Editor's Note:
State Bar Ethics Opinions cite the applicable California Rules of Professional Conduct in effect at the time of the writing of the opinion. Please refer to the California Rules of Professional Conduct Cross Reference Chart for a table indicating the corresponding current operative rule. There, you can also link to the text of the current rule.
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1. May multiple "principal" law firms designate the same independent attorney or law firm as "of counsel" in their solicitations, including stationery and similar public announcements.
2. Absent written client waivers, may a principal law firm and its independent "of counsel" attorneys represent adverse or potentially adverse interests.
1. In order to avoid false, deceptive or confusing communications, a principal member or law firm ("principal") may hold out another member or law firm as "of counsel" only where the relationship between them is "close, personal, continuous, and regular." So long as that standard is observed, there is no absolute limit to the number of "of counsel" relationships in which a member or firm may participate as "of counsel."
2. Due to the requirement to maintain a "close, personal, continuous, and regular" relationship within the principal and "of counsel" relationship, neither the principal nor "of counsel" members or law firm may represent adverse or potentially adverse interests except as authorized by rule 3-310 of the California Rules of Professional Conduct.
Rules 1-400 and 3-310 of the California Rules of Professional Conduct of the State Bar of California.
The Committee has been requested to consider the application of the California Rules of Professional Conduct to the following "of counsel" relationship:
Law firm "O" maintains a specialty or "boutique" practice. As a result of that specialization, "O" is regularly employed by principal Law Firms "A," "B" and "C" to assist in specific matters for the principal firms' respective clients. "A," "B" and "C" each list firm "O" as "of counsel" on their stationery and public announcements.
Neither "O" nor "A", "B" and "C" regularly reconcile potential or actual conflicts of interest. Rather, a conflicts analysis is only conducted case-by-case between "O" and the retaining principal firm, "A", "B" or "C." No conflict reconciliation is conducted between "A", "B" and "C." "A", "B", "C" and even "O" periodically represent adverse or potentially adverse interests without obtaining written waivers from their respective clients. Indeed, such adverse and potentially adverse representations sometimes occur concurrently between "O" and its principal firm while the principal firm employs "O" in an "of counsel" relationship in an unrelated matter.
As set forth below, the proposed relationship creates serious and potentially prohibitive concerns.
The use of the term "of counsel" has received significant attention in recent years. Nationwide, the American Bar Association has issued several formal and informal ethics opinions concerning the use of the term. In California, this Committee addressed the issue in State Bar Formal Opinion No. 1986-88 while the San Diego, San Francisco and Los Angeles Bar Associations have each issued one or more opinions of their own.1
Much of the attention concerning "of counsel" relationships has resulted from the apparent proliferation of such relationships and a corresponding growth in the use of similar terms such as "counsel," "senior counsel," and "special counsel," to name a few. Ethics authorities have recognized four principal patterns of such relationships. (See ABA Formal Opn. No. 90-357.) Probably the most common is the circumstance of a part-time practitioner who is associated with another member or law firm on a basis different than the other members of the firm. Another common example is that of retired partners who desire to continue a less rigorous association with a firm. And, the "of counsel" title is also frequently used with laterally-hired attorneys participating in a probationary evaluation prior to admission as a partner. Finally, the title has also gained widespread use to describe senior attorneys employed in non-partnership track positions.2
Prior to enactment of the current California Rules of Professional Conduct, State Bar Formal Opinion No. 1986-88 provided the most specific guidance concerning the proper use of the term by members. As the committee noted, the then-current rules provided little if any guidance concerning "of counsel" relationships. However, we recognized that the term was generally used:
[T]o describe a relationship between a lawyer or law firm and one listed as "of counsel" in which the person listed as "of counsel" has: (1) a close and personal relationship with the law firm; (2) is available to the listing firm or attorney for consultation and advice; (3) is not a partner, associate, or mere forwarder-receiver of legal business; (4) is compensated on the basis of individual cases; and (5) does not in other respects or in other cases share the continuing obligations of the listing lawyer or law firm.3
Accordingly, based upon the proscriptions of former rule 2-101 of the California Rules of Professional Conduct concerning "false, deceptive or misleading" communications, and in the absence of a universally accepted definition, we concluded that "prudent" members should use the term "of counsel" only when the relationship conforms to the American Bar Association definition in former DR 2- 102 of the American Bar Association, Model Rules of Professional Conduct. (e.g., a "continuing relationship with a lawyer or law firm other than as a partner or associate"). (State Bar Formal Opinion No. 1986-88.)
