Miracle On Eagle Street: New York's Temporary Practice Rule

To many in the New York professional responsibility community, it seemed like a Christmas miracle. For more than 15 years, the New York State Bar Association and legal ethics experts have implored the Office of Court Administration, the Presiding Justices of the four Appellate Divisions, and the Chief Judge of the Court of Appeals (the Presiding Justice and Chief Judge, the "Administrative Board") to adopt a version of ABA Model Rule 5.5, the so-called "multijurisdictional practice rule" that would allow lawyers admitted in other jurisdictions to come to New York on a temporary basis to handle particular litigation and transactional matters. This would, proponents hoped, bring New York's ethics rules into step with the day-to-day reality of modern law practice. Every day, New York lawyers travel to other states and out-of-state lawyers come here to serve their clients. But numerous reports, resolutions, and articles fell on deaf ears. The revised New York Rule of Professional Conduct 5.5 was never passed, even as 46 other U.S. jurisdictions adopted it in some form.

All this changed on Dec. 10, 2015. On that day, Chief Judge Lippman promulgated 22 NYCRR §523 (Section 523), permitting temporary practice in New York for the first time. Section 523 is a court rule, not a Rule of Professional Conduct, but it has the same effect: It allows lawyers admitted in other U.S. jurisdictions or certain foreign jurisdictions to practice here on a temporary basis. For those who had labored since 1999 in what seemed a fruitless effort to make this happen, it was as if Santa Claus had appeared in person to light the Rockefeller Center Christmas tree.

In this article, we will discuss Section 523, why it is so important, and how it evolved. We will also discuss another, simultaneous development, the amendment of New York's in-house counsel registration rule, 22 NYCRR §522 (Section 522), to allow certain foreign in-house lawyers to register to practice here.

Section 523 — The Basic Criteria

Section 523 is very simple, but it has revolutionary impact on the way New York regulates the legal profession. It continues to prohibit lawyers not admitted here ("out-of-state lawyers") from "establish[ing] an office or other systematic or continuous presence" in New York or from holding themselves out to the public as New York lawyers — the exact same prohibition found in New York Rule of Professional Conduct (RPC) 5.5. But Section 523 permits certain out-of-state lawyers to practice in New York temporarily under four separate sets of circumstances — the so-called "safe harbors." Section 523 thus redefines and narrows the scope of unauthorized practice in New York by out-of-state lawyers, an act which remains a crime under Sections 478 and 484 of the N.Y. Judiciary Law.

To invoke the safe harbors of Section 523, out-of-state lawyers must meet three criteria. They must: (i) "be admitted or authorized to practice law in a state or territory of the United States or in the District of Columbia, or [be] a member of a recognized legal profession in a non-United States jurisdiction," as long as they are "admitted or authorized to practice as attorneys or counselors at law or the equivalent and are subject to effective regulation and discipline by a duly constitute professional body or public authority" (this rules out countries where lawyers are not effectively regulated) [22 NYCRR §523.2(1)]; (ii) be in good standing in every jurisdiction in which they are admitted [Id. §523.2(2)]; and (iii) perform services they are authorized to perform in their home jurisdictions, and which New York lawyers may perform here. Id. §523.3. (We will call lawyers who meet these criteria "qualified out-of-state lawyers.") Thus, if an out-of-state lawyer is not subject to effective professional regulation in his or her home jurisdiction, has already been disciplined there, or is attempting to perform services here they would not be allowed to perform there (such as, arguably, a British solicitor seeking to try a case in New York), they are not permitted to practice in New York, even temporarily, and even if they fall within the safe harbors.

The Safe Harbors

What are the safe harbors? Let's examine each in turn.

First, qualified out-of-state lawyers may engage in temporary practice in New York if their work is "undertaken in association with a lawyer admitted to practice in this State who actively participates in, and assumes joint responsibility for, the matter." Section 523.2(3)(i) (emphasis added). The italicized "and" underscores the conjunctive nature of this requirement: The local lawyer must not only assume joint responsibility for the matter from a malpractice standpoint, he or she must also actively participate in the work. While just one or the other is necessary to earn a fee split [RPC 1.5(g)(1)], both are required to provide a safe harbor for an out-of-state lawyer wishing to practice here. The local lawyer, in short, cannot be a mere mail drop; they must be an engaged member of the legal team.

Second, a qualified out-of-state lawyer may perform work in New York "in or reasonably related to" a court proceeding pending here or in another jurisdiction in which they are authorized to practice, as long as the lawyer "or a person the lawyer is assisting" is authorized by law or order to appear in that proceeding or reasonably expects to be so authorized. Section 523.2(3)(ii). This means that the qualified out-of-state lawyer herself, or a person she is assisting, must gain, or reasonably expect to gain, pro hac vice admission in New York. The "person" need not be a lawyer; for example, it may be a patent examiner authorized to practice by...