The New York State Legislature has tightened its reins on unlicensed legal advisors. The New York Judiciary Law has been amended to make the unauthorized practice of law a felony in New York if it substantially damages the client.

Under the new law,1 it is a class E felony to (1) either impersonate an attorney or offer legal services to the public under a title other than attorney; and (2) cause another person to suffer monetary loss or damages exceeding $1,000 or other material damage from impairment of a legal right to which he or she is entitled according to law. This offense was previously a misdemeanor, whether or not the client was damaged. The new law becomes effective November 1, 2013.

This legislation applies to several groups: (1) non-lawyers who hold themselves out as attorneys-atlaw or counselors-at-law, (2) disbarred and suspended attorneys, (3) out-of-state lawyers not admitted to practice pro hac vice, (4) corporations and voluntary associations (unless specifically exempt under the Judiciary Law), and (5) individuals and businesses that seek to offer legal advice using a non-legal title.

The new law was proposed by the New York State Bar Association’s Committee on Unlawful Practice of Law which observed that the current Judiciary Law “imposes minor penalty for actions in violation of the statute without injury. In cases of dramatic damage and larger patterns of abuse, the law disproportionately imposes the same minor misdemeanor penalty, serving little deterrent to the criminal acts.” The Committee elicited testimony regarding the unauthorized practice of law involving identity theft, bankruptcy fraud, reverse mortgage scams targeting the elderly, immigration abuse, and illegal real estate schemes. Given the heightened severity and increased sophistication of recent offenses, the Committee argued that “the unlawful and unauthorized practice of law statutes are needful of updating and should evolve to recognize that there are varying degrees of injury and harm which are occasioned by the deliberate, and at times sophisticated and more heinous violations of this area of legal protection.”

Notably, recently adopted Section 476(d) of the Judiciary Law allows the New York State Attorney General to prosecute violations of the Judiciary Law based on the unlawful practice of law.