ARCHIVE – old Formal Opinion 2014-02

June 2014

TOPIC:  Use of virtual law office as a principal law office address in advertising and on business cards, letterhead and website

DIGEST:  A New York lawyer may use the street address of a virtual law office (“VLO”) located in New York state as the “principal law office address” for the purposes of Rule 7.1(h) of the New York Rules of Professional Conduct (the “New York Rules” or the “Rules”), even if most of the lawyer’s work is done at another location.  In addition, a New York lawyer may use the address of a VLO as the office address on business cards, letterhead and law firm website.  Given the lower overhead, improved encryption systems, expansion of mobile communication options, availability of electronic research, and the ease of storing and transmitting digital documents and information, VLOs are becoming an increasingly attractive option for attorneys throughout the country.  A New York lawyer who uses a VLO must also comply with other New York Rules, including Rules 1.4, 1.6, 5.1, 5.3, 8.4(a) and 8.4(c).

A New York lawyer may need to consider additional issues, such as whether the contemplated arrangement complies with relevant substantive laws and court rules, and the professional conduct rules of other jurisdictions.  These additional issues fall outside the jurisdiction of the Committee on Professional Ethics (the “Committee”), which is limited to interpreting the New York Rules.[1]

RULES:  1.4, 1.6, 5.1, 5.3, 7.1(h), 7.5(a)(1), 7.5(a)(4), 8.4(a), 8.4(c)

QUESTIONS:

1. Is a New York lawyer permitted to use the street address of a VLO located in New York State as a “principal law office address” for purposes of Rule 7.1(h), even though most of the lawyer’s work is done at another location?
2. Is a New York lawyer permitted to use the street address of a VLO on business cards, letterhead, and law firm website?

OPINION

A New York lawyer (the “Lawyer”) is considering becoming a solo practitioner and plans to do most of her work at her home.  The Lawyer does not intend to maintain a separate physical office.  Instead, she plans to use a VLO in New York State, as defined below, to meet with clients, hold “office hours,” receive mail, or otherwise be present and available at various times.  For privacy and security reasons, she does not wish to identify her home address as her business address.  She would like to use the address of the VLO as her “principal office address” for purposes of advertising her legal services under Rule 7.1(h).  She would also like to use the VLO address on her letterhead, business cards and law firm website.

A VLO, as it is used in this opinion, refers to a physical location that offers business services and facilities, such as private or semi-private work spaces, conference rooms, telephones, printers, photocopy machines, and mail drop services to lawyers.  Although arrangements vary, many VLO’s charge a monthly fee for use of their services and facilities.[2]

I.         Is a New York Lawyer Permitted to Use the Street Address of a VLO Located in New York State as a “Principal Law Office Address” for the Purposes of Rule 7.1(h)?

New York Rule 7.1 sets restrictions on advertisements disseminated by lawyers or law firms.[3]  One of those restrictions is stated in Rule 7.1(h): “All advertisements shall include the . . . principal law office address . . . of the lawyer or law firm whose services are being offered.” Comment [17] to Rule 7.1 adds:  “A law firm that has no office it considers its principal office may comply with paragraph (h) by listing one or more offices where a substantial amount of the law firm’s work is performed.”  For the reasons set forth below, the Committee concludes that a VLO address meets the requirement of a “principal law office address” under Rule 7.1(h).

        A.        The VLO Has a Physical Location with a Street Address in New York State that Qualifies as a “Principal Law Office Address”

Although the phrase “principal law office address” is not defined anywhere in the New York Rules, two ethics opinions issued by the New York State Bar Association (“NYSBA”) have concluded that Rule 7.1(h) requires a physical street address.  NYSBA Ethics Op. 756 (2002) states that a “principal law office” means “a physical street address at which the principal office of the firm or lawyer offering legal services is located and to which mail, express deliveries and other communications can be addressed.”[4]  Failing to include a street address in an attorney advertisement could be misleading, according to Opinion 756, because it could suggest “a physical proximity to the recipient that does not in fact exist.” Thus, Opinion 756 concluded that a website or e-mail address does not qualify as a “principal law office address.”  Building on the reasoning of Opinion 756, NYSBA Op. 964 (2013) concluded that a “mailbox service address” also does not qualify as a “principal law office address” for purposes of Rule 7.1(h).  As explained in Opinion 964, the intent of Rule 7.1(h) is to require all lawyer advertisements to “disclose the address of an office where the lawyers were present and available for contact, and where personal service or delivery of legal papers could be effected.”[5]

The VLO, as used herein, has a physical street address where the Lawyer plans to make herself available for meetings with clients and where the Lawyer can receive service and delivery of legal papers.  Accordingly, we conclude that the use of a VLO address in attorney advertising complies with the requirement of 7.1(h) to disclose a physical street address.

