FORMAL OPINION
1996-6
COMMITTEE ON PROFESSIONAL AND JUDICIAL ETHICS
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May
31, 1996
ACTION: FORMAL OPINION
OPINION:
TOPIC: Letterhead; Limited
Liability Partnership.
DIGEST: New York limited liability
partnership need not indicate on its letterhead that certain of
its partners are themselves professional corporations. However,
different conclusions may be warranted where the law or rules of
ethics of states other than New York apply.
CODE: DR 6-102(A).
NOTE: Modifies N.Y. City 81-111.
QUESTION
Must a law firm that is a New York
limited liability partnership indicate on its letterhead that
some of its individual members are professional corporations?
OPINION
The inquiring law firm is a
limited liability partnership, with some of its individual
members being professional corporations. The firm asks whether it
must indicate on its letterhead and business cards that it is a
limited liability partnership and that some of its members are
professional corporations, such as by use of the phrase: "a
limited liability partnership including professional
corporations." The firm would prefer to indicate simply that
it is a "limited liability partnership."
In our Formal Opinion No. 1995-7,
we concluded that a New York attorney may prospectively limit
liability for malpractice as provided in the New York Limited
Liability Company ("LLC") and Limited Liability
Partnership ("LLP") statutes because the liability of
individual members of LLCs and LLPs is consistent with the
requirements of DR 6-102(A) and indistinguishable from the
liability of individual shareholders of a professional
corporation, a form of practice expressly permitted by the Code.
In particular, the limitation of liability provided by the LLC
and LLP laws is a limitation on the lawyers vicarious liability
imposed by virtue of the lawyers practice through the medium of a
general partnership. The new statutes clearly do not absolve the
lawyer from liability for his or her own "individual"
malpractice nor for that of anyone directly supervised by the
lawyer.
Thus, all lawyers who are members
of the inquiring LLP, whether they are individuals or
professional corporations (PCs), will be personally liable for
their own acts of malpractice and for the acts of those over whom
they had "direct supervision or control" and will have
no vicarious liability for the acts of other members or
associates of the LLP over whom they do not have direct
supervision or control. As a result, we see no reason to require
the inquiring LLP to indicate that some of its members are PCs,
because the distinction would not be of significance to clients,
potential clients, or to the public generally.
We recognize that in N.Y. City
81-111 we addressed the issue of whether a law partnership must
indicate on letterhead and business cards that it included some
members who were PCs. In that opinion -- issued long before the
New York LLC and LLP statutes were enacted in 1994 -- we stated
that the partnership must indicate that it was a partnership
including PCs, and when it identified its members, it must
indicate which members were PCs. We continue to hold those views.
However, the rationale for those views is not applicable when the
firm is an LLP rather than a partnership. When the firm is a
partnership, clients and potential clients should know which of
its members are PCs (when indeed there are any), because the PCs,
unlike the other members of the partnership, do not have
vicarious liability. When the firm is an LLP, as noted above,
none of the members of the LLP have vicarious liability, whether
or not they are PCs.
We emphasize that we are
expressing no opinion as to whether different conclusions may be
warranted where the law or rules of ethics of states other than
New York apply. For example, in a state in which the liability
limitation claimed by a New York LLP is not entirely enforceable,
the fact that individual partners of the firm are professional
corporations would conceivably be relevant to clients or other
persons dealing with the firm. In such circumstances, the failure
to state on letterhead that the firm is "a limited liability
partnership including professional corporations" may be
misleading and violative of applicable legal or ethical
principles. Consequently, a multistate law firm with a nationwide
practice should exercise caution before deleting the legend in
question.
CONCLUSION
Subject to the limitation set
forth above, the question presented is answered in the negative.