Since the issuance of State Bar Formal Opinion No. 1986-88, the trend of widespread inconsistency in the use of the "of counsel" designation has continued. However, with the adoption of rule 1- 400 of the California Rules of Professional Conduct, members are now guided by specific rule-based authority concerning such relationships. In particular, through the Standards promulgated by the Board of Governors pursuant to rule 1-400, a "communication" which states or implies that a lawyer or a law firm is "of counsel" to another lawyer or a law firm is presumed to violate rule 1-400 unless the relationship is "close, personal, continuous, and regular" and other than that as a partner, associate or officer or shareholder pursuant to Business and Professions Code sections 6160-6172. (See rule 1-400(E)(8).)4
In light of the foregoing, the issue as to whether a member or law firm may serve in multiple, simultaneous "of counsel" relationships depends upon an interpretation of the requirement that such relationships be "close, personal, continuous, and regular." This question has also received substantial scrutiny. In State Bar Formal Opinion No. 1986-88, for example, we concluded that law firms could maintain a sufficiently continuous relationship with another member or law firm to be listed as "of counsel" in the principal's solicitations.
We recognize the standard suggested in State Bar Formal Opinion No. 1986-88 has been replaced by the arguably more restrictive standard of "close, personal, continuous and regular." Nonetheless, we believe that nothing precludes a law firm and its constituent members from maintaining a close, personal, continuous, and regular relationship as an organization with another member or law firm. So long as the relationship involves more than merely collaborating upon an individual or occasional matter, forwarding or receiving legal business or infrequent independent consulting, we believe the standard is met. (See ABA Formal Opn. No. 90-357.)5 Thus, we conclude the current standard for "of counsel" relationships may still be satisfied where a law firm, rather than an individual member, serves in the "of counsel" role.
The American Bar Association has directed substantial attention to the question of whether its "close, regular, personal" standard implies such an intimate professional relationship that, by definition, it precludes a member or law firm from serving in multiple "of counsel" relationships. Originally, in Informal Opinion No. 1173, the American Bar Association first opined that a lawyer could not be of counsel to more that one firm. Then, in Formal Opinion No. 330, the American Bar Association modified that position to conclude that it was not possible for a lawyer to have a "close, regular, personal relationship" with more than two lawyers or law firms. Recently, however, in Formal Opinion No. 90- 357, the American Bar Association rejected that strict numerical standard in favor of a qualitative analysis emphasizing the need for all such "of counsel" relationships, no matter how many or few, to maintain a "close and regular" affiliation:
A lawyer can surely have a close, regular, personal relationship with more than two clients; and the Committee sees no reason why the same cannot be true with more than two law firms. There 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, and the number may not be much beyond two, but the controlling criterion is "close and regular" relationships, not a particular number. (ABA Formal Opn. No. 90-357.)
We agree with and adopt the reasoning of American Bar Association Formal Opinion No. 90-357 in this regard. Given the virtual identity of the American Bar Association standard of "close, regular, personal" with that expressed in rule 1-400(E)(8)of the California Rules of Professional Conduct as "close, personal, continuous and regular," we believe 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 relationship is limited by strict observance of the qualitative criteria of rule 1-400. Thus, in theory, law firm "O" may serve as "of counsel" to law firms "A", "B" and "C." 6
In application, however, we suspect that the question of the application of conflicts analysis under rule 3-310 may pose a much more significant practical limitation upon the number of "of counsel" relationships which may be maintained simultaneously than the qualitative analysis set forth above. For, as we explain below, one consequence of the maintenance of an "of counsel" relationship is to make the principal and "of counsel" constituents of the same de facto law firm for conflicts purposes.
Rule 3-310 of the California Rules of Professional Conduct precludes a member from accepting or maintaining the representation of adverse interests without providing written disclosure to and/or receiving informed written consent from the member's client.7
Generally, in the civil context, where an individual member is precluded from a representation by reason of rule 3-310, so also is the member's law firm. (E.g., William H. Raley Co. v. Superior Court (1983) 149 Cal.App.3d 1042, 1049 [197 Cal.Rptr.232].) For the same reasons, and consistent with State Bar Formal Opinion No. 1986-88, we believe that, to the extent the relationship between a principal member or law firm and another member or law firm is sufficiently "close, personal, regular and continuous," such that one is held out to the public as "of counsel" for the other, the principal and "of counsel" relationship must be considered a single, de facto firm for purposes of rule 3-310.8 Accordingly, if the "of counsel" is precluded from a representation by reason of rule 3-310 of the California Rules of Professional Conduct, the principal is presumptively precluded as well, and vice-versa. (Accord, Bar Association of San Francisco Formal Opn. No. 1985- 1.)9
The implications of the "of counsel" relationship are even more far reaching where two or more principals share the same "of counsel." We view this relationship no differently than if two or more law firms shared one or more common partners, shareholders or associates. Thus, they will all be viewed effectively as constituents of one de facto firm for purposes of rule 3-310 of the California Rules of Professional Conduct. Consequently, by the seemingly innocuous events involved in holding out to the public a shared "of counsel," a principal member or law firm will exponentially increase the complexities of compliance with rule 3- 310 of the California Rules of Professional Conduct.10
This opinion is issued by the Committee on Professional Responsibility and Conduct of the State Bar of California. It is advisory only. It is not binding upon the courts, the State Bar of California, its Board of Governors, any persons or tribunals charged with regulatory responsibilities, or any member of the State Bar.
