New York state legal authorities have reaffirmed their resistance to non-lawyer ownership of firms. In a decision likely to affect international firms, New York Bar Association this week ruled that lawyers cannot practise in the state if their firm is owned by non-lawyers, even if the owners are overseas.

The association’s ethics committee said that existing rules, forbidding lawyers from sharing fees with a non-lawyer, would prevent the practice. The ruling applies even if non-lawyer ownership is allowed where the firm is established, such as in England and Wales and Australia.

The committee was ruling on a question asked by lawyers admitted to practise in New York who wanted to enter into a business relationship with ‘a UK entity’. The committee concluded that, even if the lawyers are also licensed in England, the predominant effect of their conduct would be in New York.

The New York group is the largest voluntary bar association in the US, with 77,000 members.

New York and 49 other US states prohibit arrangements along the lines of alternative business structures (ABSs), with just the District of Columbia allowing non-lawyer employees to have an equity interest in firms. However, the American Bar Association (ABA) is discussing a relaxation of the rules.

Law Society president John Wotton will attend the ABA conference in New York next month, with ABSs sure to be one of the key talking points. Wotton is keen to tell US authorities they have nothing to fear from the liberalisation of their legal market.

He said: ‘I am confident that ABSs regulated by SRA will demonstrate that professional independence and standards have not been compromised.

‘I trust that the experience of liberalisation of ownership of legal services in England & Wales will in due course lead to the New York State Bar Association changing its position on this question to allow its members to continue to contribute to all successful international legal practices.’

The ABA House of Delegates will consider a formal proposal no sooner than February 2013.