Recommendations by NYCLA’s Committee on Professional Ethics on Judiciary Law Revisions

Recommendations by NYCLA’s Committee on Professional Ethics on 

Judiciary Law Revisions Proposed by the NYSBA Special Committee on

Unlawful Practice of Law


These recommendations by its Committee on Professional Ethics were approved by the Board of Directors of the New York County Lawyers’ Association at its regular meeting on December 10, 2001.


The members of the Committee on Professional Ethics of the New York County Lawyers’ Association (“NYCLA”) make the following recommendation to the Board of Directors of the NYCLA as to what we described in our memorandum to the Board of Directors dated October 8, 2001 as “the New York State Bar Association’s Special Committee on Unlawful Practice of Law proposal to amend the Judiciary Law in relation to unlawful practice of law.”


The Special Committee on Unlawful Practice of Law has drafted proposed revisions to Sections 478, 484 and 485 of the Judiciary Law . . . it deletes the current Section [sic.] 478 and 484. It also amends Section 485, which makes violations of unlawful practice of law a misdemeanor by deleting Sections 478 and 484 since they have incorporated the crime into those sections. They have also made the penalty a Class E felony instead of a misdemeanor for a violation of Section 478.


The Committee on Professional Ethics at its meeting on November 27, 2001 reviewed a subcommittee report and it recommends that the Board of Directors of the NYCLA oppose enactment of the above proposal. Our reasons are set forth below.


  1. The Proposed Definition of “Practice of Law” is Overbroad and Would Do Substantial Injury to the Public Interest.


Section 478(l), as proposed, would define the “Practice of Law” as, including but … not limited to … (a) “the provision of advice involving the application of legal principles to specific facts or purposes …” and (b) the preparation of legal instruments of any character …”


The breadth of the definition is obvious. Within the proposed statutory definition of “Practice of Law” would be included numerous currently performed activities of non-licensed professionals. Included in the dragnet of the “Practice of Law” whose proper practice or calling involves to some extent the “application of legal principles to specific facts” or “the preparation of legal instruments of any character.”


Surely, it would be an undue burden to require employment of a lawyer in each of these many instances.


The proposed Section 478(b) would make illegal (and subject to a felony prosecution) the engagement in “the Practice of Law” as defined above, “while asking for or receiving, directly or indirectly, compensation for such practice …”


Presumably, if the adviser provides services for free, then that adviser would not run afoul of the law. It is hard to see why if provision of such services by an unlicensed provider to the public is a social evil, it should make a difference whether the provider of the services asks for or receives compensation. The injury is to the members of the public regardless of whether the advice is paid for. Indeed, a reason for the distinction between compensated and uncompensated for advice could well be regarded as the concern of members of the organized bar that their own financial circumstances would be adversely affected by competition with unlicensed advisers to the public. Such a reason hardly does credit to our profession.


The requirement that the provider ask for or receive “direct” or “indirect” compensation is inherently ambiguous. For example, does the social worker, employed by a not-for-profit organization, seek “compensation” when he or she receives payment (i.e. “salary”) for his/her services to the indigent? What about a bank officer who arranges a retail loan without the benefit of counsel for the borrower? His or her services are being compensated for by salary; wouldn’t that officer then be “practicing law” in violation of the proposed statute, making the officer and the bank lender susceptible to a felony prosecution? Even if we considered the officer a mere agent, is not the bank lender “indirectly” or even “directly” asking for or receiving compensation by payment to it of bank charges or interest?


The proposed legislation is further flawed in that it does not clearly exempt from its prohibition the work of legal assistants or clerks who act under supervision of lawyers. Ironically, the recommended statute does allow for employment of law students who have completed “at least two semesters of law school when they are acting under the supervision of legal aid or government agencies. See proposed Section 478(2)(b)(iii) and (iv). Implicitly, non-lawyers “supervised” by lawyers who are not affiliated with such agencies are subject to the sanctions of the proposed amendments.


  1. The Public Interest Would Be Best Served by Maintaining The Status Quo


There is no demonstration that the public is being injured by the current state of the Judiciary Law. The New York State Bar Association’s Committee offers no empirical evidence of any such injury. Its primary inspiration seems to come not from the need to address a need of New York citizenry but the concern of the MacCrate report as to multidisciplinary practice. At the veryleast, in the absence of evidence of public injury or concern, that inspiration seems economically self-serving. 


It is our view that the definition of “Practice of Law” and the problem of unauthorized practice is a matter far better left to the judiciary and the Attorney General of the State. The organized bar has long recognized the rule that certain services often performed by non-lawyers may constitute the practice of law when performed by those licensed to practice law. The organized bar has always accepted that duality. However, it also has emphasized the importance that the receiver of those services understand the difference between the trust he or she can place in lawyers who are governed by codes of ethics and regulation by appropriate agencies contrasted with those are not so regulated or licensed. The foregoing is one of the cardinal features of the newly promulgated rules dealing with multidisciplinary practice by New York State licensed lawyers (i.e. the duty of the provider of law related services to disclose the absence of a license to practice law). It is hard to understand how the proposed legislation would square with the multidisciplinary practice now accepted under the new rules.


The legislation proposed by the New York State Bar Association’s Special Committee on Unauthorized Practice would also interfere with the constructive ways that the New York courts have treated the drafting of real estate brokerage contracts by non-lawyer real estate professionals. See, Willinger and Lee, “Drafting Preparation of Contracts of Sale by Brokers,” Land Title Trends, N.Y.L.J. (August 20, 2001), 54 et seq and cases cited therein.


  1. Proposed Section 484 Is Inconsistent With New York’s Policies on Multijurisdictional Practice Including the Opinions of the New York State Bar Association


Proposed Section 484 seeks to rewrite the current provision in an effort to make it consistent with proposed Section 478, defining the “Practice of Law” and prohibiting engagement therein by those who are unlicensed and directly or indirectly compensated.


We would have no comment on proposed Section 484 since it is not a substantive change in law to the extent that the proposed Section 478 would be adopted. However, we must observe that, by oversight or otherwise, the newly proposed Section 484(1) “makes unlawful” any “natural person” not “admitted to practice law in the courts of record of any state…in any manner advertising that he or she either alone or with any person or persons has, owns, conducts or maintains a law office, or law and collection office, or office of any kind of, or for the practice of law…”


The restriction to those “admitted to practice law in the courts of record of any state” overlooks that multistate law partnerships and professional corporations operating in New York have long consisted of lawyers admitted in New York and other states, but also lawyers admitted in the District of Columbia and foreign nations. e.g. See: New York State Bar Association Professional Ethics Committee Opinions 542 (1982), 646 (1993); ABA Formal Opinion 01-423 (2001).


We can only assume that the foregoing language was an oversight by the drafters.


  1. Conclusion

The Committee recommends disapproval of what the Special Committee on Unlawful Practice of Law of the New York State Bar Association describes as proposed “amendments to New York’s Judiciary Law” to define the ‘practice of law’ and to clarify and modernize the prohibitions against organized practice.