Ethics Opinion 255
Use of Former Firm Lawyer on a Contract Basis
A law firm and a former firm lawyer employed by the firm by contract on a case-by-case basis are not regarded as a single entity for conflicts purposes so long as clients of the firm are accurately informed about the nature of the relationship between the firm and the contract lawyer and so long as no impression is created that there is a continuing relationship between the firm and the lawyer.
- Rule 1.5(e) (Division of Fees)
- Rule 1.7(b)(4) (Conflicts Created by Lawyer’s Own Interests)
- Rule 1.10(a) (Imputed Disqualification)
- Rule 7.1(a) (Communications Regarding a Lawyer’s Services)
The Inquirer is a law firm (the Firm) that is engaged in the practice of law in the District of Columbia and is incorporated under the D.C. Professional Corporations Act. One of its shareholder lawyers, whom we will refer to as B, is terminating his employment agreement with the Firm and his general association with the Firm as a practicing lawyer, although he will remain a shareholder in the Firm (as permitted by D.C. Code § 29-608) unless and until his shares are bought out by the Firm.
B will no longer, however, share in any profits or losses of the Firm, and his name will not appear in the Firm’s letterhead or in any lists of Firm lawyers in Martindale-Hubbell or similar publications. B will become an officer of Corporation X, but his position with Corporation X will not involve the provision of legal services. Corporation X will sublease space from the Firm and B will occupy that subleased space. The sublease contains a provision obligating Corporation X and its employees, including B, to refrain from listening to or examining matters pertaining to firm clients or firm business. The Firm has also established a screening system and taken other steps to assure that no confidential information of the Firm or its clients is made available, without authorization, to Corporation X or to B. In addition, B will be excluded from the Firm’s conflict clearance system and will thus not have access to information about new client matters of the Firm.
Because of B’s expertise in a specialized area of the law in which the Firm will continue to practice, the Firm contemplates an arrangement with B, to which Corporation X has consented, in which it proposes to employ B from time to time, as an independent contractor, to assist the Firm as a lawyer or expert witness in providing legal services to the Firm’s clients. The Firm and B contemplate entering into a general contract, under which B would agree to consider serving in particular matters as a contract attorney (designated as “special counsel”) or as an expert witness, or individual matter-specific contracts on each matter on which B is retained by the Firm. B will not be guaranteed any particular amount of payments from the Firm.
The Firm also proposes to include in promotional materials and letters to clients representations that B’s services are available to the Firm in his field of expertise when such services may be ethically provided and subject to his obligations to Corporation X.
On the basis of these facts, the Firm requests our advice as to (1) whether the arrangements it contemplates will result in imputation to the Firm under Rule 1.10 of any disqualification of B flowing from his status as an executive of Corporation X in matters in which B is not assisting the firm as an independent contractor; and (2) whether the representations that the Firm intends to make in promotional letters to clients are consistent with Rule 7.1.
When B becomes an employee of Corporation X, he will not be acting as a lawyer for Corporation X. Most of the provisions of Rule 1.7, therefore, would not apply to work done by B as a contract lawyer for the Firm because they are triggered by a lawyer representing clients in more than one matter. However, B’s position with Corporation X could result in B’s disqualification, under Rule 1.7(b)(4),1 from representing a client in a situation in which his professional judgment on behalf of that client would, or reasonably might, be adversely affected by B’s responsibilities to Corporation X or his interest in Corporation X created by his high-level executive position.
In any case in which B would be disqualified from representing a client under Rule 1.7(b)(4) because of his responsibilities to or interest in Corporation X, the Firm clearly would also be disqualified under Rule 1.10(a) if B were associated with the Firm in that representation as a contract lawyer.2 The question posed by the Inquiry is whether the Firm’s contemplated relationship with B is a sufficiently ongoing alliance or association to impute to the Firm B’s disqualifications even on Firm matters on which B is not working as a contract lawyer.
We think not. To be sure, both this Committee and the ABA Standing Committee on Ethics and Professional Responsibility have held that a continuing “of counsel” relationship between a lawyer and a firm or a continuing relationship between two firms (as in the case of a “correspondent” law firm) result in the lawyer and the Firm, or the two firms, being treated as a single entity for conflicts purposes. See D.C. Opinion No. 192 (May 17, 1988); ABA Formal Opinion No. 84-351 (October 20, 1984). But, in our view, the association of a lawyer with a firm on an ad hoc, case-by-case basis does not create that kind of continuing relationship, triggering imputation under Section 1.10 of the individual lawyer’s disqualifications to the firm, except with respect to the individual matters on which the lawyer is associated with the firm—so long as the firm does not create the impression among its clients or the public at large that such a continuing relationship exists.
Here, B will not be included on the Firm’s letterhead or in other listings of firm lawyers. He will be screened from confidential information about Firm clients and matters on which he is not employed as an independent contractor. And promotional materials and letters to clients that mention his availability will make clear that he is available to work on specific matters on a case-by-case basis and that he does not have a continuing relationship with the Firm. We believe these steps are sufficient to avoid a general imputation of B’s disqualifications to the Firm. See ABA Formal Opinion 88-356 (Dec. 16, 1988).
We add, however, a cautionary note. We believe that the term “special counsel” should not be used to describe B’s relationship to the Firm. While the term might be appropriately thought to denote a relationship for the particular case only, we note that the term “special counsel” is also used by many law firms more or less interchangeably with terms such as “counsel” and “of counsel,” to denominate a continuing relationship. See ABA Formal Opinion 90-357 (May 10, 1990). While it may be true that all these terms have an evolving rather than a fixed meaning (see D.C. Opinion No. 151 (April 16, 1985)), we think that the Firm in this case would be well-advised to refer to B as a “consultant” or “contract lawyer” rather than a “special counsel.”
The same caveat applies to the second question raised by the Inquiry. We see no violation of Rule 7.13 in the Firm’s plans to describe for prospective clients, in promotional materials and letters, the availability of B as a contract lawyer or expert witness in particular cases. The key here is full and accurate disclosure. As the ABA Committee had occasion to observe recently in the context of discussing networks or alliances between law firms, “It is critical, no matter what words are used to describe the relationship between firms, for clients to receive information that will tell them the exact nature of the relationship and the extent to which resources of another firm will be available in connection with the client’s retention of the firm that is claiming the relationship.” ABA Formal Opinion 94-388 (December 5, 1994). The mandate of Rule 7.1 can be met only if a full description of the relationship is provided to all prospective and present clients for whom the relationship may be relevant. Id.
The same principles apply here, and we conclude that the planned representations by the Firm as to its relationship with B are adequate to assure compliance with Rule 7.1. We again recommend, however, that the Firm not use the term “special counsel” to describe B’s relationship to the Firm.
1. Rule 1.7(b)(4) provides that a lawyer shall not, without the consent of the client, represent a client where “the lawyer’s professional judgment on behalf of the client will be or reasonably may be adversely affected by the lawyer’s responsibilities to or interests in a third party or the lawyer’s own financial, business, property, or personal interests.”
2. Since B will be employed and compensated by the Firm, this situation is different from the common one in which two lawyers in different firms are co-counsel in a case. In such situations, conflicts of one lawyer are not imputed to the other, at least in the absence of an exchange of confidential information. E.g., Richers v. Marsh & McLennon Group Associated, 459 N.W.2d 478 (Iowa 1990); Brennan’s Inc. v. Brennan’s Restaurants, Inc., 590 F.2d 168 (5th Cir. 1979).
3. Rule 7.1 bars false or misleading communications about a lawyer’s services.