Legal Ethics

'Soaring rhetoric' doesn't save Jacoby's suit challenging ban on outside ownership in law firms

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Jacoby and Meyers

Deeming arguments by Jacoby & Meyers to be “frivolous” and lacking “logical coherence,” a federal judge in Manhattan has dismissed a suit challenging New York’s ban on outside equity ownership in law firms.

Jacoby’s arguments—that the ban violated the First and 14th amendments and the dormant commerce clause— are “entirely without merit,” U.S. District Judge Lewis Kaplan said in a decision (PDF) on Wednesday. The New York Law Journal (sub. req.) has a story.

Turning to the First Amendment arguments, Kaplan said the law firm employed “soaring rhetoric” to argue that the ban infringed its right to form associations for the purpose of providing representation and lawyers’ right to speak for clients.

The argument is “at best is unpersuasive,” Kaplan said. “At worst, it makes a mockery of the First Amendment. It lacks logical coherence. At times, it misstates the law, misconstrues Supreme Court precedent, and misunderstands critical distinctions in First Amendment jurisprudence.”

Whatever the reach of First Amendment principles, Kaplan said, the right to associate with nonlawyers to practice law is not within it.

Kaplan also dismissed Jacoby’s argument that New York’s laws banning nonlawyer ownership violate the commerce clause by dampening the flow of services across state lines. The claim, he said, relies on “the woefully misguided premise” that the laws are facially discriminatory when, in reality, they give no special treatment to New York lawyers.

Kaplan also deemed “frivolous” Jacoby’s argument that it was denied equal protection because there is no ban on outside ownership that applies to similarly situated professionals, such as investment bankers.

Jacoby & Meyers was represented by Finkelstein, Blankinship, Frei-Pearson & Garber, and by Meiselman, Packman, Nealon, Scialabba & Baker. Finkelstein partner Todd Garber issued this statement to the ABA Journal: “While we are disappointed with the decision, we look forward to the 2nd Circuit’s review of the District Court’s ruling.”

Related article: “2nd Circuit Revives Suit Challenging Ban on Nonlawyer Ownership of Law Firms”

Story updated at 8:50 a.m. to add information about the law firms that represented Jacoby & Meyers. Updated at 11:40 a.m. to add statement from Garber.

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