        B.        Use of a VLO Address Is Consistent with the Policies Underlying Rule 7.1(h)

Ethics opinions that discuss Rule 7.1(h) identify several reasons for the office address requirement.  See, e.g., NYSBA Ethics Op. 756.  First, disclosure of a physical address “should facilitate a prospective client’s ability to make an intelligent selection of lawyer.”  Id.  Second, a physical location enables members of the public or clients to meet with the lawyer, contact the lawyer by mail, and serve legal papers.  Id.  Third, as noted above, the absence of an address “could be misleading by suggesting a physical proximity to the recipient that does not in fact exist” or “the ability to serve in jurisdictions in which the advertising firm or lawyer is not qualified to practice.”  Id.

Each of these policy interests can be advanced by the use of a VLO.  First, the fact that a lawyer uses a VLO may itself be a relevant factor in selecting or rejecting a particular lawyer.  For example, a prospective client may conclude that a lawyer who uses a VLO can provide greater value due to lower overhead and other efficiencies.  In addition, clients who are technologically savvy and who themselves may use similar facilities for their own businesses may be more comfortable with a lawyer who understands how those business models work.  On the other hand, use of a VLO may be less appealing to clients that prefer their lawyers to work in more traditional office environments.

Second, the VLO – as defined herein – provides a physical location for clients or members of the public to contact, meet with or serve legal papers on the Lawyer.  In view of the saturation of our society with mobile devices enabling voice and electronic communications as well as the numerous other communication options that emerging technologies have made available, the concern that a client might not be able contact a lawyer simply because the lawyer does not have a traditional brick-and-mortar law office is less compelling than in the past.  In fact, a lawyer who uses a VLO may be at least as accessible as a lawyer who rents a dedicated physical office space. Imposing an inflexible requirement on lawyers to maintain a traditional brick-and-mortar office does not necessarily provide enhanced protection to clients or the public.

Third, we do not believe use of a VLO address in advertising is inherently misleading.  Given the prevalence of alternative work arrangements (telecommuting, work-sharing, office-sharing, etc.), members of the public no longer assume that a physical street address is equivalent to a traditional, single-purpose, brick-and-mortar office.  Nor do they assume that a lawyer is always present and available to meet at the address provided in the lawyer’s advertising.  As discussed further below, however, all lawyers (including those using VLOs) should take care not to mislead the public as to the nature of their office arrangements, accessibility, or availability for meetings.

        C.        The Evolving Jurisprudence Surrounding New York Judiciary Law Section 470, While Not Directly on Point, is Instructive

New York ethics opinions have noted that the policy goals discussed above are the same or similar to those which animate New York Judiciary Law § 470 (“Section 470”).  See, e.g., NYSBA Ethics Op. 756 (noting that “[t]he requirement of a street address in lawyer advertising . . . serves the same purposes as Judiciary Law § 470,” such as “to ensure that attorneys practicing in this state are amenable to contact by their clients, adversaries and other interested parties” and to facilitate “personal service or delivery of legal papers and other correspondence”).

Section 470 states that “[a] person, regularly admitted to practice as an attorney and counsellor, in the courts of record of this state, whose office for the transaction of law business is within the state, may practice as such attorney or counsellor, although he resides in an adjoining state.”  Historically, New York state courts have interpreted this provision to require New York-admitted lawyers who reside in adjoining states to maintain a bona fide physical law office in New York. SeeSchoenefeld v. New York, ___ F.3d ___, No. 11-4283-CV, 2014 WL 1362351, at *3 (2d Cir. 2014) (citing cases). In 2010, however, a solo practitioner licensed to practice law in New York, New Jersey and California challenged the constitutionality of Section 470, arguing that it violates the Privileges and Immunities Clause of the United States Constitution insofar as it requires non-resident New York admitted attorneys to maintain an “office for the transaction of law business” when resident New York admitted attorneys are not burdened with that requirement.  Schoenefeld v. New York, 907 F. Supp. 2d 252 (N.D.N.Y. 2011).  In 2011, the lower federal court issued a decision holding the office requirement unconstitutional.  The state appealed to the Second Circuit.  See id.

