When New York Lawyers are Your Renters Rather than Your Clients
As the pandemic winds down and folks return to work, there is a lot of discussion about the work place—remote, in person, or hybrid—and the nature of a post COVID work space. In New York one lawyer recently submitted an inquiry to the New York State Bar Association (“NYSBA”) about the permissibility of establishing a nonlegal services business that rents office space to lawyers.
The lawyer’s business concept the rental of a “virtual office suite” on the first floor of his home that could accommodate up to ten or more independent workstations with computers, internet access, secure filing system, and shared conference space. The inquirer also ensured compliance with New York’s Judiciary Law, Section 470, which allows New York barred lawyers to reside in contiguous states and practice in New York as long as they maintain “an office for the transaction of business” in New York.
The NYSBA responded based upon the assumption that the inquiring lawyer would not be renting to the lawyer’s own clients and with the disclaimer that the NYSBA does not opinion on matters of law, such as the corporate structure of the entity that the inquirer proposed. Having stated those conditions, the NYSBA concluded that a lawyer operating a nonlegal business is generally governed by New York’s Rule of Professional Conduct (“Rules”) 5.7, which provides that the lawyer/owner of the nonlegal business remains subject to all of the Rules only if a person receiving the services would have a reasonable belief that the person and the lawyer are entering into a lawyer-client relationship—a situation that the Opinion considered extremely unlikely here.
The Opinion provides a detailed history of Section 470 as it pertains to New York barred lawyers who do not reside in New York, but declines to otherwise opine what is identified as principal issue of law as to the compliance of nonresident New York lawyers renting space from the inquirer. The Opinion does note that New York State 1025 permitted a lawyer legally practicing in New York to use a virtual office address for advertising purposes (see our prior coverage of the related New York City Bar Association Opinion here,) but the NYSBA Opinion stops there and so do we for now.
