Constitutional Challenge to Non-Lawyer Ownership of New York Law Firms Lives . . . For Now


The Second Circuit has revived Jacoby & Meyers’s lawsuit challenging the constitutionality of Rule 5.4 of the NY Rules of Professional Conduct, which prohibits non-lawyer ownership of law firms. The district court had dismissed the lawsuit on the ground that multiple state laws –notably N.Y. Jud. Law § 495 and N.Y. LLC Law § 201 – independently prohibit non-lawyer equity investment in law firms and, thus, any decision invalidating Rule 5.4 would be merely advisory. Nevertheless, the appellate court's resuscitation of the lawsuit is unlikely to threaten New York’s long-standing prohibitions against non-lawyer ownership of law firms, since federal courts traditionally defer to states on lawyer regulation.

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