June 8, 1981
It is ethically improper for a law office to list the name of an outside sole practitioner on its letterhead in any capacity suggestive of an "Of Counsel," partnership, association or other professional relationship under circumstances where the sole practitioner is merely a forwarder of legal referral business to the law office.
References: DR 2-107(A); CI-472; ABA Formal Opinion 330; Administrative Order 1978-4.
You state that you are in a private practice of law sharing space and expenses with two other attorneys. Another sole practitioner and one of the "partners" at your current address have entered into an agreement whereby certain types of cases are referred to your office and that you and the other "partner" share equally in the proceeds generated by the referral cases. You conclude by asking how your office should refer to the outside sole practitioner, that is, "of Counsel" or an "Associate"?
The Michigan Supreme Court, in 1978 issued Administrative Order 1978-4 that states:
"A lawyer may, on behalf of him or herself, partner, or associate, or any other lawyer affiliated with him or her or his or her firm, use or participate in the use of any form of public communication that is not false, fraudulent, misleading, or deceptive. Except for DR 2-103 and DR 2-104, disciplinary rules in conflict with this Order are suspended for a period of one (1) year."
This one-year limitation has been periodically extended so that the Order is now considered by this Committee to be the permanent rule. Thus, Administrative Order requires two basic criteria:
- That the communication not be false, fraudulent, misleading or deceptive;
- That the communication not violate DR 2-103 and DR 2-104.
Subsequent to the adoption of Administrative Order 1978-4, this Committee had occasion to express this Opinion on use of the "Of Counsel" designation on an attorney's letterhead. In CI-472 the Committee adopted ABA Formal Opinion 330 that described the "Of Counsel" relationship as follows:
"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 law firm, and not a relationship better described as a forwarder-receiver of legal business; see DR 2-102(A)(4) and cf. DR 2-107(A). His or her relationship with that lawyer or firm must not be that of a partner (or fellow member of a professional legal corporation) nor that of an employee; see DR 2-102(A)(4). His or her 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 former partner who remains available to the firm for consulting and advice, or a retired public official who regularly and locally is available to the firm for consultation and advice, . . . 'Of Counsel' contemplates either that the lawyer practice in the offices of the lawyer or firm to which he or she is 'Of Counsel' or that his or her relationship, by virtue of past partnership of a retired partner that has led to continuing close association, be so close that he or she is in regular and frequent, if not daily, contact with the office of the lawyer or firm;" (Citation omitted).
In line with ABA Formal Opinion 330 and CI-472, this Committee concludes that the proposed use of the words "Of Counsel" ion your letterhead in reference to the outside sole practitioner would be improper, since it would be misleading as to the relationship described, that is, a forwarder of legal business. From this, it follows that it would be equally misleading for your office to designate the outside sole practitioner as an "Associate." Finally, it would be improper for your office to list the name of the outside sole practitioner on your letterhead in any capacity which suggest a partnership, association, "of Counsel," or other form of business relationship absent the criteria described in ABA Formal Opinion 330.
Your inquiry suggests another area of concern to this Committee namely, the division of fees among lawyers. DR 2-107(A) states:
"(A) A lawyer shall not divide a fee for legal services with another lawyer who is not a partner in or associate of his or her firm or law office, unless:
"(1) The client consents to employment of the other lawyer after a full disclosure that a division of fees will be made.
"(2) The division is made in proportion to the services performed and responsibility assumed by each.
"(3) The total fee of the lawyers does not clearly exceed reasonable compensation for all legal services they rendered the client."
It is inappropriate for lawyers who are not partners or associates of the firm to split fees without a full disclosure to the client and then the division can only be in proportion to the services performed and responsibility assumed by each of the lawyers. This rule applies equally to the outside sole practitioner referring cases to your office as well as the division of fees among the attorneys with whom you have an expense sharing arrangement.