On June 18, 2020, New York regulators revised an onerous ethics rule that largely banned law firms from advertising services under trade names. The revised version of rule 7.5 (available here as the online rules do not appear to have been updated) allows trade names provided they are not “misleading, false or misleading”. The changes bring the New York Rule into general alignment with the ABA Model Rule 7.5 for trade names and the majority of jurisdictions (so far, I’ve found Nevada, Ohio, and Indiana prohibit trade names, as does Texas, although this is subject to change).
New York’s original rule was wildly expansive and showed no sign of change over time. As recently as January 2020, regulators reinterpreted it to prohibit a New York attorney from working for a non-state law firm wishing to open a business in New York under a trade name approved in his home state. See NYSBA Ethics Opinion 1179.
As I wrote earlier, New York’s ban on trade names puts lawyers at a disadvantage over Legal Zoom or Rocket Lawyer, both of which offer legal services but are not law firms and can therefore be operated under any name they want. And the rule was hypocritical too – established large legal institutions like Cravath or Skadden were allowed to operate under the last names of deceased founders, fooling potential clients (who might assume they can meet Mr. Skadden) as sole proprietorships by the name of Triangle Personal Injury.
Unfortunately, New York’s changes weren’t motivated by logic, newly discovered recognition that today’s consumers aren’t idiots, or even by adherence to constitutional principles like the First Amendment or the Trade Clause. A self-proclaimed Utah-based Lawtech firm keen to establish a national presence has filed a lawsuit against New York regulators in federal court, challenging their outdated rule for the first amendment. Here is the money quote from the complaint:
The New York tradename ban has no valid purpose. Nobody could argue that consumers would be better protected if trade names were banned in other industries – if the law required Facebook to be, for example, Mark Zuckerberg & Associates or Apple Jobs & Wozniak. Law firms are no different. On the contrary, companies prohibit its use
Trade names make their names rather misleading by replacing memorable and easily distinguishable company names with the names of partners who are often retired, deceased, or unlicensed in the state.
What is also unfortunate is that regulators didn’t educate New York attorneys very well. In fact, this post was triggered by comments I’ve received on various online forums over the past two weeks from three different lawyers who are knowledgeable and smart – but all had the same impression that New York still bans trade names. The regulators are certainly able to communicate with the members of the bar association when it comes to collecting fees. You need to keep attorneys better informed of changes in the code of ethics governing attorney conduct.
While New York deserves modest praise for the final revision of Rule 7.5, it shouldn’t require legal action to bring about changes. Hopefully the pandemic has given regulators the opportunity to think long and hard about which ethical rules make sense and which ones we have now learned that we can do without.