Adds response from New York attorney general's office in paragraph 7

By David Thomas

March 6 (Reuters) - A New York nonprofit seeking to expand legal assistance to poor people cannot evade a state law barring non-lawyers from giving legal advice, a federal judge ruled.

The organization, Upsolve, had sought to block New York from enforcing rules prohibiting the unauthorized practice of law against its program, which trained people who aren't lawyers to provide free legal advice to people facing debt-collection lawsuits.

U.S. District Judge Lewis Kaplan in Manhattan dismissed the case on Thursday, ruling that the state of New York has a "particularly strong" interest in regulating attorneys who are licensed to give out legal advice. Kaplan said Upsolve is free to post self-help materials to help guide people through the bankruptcy process on their website.

"The only thing plaintiffs cannot do is advise a specific person about his or her individual case – the circumstances in which incompetent and unscrupulous legal advice is most likely to be relied upon and thereby cause harm," Kaplan said.

Kaplan's ruling means that Upsolve is "forbidden from training volunteers to give free advice to people who want to hear it," said Robert McNamara, the deputy litigation director at the Institute for Justice, which represented Upsolve.

McNamara said Upsolve plans to appeal the ruling, adding they "expect the appellate court to recognize that the government cannot make it illegal to talk to your fellow New Yorkers without a license."

A spokesperson for the New York attorney general's office declined to comment.

Upsolve sued the New York attorney general's office in January 2022, seeking a declaration that applying the state's legal practice restrictions to the program would be unconstitutional. The organization said it was "chilled" from giving advice through the initiative because of the threat of prosecution.

U.S. District Judge Paul Crotty, who initially oversaw the case, agreed with Upsolve and issued a preliminary injunction blocking the state's enforcement of its rules in May 2022.

Crotty found that the rules as applied to Upsolve's program would not survive the highest standard of judicial review, known as strict scrutiny, required when the government infringes a fundamental right. Crotty later left the case in 2024.

But the 2nd U.S. Circuit Court of Appeals in September vacated Crotty's ruling and ordered the district court to apply a lower level of scrutiny to New York's rules on the unauthorized practice of law.

(Reporting by David Thomas)