| NEW YORK - Chief Judge Judith S. Kaye and Chief Administrative
Judge Jonathan Lippman today announced that New York will be the first
state in the country to directly address the regulation of the multidisciplinary
practice of law (MDP). The new regulatory framework is based on a
proposal of the New York State Bar Association and reflects New York's
response to the American Bar Association's July 2000 resolution urging
each jurisdiction to revise its laws to regulate MDP in a way that preserves
the core values of the legal profession. The New York Code of Professional
Responsibility will include two new sections and several related amendments
approved by the Presiding Justices and the four Appellate Divisions of
the Supreme Court, which regulate the practice of law in New York.
Chief Judge Kaye stated: "I am very pleased that New York is taking
the national lead in developing a model for regulating cooperative business
arrangements between lawyers and nonlawyers. First and foremost, the new
regulatory framework protects the interests of clients and preserves the
core values of the legal profession-professional independence of judgment,
undivided loyalty to clients and protection of confidential client information.
I commend and thank the New York State Bar Association for its strong leadership
and the sound approach it has taken to the national debate on MDP.
My colleagues on the Administrative Board-Presiding Justices Sullivan,
Bracken, Cardona and Pigott-and their courts have again demonstrated their
commitment to ensuring that the practice of law serves the best interests
of the public. "
The modifications to New York's lawyer disciplinary rules are available
in their entirety at www.courts.state.ny.us. Among the more
significant provisions:
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New DR 1-106 sets forth the conditions under which the Code of Professional
Responsibility (CPR) applies to lawyers or law firms who participate in
the provision of nonlegal services to clients.
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DR 1-106 makes clear that nonlawyers are prohibited from directing or regulating
the professional judgment of lawyers in the rendering of legal services
or from taking action that would cause the lawyer to compromise his or
her duty to protect client confidences and secrets.
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New DR 1-107 contains a discussion of the importance and necessity of preserving
the core values of the legal profession an serves as the context for certain
contractual relationships between lawyers and nonlawyers.
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DR 1-107 imposes specific limitations on contractual relationships between
lawyers and nonlawyers for the provision of nonlegal services: nonlegal
professionals are not permitted to obtain, hold or exerciser any ownership
or investment interest in a law practice, or to have any managerial or
supervisory right, power or position in connection with the law practice;
contractual relationships can be formed only with members of professions
approved by the Appellate Divisions; lawyers and nonlawyers may not share
legal fees; lawyers man not give any monetary or other tangible benefit
for giving or receiving referral to or from nonlawyers; and lawyers must
disclose the existence of a contractual relationship to any client to whom
nonlegal services are provided.
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New Part 1205 of the Joint Appellate Division rules requires that lawyers
provide clients with a " Statement of Client's Rights In Cooperative Business
Arrangements" where, pursuant to such and arrangement, the lawyer
undertakes to provide legal services to a client referred by non-legal
service provider or refers an existing client to a nonlegal service provider.
The Statement, which explains the client's rights in the context of a lawyer-nonlawyer
contractual relationship, must be signed by the client.
Chief Administrative Judge Lippman stated: "These amendments adopted by
the Appellate Divisions are in keeping with the very high ethical standards
governing the legal profession in this State and ensure that no nonlawyer
or nonlegal entity can own or control a law practice or otherwise direct
or influence the professional judgment of the lawyer in rendering legal
services to clients. I am confident that the amendments to the New
York Code of Professional Responsibility provide a valuable model for other
jurisdictions grappling with the difficult issue of MDP. I want to
thank the Administrative Board of the Courts, the NYSBA and its President,
Steven Krane, for their collaborative efforts in the development of a regulatory
approach to MDP that preserves the ability of lawyers to exercise independent
professional judgment in the service of clients. "
NYSBA President Steven C. Krane added: "We are enormously proud that
New York has taken the lead and become the first state in the nation to
establish comprehensive rules governing strategic alliances and other contractual
relationships between lawyers and nonlegal professional service providers.
The new rules are the product of several years of study and analysis, and
stand as a testament to what can be accomplished when bench and bar work
together toward common goals. The NYSBA expresses its deepest gratitude
to the Interdepartmental Committee on the Code of Professional Responsibility,
the Administrative Board of the Courts and to Chief Administrative Judge
Lippman for acting upon this critical issue with such thoughtfulness and
promptness."
The amendments to the Code of Professional Responsibility had their
origin in a 388-page report issued in April 2000 by the NYSBA's Special
Committee on the Law Governing Firm Structure and Operation. The
report, entitled "Preserving the Core Values of the American Legal Profession:
The Place of Multidisciplinary Practice in the Law Governing Lawyers,"
set forth certain principles which greatly influenced the national debate
on MDP. It ultimately formed the basis for the ABA House of Delegates'
July 2000 resolution, which called upon each jurisdiction to revise its
law governing lawyers by adopting safeguards relating to strategic alliances
and other contractual relationships between lawyers and nonlegal professional
service providers, and otherwise to assure the preservation of the core
values of the legal profession.
The amendments will take effect on November 1, 2001. They will
be codified in the Joint Appellate Division Disciplinary Rules.
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