold cost on all nonresidents wishing to practice law in New York – an additional threshold cost that resident attorneys are not required to incur. A resident attorney of New York may operate an office for the practice of law out of his home or residence. See Lichtenstein v. Emerson, 656 N.Y.S.2d 180, 182 (Sup. Ct. 1997). Conversely, a nonresident attorney must maintain, at minimum, both her residence in another state and an office in New York. See id. A nonresident attorney may be required to pay property taxes and rent or mortgage payments on her home, on an office maintained in New York, and potentially on an office maintained in her home state, whereas a New York resident attorney may only be required to pay taxes on her home. This imposes a financial burden far surpassing that imposed by either the licensing fee disparity of $2475 found unconstitutional in Toomer, or the $288 fee disparity found unconstitutional in Ward. Cf. Toomer, 334 U.S. at 385; Ward, 79 U.S. at 418. The additional costs that nonresident attorneys incur in order to practice law in New York impose a significant burden on those who wish to practice law in multiple states. Cf. Matter of Gordon, 48 N.Y.2d at 272 (stating that attorneys who wished to practice law in multiple states were “foreclosed from doing so” by the now-unconstitutional New York residency requirement for admission). Section 470 thus effectively precludes a number of nonresident attorneys from practicing law in New York, regardless of whether they have complied with all requirements imposed on residents to

practice law in New York. All of these factors support a conclusion that Section 470 infringes on the right to practice law in New York on the basis of residency and is therefore discriminatory under the Privileges and Immunities Clause.