SBM - State Bar of Michigan


October 5, 1990


When a lawyer who is a shareholder in a professional corporation ceases to be a shareholder, but remains with the firm as an employee, the professional corporation may not ethically continue to use the former shareholder's name in the firm name.

References: MRPC 7.1, 7.5(a), 7.5(d); RI-45; C-230; CI-6, CI-111, CI-154, CI-298, CI-449, CI-536, CI-730.


A law firm's sole stockholders have been lawyers A, B, C and D. It is anticipated that D will surrender all shares of stock in said firm, but will remain employed as a practicing lawyer with the firm performing the same employment functions as D did during the time that D was a shareholder of the firm. The percentage of stock owned by D will now be owned by E. The firm wishes to use the professional name "A, B, C, D, and E, P.C." on letterhead, office signs, business cards, pleadings and other documents. It wishes to retain the names of each of the five lawyers until the date any lawyer ceases to practice with the firm.

The issue presented is whether the law firm may ethically use lawyer D in its firm name after D is no longer a shareholder in the professional corporation.

MRPC 7.5(a) states:

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

MRPC 7.1 states:

"A lawyer may, on the lawyer's own behalf, on behalf of a partner or associate, or on behalf of any other lawyer affiliated with the lawyer or the lawyer's law firm, use or participate in the use of any form of public communication that is not false, fraudulent, misleading, or deceptive."

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."

In RI-45 this Committee held that where a partner-shareholder leaves a partnership-professional corporation and continues to share office space with the

firm, the partnership-professional corporation may not continue to use the name of the departed partner-shareholder in the firm name. In that opinion, the Committee reasoned:

"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." Emphasis added.

Where a firm name includes an employee of the firm, a consumer of legal services could be confused as to whom the consumer could hold responsible for the services provided. For example, if lawyer A committed malpractice, lawyer D may not be legally responsible for that malpractice since he is just an employee of the firm. However, the consumer of legal services could be confused in this regard.

The Committee also held lawyers who are not in fact members of a partnership or a single professional corporation may not use letterhead identifying themselves as associates or as an association of professional corporations, C-230. In that opinion the Committee stated:

". . . an attorney who practiced as 'of counsel' to a firm, and was so designated on that firm's stationery, could not be included in the name of the firm in such a manner as to imply to the general public that he was in fact a partner in the firm."

The Committee faced this exact issue in CI-111. In that case, lawyer Able practiced as a professional corporation. Lawyers Baker and Case were employees of that corporation. The lawyers proposed to practice as Able, Baker and Case, P.C. although Able would be the sole shareholder. The Committee held that it was not ethical for lawyers to practice as Able, Baker and Case, P.C. under those circumstances.

This Committee has addressed similar issues with similar results in: CI-730, CI-536, CI-449, CI-298, and CI-6. This situation should be distinguished from that in which a deceased or retired shareholder's name is used in the firm name, which is explicitly allowed under the Comment to MRPC 7.5. In that instance the lawyer is not present in the firm and will not confuse a client as to the role the lawyer is serving with the firm.

In summary, when a lawyer ceases to be a shareholder in a professional corporation but remains on as an employee, that lawyer's name may no longer be included in the firm name. The inclusion of this person's name in the firm name implies the existence of a partnership or shareholder status which in fact does not exist.