Opinion ID: 8414574
Heading Depth: 2
Heading Rank: 4

Heading: The State’s Interest in the Challenged Regulations

Text: Because we hold that the J&M Firms’ complaint does not plausibly allege the infringement of any First Amendment right, we need not stay long with the question whether New York’s interests as a state justify its regulations regarding non-lawyer investments. The J&M Firms ask us to apply strict scrutiny to the regulations. In the context of claims asserting First Amendment associational rights we have instructed that, depending on the burden that the statute imposes on those rights, we will “apply either strict scrutiny, in which case the restriction survives only if it is narrowly drawn to advance a compelling state interest, or rational basis review, in which case the restriction need only be rationally related to a legitimate government interest.” Kraham v. Lippman, 478 F.3d 502, 506 (2d Cir. 2007) (citations omitted). Strict scrutiny applies only when a challenged regulation imposes “severe burdens” on associational rights. Id. As discussed above, however, no First Amendment right of the J&M Firms is even implicated by the challenged regulations, much less substantially burdened by them. Accordingly, rational basis review applies. The regulations at issue plainly survive that standard because they are rationally related to a legitimate government interest. As the District Court noted, and as we think is cognizable even on a motion to dismiss, the challenged laws serve New York State’s well-established interest in regulating attorney conduct and in maintaining ethical behavior and independence among the members of the legal profession. See, e.g., Jacoby III, 118 F.Supp.3d at 574-75; Ohralik, 436 U.S. at 460-61, 98 S.Ct. 1912. For example, by proscribing the involvement of unrelated third parties in the attorney-client relationship, the regulations preclude the creation of incentives for attorneys to violate ethical norms, such as those requiring attorneys to put their clients’ interests foremost. See, e.g., Lawline v. Am. Bar Ass’n, 956 F.2d 1378, 1385-86 (7th Cir. 1992). They therefore easily pass muster under rational basis review.