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Legal Polygamy: Ethical Considerations
Attendant to Multiple Law Firm Affiliations

March 26, 2013, 4:00 AM

This article analyzes the ethics issues that would be raised by an attorney’s simultaneous affiliation with multiple law firms. While there are a number of issues, we believe that none of them is an absolute bar or even a serious impediment to an attorney’s ability to serve simultaneously as a partner in or “of counsel” to multiple firms.

However, such situations will likely present certain ethical issues that merit careful consideration. Moreover, as a practical matter, the ethics considerations attendant to such relationships may limit their frequency. The law is clear, for example, that the multiple entities with which the attorney is affiliated would be viewed as one entity for conflicts purposes.

On the whole, however, the ethics issues, although somewhat numerous, can be addressed with relatively straightforward modifications to client engagement letters and other changes in procedure.

Affiliation of a Lawyer With Multiple Firms

Most ethics opinions have concluded that the permissibility of an attorney’s affiliation with multiple law firms as “of counsel” is determined by the nature of the relationship between the attorney and the law firm, and not by any predetermined numerical limit on such affiliations.

In its Formal Ethics Opinion 90-357, the American Bar Association Standing Committee on Ethics and Professional Responsibility concluded that a lawyer may be “of counsel” to multiple law firms, without limit, provided that the association with each is “close, regular [and] personal.” 1Note that this opinion reversed the ABA’s prior stance on the issue, set forth in ABA Formal Ethics Opinion 330 (1972), that a lawyer could not be of counsel to more than two firms. This view was based on the Ethics Committee’s opinion that the “close, regular, and personal relationship” that is the requisite characteristic of the “of counsel” relationship could not exist on a plural basis. ABA Formal Ethics Op. 90-357 (1990) at 3.

The California State Bar has adopted the reasoning of ABA Opinion 90-357 to conclude that “the number of ‘of counsel’ relationships in which a member or law firm may serve is limited not by any strict numerical standard. Instead, the number of such relationships is limited by strict observance of the qualitative criteria [that such relationships must be ‘close, personal, continuous, and regular’].” California Formal Ethics Op. 1993-129 (1993) at 3.

Similarly, in Opinion 2008-1 (2008), the Ohio Supreme Court Board of Commissioners on Grievances and Discipline concluded that “a lawyer in a law firm may be ‘of counsel’ to another law firm so long as the requisite continuing relationship exists between the lawyer and the law firm.” Id. at 1.

The requisite continuing relationship is “other than as a partner or associate or its equivalent and is more than a mere forwarder or receiver of legal business, more than a one-time advisor/consultant relationship, and more than a one-case relationship.” Id. Instead, the relationship must be “continuing, close, regular and personal.” Id. But see Iowa Ethics Op. 87-09 (1987) (It is “improper” for an attorney to serve as of counsel to more than one law firm in Iowa); Texas Ethics Op. 402 (1981) (“an attorney may not be ‘Of Counsel’ to more than two firms.”). 2Texas Op. 402 (1981) was explicitly based on ABA Formal Op. 330 (1972), which was reversed by ABA Formal Op. 90-357 (1990).

As a practical matter, even in the absence of a numerical limit to the permissible number of an attorney’s of counsel affiliations, “[t]here is, to be sure, some point at which the number of relationships would be too great for any of them to have the necessary qualities of closeness and regularity … but the controlling criterion is ‘close and regular’ relationships, not a particular number.” ABA Formal Ethics Op. 90-357 at 3. See also Michigan Informal Ethics Op. RI-102 (1991) (“[a]lthough there is no ethical guidance regarding the maximum number of such affiliations, it is difficult to conceive of a situation in which a lawyer or law firm could establish numerous ‘of counsel’ affiliations and still maintain the required close, regular and personal contact with each affiliated lawyer or law firm.”).

A lawyer who practices at two firms has fiduciary duties to both of them.

Several ethics opinions have concluded that a lawyer with an “of counsel” relationship to one firm can simultaneously practice law in a second firm that bears that lawyer’s name. See, e.g., District of Columbia Ethics Op. 338 (2007) (“When a former partner continues to render legal services to the firm’s clients, that firm may retain the former partner’s name in the firm name, even though the former partner also practices in a new firm with a name that also includes his name.”); New York City Formal Ethics Op. 1995-9 (1995) (a lawyer may be “an active name” partner in one firm while being “of counsel” to another firm provided that the lawyer maintains “a close, regular, personal relationship” with the latter firm).