The lawyer who is described as being "of counsel" to another lawyer or law firm must have a continuing (or semi-permanent) relationship with that lawyer or firm, and not a relationship better described as a forwarder- receiver of legal business. His relationship with that lawyer or firm must not be that of partner (or fellow member of a professional legal corporation) nor that of employee. His relationship with the lawyer or law firm must be a close, regular, personal relationship like for example, the relationship of a retired or semi-retired public official who regularly and locally is available to the firm for consultation and advice. While it would be misleading to refer to a lawyer who shares in the profits and losses and general responsibility as being "of counsel," the lawyer who is "of counsel" may be compensated whether on a basis of division of fees in particular cases or on a basis of consultation fees.
(D) A communication or a solicitation (as defined herein) shall not:
(1) Contain any untrue statement; or
(2) Contain any matter, or present or arrange any matter in a manner or format which is false, deceptive, or which tends to confuse, deceive, or mislead the public; or
(3) Omit to state any fact necessary to make the statements made, in light of circumstances under which they are made, not misleading to the public . . . .
Rule 1-400(E)(8) which was adopted by the Board of Governors of the State Bar, effective May 27, 1989, defines the following forms of "communication" defined in rule 1-400(A) to be presumptively violative of rule 1-400:
(8) A "communication" which states or implies that a member or law firm is "of counsel" to another lawyer or a law firm unless the former has a relationship with the latter (other than as a partner or associate, or officer or shareholder pursuant to Business and Professions Code sections 6160-6172) which is close, personal, continuous, and regular.
(A) For purposes of this rule:
(1) "Disclosure" means informing the client or former client of the relevant circumstances and of the actual and reasonably foreseeable adverse consequences to the client or former client;
(2) "Informed written consent" means the client's or former client's written agreement to the representation following written disclosure;
(3) "Written" means any writing as defined in Evidence Code section 250.
(B) A member shall not accept or continue representation of a client without providing written disclosure to the client where:
(1) The member has a legal, business, financial, professional, or personal relationship with a party or witness in the same matter; and
(2) The member knows or reasonably should know that:
(a) the member previously had a legal, business, financial, professional, or personal relationship with a party or witness in the same matter; and
(b) the previous relationship would substantially affect the member's representation; or
(3) The member has or had a legal, business, financial, professional, or personal relationship with another person or entity the member knows or reasonably should know would be affected substantially by resolution of the matter; or
(4) The member has or had a legal, business, financial, or professional interest in the subject matter of the representation.
(C) A member shall not, without the informed written consent of each client:
(1) Accept representation of more than one client in a matter in which the interests of the clients potentially conflict; or
(2) Accept or continue representation of more than one client in a matter in which the interests of the clients actually conflict; or
(3) Represent a client in a matter and at the same time in a separate matter accept as a client a person or entity whose interest in the first matter is adverse to the client in the first matter.
. . .
(E) A member shall not, without the informed written consent of the client or former client, accept employment adverse to the client or former client where, by reason of the representation of the client or former client, the member has obtained confidential information material to the employment . . . .
[o]n the other hand, application of rule 5-102 to non- traditional relationships is problematic. The two law firms may be sufficiently separate and distinct to avoid any conflict of interest considerations.
In light of the more precise guidelines for "of counsel" relationships now available through rule 1-400, even "non- traditional" "of counsel" relationships must nonetheless conform with the "close, personal, regular and continuous" criteria.
The relationship of an attorney who is not a partner, member of a professional legal corporation, or associate may not seem significant enough to warrant considering that attorney a member of the firm. However, by stating on its letterhead, shingle or listing that an attorney is "of counsel" to a firm, the firm is making an affirmative representation to the public that the services of that attorney are available to the firm, although not on the same basis as that of a partner, associate, or member.
. . .
By characterizing an attorney as "of counsel" to the firm, a law firm is representing to the public at large and its clients in particular that the attorney's services are regularly available to the firm as co- counsel, if warranted, or as a consultant, if needed.
. . .
[A] firm which lists an attorney as "of counsel" on its letterhead, shingle or listing is making an affirmative representation to its clients that the services of that attorney are available to clients of the firm. Consequently, he or she should be considered a member of the firm in determining whether a particular conflict exits.
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