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Jacoby & Meyers Will Get Merits Ruling on Non-Lawyer Firm Ownership

By Robyn Hagan Cain | Last updated on

Jacoby & Meyers LLP won a Second Circuit Court of Appeals ruling Wednesday, reinstating its legal attack on a New York rule barring non-lawyers from owning an interest in law firms, Bloomberg reports.

The order modifies a previous ruling from the court, which permitted the firm to amend its complaint to include additional state defendants, and challenges to New York Judiciary Law §495 and LLC Law § 201.

Jacoby & Meyers claims that New York's only-lawyers-can-own-law-firms rule infringes on fundamental rights like equal protection and due process. Now, it's up to a federal district court to figure that out.

Last March, District Judge Lewis Kaplan dismissed the case, holding that the firm lacked standing since it hadn't proved it had been harmed by the rule. Judge Kaplan also observed that New York's Rule of Professional Conduct 5.4 wasn't the only obstacle to Jacoby & Meyers' open ownership plan: Judiciary Law §495 and LLC Law §201 also bar the firm from accepting investment capital from non-lawyers, The Wall Street Journal reports.

In November, the Second Circuit remanded the firm's previously dismissed challenge.

Both of the orders vacating the district court ruling and remanding the case include similar language. In each, the Second Circuit concluded, "We see no reason not to remand the case back to the district court, in order to permit the plaintiffs to amend their complaint to name additional state defendants and challenge other provisions of New York law that prohibit non-lawyer investment in law firms."

Andrew Finkelstein, the managing partner at Jacoby & Meyers, told Bloomberg, "The Second Circuit clearly said they want the judge to make a determination on the merits."

The district court's decision -- and, let's face it, the subsquent appeals -- could shake up the legal industry. Currently, Washington, D.C., is the only jurisdiction that allows non-lawyers to own a stake in a law practice.

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