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THE ASSOCIATION OF THE BAR OF THE CITY OF NEW YORK

FORMAL OPINION 1996-6

COMMITTEE ON PROFESSIONAL AND JUDICIAL ETHICS

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.