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In re Sackman

New Jersey Supreme Court

Decided: August 12, 1982.


On petition for review of the constitutionality of Rule 1:21-1(a) of the New Jersey Court Rules.

For dismissal -- Chief Justice Wilentz and Justices Pashman, Clifford, Handler, Pollock and O'Hern. Opposed -- none.

Per Curiam

[90 NJ Page 522] This ethics case presents a challenge both to the constitutionality and the wisdom of part of R. 1:21-1(a). The challenged portion requires out-of-state attorneys to maintain their principal

[90 NJ Page 523]

office in New Jersey. Attorneys who live in New Jersey need only a "bona fide" office. We do not reach the constitutional question. Exercising our plenary power over the practice of law, we have decided that henceforth all licensed New Jersey attorneys shall be treated alike, whether they live here or not. The only requirement for both, in order to practice in New Jersey, shall be that they maintain a bona fide office here.

Petitioner, Jay Mark Sackman, is a resident of New York City and is licensed to practice law in New York and New Jersey. He is the sole proprietor of the law firm of Jay Mark Sackman, and maintains four offices for the practice of law: in New York City and Westbury, New York, and in Hackensack and Freehold, New Jersey. An appreciable portion of his practice is devoted to New Jersey clients, many of whom are participants in a prepaid legal services plan for which petitioner provides legal representation. The plan is available to employees for whom Local 1115 Joint Board is the collective bargaining representative.*fn1 Eligible members include residents of New York and New Jersey who work in one of the two states. In addition to members of this plan, Sackman represents some other New Jersey clients.

Mr. Sackman staffs his New Jersey offices with two attorneys licensed to practice law in New Jersey who are domiciliaries of this State. They provide the majority of the services in the New Jersey offices. The work is reviewed by petitioner, who performs most of his administrative and supervisory work in his New York City office. He spends at least one day a week in his New Jersey offices and his Long Island office,*fn2 and estimates

[90 NJ Page 524]

that he devotes approximately 25 percent of his total time to clients who either live or work in New Jersey.

On November 28, 1978, Sackman received a letter from the New Jersey Board of Bar Examiners reminding him that as a non-domiciliary of New Jersey, he was not eligible to practice law in New Jersey and could be disbarred under R. 1:21-1(a) if one of his New Jersey offices was not his principal office. This was followed by a more expansive letter of inquiry into Sackman's multi-state practice from the Division of Ethics and Professional Services. Petitioner filed an action against the New Jersey Supreme Court and the Administrative Director of the Courts in Superior Court, Chancery Division, Bergen County, on March 20, 1979, challenging the constitutionality of the rule. He alleged that the rule violates the Privileges and Immunities Clause, Art. IV, § 2; the Commerce Clause, Art. I, § 8, cl. 3; and the Equal Protection and Due Process Clauses of the Fourteenth Amendment of the United States Constitution.

Under an agreement between the parties by which a record was established for review, the constitutional issues were placed directly before this Court. The petitioner executed an affidavit in which he set forth an account of the facts relevant to the controversy; the Attorney General did not contest them. This Court granted petition to review the validity of R. 1:21-1(a) on June 10, 1981. 91 N.J. 236 (1981). On September 2, 1981, Leslie Ann Chen, temporarily licensed to practice law in New Jersey, was granted permission to intervene in the matter.*fn3

[90 NJ Page 525]

Under rules that have since been revised, Ms. Chen had sought full admission to the New Jersey bar despite her inability to comply with the domicile or principal office requirements of R. 1:21-1(a).

The challenged rule was adopted by this Court pursuant to its power to promulgate rules for admission to the New Jersey bar. N.J.Const. (1947), Art. VI, § II, par. 3. The rule provides in part:

(a) Qualifications. No person shall practice law in this State unless he is an attorney, holding a plenary license to practice in this State, is in good standing, and is either domiciled and maintains a bona fide office for the practice of law in this State or, if not domiciled in this State, maintains in this State his principal office for the practice of law . . .

For the purpose of this section, a bona fide office is a place where the attorney or a responsible person acting on his behalf can be reached in person and by telephone during normal business hours. A bona fide office is more than a maildrop, a summer home which is unattended during a substantial portion of the year, or an answering service unrelated to a place where business is conducted. [ R. 1:21-1(a)].

It thus establishes a more stringent requirement for non-domiciliaries practicing in New Jersey than for domiciliaries. Petitioner, a non-domiciliary, does not satisfy the rule: his principal office is in New York.

The rule has been amended several times and has been the subject of much debate. It represents the continuing effort to determine where the public interest lies when non-domiciliaries seek to practice law. If such practice poses a risk to the public, nowhere is it greater than in New Jersey. Located between two large states that are major commercial and industrial centers,

[90 NJ Page 526]

with New York City and Philadelphia directly on our borders, New Jersey is a natural place to practice for many residents of New York and Pennsylvania. Similarly, many New Jersey domiciliaries practice in those states.

