You have been a named partner for the past 35 years in a small law firm that has a concentration in estate planning and probate matters. You have been contemplating retirement but for a variety of reasons you have concerns about abruptly withdrawing from the practice altogether.
You have considered becoming “of counsel” to the firm, but have many questions, including:
- What type of relationship you will have with the firm?
- Can your name remain in the firm name?
- Other firms in the area have expressed an interest in your estate planning expertise. Can you be of counsel to more than one firm?
In 1990, the ABA Standing Committee on Ethics and Professional Responsibility issued Formal Opinion 90-357 Use of Designation “Of Counsel" (1990); Withdrawal of Formal Opinion 330 (1972) and Informal Opinions 678 (1963), 710 (1964), 1134 (1969), 1173 (1971), 1189 (1971) and 1246 (1972).
Close, regular, personal
In this opinion, the committee considered the meaning and scope of the “of counsel” relationship. The committee stated that the of counsel designation carries with it the inference that the lawyer has a close, regular, ongoing relationship with the firm:
…It is the Committee’s view that, whatever the connotative differences evoked by these variants of the title “counsel,” they all share the central, and defining, characteristic of the relationship that is denoted by the term “of counsel,” and so should all be understood to be covered by the present opinion. That core characteristic properly denoted by the title “counsel” is, as stated in Formal Opinion 330, a “close, regular, personal relationship”;
The committee further described the lawyer who is of counsel as not having the same shared liability and managerial responsibilities as a partner, and listed four basic categories where the term is often used. These include lawyers who have recently retired but who want to maintain an ongoing relationship with the firm; a lateral hire who is on probationary status before being elevated to partner; a lawyer with special expertise that consults regularly with the firm (think “Tax Counsel” or “Patents and Trademark Counsel”); and a lawyer who is in between the status of associate and partner.
The committee also noted that there are many types of designations for lawyers who are associated with a law firm such as “special counsel,” “senior counsel,” etc., that share the same characteristics as the of counsel designation.
The committee also described certain relationships between a lawyer and a law firm where the of counsel designation would not be appropriate. These include situations where a lawyer associates with a firm for only one case, where a lawyer and law firms only very occasionally collaborate on certain matters or where the relationship is akin to a forwarder or receiver of legal business.
How many relationships can one lawyer have?
Historically, ABA ethics opinions (many of which were withdrawn by 90-357) had stated that a lawyer could not have an of counsel relationship with more than two law firms and that law firms could not have of counsel relationships with each other. Opinion 90-357 changed all that, stating that not only could lawyers have multiple of counsel relationships with multiple firms, but that law firms could also have them. However, the committee warned that the number of such relationships any lawyer or law firm could have would have a practical limitation, since when a lawyer or law firm is of counsel to another firm, the lawyer and the firm(s) that have the relationship become joined as one for the purposes of imputed disqualification under Rule 1.10 Imputation of Conflicts of Interest: General Rule so that in consequence, the more firms a lawyer is of counsel to the more likely it is that conflicts will emerge that would disqualify the lawyer and the firms he has the of counsel relationship with from taking on matters involving clients that have adverse interests. On a related note, see the April 2006 Eye on Ethics column entitled, Can a Lawyer be a partner in more than one firm?
When can an of counsel lawyer appear in the firm name?
Another question the committee addressed was whether the of counsel lawyer’s name can appear in the law firm’s name. The committee stated that if the lawyer was a partner in the firm, then it would be appropriate for the lawyer’s name to remain in the firm name after he moved to of counsel status and the firm name is well established. On the other hand, if the lawyer had recently joined the firm or if he joined the firm as of counsel and remained in that status, it would be misleading under Rule 7.1 for him to be included in the firm name since being included carries with it the implication that the lawyer is a partner in the firm with all of the attendant liabilities and responsibilities that a partner owes his firm.
State and local bar association opinions
Some of these opinions explore and expand upon other dimensions of the relationship that the ABA opinion did not address in detail. See, e.g., Arizona State Bar Opinion 12-01 (2012), (misleading to list name on firm letterhead without indicating of counsel status, furthermore, to the extent that the lawyer’s practice is limited to a specific area, that area must be explicitly disclosed), Philadelphia Opinion 2001-5 (2001), (lawyer who has multiple of counsel relationships must list them on all stationary and announcements) and Los Angeles Opinion 516 (2006), (lawyer who has of counsel relationship may have separate letterhead for each practice but must disclose of counsel relationship to clients).
Because of imputed disqualification concerns, Ohio Opinion 2014-4 stated that lawyers and law firms that become of counsel to one another should conduct conflicts checks before doing so:
…Conflict of interest analysis is of primary concern because all of the lawyers in a firm that is “of counsel” with another firm may be disqualified due to the “of counsel” relationship. For conflict analysis, the firms are treated as one unit, and conflicts are imputed to all “of counsel” lawyers and/or firms. See Prof.Cond.R. 1.8(c); 1.10. Therefore, any conflicts applicable individually to either firm or lawyer apply to all. As a result, firms in “of counsel” relationships with other firms must conduct comprehensive conflict checks.
Recent ABA Commission on Ethics 20/20-inspired amendments to Rule 1.6 Confidentiality of Information regarding the detection of conflicts of interest when lawyers change employment or when the composition and ownership of a law firm changes may also be apropos when lawyers consider becoming of counsel to a law firm. See the June 2015 Eye on Ethics column, Seeking greener pastures: Job negotiations and disclosure of conflicts information with an adverse firm
Fee sharing: Are of counsel lawyers members of the firm?
State bar opinions are split on the question of whether lawyers who are of counsel to a law firm are considered to be members of the same firm and thus not subject to Rule 1.5(e) fee-sharing requirements. Opinions stating that of counsel lawyers are members of the firm include Ohio Supreme Court Bd. of Comm'rs on Grievances & Discipline, Opinion 2014-4 and Iowa State Bar Opinion 13-01 (2013):
…Questions often arise regarding whether compensation for of-counsel services constitutes fee splitting within the meaning of Iowa Rules of Prof. Conduct 32:1.5(e). The rule prohibits a division of fee between lawyers “…who are not in the same firm...” without the consent of the client. We do not believe the rule applies. As stated previously, we consider all parties to the of-counsel relationship to be in the same firm for all ethical purposes.
See also Ohio Supreme Court Bd. of Comm’rs on Grievances & Discipline, Opinion 2014-4.
For further information on this topic, See the chapter entitled “Of Counsel” (last updated in 2012) as it appears at page 91:501 of the ABA/BNA Lawyers’ Manual on Professional Conduct. See also The ABA Senior Lawyers’ Division book entitled “The Of Counsel Agreement, 4th edition” (2013).