March 25, 2020 Book Synopsis

Of Counsel – It’s Not Just for Seniors Anymore

By Jean L. Batman

Law firms and lawyers seeking unconventional working relationships take note: "Of Counsel" arrangements can now properly take a variety of forms. Common examples include close working relationships between two or more law firms, between two or more sole practitioners, between a law firm and a lawyer who works for the firm on a part-time basis, between a law firm and an expert in an area of law in which the firm is not otherwise well qualified, and between a law firm and a probationary partner, among others.

Historically, the "Of Counsel" title has most commonly been used by those who were partially or fully retired from the practice of law. Today, the "Of Counsel" designation is used in so many different contexts that one cannot assign a single meaning to it, and it most certainly is not just a designation for senior lawyers.

The American Bar Association's Formal Opinion 90-357, issued in May 1990, is now the primary authority on the appropriate use of the term “Of Counsel.” The critical element necessary for an “Of Counsel” relationship is a close, regular, personal relationship that is neither that of partner, with shared liability and/or managerial responsibility, nor that of associate, or junior non-partner lawyer regularly employed by the firm. Formal Opinion 90-357 provides in part:

The use of the title “of counsel,” or variants of that title, in identifying the relationship of a lawyer or law firm with another lawyer or firm is permissible as long as the relationship between the two is a close, regular, personal relationship and the use of the title is not otherwise false or misleading.

Formal Opinion 90-357 replaced the approach of Formal Opinion 330, which distinguished two forms of "Of Counsel" arrangements: (1) where the lawyer practices in the same office as the other lawyer or firm; and (2) where the lawyer does not practice in the same office but is in regular and frequent contact with the other lawyer or firm. Although a close, personal, and continuing relationship is still essential, Formal Opinion 90-357 is far less restrictive than Formal Opinion 330. Under Formal Opinion 90-357, four categories of "Of Counsel" relationships are specifically recognized: the part-time practitioner, the retired partner, the probationary partner, and the senior attorney. Four other categories are specifically prohibited: the lawyer on a single case, the forwarder or receiver of legal business, the occasional collaborator, and the outside consultant. Between these two groups lie countless other situations more or less comparable to one or the other of the two extremes.

Under Formal Opinion 330, if the "Of Counsel" attorney was a retired partner, he or she was deemed to have a close association with the lawyer or firm. This lawyer did not need to practice in the offices of the lawyer or firm. But, to satisfy the notion of a "continuing" relationship, there was an implied requirement to remain active in the practice of law and to remain in daily contact with the lawyer or firm. While Formal Opinion 90-357 removed any requirement of daily contact with the law firm or lawyer, it retained a requirement of a continuing relationship.

Formal Opinion 90-357 permits the "Of Counsel" designation to be used by current political officeholders and other public officials, provided they actively practice law in the same offices as the lawyer or firm, regardless of their prior affiliation with the firm. Some states follow the view of the ABA opinions; others do not. In the latter jurisdictions, the "Of Counsel" attorney need not actively engage in the practice of law with the firm, provided the parties' past relationship satisfies the requirement of a continuing relationship.

Some arrangements contemplate that "Of Counsel" attorneys will not practice law in the same office as the lawyer or firm. An out-of-state lawyer, a lawyer who acts as a consultant to one firm while maintaining a full-time position with a corporation or other law firm, or a lawyer who engages in multiple "Of Counsel" relationships cannot be physically present on a full-time basis in the office of the lawyer or firm with which he or she is affiliated as "Of Counsel". Despite this, Formal Opinion 90-357 seems to allow these relationships, where they might have been prohibited under Formal Opinion 330. "Of Counsel" attorneys must be available to the lawyer or firm on a frequent, ongoing, and continual basis. Consultation on a single case is insufficient to establish an "Of Counsel" relationship, even where the consultant is a former partner of the firm.

Formal Opinion 90-357 permits law firms to use the "Of Counsel" designation to describe a relationship between law firms. It also permits a lawyer to be "Of Counsel" to more than two law firms. Probationary partners and senior attorneys who normally have an employee relationship with the firm are now recognized as appropriate candidates for the "Of Counsel" designation.