For many years, New Jersey had required all attorneys who practiced here to be domiciliaries of the State. See R.R. 1:12-1(a) (Revision of 1959). In 1960, this Court embarked on a general review of the rules of court by appointing the Supreme Court Coordinating Committee on the Revision of the Rules of Court that led to the Proposed Revision of the Rules Governing the Courts of the State of New Jersey III (November 1966). The Proposed Revision addressed the problem that R.R. 1:12-1(a) created for lawyers who maintained their practices in New Jersey but wished to live in a neighboring state. Id. at 74. The Committee proposed a rule that required either domicile or "regular attendance at an office in this State" as a means of permitting practicing New Jersey attorneys to live elsewhere while preventing occasional practice by those who practiced primarily in another state and thereby, according to the Committee, lacked "familiarity with [New Jersey] law and its developments." Id. The Committee suggested that the "regular attendance rule might be substituted altogether for the domicile requirement, as mere domicile would not prevent occasional practice by a domiciliary attorney who practiced regularly in another state." Id.

The "regular attendance" proposal provoked considerable criticism. Pressler, Rules Governing the Courts of the State of New Jersey 87 (1969) (hereafter Pressler, 1969 Court Rules). It was perceived as ambiguous, open to an interpretation that would allow attorneys who regularly practiced in New York or Philadelphia to meet the requirement merely by, for example, attending a New Jersey office once a week. 90 N.J.L.J. 164 (1967). See also Pressler, 1969 Court Rules 87. An editorial in the New Jersey Law Journal suggested that the proposed rule could have an adverse impact on the economic interests of the New Jersey bar as well as implicating the "general public

[90 NJ Page 527]

interest in securing qualified and committed counsel." 90 N.J.L.J. 164 (1967).

Subsequently, pursuant to a Committee recommendation, the Court revised the rule to require either domicile or maintenance of a principal office as a condition to practicing law in this State, R. 1:21-1 (1969), thus "reject[ing the] implicit approval of a multi-state practice . . . ." Pressler, 1969 Court Rules at 87. The rule was again amended in 1978 to require a domiciliary to maintain a bona fide office in this State. Pressler, Current N.J. Court Rules, Comment R. 1:21-1 (1982). The additional requirement was seen as a means of controlling the occasional practice of law by domiciliaries who primarily practiced in other jurisdictions or who practiced law only sporadically in New Jersey. Id.

"Bona fide office" was not initially defined, a failure that led to another amendment in September 1981, upon the recommendation of the Committee to Evaluate Bar Admission Requirements, chaired by former Justice Nathan L. Jacobs (Jacobs Committee).*fn4 The definition states:

For the purpose of this section, a bona fide office is a place where the attorney or a responsible person acting on his behalf can be reached in person and by telephone during normal business hours. A bona fide office is more than a maildrop, a summer home which is unattended during a substantial portion of the year, or an answering service unrelated to a place where business is conducted. [ R. 1:21-1(a)].

The "domicile/bona fide office," "non-domicile/principal office" distinction was maintained. In its commentary accompanying the suggested revision, the Jacobs Committee recommended retention of the "principal office" requirement as a "reasonable means to ensure that attorneys practicing in New Jersey remain accountable to authorities in this State, and readily accessible to opposing counsel and to their clients. The rules also tend to ensure that attorneys who practice in New Jersey are familiar

[90 NJ Page 528]

with local custom as well as recent developments in local law." Jacobs Committee Interim Report, 108 N.J.L.J.Supp. 11 (1981). Although the Committee considered recommending modification of "principal office" to "substantial office," it declined to do so as the latter "could be interpreted as a place where an attorney spends as little as several days a month." Id. It similarly declined to define "principal office," stating that precise standards could result in arbitrary determinations, but suggested that the "principal office" requirement was met "so long as [an attorney's] practice in New Jersey is not subordinated to his [or her] practice in another state." Id.*fn5

We need not address the various contentions made by petitioner in his challenge to R. 1:21-1(a)*fn6 because we have [90 NJ Page 529] decided, as a matter of policy to amend the rule so as to remove the distinction between domiciliaries and non-domiciliaries. Thus amended, the rule permits petitioner to practice in New Jersey and renders the case moot.*fn7

[90 NJ Page 530]

We have concluded that the public would be better served if licensed New Jersey attorneys residing, for example, in New York and Philadelphia were subject to no greater restrictions in their practice in New Jersey than those residing in Newark and Camden. The risks, if any, to the public arising from the potential lack of contact of non-domiciliary attorneys with New Jersey are not significantly greater than the same risks that arise when licensed New Jersey attorneys, living in Newark or Camden, practice almost exclusively in New York City or Philadelphia. In any event, the difference in risk is substantially outweighed by the advantage to the public of allowing such out-of-state attorneys to practice here.

