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Part 1: Of Counsel Risk Management Series

By Whittney Dunn, Risk Manager, The Bar Plan Foundation

We all know how much the practice of law is changing, and how difficult it can be for attorneys to keep up with these seemingly seismic shifts in our profession. Some attorneys are responding to these changes by forming alternative types of legal business entities and searching for unique client sources. These creative business solutions may cause issues with the rules of professional conduct, and many attorneys end up seeking to resolve these issues under the umbrella of an “Of Counsel” relationship. “Of Counsel” has become a catch-all term applied across the profession to various types of relationships, frequently with the sole intention of finding a “work around” to the rules of professional conduct.

This article, the first in a three-part series, breaks down what exactly an “Of Counsel” relationship is, and what it isn’t – including why attorneys are misguided when seeking to avoid rule violations simply by placing an “Of Counsel” label on a legal relationship. Future articles in the series will address risk management considerations in “Of Counsel” relationships and what attorneys and firms should watch for when those “Of Counsel” relationships cross state lines.

What does “Of Counsel” mean?

The Model Rules of Professional Conduct (MRPC) define “firm” or “law firm” as “a lawyer or lawyers employed in a law partnership, professional corporation, sole proprietorship or other association authorized to practice law…”  See MRPC 1.0(c).  Though the term “Of Counsel” is not specifically defined by the rules, many law firms attempt to create this type of legal association between two lawyers not otherwise associated by designating an attorney as “Of Counsel” to their firm.

The term “Of Counsel” is defined by the ABA as a “close, regular, personal relationship” between the “Of Counsel” attorney and the firm. See ABA Formal Ethics Op. 90-357 (1990). Each law firm will likely have varying reasons for designating an attorney as “Of Counsel” and whether or not the designation will accomplish the firm’s goals will depend upon the circumstances. No firm should designate an attorney as “Of Counsel” nor should any attorney allow themselves to be thusly designated without the existence of that “close, regular, personal relationship.”

What doesn’t “Of Counsel” mean?

The term “Of Counsel” would not apply to any relationship between a lawyer and a law firm that could not be described as close, regular and personal.  The following situations would all be inappropriate relationships to designate as “Of Counsel” according to ABA Formal Ethics Opinion 90-357 and numerous ethics opinions throughout the country:

  • Mere forwarder or receiver of legal business: A firm wishing to avoid the requirements of the fee division rules or any rules prohibiting a referral fee between lawyers not in the same firm by designating one lawyer as “Of Counsel” may be disappointed to learn that an affiliation that amounts to nothing more than a referral relationship does not merit “Of Counsel” designation.
  • Only one case: A relationship between attorneys who are not in the same firm working together on one case can be referred to as a “co-counsel” relationship, but does not make either attorney “Of Counsel” to the other’s firm.
  • Occasional consultations or collaborations: Even if the attorney and the firm collaborate more than once, merely occasional consultations or collaborations do not amount to the “close, regular, personal” relationship that is required to label the attorney as “Of Counsel” to the firm. This is also true for designations that indicate a specific field of concentration such as “Tax Counsel,” “Antitrust Counsel” and the like. While these terms may be permissibly used interchangeably with “Of Counsel,” they should not be used for any attorney who does not have the required “close, regular, personal” relationship with the firm. Mere availability to answer occasional tax or antitrust questions that may arise for clients of the law firm does not justify the “Of Counsel” label or any specialized variant. Firms and individuals designating anyone associated with the firm to be a specialist in any field should also review the rules of professional conduct relating to communication of fields of practice and specialization (e.g., Rule 4-7.4 in Missouri).
  • Outside consultants: Any attorney outside the firm who provides consultation services does not, by that fact alone, become “Of Counsel” to the firm. Consultants with “Of Counsel” designation must have the “close, regular, personal” contact required of the title, and, therefore, would not properly be defined as outside the firm.
  • Partner or associate: A partner, with the shared liability and/or managerial responsibility implied by that term or an associate who is “regularly employed” by the firm should be characterized as such in any public communications. The term “Of Counsel” does not apply to this type of relationship.

The firm and “Of Counsel” attorney should fully understand that courts and disciplinary authorities confronted with “Of Counsel” relationships routinely discount those relationships where they exist solely to find a work around to the rules of professional conduct. While some authority supports the conclusion that a lawyer designated as “Of Counsel” and the law firm do not need to comply with the requirements of their respective division of fee rules between lawyers not in the same firm, other states and courts have concluded to the contrary. Therefore, a lawyer and law firm relying on “Of Counsel” status to avoid the necessity of complying with any particular rule of professional conduct are potentially at risk.

Risk management considerations relating to the “Of Counsel” relationship

A nonexclusive list of the risk management considerations that can arise relating to “Of Counsel” relationships that will be addressed in future articles in this series is below:

  • Division of fees
  • Conflict checking
  • Vicarious liability and malpractice coverage
  • Office-sharing vs. “Of Counsel”
  • Advertising “Of Counsel” status
  • Relationships with attorneys in other states

If you or your firm has 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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