The current view on “Of Counsel” relationships has important ramifications for many arrangements that previously failed to satisfy the “close, regular, and personal” requirement for proper use of the designation. A lawyer may now maintain multiple relationships with several law firms without jeopardizing the “Of Counsel” status with any one firm or other lawyer. In fact, it is possible to organize a law firm so that lawyers in the firm would all be "Of Counsel" to the firm’s founder, whether the founder was a wholly owned professional corporation or simply an individual. Each lawyer, other than the founder, could be either an independent contractor or employee of the founder. Such a form of business organization would not necessarily relieve the founder from liability for the torts of the “Of Counsel” lawyers, but it would insulate each lawyer from liability for the torts of fellow lawyers.

Despite its positive, flexible approach to defining the "Of Counsel" relationship, Formal Opinion 90-357 relies on one negative aspect contained in Formal Opinion 330 in its prohibition on the use of the “Of Counsel” designation for relationships that are like that of a partner or associate. If the relationship has facets commonly found in one of these other relationships, use of the "Of Counsel" designation may be improper. When the relationship more nearly resembles that of partner or associate, the "Of Counsel" attorney is exposed to other problems, particularly in the area of vicarious liability. Thus, an "Of Counsel" attorney should never share in the firm's general profits or assume management and control of the business. Likewise, an "Of Counsel" attorney should be careful to avoid the appearance of a partnership. An implied partnership could exist when the parties represent to the public that a partnership exists, and there is reasonable reliance upon that representation by the person seeking to establish the partnership. If an implied partnership is found, an "Of Counsel" attorney will be liable to an injured third party for torts committed by the firm.

The law with respect to "Of Counsel" arrangements is still developing and may produce unexpected or undesirable results in view of the wide variety of situations in which "Of Counsel" designations are used today. Therefore, it would be unwise to leave any of these arrangements to oral agreements or the general understanding of the parties. A written “Of Counsel” agreement is strongly advised to articulate the rights and duties of the parties to the “Of Counsel” arrangement in relation to one another, as well as with respect to third parties. The form of the agreement is a function of (1) the business objectives of the parties; (2) the nature of the relationship; and (3) the form of business organization.

For assistance with these issues, the 5th edition of the American Bar Association Of Counsel: Forms and Advice for Legal Practitioners by Jean L. Batman, provides guidance, forms, and advice for law firms and lawyers wishing to establish “Of Counsel” relationships. Revised over the years to keep pace with developments in the law, and the increased and varied use of the “Of Counsel” designation in the profession, each edition has had an increasing emphasis on the importance of managing conflicts of interest, professional liability, and preparing a well-drafted Of Counsel Agreement. The current edition of the Of Counsel book, first authored by Harold G. Wren and Beverly J. Glasscock and published in 1991, reflects some changes to the Model Rules of Professional Conduct adopted since the Fourth Edition was published in 2013, as well as some changes and additions aimed at providing those considering an “Of Counsel” relationship with all of the tools necessary to successfully navigate the process. Among the forms and checklists provided are Term Sheets for use in negotiating specific “Of Counsel” arrangements, a Conflicts of Interest and Risk Management Questionnaire, Top Ten Tips for Staying Out of Trouble in an “Of Counsel” Arrangement, and sample agreements for part-time lawyers, retired partners, probationary partners, and entrepreneurial lawyers using “Of Counsel” as a vehicle for law firm organization. Finally, the 5th edition has been reorganized so that each chapter is a self-contained module on the subjects covered, including copies of applicable rules and opinions, for increased ease of reference by the practitioner.

Author

Jean L. Batman is the President and founder of Legal Venture Counsel, Inc., formed in 2004 to provide outside general counsel services to investors, entrepreneurs, and small businesses in industries ranging from real estate development to high technology. She has written and spoken on a number of business law topics, such as choice of entity, venture financing, and finding practical solutions to common legal problems. She is also the author of Advising the Small Business: Forms and Advices for the Legal Practitioner 3rd Ed., ABA, 2018, and Letters for Small Business Lawyers, ABA, 2011.                                 

Ms. Batman chaired the ABA Business Law Section's Middle Market and Small Business Committee (2001 to 2005), was a Board Member of the ABA Business Law Section's Publications Board (2001 to 2005), Co-Founded and Co-Chaired the ABA's Private Placement Broker-Dealer Task Force (1999), and is a former Partner of Duane Morris LLP, one of the country's 100 largest law firms.

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