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Part 3: Of Counsel Risk Management Series

By Whittney Dunn, Risk Manager, The Bar Plan Foundation

The reasons for an attorney and a law firm deciding to enter into an “Of Counsel” relationship are numerous and will vary from attorney to attorney. Before entering into any type of “Of Counsel” relationship, the attorney and the firm should carefully consider their reasons for doing so and what risk management issues might arise as a result of that relationship. One type of “Of Counsel” relationship that is becoming increasingly common is one between an attorney in one state and a firm with attorneys licensed in another state. The spread of technology and changes in the legal marketplace have caused some firms to try to bring in “Of Counsel” attorneys in other states to expand their client base beyond the reaches their own law licenses. These relationships frequently raise ethics and malpractice issues.

Additional information regarding what is and what is not a proper “Of Counsel” relationship can be found in our first article in this series, “Defining ‘Of Counsel’ relationships.”  Additional information can be found in our second article “Risk management considerations in ‘Of Counsel’ relationships.”

Is it permissible at all?

A lawyer in one state may be “Of Counsel” to a lawyer or firm in another state provided that the requisite “continuing, close relationship” is maintained.  See ABA Informal Ethics Op. 1315 (1975). The jurisdictional limitations of the “Of Counsel” lawyer must be noted on the affiliated firm’s letterhead and other public communications that include the “Of Counsel” lawyer’s name. See ABA Formal Ethics Op. 90-357 (1990). The firms should also carefully analyze the advertising rules in each state to ensure compliance. See Model Rules of Professional Conduct (MRPC) 7.1 – 7.3 and the corresponding rules in each state (e.g., Rules 4-7.1 – 7-7.5 in Missouri).

Unauthorized Practice of Law

The “Of Counsel” attorney and the firm must also be careful that no attorney in the association is running afoul of the limits on unauthorized practice of law for each state. The “Of Counsel” label cannot be placed on an attorney in a state where the firm’s attorneys are not licensed merely to provide the firm an opportunity to practice law in that state under the illusory “review” of the “Of Counsel” attorney. See Matter of Crosley, 99 N.E.3d 643 (Ind. 2018) (lawyer in “Of Counsel” arrangement found to have violated Rule 1.4(a)(2): Communication, Rule 5.4(c): Professional Independence of a Lawyer, and Rule 5.5(a): Unauthorized Practice of Law; Multijurisdictional Practice of Law). Furthermore, the “Of Counsel” attorney may not enter into a state where he or she is not licensed and begin to practice law in that state simply because he or she is “Of Counsel” to a firm in that state.  See Kansas Ethics Op. 08-01 and Missouri Informal Ethics Op. 20010080.

Both the firm and the “Of Counsel” attorney should fully understand the requirements of the Unauthorized Practice of Law; Multijurisdictional Practice of Law rule in all states where all attorneys are licensed and should be mindful not to engage in actions which could be considered the unauthorized practice of law or aiding another in committing the unauthorized practice of law.

Trust Account Supervision Requirements

Attorneys and firms should also carefully review the trust accounting rules in each state where any attorneys are licensed to ensure that requirements relating to the location and supervision of the account comply with each state’s requirements. Some states (e.g., Kansas) require that a separate trust account be opened within that state’s borders to hold client money for clients and/or matters within that state. Other states (e.g., Missouri) may allow the account itself to be located outside the state’s borders, but require that a lawyer admitted to practice in the state have supervisory control over the account.

If you or your firm have any questions about whether or not an “Of Counsel” relationship would create ethics or liability issues, you should contact the appropriate ethics authority in your state or reach out to The Bar Plan Risk Management Department at Foundation@TheBarPlan.com.

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