The Second Circuit recently determined that, in order to rule on the constitutionality of Section 470, it needed to certify the following question to the New York Court of Appeals:  “Under New York Judiciary Law § 470, which mandates that a nonresident attorney maintain an ’office for the transaction of law business’ within the state of New York, what are the minimum requirements necessary to satisfy that mandate?”  2014 WL 1362351, at *6.  The Second Circuit noted that, as the statute is currently interpreted by the lower state courts, “it appears that Section 470 discriminates against nonresident attorneys with respect to their fundamental right to practice law in the state and, by virtue of that fact, its limitations on non-resident attorneys implicate the Privileges and Immunities Clause.”[6]  2014 WL 1362351, at *4.

A fundamental premise of the Second Circuit’s decision is that, unlike nonresidents, lawyers who reside in New York are not subject to a bona fide office requirement.  As the court notes, “with respect to New York residents the Judiciary Law does not impose a specific obligation on an attorney to maintain an office for the transaction of law business in New York.”  Id. at *3.  Furthermore, while the New York Rules require “that an attorney be adequately equipped to maintain a certain level of accessibility and communication with clients,” there is “no authority specifically requiring New York residents to maintain any office at all.”  Id.  Thus, according to the Second Circuit, a lawyer who is a New York resident “may set up her ’office’ on the kitchen table in her studio apartment and not run afoul of New York law.”  Id.

While a conclusive interpretation of Section 470 awaits the decision of the New York Court of Appeals, one clear inference that can be drawn from the Second Circuit’s ruling is that New York lawyers do not require a traditional office in order to maintain appropriate levels of “accessibility and communication with clients.”  This rationale is consistent with our view that Rule 7.1(h) does not require a conventional office and may be satisfied by a VLO.[7]

        D.        Use of a VLO Address Is Consistent with the Evolution of Modern Law Practice

Courts and enforcement authorities increasingly recognize that the economic and technological conditions of modern law practice justify some flexibility in practice arrangements.  One example involves an attorney who was a member in good standing of the D.C. bar and was employed by a D.C. law firm, but resided in Cambridge, Massachusetts.  SeeIn re Application of Carlton, 708 F. Supp. 2d 524 (D. Md. 2010).  When the attorney applied to renew her membership in the Maryland bar, she identified the address of her D.C. law office as her “principal office.”  Id. at 525.  The attorney’s mail and phone calls went to the D.C. office.  She met with clients in the D.C. office.  However, she spent most of her time working from home in Cambridge or from an office space in Boston.  The Chair of the Disciplinary and Admissions Committee of the District Court of Maryland denied her application, based on a Maryland rule that required her to be “a member in good standing of the highest court of any state (or the District of Columbia) in which [she] maintains [her] principal law office . . . .”  Id. at 524-25.  The District Court disagreed and granted the attorney’s application to renew her membership in the Maryland Bar.  The court concluded that her D.C. office met the requirements of Maryland’s “principal office” rule, even though she was physically located in Massachusetts when performing many legal tasks.  Said the court:

In recent years, the concept of a “principal law office” has evolved somewhat as a result of significant advances in technology which provide an attorney with the flexibility to carry out a variety of activities at different locations and under varying circumstances.  The term does not necessarily mean continuous physical presence but, at a minimum, it requires some physical presence sufficient to assure accountability of the attorney to clients and to the court.

Id. at 526.

Recently, New Jersey grappled with whether to permit VLOs, and in 2013 changed its rules to allow them.  These developments are instructive.  Prior to 2013, a New Jersey court rule required that “a New Jersey attorney maintain a bona fide office for the practice of law.”  N.J. Eth. Op. 718, N.J. Eth. Op. 41, 2010 WL 1829019, at *1 (2010) (“N.J. Ethics Op. 718”) (quoting former R. 1:21-1(a)).  N.J. Ethics Op. 718 interpreted the “bona fide office” requirement to mean a fixed specific full-time physical location where “clients are met, files are kept, the telephone is answered, mail is received and the attorney or a responsible person acting on the attorney’s behalf can be reached in person and by telephone during normal business hours to answer questions posed by the courts, clients or adversaries and to ensure that competent advice from the attorney can be obtained within a reasonable period of time.”  Id.  By contrast, a VLO “refers to a type of time-share arrangement whereby one leases the right to reserve space in an office building on an hourly or daily basis.”  Id.  The opinion continued:

[A]n attorney’s use of a “virtual office” is by appointment only. The office building ordinarily has a receptionist with a list of all lessees who directs visitors to the appropriate room at the appointed time. Depending on the terms of the lease, the receptionist may also receive and forward mail addressed to lessees or receive and forward telephone calls to lessees.