Similarly, an attorney can be a partner in one law firm and of counsel to another.

In Opinion 338, the Washington D.C. Bar Legal Ethics Committee stated that “[a] partner may have an ‘of counsel’ relationship with one firm and be a partner in a different firm,” provided that the “of counsel” relationship is “regular and continuing.”

The Association of the Bar of the City of New York Formal Opinion 1995-9 notes that “it is possible, although not usual, for a lawyer to satisfy the requirements to serve as both partner in one firm and ‘of counsel’ to another.” See also Ohio Supreme Court Ethics Op. 2004-11 (2004) at 4 (“A member, associate, partner, shareholder or an attorney employee of a multi-lawyer law firm may serve as ‘of counsel’ to another lawyer or law firm.”).

A number of ethics opinions have also stated that a lawyer may be a partner in two different law firms. “[T]he prevailing view among the various jurisdictions that have considered these issues is that a lawyer is not prohibited from being a partner in more than one firm if the firms are treated as one for imputation of conflicts.” District of Columbia Op. 338 (footnote omitted). See also Philadelphia Ethics Op. 2001-5 (2001) (“there is nothing unethical in the Rules per se about an attorney practicing as a partner or member in more than one firm at the same time.”); New York City Formal Ethics Op. 1995-9 (“It is not per se improper for attorneys to be members of two partnerships, in two jurisdictions”); Maryland Ethics Op. 88-45 (1988) (lawyer may be a partner in multiple firms although such a scenario is “fraught with many potential ethical problems”); New Jersey Ethics Op. 637 (1990) (New Jersey lawyer may have a solo practice and also be a partner in a law firm with New York lawyers). But see Ohio Supreme Court Ethics Op. 97-2 (1997) at 2 (“an attorney should not practice with more than one law firm as a partner or associate.”).

There is also substantial authority that a law firm may be a member of or “of counsel” to another firm. ABA Formal Ethics Op. 90-357 (reversing prior opinion, states “[we] do[] not now perceive … any reason of policy why a firm should not be of counsel to another firm.”); Maryland Ethics Op. 88-45; New York City Formal Ethics Op. 1995-8 (1995).

Fiduciary Duties to Multiple Firms

A lawyer—whether a partner, associate or of counsel—has a fiduciary duty to any law firm in which the lawyer practices. When a lawyer practices at two firms, the lawyer has fiduciary duties to both firms.

The lawyer and the firms involved need to have a consistent approach regarding client and other business opportunities. For example, if a prospective client comes to a lawyer who practices at multiple firms, which firm gets the engagement? Does the lawyer who has a solo practice, but is also associated with a multi-lawyer law firm, violate a fiduciary duty to the latter if the lawyer sends the best and most lucrative cases to his solo practice?

These are not insurmountable issues but they need to be discussed and an approach for allocating new engagements and prospective clients should be agreed upon in advance.

An additional complication can arise where a firm’s partnership agreement prevents partners from engaging in outside business or professional activities, or when such agreements provide that the income derived from any outside activity involving the practice of law should be paid to the firm. See, e.g., Leslie D. Corwin and Arthur J. Ciampi, Law Firm Partnership Agreements §3.04[2] (2012).

In such a situation, a carefully drafted side letter to the standard employment agreement may be necessary to allow an attorney to pursue or maintain multiple affiliations.

Conflicts Checking

Most ethics opinions across jurisdictions have adopted the ABA’s view that “the effect of two or more firms sharing an of counsel lawyer is to make them all effectively a single firm, for purposes of attribution of disqualifications.” ABA Formal Ethics Op. 90-357.

See, e.g., District of Columbia Ethics Op. 338 (“the lawyer’s ‘of counsel’ relationship with both firms effectively makes the two firms a single firm for conflict of interest purposes”); New York City Formal Ethics Op. 1995-8 (“‘of counsel’ relationships are treated as if the ‘counsel’ and the firm are one unit”); Philadelphia Ethics Op. 2001-5 (“the conflict of any member of any of the involved firms becomes the conflict of all of the members of all of the involved firms”).

Similarly, where one law firm is of counsel to another firm, conflicts of one will be imputed to the other. See, e.g., New York State Ethics Op. 793 (2006) at 4 (conflicts of one firm are imputed to any other firm with which it shares an of counsel relationship).

