THE ASSOCIATION OF THE BAR OF THE CITY OF NEW YORK

FORMAL OPINION 1996-8

COMMITTEE ON PROFESSIONAL AND JUDICIAL ETHICS

July 15, 1996

ACTION: FORMAL OPINION

OPINION:

TOPIC: Associates; Of Counsel Relationships.

DIGEST: An attorney engaged by a law firm on a non-exclusive, per diem basis cannot properly be referred to as an "associate" of the firm. Whether the attorney may be referred to as "of counsel" to the firm hinges upon the existence of a close, regular and personal relationship between the attorney and the firm.

CODE: DRs 1-102(A)(4),2-107(A),5-107(A)(1);ECs 2-13, 2-22, 4-2.

QUESTIONS

1. May a law firm that retains an attorney on a non-exclusive, per diem basis, properly refer to the attorney, on its letterhead, for billing purposes and in other settings, as an "associate"?

2. Alternatively, may the firm refer to the attorney as "of counsel" to the firm?

OPINION

A law firm retains an attorney on a per diem basis. Although the attorney works for the firm on a continuing basis and plays a significant role in meeting with clients and handling client matters, the attorney does not work exclusively for the firm, and spends only between 10-15 hours per week on firm matters. The firm asks whether on its letterhead, for billing purposes and in other settings it may refer to this attorney as an "associate" or, alternatively, as "of counsel" to the firm. We conclude that an attorney engaged on a non-exclusive, per diem basis cannot properly be referred to as an "associate" of the firm. Whether the attorney may be referred to as "of counsel" hinges upon the existence of a close, regular and personal relationship between the attorney and the firm.

Associate

Although the New York Code of Professional Responsibility does not define "associate," the term has been interpreted by courts and other ethics committees to mean a salaried lawyer-employee who is not a partner of a firm. The Florida Bar v. Fetterman, 439 So. 2d 835 (Fla. 1983); Samuels v. Montgomery, 793 S.W.2d 337, 340 (Tex. Ct. App. 1990) ("To be an 'associate' she would be on the payroll of a law firm as an employee"); In re Sussman, 405 P.2d 355, 356 (Or. 1965) ("Principally through custom, the word [associate] when used on the letterheads of law firms has come to be regarded as describing those who are employees of the firm"); ABA 90-357 (the status ordinarily conveyed by the term "associate" is "a junior non-partner lawyer, regularly employed by the firm"); Illinois 657 (1980) ("an 'Associate' is widely understood to be a salaried employee of a law firm who takes direction from the partners or members of the firm"). See also ABA 88-356 ("the term 'temporary lawyer'. . . does not . . . include a lawyer who works part-time for a firm or full time but without contemplation of permanent employment, who is nevertheless engaged by the firm as an employee for an extended period and does legal work only for that firm. That person's relationship with the firm, during the period of employment is more like the relationship of an associate of the firm.").

Because the word "associate" has acquired this meaning, the use of the word to describe lawyer relationships other than that of employer-employee or to refer to a lawyer who does not work exclusively for a firm is likely to be misleading. See EC 2-13 ("In order to avoid the possibility of misleading persons with whom a lawyer deals, a lawyer should be scrupulous in the representation of professional status. A lawyer should not hold himself or herself out as being a partner or associate of a law firm if not one in fact . . . ."); see also Illinois 657 (1980) ("a person who maintains a separate and independent practice and who gets assignments from a firm from time to time would be misleading the profession and the public to call himself an 'Associate' of that firm"). Because the per diem attorney in question does not work exclusively for the firm and is paid to work only on specific matters, the attorney cannot be considered an "associate" of the firm and cannot properly be referred to as such. n1

n1 This conclusion applies not only to letterhead, business cards, announcements and other public communications, but in other contexts as well. Thus, the firm may not refer to the per diem attorney as an "associate" for billing purposes. Clients who are billed for the per diem lawyers' services as if they were associates may reach unwarranted conclusions regarding the nature of the relationship between the firm and the per diem lawyer. Likewise, the firm may not refer to the attorney as an "associate" of the firm in client meetings. Use of the term associates to refer to the attorneys who are not truly associates of the firm would be false and misleading and therefore violative of DR 1-102(A)(4) (prohibiting "conduct involving dishonesty, fraud, deceit, or misrepresentation").

Of Counsel

The per diem attorney may still be considered "of counsel" to the firm. The principal characteristic implied by the title "of counsel" is a "close, regular, personal relationship," but not one of a partner, principal of a professional corporation or associate. N.Y. City 1995-8; ABA 90-357; ABA 330 (1974). See also N.Y. City 81-3 (1982) ("of counsel" designation permitted only where there is a close, continuing, regular and personal relationship or there is a "present day-to-day working familiarity with the affairs of the law firm in question"). As noted in N.Y. City 1995-8, the "of counsel" relationship may not, however, be used to designate a relationship that arises "by the mere referral of business between firms or an occasional consulting relationship," N.Y. City 891 (1977); see also ABA 90-357; ABA 330 (1974); or as a result of consultation on one case, N.Y. State 262 (1972). An "of counsel" designation must mean something more than merely "a relationship involving only occasional collaborative efforts among otherwise unrelated lawyers or firms." See ABA 90-357.