What is the public interest here? It is to make more qualified lawyers available to New Jersey's citizens. That interest is achieved by eliminating restrictions that reason and experience have shown are not needed for the public's protection.

No one before us has suggested that the public interest would be served by a limitation on the number of lawyers authorized to practice in New Jersey. Whether the financial interest of the bar would be served by any such limitation is irrelevant unless and until that financial interest can be equated with the public interest, which we doubt it ever could. We assume, and believe, that the more qualified lawyers in New Jersey, the better the public will be served; that potential clients of all income levels will benefit from more lawyers being available; that the increase in competition may have the beneficial effect of lowering fees; that if any risks to the public interest are caused by such increased competition, they can be controlled by this Court; and that the adverse economic impact, if any, on lawyers now practicing in New Jersey is no more relevant to the issue before us than it is to the number of new attorneys admitted as a result of each new bar examination. The New Jersey State Bar

[90 NJ Page 531]

Association has not suggested any contrary contention. If experience proves that our judgment is wrong on any of these matters we can, and will, revise the rule accordingly.

The premise of the present rule is that the out-of-state residency of a lawyer means that he is not qualified to practice law here unless his principal office is located here. This premise supposes that without the principal office requirement, an attorney's contacts with New Jersey may be so insignificant that he will lose that contact with New Jersey law and procedure needed to serve clients with competence, or that he may be either inaccessible or unaccountable both to clients and to the authorities.

Several things may be immediately observed. But for their non-residence, the out-of-state lawyers are just as qualified as their New Jersey counterparts, since both have passed the New Jersey bar examination and all other tests necessary to obtain a New Jersey license.

Second, no requirements in New Jersey today assure that a New Jersey domiciliary has kept informed about New Jersey law and procedure. Nor is there any solid reason to believe that New Jersey residents are more accessible to clients than non-residents if both are required to have a responsible person and a telephone at their office, as the current definition of a bona fide office requires. New Jersey residency does make it easier to serve process on attorneys, to notify them of proceedings, and to bring them within the jurisdiction of the court. This difference can easily be remedied, however, by requiring non-residents to authorize some person within the State to accept service on their behalf.

Residents and non-residents may differ to some degree in competence, accessibility, and accountability. That is to say, a statistical evaluation may show that today the percentage of New Jersey domiciliaries practicing out of state but maintaining a "bona fide" office within the state who are either incompetent or inaccessible is lower than the similar percentage applied to

[90 NJ Page 532]

out-of-state attorneys practicing here, even with the "principal office" requirement in existence. There is no proof, however, of that fact nor any proof to suggest that equating the two requirements (so that both would require only a bona fide office) would result in a significant or even measurable difference.

Third, if every state in the nation imposed the same requirements that we have in New Jersey, no lawyer in this country could practice in more than two states, the state of his residence and, if he has his principal office elsewhere, that state; and practically every attorney in this country would be limited to practicing in but one state, since we assume that practically the overwhelming majority of attorneys have their principal office in the state where they live. Given the dramatic increase in interstate travel and the corresponding increase in interstate law practice and its uniformity, such a national pattern of restriction would be a national disgrace.*fn8 The only

[90 NJ Page 533]

conceivable justification for imposing such restrictions in New Jersey is the greater likelihood of non-residents practicing here because of the large number of attorneys found near our borders in neighboring states. The risks here, in other words, if there are any from out-of-state attorneys, may be substantial. We believe that the proper response is not the kind of rule that if applied elsewhere would stifle the interstate movement of attorneys, but rather the tailoring of a rule allowing interstate movement while at the same time assuring a sufficient degree of competence, accessibility and accountability.

We have no doubt that non-residents required to have their principal office in New Jersey are more likely to be competent, accessible and accountable than one not so required; and similarly, no doubt that New Jersey domiciliaries required to have their principal office in New Jersey (while practicing perhaps in Philadelphia or New York as well) would be more likely to be competent, accessible and accountable than if all that was required was a "bona fide" office. Nevertheless we allow the latter to practice in New Jersey with just a bona fide office while the former must have his principal office here. The premise behind the distinction is that the mere fact of living in New Jersey makes it more likely, and more to the point, sufficiently more likely, that that lawyer will be more competent, accessible and accountable than the one who is living in another state. If it is true, then it is only marginally true. We do not know whether the lawyer in Camden or Philadelphia reads the New Jersey Law Journal, the advance sheets, or goes to continuing legal education courses. We do not know which one regularly responds to telephone calls, and which will respond to calls at home. We do not know which one comes to the

[90 NJ Page 534]

office, whether principal, bona fide or any office, regularly, and works hard. We know that some New Jersey lawyers are not up to date on New Jersey law and procedure, that some handle cases in areas for which they are ill-equipped, that some have more than one office in New Jersey and cannot be found when needed; in short, we know that all of the problems attributed to non-residents that might require them to have a principal office in New Jersey may be caused also by New Jersey attorneys. The differential in risk to clients concerning the competence, accessibility and accountability of the out-of-state lawyers as compared to the New Jersey resident seems to us insufficient to warrant a difference in these requirements.