Nor is the implementation of a “screen” sufficient to avoid the imputation of conflicts to all firms and attorneys with which an attorney is affiliated. New York State Ethics Op. 876 (2011) (conflicts imputed to an attorney who is of counsel to a law firm will also be imputed to all attorneys in that law firm, and a “screen” cannot avoid the imputation of such conflict).”

However, note that not all attorney affiliations give rise to the imputation of conflicts. See, e.g., Oregon Ethics Op. 2005-155 (2005) (“the Of Counsel relationship can and should be distinguished from the situation in which law firms, or a lawyer and a law firm, associate with each other or are employed as co-counsel on specific cases. An occasional collaboration with no indicia sufficient to establish a de facto law firm among the lawyers will avoid the implication that they are members of the same firm,” and will thus avoid their treatment as a single firm for conflicts purposes.)

The trickier issue is getting client permission to circulate conflict information. See, e.g., Philadelphia Ethics Op. 2001-5 (“the dictates of client confidentiality under Rule 1.6 require that each firm obtain a client’s or potential client’s permission to circulate enough information outside the firm to the other firms involved in order to do the required conflict check.”). See also District of Columbia Ethics Op. 303 (2001).

Information that is in the public domain usually does not pose a confidentiality issue, but information about a client’s confidential plans or intentions, such as a plan to file a trade complaint, petition or other action, however, would likely be covered by confidentiality rules.

New ABA Model Rule 1.6(b)(7) might help to address these concerns. The rule, adopted by the ABA in 2012, 3Note that, as of this writing, Rule 1.6(b)(7) has been adopted in only one jurisdiction (Delaware). permits a lawyer to

reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary” in order to “detect and resolve conflicts of interest arising from the lawyer’s change of employment or from changes in the composition or ownership of a firm, but only if the revealed information would not compromise the attorney-client privilege or otherwise prejudice the client.

ABA Model Rule 1.6(b)(7) (2012). Although Rule 1.6(b)(7) is explicitly concerned with an attorney’s change of employment from one firm to another, its logic would appear to apply to a situation where an attorney is affiliated with multiple firms simultaneously.

The new rule “recognizes that lawyers in different firms may need to disclose limited information to each other to detect and resolve conflicts of interest,” a situation that clearly applies where an attorney has multiple affiliations. ABA Model Rule 1.6 cmt. [13]. Note however, that such a disclosure must be very limited, 4“Any such disclosure should ordinarily include no more than the identity of the persons and entities involved in a matter, a brief summary of the general issues involved, and information about whether the matter has terminated. Even this limited information, however, should be disclosed only to the extent reasonably necessary to detect and resolve conflicts of interest that might arise from the possible new relationship.” ABA Model Rule 1.6 cmt. [13]. and is subject to the attorney-client privilege. 5Moreover, the disclosure of any information is prohibited if it would compromise the attorney-client privilege or otherwise prejudice the client (e.g., the fact that a corporate client is seeking advice on a corporate takeover that has not been publicly announced; that a person has consulted a lawyer about the possibility of divorce before the person’s intentions are known to the person’s spouse; or that a person has consulted a lawyer about a criminal investigation that has not led to a public charge).

Fee Sharing

The ethics rules allow client fees to be apportioned in any manner within a firm without disclosure to or approval from the client. However, the ethics rules contain disclosure and client approval requirements when fees are shared between different firms.

These requirements are set forth in ABA Model Rule 1.5(e). This rule allows the division of a fee between different firms either (a) in proportion to the “services performed”; or (b) in some other proportion provided that each firm agrees to assume “joint responsibility for the representation.” 6“Joint responsibility” means that both firms are responsible to the client for the representation in a malpractice sense even though one firm may do all of the work. This arrangement is typically used in contingency fee cases to allow a referring lawyer to receive a greater share of the proceeds than the quantum of the referring lawyer’s services would otherwise justify. ABA Model Rule 1.5(e) also requires that the identity of the lawyers or law firms who will participate in the representation of the client and the division of responsibility be disclosed in writing to the client and that the client give informed consent to the entire fee-sharing arrangement.

Screening isn’t enough to avoid imputation of conflicts to all firms and attorneys with which a lawyer is affiliated.

The authorities are split concerning whether compensation to an “of counsel” lawyer who is also affiliated with another firm requires compliance with fee-sharing restrictions.

