New York Court of Appeals Announces New Rules Governing Practice in New York by Attorneys Not Admitted in the State

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1 New York Court of Appeals Announces New Rules Governing Practice in New York by Attorneys Not Provisions Permit Temporary Practice by Non-New York Attorneys and Registration of Non-U.S. Lawyers as In-House Counsel SUMMARY On December 15, 2015, the New York State Court of Appeals announced the following two changes to its rules: (i) adoption of a new rule authorizing out-of-state and non-u.s. lawyers to practice in New York on a temporary basis; and (ii) an expansion of the rule governing registration of in-house counsel to permit non-u.s. lawyers (as well as out-of-state lawyers) to register as in-house counsel in New York. Attorneys seeking to practice under the new provisions must satisfy certain conditions, including maintaining admission or authorization to practice in another jurisdiction. The rule changes were approved by the Court of Appeals on December 10, 2015 and will take effect on December 30, Although practitioners have generally understood the temporary practice of law to be permitted in New York, such practice has proceeded informally and has not previously been endorsed or regulated by the State. In addition, the present in-house counsel registration is limited to domestic lawyers, which has hindered foreign companies seeking to receive legal services in New York from in-house attorneys based outside the United States; non-u.s. lawyers could engage in on-going practice in New York only by registering as foreign legal consultants, which involves a somewhat more elaborate application process. Accordingly, the newly announced rules may give clients operating in New York greater access to legal services from out-of-state and non-u.s. attorneys. New York Washington, D.C. Los Angeles Palo Alto London Paris Frankfurt Tokyo Hong Kong Beijing Melbourne Sydney

2 ANALYSIS Temporary practice: Under newly enacted Part 523 of the Rules of the Court of Appeals, a non-new York lawyer may provide legal services in New York on a temporary basis, provided that the lawyer (i) is admitted or authorized to practice law in another U.S. jurisdiction or is a member of a recognized legal profession in a non-united States jurisdiction, the members of which 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 constituted professional body or a public authority ; (ii) is in good standing wherever he or she is admitted or authorized to practice; and (iii) provides legal services that the lawyer could provide in his or her home jurisdiction and that may generally be provided by New York lawyers. 1 The temporary services provided by the non-new York lawyer must also either (a) be undertaken in association with a New York attorney assuming joint responsibility for the matter; (b) reasonably relate to a pending or potential proceeding in which the non-new York lawyer, or a lawyer he or she is assisting, is or reasonably expects to become authorized to appear; (c) reasonably relate to a pending or potential alternative dispute resolution proceeding, as long as the services do not require pro hac vice admission; or (d) otherwise arise out of or reasonably relate to the lawyer s practice in his or her home jurisdiction. 2 Consistent with the American Bar Association s Model Rules, on which the new New York rules are based, Part 523 leaves the term temporary practice undefined. The ABA s comments suggest a broad interpretation of the concept. 3 The new rule prohibits lawyers practicing under Part 523 from establishing a law office or other systematic and continuous presence in New York, except as otherwise permitted, or from holding themselves out as admitted to practice in New York. 4 New Part 523 does not impose any registration requirement on attorneys practicing temporarily in New York. However, non-new York lawyers who avail themselves of the new rule will be subject to the New York Rules of Professional Conduct and the disciplinary authority of New York courts in connection with their temporary practice. 5 Registration of in-house counsel: Through the amendment of Part 522, New York will join nineteen other jurisdictions that have permitted registration of non-u.s. lawyers as in-house counsel. 6 The amendment to Part 522 expands the Appellate Division s discretion to permit registration as in-house counsel of an applicant who is a member in good standing of a recognized legal profession in a foreign non-united States jurisdiction, the members of which are admitted to practice as lawyers or counselors at law or the equivalent and subject to effective regulation by a duly constituted professional body or public authority. 7 The rule also requires that the applicant s home jurisdiction reciprocally permit registration of New York-admitted attorneys as in-house counsel. 8 The registrant will be permitted to engage in providing legal advice only to the registrant s employer. 9-2-

3 IMPLICATIONS The rule changes announced by the Court of Appeals will substantially expand the circumstances under which out-of-state and non-u.s. attorneys are expressly permitted to practice law in New York. However, the text of the new rules creates some uncertainty as to their scope, in at least two respects: First, as noted, the Court of Appeals declined to define the term temporary practice, leaving for future determination the scope of permissible activities under Part 523. Second, both the amendment to Part 522 and newly enacted Part 523 apply to non-u.s. attorneys only if, in their home jurisdictions, those attorneys belong to a recognized legal profession whose members are admitted or authorized to practice as attorneys, counselors at law, or the equivalent and are subject to effective regulation by a duly constituted professional body or a public authority. These requirements appear to presuppose that non-u.s. lawyers are, as a rule, admitted to practice before bars or other self-regulatory organizations in their home jurisdictions. That is not necessarily the case. Some jurisdictions, including Mexico, permit legal practice without formal admission to the bar, while others, including many states of the European Union, categorically exclude in-house counsel from admission to the bar or its closest analogue. 10 The provisions enacted by the Court of Appeals do not address the status of attorneys, particularly in-house attorneys, from such jurisdictions. With respect to the latter issue, the ABA is currently studying ways to include in its in-house counsel registration rules in-house practitioners who are not subject to formal disciplinary or regulatory regimes. 11 It may be that the courts will consider amendments to the rules after the ABA completes its work. * * * Copyright Sullivan & Cromwell LLP

4 ENDNOTES NYCRR 523.2(a) (Dec. 10, 2015). Id (a)(3). AMERICAN BAR ASSOCIATION, MODEL RULE OF PROFESSIONAL CONDUCT 5.5 cmt. 6 ( There is no single test to determine whether a lawyer s services are provided on a temporary basis in this jurisdiction, and may therefore be permissible.... Services may be temporary even though the lawyer provides services in this jurisdiction on a recurring basis, or for an extended period of time, as when the lawyer is representing a client in a single lengthy negotiation or litigation. ). 22 NYCRR Id See AMERICAN BAR ASSOCIATION CENTER FOR PROFESSIONAL RESPONSIBILITY, POLICY IMPLEMENTATION COMMITTEE, STATE BY STATE ADOPTION OF SELECTED ETHICS 20/20 COMMISSION POLICIES & GUIDELINES FOR AN INTERNATIONAL REGULATORY INFORMATION EXCHANGE (2015) (noting that, as of December 12, 2015, Arizona, Colorado, Connecticut, Delaware, the District of Columbia, Georgia, Illinois, Indiana, Iowa, Kansas, Montana, New Hampshire, North Carolina, Oregon, Texas, Virginia, Washington, West Virginia, and Wisconsin permitted registration of foreign attorneys as in-house counsel). 22 NYCRR 522.1(b) (Dec. 10, 2015). Id (b)(2). Id See NEW YORK STATE BAR ASSOCIATION, COMMENTS ON PROPOSED CHANGES TO THE RULES OF THE COURT OF APPEALS THAT WOULD (1) PERMIT TEMPORARY PRACTICE BY OUT-OF-STATE AND FOREIGN LAWYERS AND (2) ALLOW FOREIGN LAWYERS TO REGISTER UNDER THE IN-HOUSE COUNSEL RULE, at 7 8 (Nov. 9, 2015). Id. at 16. The New York State Bar Association suggested that the courts adopt provisions in both the temporary-practice and in-house counsel registration rules to address in-house counsel from such jurisdictions, id. at 10 11, 16, but the courts did not include those provisions in the rules as adopted. -4-

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