SBM - State Bar of Michigan

RI-45

February 28, 1990

SYLLABUS

It is permissible to use the name of a deceased partner in a firm name where there is a continuing line of succession from the firm of which the deceased lawyer was a partner.

It is misleading and impermissible to use the name of a lawyer in the firm name where the lawyer is no longer associated with the firm.

It is not permissible to use a firm name which suggests that the attorneys in the firm are partners, or members of a professional corporation, if that is not, in fact, the case.

References: MRPC 7.1 and 7.5(a) and 7.5(d); C-230, CI-1179.

TEXT

Several questions have been raised concerning law firm names, as follows:

  1. Is it permissible to use the name of a deceased partner/shareholder in a firm name if the other named partners change?
  2. Is it permissible to continue to use the name of a deceased shareholder in a firm name if the professional corporation is changed to a partnership?
  3. When a named partner/shareholder leaves the partnership/professional corporation, and continues to share office space with the former partnership/professional corporation, may the former partnership or professional corporation continue to use the name of the departed partner/shareholder in the firm name?
  4. Under a dissolution agreement, departing partners/shareholders are paid periodic payments for their share until the share is entirely compensated. At what point must the name of the firm be changed to reflect the departure of the partner/shareholder?

MRPC 7.5(a) states:

"A lawyer shall not use a firm name, letterhead, or other professional designation which violates Rule 7.1."

MRPC 7.1 prohibits a lawyer from making any public communication which is "false, fraudulent, misleading or deceptive." The Comment to MRPC 7.5 states, inter alia, that a firm may be designated by the name of deceased members where there has been a continuing succession in the firm's identity. It also states that "it is misleading to use the name of a lawyer not associated with the firm or with a predecessor of the firm."

To answer the first inquiry, an example is helpful. Law Firm A, B, and C, P.C. (or partnership) has been in existence for a period of time. Lawyer D becomes a shareholder (or partner); Lawyer A then dies. Shareholders C and D buy out shareholder B.

If there has been a "continuing succession" from the original firm, the name of the deceased lawyer may be used in the name of the resulting firm, i.e., A, C, and D, P.C. In order to be a "successor" the resulting shareholders (or partners) must continue to retain the same rights as the original owner without change in ownership, and there must be change in form only and not in substance; "succession" is the right by which one set of persons may, by succeeding another set, acquire a property interest in all the goods, movables, and other chattels of a corporation. Black's Law Dictionary, 5th Abridged Edition, 1983.

In the example given, when lawyer D becomes a shareholder the name of the firm may become A, B, C, and D, P.C., since the resulting firm retains the property interest of the original firm. When lawyer A dies the entity may continue using the name A, B and C, P.C., since the surviving shareholders fit the definition of "successors." When C and D buy out B, C and D retain the property interest of the original firm, and may be called A, C and D, P.C. If lawyer B begins a new firm, B cannot use deceased lawyer A in the firm name, because the new firm will not continue the same rights as the original firm.

In the second inquiry, a professional corporation has been changed to a partnership. If the form of the legal entity is the only aspect changed, i.e., the firm is in the same location, has the same employees, equipment, and client base, there is no break in the "succession" between the P.C. to the partnership.

The Committee has answered the third inquiry many times. MRPC 7.5(d) states: "Lawyers may state or imply that they practice in a partnership or other organization only when that is the fact." The Comment adds that lawyers who share office facilities may not call themselves Smith and Jones if they are not, in fact, partners, as that name suggests partnership. Using joint letterhead is "stating and implying" that the lawyers practice together. Office sharers may not use joint letterhead, C-230, CI-1179.

The last inquiry concerns the timing in which the firm name must be changed. The rule is that the name of the business must accurately reflect the legal entity and the responsibility of the named shareholders/partners for the business of the firm.

Whether there is a continuation of the original firm would depend on a number of factors. Did the lawyers continue to use the professional corporation name on letterhead, office signs, pleadings and other documents? Did they maintain a common trust account, common bookkeeping, common employees? Were they covered by a single malpractice insurance company policy? Did the firm continue to pay taxes as the original corporation? It may be that even though the original corporation has not yet been dissolved, the departing lawyer has begun to function outside the corporate structure. If the departing lawyer has withdrawn from the corporation even though he will not be paid off until some later date, it would be unethical to continue using the lawyer's name in the firm name, pursuant to MRPC 7.5(d).

The name of the entity may be retained until the date the departing shareholder/partner departs and ceases to practice with the firm. Payments made under a buy-out or other departure agreement after the departure do not affect the legal standing of the entity. Similarly the P.C. name cannot be used if the named shareholders are not in fact responsible for the firm.

In sum, the rules require that lawyers be honest and clear in the representations which they make to the public regarding the nature of their practices. Firm names, letterhead, office signs, court pleadings, advertisements, and all other communications must accurately describe the nature of the relationship with other lawyers. Consumers of legal services have a right to understand what individual or entity they can look to for the provision of legal services and who they can hold responsible for the manner in which those services are provided.