No Initial Public Offering|for Jacoby & Meyers Firm

MANHATTAN (CN) - Jacoby & Meyers, the firm that pushed the boundaries for television, print and other media blitzes for lawyers, cannot sue their way to Wall Street, a federal judge ruled.

The New York-based firm launched its first televised advertisement in 1977, after the Supreme Court made that possible with Bates v. The State Bar of California.

California's high court allowed Jacoby & Meyers to hold open houses for journalists in their offices the same year, quashing an ethics investigation over the practice by the State Bar of California.

But the firm filed a series of lawsuits in May 2011, claiming that Rule 5.4 of the Rules of Professional Conduct "is impeding law firms' ability to compete in today's global marketplace and restricting the public's access to affordable, quality representation."

In various states, the rule states that a "lawyer or law firm shall not share legal fees with a nonlawyer."

Jacoby & Meyers says this prohibition unconstitutionally interferes with their efforts to provide lower cost "legal services for the masses."

U.S. District Judge Lewis Kaplan dismissed the Manhattan complaint Friday, saying it might be a "deal with the devil" if Jacoby & Meyer were to sell stocks of their practice to the public.

"The advisability of allowing non-lawyer equity investment and, perhaps ultimately, public offerings of shares in law practices has become a much debated topic," Kaplan wrote. "Permitting it, as J&M contends, conceivably might broaden the availability and lower the cost of legal services without serious adverse consequences. On the other hand, it instead might prove to be 'a deal with the devil,' as some have argued was the case when traditionally private investment banking partnerships went public."

Kaplan noted that Jacoby & Meyers described its mission "perhaps hyperbolically."

Indeed, the firm's original 23-page complaint describes itself as an attempt by Jacoby & Meyers "to free itself of the shackles that currently encumber" it.

Even if the firm proved Rule 5.4 unconstitutional, Kaplan said other statutes would prevent them from going public.

"The fundamental problem is this," according to the 18-page opinion. "Rule 5.4 is not the only provision of New York law that forecloses plaintiffs from receiving non-lawyer equity investment. But plaintiffs challenge only Rule 5.4."

Jacoby & Meyers' formation of an LLC to move forward on its initial public offering ran afoul of Section 495 of the judiciary law, titled "Corporations and voluntary associations not to practice law."

Attorneys with Meiselman, Denlea, Packman, Carton & Eberz, which represents Jacoby & Meyers, were not immediately available to respond to the ruling.

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