Id.  N.J. Op. 718 concluded that such an office was not a “bona fide office” because, inter alia, “the attorney generally is not present during normal business hours but will only be present when he or she has reserved the space” and “the receptionist at a ’virtual office’ does not qualify as a ’responsible person acting on the attorney’s behalf’ who can ’answer questions posed by the courts, clients or adversaries.’”  Id.

In the wake of N.J. Op. 718, the Court amended Rule 1:21-1(a) to eliminate the bona fide office requirement and to permit the use of a VLO.  Rule 1:21-1(a) now provides:

An attorney need not maintain a fixed physical location for the practice of law, but must structure his or her practice in such a manner as to assure, as set forth in RPC 1.4, prompt and reliable communication with and accessibility by clients, other counsel, and judicial and administrative tribunals before which the attorney may practice, provided that an attorney must designate one or more fixed physical locations where client files and the attorney’s business and financial records may be inspected on short notice by duly authorized regulatory authorities, where mail or hand-deliveries may be made and promptly received, and where process may be served on the attorney for all actions, including disciplinary actions, that may arise out of the practice of law and activities related thereto.[8]

In contrast to New Jersey’s former bona fide office rule, New York’s Rule 7.1(h) merely requires a lawyer to designate a “principal law office address” in advertising – a requirement that has been expanded to mean a “physical street address” through the interpretation of various ethics opinions.  Rule 7.1(h) does not, in our view, impose a requirement to maintain a “bona fide” office as that term was formerly used in New Jersey.  To engraft a more burdensome “bona fide office” requirement onto New York Rule 7.1(h) via an interpretation of “physical street address” (which is itself an interpretation of Rule 7.1(h)) is not justified.  If we were to read such a requirement into Rule 7.1(h), busy solo practitioners who spend most days in court and may have no full-time support staff would be in jeopardy of violating the rule every day.  Requiring full-time support staff or any other significant office expense is not necessary to further the policy goals of 7.1(h) and should not be imposed under guise of “interpreting” the Rule.

Finally, economic conditions in the legal world and technological developments persuade us that we should not create obstacles to the use of VLOs as long as the interests of clients, the courts, and the legal system are protected.  Economic conditions and technological advances justify giving lawyers flexibility.  Online research eliminates the need for a physical library.  By using an Internet connection, a laptop computer, a mobile phone, and other devices, a lawyer can communicate easily with colleagues, clients, and adversaries from any location, at any time.  Our interpretation of the Rules should recognize these technological developments.[9]

II.        Is a New York Lawyer Permitted to Use the Street Address of a VLO on Her Business Cards, Letterhead, or Law Firm Website?

The Lawyer also asks whether she may use the VLO address on her letterhead, business cards and law firm website.  As noted above, NYSBA Ethics Op. 964 concluded that business cards and letterhead do not need to list a physical street address, unless they are used for advertising purposes.  Even when business cards and letterhead are not used for advertising purposes, however, they must not be deceptive or misleading.  See Rule 8.4(c) (providing that a “lawyer or law firm shall not . . . engage in conduct involving dishonesty, fraud, deceit or misrepresentation”).  As with all attorney communications, any information contained on an attorney’s website, letterhead and business cards must be truthful.

As discussed above, in our view the use of a VLO address is not inherently misleading.  Accordingly, we conclude that a lawyer may use a VLO address on letterhead and business cards, so long as the use is not misleading under the circumstances.  The same conclusion applies to the law firm website.

III.        Additional Ethical Considerations When Using a VLO

Although we approve the use of VLOs in appropriate circumstances, we recognize that they carry with them certain challenges that may not be present in a traditional law firm office.  Attorneys who elect to use VLOs should be mindful of these challenges and should not allow them to become obstacles to fulfilling their ethical obligations.  We believe that attorneys should pay particular attention to the following ethical concerns when using a VLO.

