Communications Office:
David Bookstaver, Director
Mai Yee, Assistant Director
(212) 428-2500

Date: July 24, 2001

Seal of the Unified Court System
www.nycourts.gov
New York is First State to Regulate MDP
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:

  • 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.
  • 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.
  • 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.
  • 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.
  • 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.