NY Attorney General argues against opening law firms to outside investment
Jacoby & Meyers has brought a case seeking to overturn New York Court Rule 5.4, which prohibits law firms from accepting outside investment. The firm argues that the rule is unconstitutional, interferes with the business and professional interests of the firm, and ultimately harms the public by denying attorneys "a critical source of funding" that "dramatically impedes access to legal services for those otherwise unable to afford them".
The New York Attorney General Eric T. Schneiderman has asked a federal court to dismiss the claim on the basis that it is meritless on the law and dangerous to the legal profession and its clients. AG Schneiderman sets out his argument in the court papers: "[T]he limitations on non-lawyer investments found in the Rules are necessary to ensure that the profession's 'complete independence and uncompromised loyalty to those it serves…the very foundation of the profession' is not compromised by conflicts of interest that would arise whenever a law firm becomes financially beholden to its non-lawyers investors."
He added: "Plaintiff obviously believes that it would not itself bow to such economic pressures—but the existence of such apparent conflicts could undermine the public's trust in the legal profession. And plaintiff cannot answer for the multitude of attorneys practicing in this State, who would then be free to pursue such investments."
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