NYSBA 2016-05-20

Can a lawyer admitted in both New York and the UK who runs a UK firm with non-lawyer owners also become a partner in a separate New York law firm?

Short answer: Yes, conditionally. The opinion concludes the lawyer may join a separate New York firm without violating Rule 5.4 as long as the lawyer principally practices in the foreign jurisdiction (or the predominant effect of the foreign practice is there) and the New York firm includes the UK firm's engagements in its conflict-checking system.

Disclaimer: Advisory only. Not binding precedent.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked at the bottom of this page) is the authoritative source for any reliance.

NY State Bar Ethics Opinion 1093: New York practice alongside a foreign non-lawyer-owned firm

Short answer: A New York lawyer also admitted abroad who practices in a foreign firm with non-lawyer partners may join a separate New York firm without violating Rule 5.4, as long as the lawyer principally practices in the foreign jurisdiction (or the predominant effect of the foreign practice is there) and the New York firm folds the foreign firm's engagements into its conflict-checking system.

Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the New York State Bar Association's rules of professional conduct and are persuasive authority. This summary is for research purposes only and is not legal advice. Verify current rules before acting on any specific guidance.

About this page: The plain-English summary and Q&A below were written by Ezel based on the official opinion. We do not reproduce the opinion text on this page; follow the linked source for the official text, which controls.

View original opinion

Plain-English summary

The inquirer, admitted in both England and New York and resident in the UK, was CEO, director, and majority shareholder of an English law firm regulated as an alternative business structure (ABS) with non-lawyer directors and shareholders, which English law permits. He practiced only English law and wanted also to become a partner of a separate New York firm, limiting his New York role to management and administrative activities. The two firms would not share ownership or profits (¶¶ 1-2).

The committee framed the question under Rule 5.4, which bars a lawyer from forming a partnership with a non-lawyer for the practice of law or practicing in an entity in which a non-lawyer holds an interest, is an officer, or can direct the lawyer's judgment (¶ 4). Whether Rule 5.4 applies, though, depends on the choice-of-law rule in Rule 8.5(b)(2): for a lawyer licensed in New York and another jurisdiction, the rules of the jurisdiction in which the lawyer "principally practices" govern non-litigation conduct, unless particular conduct clearly has its predominant effect elsewhere (¶ 6). Applying prior opinions (N.Y. State 889 (2011), 1041 (2014), 911 (2012)), the committee concluded that because the inquirer currently practices principally and apparently exclusively in England with a lawful ABS, UK rules govern that practice, so Rule 5.4 does not bar it (¶¶ 7-10).

If the inquirer joins the New York firm, he must re-assess where he "principally practices" under the multi-factor approach of N.Y. State 1027 (2014), which weighs significant contacts with all jurisdictions, not just physical location, and distinguishes purely administrative work from management work involving legal judgment (such as deciding what matters to accept, clearing conflicts, and supervising legal work) (¶¶ 11-14). Whether his management role is the practice of law is a legal question outside the committee's jurisdiction. If he still principally practices in the UK, UK rules continue to govern the UK practice unless particular conduct's predominant effect is in New York; if his New York managerial duties make New York his principal practice, the New York Rules apply globally except where conduct's predominant effect is in the UK, and the committee saw no indication the UK non-lawyers would own, manage, share fees with, or control the New York firm (¶¶ 15-17). Finally, the two firms must comply with the imputation rule: under Rule 1.10(a) a lawyer associated with two firms makes them one for conflicts purposes, so under Rule 1.10(e) the New York firm must include the UK firm's engagements in its conflict-checking system (¶¶ 18-20).

In practice

Under the New York rules as they stood at the time of the opinion, the committee resolved the non-lawyer-ownership question not by applying Rule 5.4 directly but by routing it through the Rule 8.5(b)(2) choice-of-law analysis: New York's anti-non-lawyer-ownership rule reaches the foreign practice only if New York is where the lawyer principally practices or if the foreign conduct's predominant effect is in New York. The opinion makes the "principally practices" determination turn on the character of the lawyer's work, treating management that involves legal judgment as practice that counts, and warns that a New York managing partner may well be exercising legal judgment. It conditions the arrangement on a unified conflict-checking system so that the two firms are treated as one for imputation.

Common questions

Q: Does Rule 5.4's bar on non-lawyer ownership stop a New York lawyer from also working in a foreign non-lawyer-owned firm?

A: Not necessarily. The opinion concludes that under Rule 8.5(b)(2), UK rules govern the foreign practice when the lawyer principally practices in the UK with a lawful ABS, so Rule 5.4 does not bar it (¶¶ 9-10).

Q: Does a management-only role in the New York firm avoid "practicing law" there?

A: Not automatically. The opinion concludes that management work involving legal judgment (deciding what matters to accept, clearing conflicts, supervising legal work) can be the practice of law, and counts toward where the lawyer principally practices; what counts as practicing law is itself a legal question (¶¶ 12-14).

Q: Do the two firms have to coordinate conflict checks?

A: Yes. The opinion concludes that under Rule 1.10(a) a lawyer associated with both firms makes them one for conflicts purposes, so under Rule 1.10(e) the New York firm must include the UK firm's engagements in its conflict-checking system (¶ 20).

Background and rules framework

The opinion interprets New York Rule of Professional Conduct 5.4(b) and (d) (professional independence; non-lawyer ownership and partnership), Rule 8.5(b)(2) (choice of law for dual-admitted lawyers), and Rule 1.10(a) and (e) (imputation and conflict-checking), corresponding to ABA Model Rules 5.4, 8.5, and 1.10. Rule 8.5(b)(2)(ii) supplies the "principally practices" / "predominant effect" test that determines which jurisdiction's rules govern non-litigation conduct. The committee draws the multi-factor "principally practices" analysis from N.Y. State 1027 (2014).

Citations and references

Rules of Professional Conduct:

MR 5.4 / NY RPC 5.4(b), (d) (professional independence; non-lawyer ownership)
MR 8.5 / NY RPC 8.5(b)(2) (choice of law for dual-admitted lawyers)
MR 1.10 / NY RPC 1.10(a), (e) (imputation; conflict-checking)

Cases:

Cinema 5, Ltd. v. Cinerama, Inc., 528 F.2d 1384 (2d Cir. 1976), on imputed conflicts across associated firms

Other opinions cited:

N.Y. State 889 (2011): when a New York lawyer principally practices in D.C., D.C. rules govern absent predominant New York effect
N.Y. State 1041 (2014); N.Y. State 1027 (2014): factors for where a dual-admitted lawyer principally practices
N.Y. State 911 (2012): a lawyer may not practice principally in New York for an out-of-state non-lawyer-owned entity
N.Y. State 876 (2011): associated firms are one firm for conflicts purposes

Source

Landing page: https://nysba.org/ethics-opinion-1093/