Several ethics opinions have concluded that fee-sharing restrictions do not apply to attorneys who are of counsel. See Ohio Supreme Court Ethics Op. 2008-1 (2008) (payments to of counsel lawyers should not be considered as fee-sharing between lawyers); Texas Ethics Op. 450 (1987) (a lawyer who is of counsel is “appropriately treated as a member of the firm” and thus “may share in the fee income of the firm.”); New York City Formal Ethics Op. 1996-8 (1996) (fee sharing restrictions do not apply to attorneys who are “properly designated as ‘of counsel.’”); Maine Ethics Op. 175 (2001) (fee sharing restrictions do not apply to a lawyer who is “of counsel”).

But see South Dakota Ethics Op. 90-9 (1990) (“the ‘of counsel’ lawyer in South Dakota is not a member of a firm and therefore any division of fees must satisfy Rule 1.5(e)”); California Formal Ethics Op. 1986-88 (1986) at 5 (because an “of counsel” relationship to a firm is not that of a partner or an associate, the fee-sharing rules apply); District of Columbia Ethics Op. 151 (1985) (concluding that an “of counsel” lawyer needs to comply with Rule 1.5’s fee-sharing provisions unless the lawyer’s relationship to the firm is like that of a partner or an associate; District of Columbia Ethics Op. 197 (1989) (concluding that fee-sharing provisions applied where a lawyer was a partner in one firm and of counsel to another). 7The authors’ view is that the District of Columbia authority on this subject is outmoded and obsolete. The language of the rule then in effect required compliance with the fee-sharing rules when fees were shared with a lawyer “who [was] not [a] partner[] or associate[] of [the lawyer’s] firm or law office.” DR 2-107(A). The current D.C. Rule 1.5(e) says nothing about “partners” or “associates” and applies only to “lawyers not in the same firm.” Comment [1] to D.C. Rule 1.10 states that “[w]hether two or more lawyers constitute a firm … can depend on the specific facts…. For example, two practitioners who share office space and occasionally consult or assist each other would not be regarded as constituting a firm. However, if they present themselves to the public in a way suggesting that they are a firm, they should be regarded as a firm for purposes of the Rule.”

Compliance with the fee-sharing provisions of Rule 1.5(e) can typically be addressed at the outset of an engagement and satisfied with disclosure and consent in the client engagement letter.

That letter should disclose that lawyers from multiple firms will be working on the client’s matter and that the division of fees between the two firms will be in proportion to the services performed by the various lawyers, or under some other arrangement that is permitted under the rules. In some jurisdictions, like Washington, D.C., the letter should also describe, to the extent possible, the name of the lead or supervising attorney, and what the roles of the other lawyers on the team are likely to be. 8D.C. Rule 1.5(e)(2) requires that the client be advised “of the identity of the lawyers who participate in the representation [and] of the contemplated division of responsibility.” Finally, the letter should request written client consent to the fee-sharing arrangements, typically by countersigning the engagement letter.

Compliance With Rule 7.1

ABA Model Rule 7.1 prohibits a lawyer from “mak[ing] a false or misleading communication about the lawyer or the lawyer’s services.”

To the extent that the affiliations and identities of the attorneys who work on a particular representation may be material to a client, a disclosure in the engagement letter—such as the one already required for fee-sharing purposes—will likely suffice to avoid difficulty in this regard.

Some jurisdictions might require additional disclosures on firm stationery. See, e.g., Pennsylvania Ethics Op. 2005-13 (“[a]n attorney can be ‘of counsel’ to more than one firm, provided there is a disclosure on the letterhead so as to avoid confusion.”).

Conclusion

The ethics authorities allow a lawyer to affiliate with multiple law firms simultaneously. The various affiliations discussed above all require that the multiple firms with which the lawyer is affiliated be viewed as one entity for conflicts purposes. There may be issues concerning sharing confidential information necessary to clear conflicts. Those issues can be addressed by client consent.

With regard to fee sharing, firms should be prudent and follow the local requirements. Careful wording in the firms’ standard engagement letters may be the best vehicle to address these issues. We urge caution in situations where a client could claim that they were misled to believe that, for example, a particular firm or attorney would not be involved in a given matter. These types of misunderstandings can lead to disputes or otherwise exacerbate friction between attorney and client.

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