Thus, the accuracy of the term "of counsel" to describe the arrangement between the firm and the per diem attorney depends on the relationship being "close, continuing, regular and personal." Such factors as the sharing of space and availability for consultation on a regular basis are strongly indicative of the requisite closeness of relationship, id., but not conclusive absent closeness, regularity and a personal dimension in the relationship. See, e.g., N.Y. City 81-109 (1982) (a relationship that consists primarily of office-sharing or of forwarding or receiving legal business is not on those facts alone sufficient to permit the representation that a lawyer is "counsel").

The method of compensation is not relevant to determining whether an affiliation between lawyers may be designated as "of counsel". ABA 90-357. The fact that the per diem attorney does not work exclusively for the firm is also not in itself an impediment to an "of counsel" relationship, since it is well established that a lawyer may be "of counsel" to more than one law firm. Id. ("A lawyer can surely have a close, regular, personal relationship with more than two clients; and the Committee sees no reason why the same cannot be true with more than two law firms. There is, to be sure, some point at which the number of relationships would be too great for any of them to have the necessary qualities of closeness and regularity, and that number may not be much beyond two, but the controlling criterion is "close and regular" relationships, not a particular number."); California 1993-129 (the number of "of counsel" relationships in which an attorney or law firm may serve is not limited by any strict numerical standard); Michigan RI-102 (1991) ("Although there is no ethical guidance regarding a maximum number of such affiliations, it is difficult to conceive of a situation in which a lawyer or law firm could establish numerous "of counsel" affiliations and still maintain the required close, regular and personal contacts with each affiliated lawyer or law firm.").

If the law firm reaches the conclusion that an "of counsel" designation is appropriate, it should bear in mind that for purposes of analyzing conflicts of interest, "of counsel" relationships are treated as if the "counsel" and the firm are one unit. N.Y. City 1995-8. The implication of the "of counsel" relationship will be even more far reaching if the per diem attorney is considered "of counsel" to one or more other law firms; conflicts of interest applicable individually to any of the firms or attorneys would be imputed to all of them. ABA 90-357 ("In consequence there is attribution to the lawyer who is of counsel of all of the disqualifications of each firm, and, correspondingly, attribution from the of counsel lawyer to each firm, of each of those disqualifications. Therefore, the effect of two or more firms sharing an of counsel lawyer is to make them all effectively a single firm, for purposes of attribution of disqualifications."). See also Nemet v. Nemet, 112 A.D.2d 359 (2d Dep't 1985), appeal dismissed, 66 N.Y.2d 602 (1986).

Other Observations

If the law firm reaches the conclusion that the per diem attorney may not be referred to as "of counsel," the firm should bear in mind that DR 2-107(A) prohibits the division of fees with another lawyer who is not the partner or associate of the lawyer unless: (1) the client consents to the employment of the other lawyer after a full disclosure that a division of fees will be made; (2) the division of fees is in proportion to the services performed by each lawyer or, by a writing given to the client, each lawyer assumes joint responsibility for the representation; and (3) the total fee of the lawyers does not exceed reasonable compensation for all legal services they rendered to the client. See also EC 2-22. n2

n2 This restriction would not apply to the sharing of fees with attorneys properly designated as "of counsel." Nicholson v. Mason & Cohen, P.C., 192 A.D.2d 473 (1st Dep't), leave to appeal denied, 82 N.Y.2d 660 (1993) (although not literally embraced by DR 2-107, the "of counsel" relationship falls within the "partner or associate" exception to DR 2-107); Texas 450 (1987) (DR 2-107 does not apply to the "of counsel" lawyer's sharing in the law firm's legal fees).

In addition to a potential fee-splitting problem if the per diem attorney is not "of counsel" to the firm, the firm must consider the guidelines set forth in our trilogy of formal opinions regarding "temporary" lawyers. N.Y. City 1988-3, clarified, N.Y. City 1988-3-A, modified, N.Y. City 1989-2. We specifically note that the temporary (or appearing) attorney and the hiring law firm have a duty to disclose the temporary nature of their relationship to the client and to obtain the client's consent to the participation of the appearing attorney. See N.Y. City 1988-3 (Guideline 7); N.Y. City 1989-2; DR 5-107(A)(1); EC 2-22; EC 4-2. We also expressed the view that such guidelines should be memorialized to the extent appropriate in written agreements between the temporary attorney and the hiring attorney "to assure that the law firm and temporary lawyer discharge their respective obligations under the Code to their client." N.Y. City 1989-2.

CONCLUSION

For the reasons set forth above, the Committee answers the first question in the negative. As for the second question, whether the attorney may be referred to as "of counsel" hinges upon the existence of a close, regular and personal relationship between the attorney and the firm.