A new advisory legal ethics opinion offers guidelines for one such arrangement, based on a hypothetical in which a sole practitioner with her own PLLC, who specializes in tax work, wants to formalize a business relationship with one or two law firms.
The relationship raises questions about marketing, figuring out conflicts of interest and responsibility for ethical breaches, according to LEO 1866.
Defined by what it’s not – it’s not partner, associate or consultant – the “of counsel” status nevertheless describes a “close, continuing and personal relationship between a lawyer and a firm,” the ethics committee said. It can be applied to a retired partner, a former judge or a part-time practitioner.
But the term also is used improperly to describe a business relationship between a lawyer or firm and a national law firm that solicits cases throughout the country and then makes geographically-based referrals to its designated lawyer or firm in each state.
If the hypothetical tax lawyer becomes “of counsel” to a firm, all conflicts of the firm are imputed from the lawyer to the firm and vice versa, the LEO says. Even without the “of counsel” designation, if the lawyer holds herself out to potential clients as being closely associated with the firm, or is in fact closely associated, conflicts will be imputed.
To sidestep the conflicts issue, the lawyer can be an independent contractor, who shares fees and is governed by other LEOs that cover lawyer temps and outsourcing legal services.
The lawyer and firm would not generally be liable for one another’s ethical misconduct on cases that they were not handling together, according to LEO 1866.
The VSB Standing Committee on Legal Ethics also is seeking comment on proposed LEO 1863, which revisits the question of whether a lawyer may communicate with an insurance adjuster when the insured is represented by a lawyer provided by the insurance carrier.