        A.        Supervision of Subordinate Lawyers and Nonlawyers

Under Rules 5.1 and 5.3, law firms and lawyers are responsible for supervising the conduct of subordinate lawyers and nonlawyers and ensuring that their conduct complies with the Rules.  These obligations apply to attorneys who use VLOs.  See Cal. Op. 2012-184, 2012 WL 3182985, at *7 (noting that “in all law offices, including this hypothetical VLO, attorneys have a duty to supervise subordinate attorneys, and non-attorney employees or agents”).  Given the differences between a VLO and a traditional law office, however, it may be more challenging for lawyers who use VLOs to comply with their supervisory obligations.  As explained in Cal. Op. 2012-184, “supervision [in the context of a VLO] can be a challenge if Attorney and her various subordinate attorneys and employees operate out of several different physical locations.”  Id.  Furthermore, as a practical matter, lawyers have less control over the conduct of VLO personnel than they would over their own direct employees in a conventional physical law firm office.  Thus, lawyers who use VLOs may need to take additional precautions to ensure that they are fulfilling their supervisory obligations.  Notwithstanding the differences between VLOs and traditional law firms, the “[a]ttorney must take reasonable measures to ascertain that everyone under her supervision is complying with the Rules of Professional Conduct, including the duties of confidentiality and competence.”  Id. at *7.

        B.        Confidentiality

Rule 1.6(a) prohibits a lawyer from “knowingly revealing confidential information,” absent informed consent or other exception.  In addition, Rule 1.6(c) provides that a “lawyer shall exercise reasonable care to prevent the lawyer’s employees, associates and others whose services are utilized by the lawyer from disclosing or using confidential information of a client.” As observed in NYSBA Op. 794 (2006):

[I]n opinions addressing office sharing among separate law firms or lawyers in solo practice … [w]e and others have found that, depending on the facts and circumstances of a particular situation, [the confidentiality Rules] may prevent lawyers who practice separately but share office space from representing clients with differing interests.  Under these opinions, with appropriate safeguards, and assuming that the arrangement is not misleading to prospective and actual clients, the sharing of merely the same leasehold, a library, an electronic research account, restrooms, a central phone system with individual lines, or a common receptionist is not sufficient, alone or in combination, to merge lawyers in separate practices into one.  Acceptance of these organizations presupposes, however, that the confidences and secrets of the clients of each separate practice will not be shared or appear to be subject to sharing with lawyers working on a conflicting matter.[10]

A lawyer who uses the shared services and office space of a VLO to perform legal services and to meet with clients, witnesses, or other third parties must take reasonable steps to ensure that she does not expose or put the client’s confidential information at risk.  This should include, as appropriate, training and educating staff at the VLO on these obligations.  See Rule 5.3(a) (requiring lawyers to supervise the work on nonlawyers).

        C.        Communication

Rule 1.4 requires lawyers to communicate with clients and keep them apprised of the status of their legal matters.  Lawyers who use VLOs must be particularly mindful of these ethical obligations, given that the lawyers may frequently be away from the physical location that serves as their business address.  Lawyers who use VLOs should also take steps to ensure that they are available to meet with and communicate with their clients and respond promptly to their requests for information.

        D.        Personal Delivery and Acceptance of Service

Finally, because a significant concern underlying Judiciary Law § 470 and Rule 7.1(h) is the availability of an address for purposes of personal delivery and acceptance of service of process, a lawyer using the VLO’s services also should provide for personal delivery and acceptance of service.  This can be done either by: (a) identifying an agent for these purposes or (b) arranging for the VLO to accept service of process on the attorney’s behalf.  Where a VLO is authorized to accept service of process, the attorney must ensure that the VLO communicates with the attorney concerning the receipt of any materials with sufficient promptness to meet all professional and ethical requirements.

CONCLUSION

A New York lawyer may designate the street address of a VLO as the “principal law office address” for the purposes of Rule 7.1(h).  In addition, the lawyer may use the VLO address on business cards, letterhead and law firm website.  A New York lawyer who uses a VLO must also comply with all other ethical obligations, including duties under Rules 1.4, 1.6, 5.1, 5.3, 7.1(a), 7.1(h), 7.5(a)(4), 8.4(a) and 8.4(c).