85-01: Letterhead

1/1985

Law firms to be shown as "of counsel" to each other on their respective letterheads found to be ethically permissible.

FACTS

Law Firm X is a professional corporation located in Phoenix, Arizona. Law Firm Y is a professional corporation located in a small county in Arizona. The scope of practice of both firms is similar in nature and the firms have a number of overlapping clients and cases upon which they jointly work. Over the last several years, a continuing and ongoing relationship between the firms has evolved. As a result, the two firms propose to become "Of Counsel" to the other. Law Firm X would be listed as "Of Counsel" on the letterhead of Law Firm Y, and Law Firm Y would be listed as "Of Counsel" on the letterhead of Law Firm X, as opposed to the designation of individual attorneys' names on the respective letterheads.

The law firms have submitted an extensive accounting of their interrelationship. These facts reveal that Law Firm Y has, in the past, and will continue to become involvid in major cases which require the immediate influx of additional lawyer assistance. Law Firm X has, and will continue to provide this assistance. The firms believe that the establishment of an "Of Counsel" relationship will better enable them to more readily and efficiently offer better legal services to the clients of both firms. In addition, adoption of the arrangement will affirmatively disclose to clients and other members of the community the full extint of the ongoing relationship between the firms.

QUESTION

Is it ethically permissible for Law Firm X and Law Firm Y to be listed, in their firm status, as "Of Counsel" to each other, under these circumstances?

CODE PROVISIONS INVOLVED

EC 2-13. In order to avoid the possibility of misleading persons with whom he deals, a lawyer should be scrupulous in the representation of his professional status. He should not hold himself out as being a partner or associate of a law firm if he is not one in fact, and thus should not hold himself out as a partner or associate if he only shares offices with another lawyer.

DR 2-102. Professional Notices, Letterheads, Offices, and Law Lists.

OPINION

Under the present circumstances, the proposed designation of "Of Counsel" status between these firms is appropriate.

The question posed by the inquiring law firm is unique only because it presents the issue of the designation of entire law firms as "Of Counsel" as opposed to the listing of individual members of respective firms with this status. DR 2-102(A)(4) states in part that,

... A lawyer may be designated "Of Counsel" on a letterhead if he has a continuing relationship with a lawyer or law firm, other than as a partner or associate.... (emphasis added).

In our Opinion No. 74-33, ve held that the primary requirement for validation of an "Of Counsel" relationship is the existence of a substantial and continuing relationship that is close, regular and personal. The intent of the Code provisions and that Opinion in that "Of Counsel" status should not be misused for public relations or other purposes. The public should not be deceived into believing that an integrated relationship between a lawyer and the firm with whom he is "Of Counsel" exists when it does not. Opinion No. 74-33 indicates that contact, if not daily, must be regular and frequent to justify the designation.

Prom the facts presented to the Committee, it is clear that Law Firms X and Y not engaged in a casual relationship, but a continual one with increasing interdependence. It is anticipated that members of both law firms will spend a considerable amount of time at the offices of the other representing clients of both firms. Part-time residence at the locations of the respective firms by members of the other is also contemplated. thus, the restrictions of Opinion No. 74-33 are apparently sufficiently addressed by all members of each firm.

The only impediment to the establishment of the proposed relationship is ABA Formal Opinion 330, wherein it was held that law firms could not act as "Of Counsel" to other lawyers or law firms. The opinion was concerned with the advertising potential of such relationships. No other opinion seems to have further addressed this issue: While ABA Opinions are helpful authority, they are not binding precedent upon this Committee. We find no reason to continue drawing a distinction between inclusion of individual lawyers and entire firms as "Of Counsel" so long as the requisite tests are let. Other considerations offer further support for deviation from ABA Formal Opinion 330.

Under the current ethical scheme, nothing prohibits Law Firms X and Y from working on numerous cases together on a continuing and regular basis; from working together on non-litigation matters on a continuing and regular basis: from having members of each firm work part-time in the other's offices: or from sharing management. expertise and administrative services on a continuous and regular basis. The firms are essentially currently acting as "Of Counsel" without the benefit of the designation. It is more consistent with the philosophy of full disclosure which underlies the Code of Professional Responsibility to permit the "Of Counsel" designation. A close, continuing relationship exists between the firms, and the public mbould be informed of the relationship in the same fashion as if individual members were listed as "Of Counsel" to the law firms.

The Committee also notes that, under the new Arizona Rules of Professional Conduct which will come into effect on February 1, 1985, the relationship which is proposed herein would not be prohibited. For this reason, the Committee chooses not to follow ABA Formal Opinion 330 and to expand the availability of the "Of Counsel" status to law firms as well as individuals so long as the requisite contact between the firms exists.

Editor's Note
See, also, Arizona Opinion No. 80-30 (December 15, 1980) wherein ethical approval was given for a one-lawyer professional corporation to serve as "Of Counsel" to a three-lawyer professional corporation where the one-lawyer organization would maintain the substantial and continuing relationship with the larger professional corporation mandated by DR 2-102 (A)(4) as interpreted by Arizona Opinion No. 74-33. The Committee, on the facts of that case, also refused to follow the disapproving view of ABA Formal Opinion 330 respecting a law firm serving as "Of Counsel" to another lawyer or law firm.

Formal opinions of the Committee on the Rules of Professional Conduct are advisory in nature only and are not binding in any disciplinary or other legal proceeding. This opinion is based on the Ethical Rules in effect on the date the opinion was published. If the rule changes, a different conclusion may be appropriate.