While our experience with out-of-state attorneys cannot prove very much, since the rule has always required at least a principal office here, we note that complaints of incompetence, inaccessibility or unaccountability made of out-of-state attorneys appear to have no more frequency in relation to their total number than those against domiciliaries. There is absolutely no showing that New Jersey domiciliaries who have their principal office elsewhere, indeed almost their exclusive office elsewhere, are less competent, accessible or accountable when they practice in New Jersey at their "bona fide" office than are other New Jersey lawyers. And finally, though many states in the Union allow non-domiciliaries to practice without any "principal office" requirement, there is absolutely no literature, no statistical proof of which we are aware, not even a suggestion, that they constitute any risk to the public greater than that which emanates from the resident bar.

The record is thus barren of proof of the difference in risk. Our own knowledge and experience suggest that while residence may be a factor bearing on competence, accessibility and accountability, it is not an important factor, and that relying on it may cause more disadvantages to the public than advantages. We conclude, therefore, that the requirements for practicing in New Jersey should be the same for all who are licensed New Jersey attorneys whether resident or non-resident, and effective

[90 NJ Page 535]

today our rules have been amended to that effect. Both shall be required to maintain a bona fide office as presently defined in R. 1:21-1(a).

Given the number of years that the distinction has persisted, and its apparent basis in a belief that a lawyer's contacts with New Jersey affect his qualifications, we believe that it would be desirable to examine this aspect of the subject further. A committee sensitive to the need for access to legal services, to the implications of increased competition, and to the necessity for an acceptable level of competence, accessibility and accountability on the part of anyone who is authorized to practice in New Jersey should be asked to look into this matter. The committee recently constituted to examine the question of firm names, the desirability of the continuation of our ban on television advertising by lawyers (In re Professional Ethics Advisory Comm. Op. 475, 89 N.J. 74 (1982)), and the sufficiency of our regulation of advertising in general, is most suitable for this purpose. We are therefore requesting that committee to determine whether any requirements, in addition to those contained in the present definition of a bona fide office, should be imposed on resident and non-resident lawyers alike, and whether any special requirement should be imposed on lawyers who have multiple offices. In connection with its work on this matter, that committee should consult with the Advisory Committee on Bar Admissions, whose comments shall accompany the committee's report.

We do not foreclose the committee from suggesting modifications of the definition of bona fide office so as, for example, to impose requirements as to the use of the office, its size, the extent to which it is directly accessible to the public (and to public services such as mail, etc.), the proportion of the attorney's New Jersey legal work that is done there, whether the "responsible person" should be an employee, whether there should be an undertaking to make reimbursement for expenses incurred in communicating with and obtaining jurisdiction over an attorney, whether specific obligations should be imposed for

[90 NJ Page 536]

notifying clients of the existence of multiple offices and of the attorney's availability there: all of these may be subject to the committee's inquiry. Nor are we suggesting the desirability of any changes implicit in the range of matters mentioned. We simply want to be satisfied that the rule as we have now amended it is the best that can be designed to serve the public's interest in obtaining competent legal services at affordable prices from lawyers who are both accessible and accountable.

The inappropriateness of the differential treatment accorded domiciliary and non-domiciliary attorneys by R. 1:21-1(a) is best illustrated by the case before us. Jay Mark Sackman maintains, in addition to his New York offices, two offices in New Jersey in which fully qualified New Jersey attorneys are present full-time. He reviews their work and maintains regular contact with those offices. He can be reached by clients, by counsel, judges, or other public officials at or through his New Jersey offices or his nearby New York offices. No one has suggested that Mr. Sackman is less competent in his knowledge of New Jersey law, practice and procedure than lawyers who are New Jersey domiciliaries. In short, the concern that non-domiciliary attorneys will present problems of accountability, accessibility or familiarity with local law is in no way supported by the facts in Mr. Sackman's case. To bar a New Jersey licensed attorney from practicing law here under these circumstances obviously disserves the public interest, to say nothing of the interest of those clients who want him as their attorney; and there is no countervailing interest served by such prohibition. There may be many licensed lawyers residing out of state so situated. All should be allowed to practice here.

Jay Mark Sackman is thus no longer subject to discipline for failing to have his principal office in New Jersey. He will, however, be required to meet the same requirements applicable to licensed New Jersey lawyers who live here.

[90 NJ Page 537]

The amendment of R. 1:21-1(a) having rendered this matter moot, the Petition is dismissed.

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