Jacoby & Myers, LLP was one of the first law firms to employ
large scale consumer-oriented advertising.
Their slogan “It’s about time” promised efficiencies and
effectiveness. However the firm’s growth
stagnated as the P.C. transformed the practice of law, making it much less
labor-intensive.In hope of raising capital the firm, according to the Second
Circuit’s precis,
"challenge(d) the constitutionality of a collection of New York regulations and laws that together prevent for‐profit law firms from accepting capital investment from non‐lawyers. The J&M Firms allege that, if they were allowed to accept outside investment, they would be able to—and would—improve their infrastructure and efficiency and as a result reduce their fees and serve more clients, including clients who might otherwise be unable to afford their services. By impeding them from reaching this goal, the J&M Firms contend, the state has unconstitutionally infringed their rights as lawyers to associate with clients and to access 18 the courts—rights that are grounded, they argue, in the First Amendment. "
The Southern District
of New York’s Judge Lewis A. Kaplan
dismissed the complaint, concluding that the plaintiffs failed to state a claim
for violation of any constitutional right. The Second Circuit panel agreed in Jacoby& Myers v. The Presiding Justices. It is a decision that is a major blow to those who hoped to put a chink in the
wall that bars U.S. firms from – like British and Australian firms – bringing on
non-lawyer equity shareholders.
The panel (Lynch, Carney and Hellerstein) declared that “even
if such rights as they claim were to be recognized, the challenged regulations
withstand scrutiny because they are rationally related to a legitimate state
interest. We agree that under prevailing law the J&M Firms do not enjoy a
First Amendment right to association or petition as representatives of their
clients’ interests; and that, even if they do allege some plausible
entitlement, the challenged regulations do not impermissibly infringe upon any
such rights.“
The issues are thoughtfully explored by Prof. Alberto
Bernabe on his Professional Responsibility Blog – below. - gwc
Professional Responsibility Blog: Court of Appeals for the Second Circuit rejects argument that rules that ban lawyers from raising capital from non lawyers are unconstitutional
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