A recent Law 360 story by Andrew Strickler, “NY Bar Issues Opinion on Splitting Fees with Non-NY Attys,” reports that a New York-admitted lawyer can’t split fees with another attorney who also lives in the state but is admitted elsewhere if any of the work performed would be deemed unauthorized practice as a matter of law, according to the latest ethics guidance from the New York state bar. Despite previous opinions blessing New York attorneys partnering with non-New York lawyers, the Committee on Professional Ethics said on Jan. 2 that those contemplated a “common enterprise” in which all the lawyers would render some kind of legal services “within the confines of their jurisdictional limitations.”

In the present scenario, the bar looked at a New York-admitted lawyer hoping to team up with an out-of-state lawyer who also happens to be admitted in a New York federal court. That second lawyer would drum up business, attend initial client meetings and take a cut of fees, but leave all the actual legal work to the New York-admitted lawyer. That kind of affiliation, the bar said, could run up against Rule 5.5(b), which prohibits out-of-jurisdiction practice and aiding non-lawyers to do so. It may also implicate Rule 7.3 on soliciting and referring clients; New York’s version of the rule explicitly applies to lawyers “not admitted to practice in this state who shall solicit retention by residents of this state.”

“It would not be proper for the inquiring New York attorney to affiliate with, and share fees with, a solely out-of-state-licensed attorney, resident in New York, for matters to be solicited and originated by the out-of-state-licensed attorney, based upon the New York resident out-of-state-licensed attorney’s admission to New York federal courts” if the client solicitation or fee sharing would constitute unauthorized practice, the bar said. The committee said that guidance was “not inconsistent” with a 2006 opinion on a similar affiliation in which a New York-admitted lawyer proposed to split fees with an out-of-state lawyer who worked in a New York office but limited work to things permitted to a paralegal or other non-lawyers.

That opinion concluded that the out-of-state attorney could either be engaged in unauthorized practice in New York or “acting in a quasi-paralegal capacity” as a non-lawyer, and thus steer clear of the unauthorized practice rule. The bar also noted in the 2006 opinion that defining what exactly constitutes unauthorized practice is a matter of “statutory interpretation” rather than conduct rules, thus putting a key component of the current analysis outside of the committee’s purview.

But the bar noted a Connecticut federal bankruptcy case from 1994, known as In re Peterson, that addressed a similar situation as the current scenario. In that case, the court found a New York-admitted lawyer working in Connecticut had engaged in unauthorized practice by giving legal advice over the phone from his Stamford, Connecticut, office.

“The ultimate question being one of law, we leave to the inquirer to resolve the import of Peterson and like cases on the proposed arrangement, with the caution that, were Peterson to control, then the inquirer would run afoul” of the New York rule against unauthorized practice, the opinion states. The opinion is Ethics Opinion 1160, from the New York State Bar Association Committee on Professional Ethics.