Finding the Ethical New York Virtual Office

We rated seven virtual office vendors in New York on their compliance with legal ethics rules.

UPDATE FOR 2016: In a two-to-one split decision released on April 22, 2016, the U.S. Court of Appeals for the Second Circuit held that a New York State law requiring non-resident attorneys to have a physical office address in New York did not violate the privileges and immunities clause of the U.S. Constitution. Accordingly, all New York lawyers must comply with the office requirement imposed by Judiciary Law §470. Notwithstanding this recent decision, my opinion expressed in this article and accompanying video, that an ethically compliant virtual office rental meets the definition of an “office for the transaction of law business” required by §470, has not changed. See this article for a full update.

Without any explicit guidance from the Rules of Professional Conduct or the legislature, attorneys are left to figure out for themselves what the ethically compliant New York virtual office looks like in order to find the ethical New York virtual office.

This video presentation discusses the features of the ethically compliant virtual office in New York, and rates seven virtual office vendors in the NYC marketplace for ethical compliance.

Video Transcription

[Slide 1]

Today we are going to be talking about the features of the ethically compliant virtual office in New York, and we are also going to check out how some key virtual office vendors in the NYC marketplace stack up against each other.

[Slide 2 & 3]

Hi, my name is Stephen Furnari I’m a practicing corporate attorney and founder of a company called Law Firm Suites. We operate shared office spaces exclusively for lawyers and we rent virtual law offices to close 200 law firms.

[Slide 4]

The driving force behind the ethics of virtual office in New York is Judiciary Law s. 470, which says that all attorneys practicing in New York must have “an office for the transaction of law business.”

For New York residents, that office can be in their homes, but non-residents would be required to get, at least minimally, a virtual office rental that satisfies Section 470.

I talk about JL470, whether or not it’s valid law and suggestions for compliance in a sister video which you can check out on Law Firm Suites’ YouTube channel.

In addition to 470, lawyers need to be mindful of ethics rules regarding confidentiality, the maintenance of attorney client privilege, and restrictions on advertising, including false or misleading advertising.

[Slide 5]

I have built my profile of an ethically compliant virtual law office from three resources: case law, New York State’s policy statements on the issue, and formal ethics opinions.

[Slide 6]

So to connect the dots between the three resources, I built two profiles of the ethically compliant virtual office for non-residents: one for attorneys with a little risk tolerance, and another for those with no risk tolerance.

It’s important to first note that, for the purpose of compliance with Section 470, the argument you would be making in support of using virtual law office as your New York office is that the virtual office has all of the features of a traditional office, just purchased using a different economic arrangement. So generally, you want to make sure your virtual office, in fact, functions like a working office.

[Slide 7]

Starting with the former, this is what we recommend a virtual office to have:

• A receptionist (or staff) to greet guests and handle pop-ins.
• A process for identifying priority deliveries and notifying the attorney.
• Staff training on privilege and confidentiality requirements (or a willingness to let the lawyer train the staff on these issues).
• Private places to hold confidential meetings when needed.
• The availability of deskspace (even if shared).
• A willingness to have someone serve as an agent for service of process when you’re not there.

[Slide 8]

For more conservative attorneys, we have added three additional items, including:

• A permanent deskspace (as opposed to a floating one), even if shared with others.
• A small amount of secure storage to leave items behind (locking desk drawer).
• Signage.

[Slide 9]

Let’s take a look what we’ve just learned and apply it to what’s out there in the marketplace.

[Slide 10]

So, this slide isn’t meant to be a shill for my company, but it’s here to contrast a fully compliant virtual law office with one that is not. Our company’s VO program is fully compliant with the profiles we’ve just discussed.

And as a bonus, because our office suites are limited to lawyers, the malpractice risk associated with sharing office space is minimized.

On the left you have what we’d call a “cheap virtual office,” which is little more than a post office box purchased from a private vendor.

• You can’t have private meetings there.
• There’s no deskspace.
• They do not offer an agent for service of process, secure storage or signage.
• You’d be hard-pressed to convince any regulator that this is a Section 470 compliant office.

[Slide 11]

So we did a little research for you. Me and my staff secret shopped five additional virtual office vendors in NYC and we rated them, based on ONLY their ethical compliance, AND NOT the quality of their services, management, facility or community.

Here’s what we found:

Basically, any well-run executive suite that sells virtual office packages (except for one) passed our compliance test.

Jay Suites and ServCorp

Rating: B+

For the top of the class here, Servcorp and Jay Suites had identical profiles. They had all the requirements of the ethically compliant office, but they did not have formal programs for training or service, but they were amenable having an ad hoc arrangement. Neither had signage. We rated both of them a B+.

Sage Workspace

Rating: B

At Sage Wordspace , they were the only vendor that offered signage. They were similar to the first two with respect to Service and Training. However, they did not have dedicated floating day office space. Meaning, if all their offices were rented to long-term tenants, there would be the possibility that there would be no deskspace available for virtual clients. Also, they only had one conference room at this location, which technically meets the requirement, but could be problematic for attorneys.

[Slide 12]

New York City Bar

Rating: C-

The bottom of the class, includes one vendor that shouldn’t be, the City Bar’s virtual office program.

The City Bar was an outlier of sorts. They had stronger compliance than all the other vendors in terms of Service and Training. Where they were weak was reception.

Their program is at the Bar Building, not an office suite like all the other vendors. If you have ever walked into the Bar building, it’s confusing where to go. Your first point of contact is a security guard deep into the lobby and up a small flight of stairs.

We sent a secret shopper who had never been in the building before to try to best replicate a client’s experience. When we finally found the guard and asked about our appointment for a virtual office tour, the guard looked befuddled, and it took several phone calls for him to figure out why we were there.

So, you can imagine the confusion a client may have if they are in town and pop in to see their lawyer who uses the space as their virtual office.

While this is technically “staff to greet pop-ins”, it barely meets the requirements that the City Bar’s own ethics opinion on virtual office describes.

Other issues are that they only have one conference room and the policy is to reserve it one week in advance.

This VO program creates a challenge if you are making the argument that a virtual law office meets the definition of a Section 470 office because you get all of the features of an office, but just on a different economic basis. It’s really hard to make this argument at the City Bar. It’s not an office!

Corporate Suites

Rating: F

And with respect to the last vendor, Corporate Suites, they automatically failed because they did not have any program for Service or Training, and they refused to allow any ad hoc arrangements.

One final note — with the exception of the City Bar, all of the vendors said in some form or another: “we service a lot of attorneys, so we know what we are doing.”

But remember, there is a difference between what resident attorneys and non-residents need from a virtual law office. The resident can use their home as their Section 470 office, whereas the non-resident attorney has to rely on the virtual law office to be 470 compliant. None of these vendors even knew there was any difference.

So, the advice is, do your due diligence and ask a lot of questions before signing up.

[Slide 13]

That about wraps it up for me, two additional things: you can download this slide deck by going to www.lawfirmsuites.com/nyvlo and, if anyone wants to learn more about Law Firm Suites’ virtual office programs, check out our website at lawfirmsuites.com.

You can download the slide deck for this presentation at lawfirmsuites.com/nyvlo.