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.
