“To the extent that lawyers and law firms in “Of Counsel” relationships are treated as one firm for purposes of conflicts and fee sharing, so too is the potential for shared malpractice liability between lawyers or law firms affiliated in “Of Counsel” arrangements. Before forming an “Of Counsel” relationship with another lawyer, a firm should carefully screen potential candidates and monitor the relationship continuously.”
Ask any young lawyer who has just been hired by a firm what his or her goals are, and chances are the answer will be ‘to start off as an associate and work my way up to partner.’ Law firms generally function under a partnership structure, and it is, therefore, natural for lawyers to aspire to become a partner after a period as an associate—both for professional as well as pecuniary reasons.
Yet, there is a third position of affiliation with a law firm that is neither associate nor partner, and that is the status of ‘Of Counsel’. It is increasingly common for law firms to utilize this type of relationship, and there are certainly benefits to both the firm and lawyer arising from such an arrangement. We will examine what the role of ‘Of Counsel’ entails and what ethical as well as professional risk considerations need to be considered.
Not Just for Retiring Partners
At one time, the most common scenario under which an attorney would associate with a firm as ‘Of Counsel’ was when a senior partner was retiring from full-time service to the firm but still wished to practice in that familiar environment. Today, however, lawyers making lateral moves may enter into such a status for a variety of reasons. According to ABA Formal Opinion 90-357, which was adopted more than 30 years ago, the designation of ‘Of Counsel’ (or sometimes, simply ‘counsel’) describes a ‘close, personal, continuous, and regular relationship’ between the firm and the ‘Of Counsel’ lawyer. Firms may wish to bring on board a lawyer with significant experience in a particular niche area of practice which is outside of the firm’s normal core competencies but without providing that lawyer with the same workload as a partner or with operational or governance responsibilities. Notwithstanding the reference to ‘continuous’ in the ABA definition, a lawyer with a practice specialty may be brought in just to assist with a high-profile case or with a specific type of litigation.
The above-referenced ABA Formal Opinion recites four categories of ‘Of Counsel’ status:
- A part-time practitioner who practices law in association with a firm but on a basis different from that of the mainstream lawyers in the firm. This can include former judges, politicians, other government officials, or attorneys who are transitioning from a corporate in-house position to law firm practice.
- A retired partner of a firm who, although not actively practicing, remains available for occasional consultation.
- A probationary ‘partner-to-be’ who may be brought in laterally with the expectation of becoming a partner after a relatively short period of time.
- A permanent status that lies somewhere between associate and partner and which grants tenure to the lawyer, but without any expectation of likely promotion to partner status.
Applicability to the Solo Practitioner
But it is not just sizeable law firms that make use of the ‘Of Counsel’ designation for those affiliated with a practice. Solo practitioners and small law firms may also find that a client has a legal matter that requires legal counsel outside of their core practice area. Rather than refer the matter (and the client) out altogether, by associating with an expert in the field, the solo practitioner or small law firm can keep the client ‘in-house’, thereby reducing the risk that the client will leave for another practitioner.
An ’Of Counsel’ arrangement can also help the small firm grow legal staff resources and maintain access to specialized practitioners, including those who can provide complementary practices, without hiring a full-time associate, which may be financially beyond the ability of the solo practitioner or small firm at the early stages of practice development. Importantly, ‘Of Counsel’ relationships are not mere consulting relationships such as a firm might engage in with a tax adviser, nor are they established merely by an office-sharing agreement.
Some Ethical Considerations
In the course of weighing whether to form an ‘Of Counsel’ relationship with another lawyer, firms must consider the possible ethical ramifications, and in particular those relating to conflicts of interest, confidentiality, and compensation. Conflicts of interest are governed by the ABA’s Model Rules of Professional Responsibility 1.7 through 1.11. If either the firm’s attorneys or the ‘Of Counsel’ attorney have clients who are independent of the other’s client roster, legal matters undertaken could possibly lead to a conflict of interest. Furthermore, it is important to be aware that in the eyes of the court, the ‘Of Counsel’ and the law firm are frequently treated as one entity and will be regarded as such when it comes to such issues as disqualification, recusal, and other conflict issues. Some jurisdictions allow for a screening process in order to determine upfront whether an actual conflict of interest exists before excluding either the firm’s or the ‘Of Counsel’s’ representation.
As to confidentiality issues, the ‘Of Counsel’ is generally considered to be formally associated with the law firm, thereby imposing a duty to keep information about client matters confidential. In terms of compensation, local rules vary as to sharing any profits with the ‘Of Counsel’, and likewise, distributed bonuses may also be governed by strict fee-splitting restrictions.
A Mutual Benefit
In sum, entering into the ‘Of Counsel’ relationship can be highly beneficial for both the lawyer and the firm if handled properly. For the seasoned or niche-expert lawyer, there is the opportunity for employment despite the absence of a partnership opportunity being available, and for the firm, there is the advantage of keeping everything in-house and providing for growth without the addition of another full partner. Knowing the professional responsibility boundaries of this arrangement can make it very rewarding for both parties.
What is the role of the ‘Of Counsel’ lawyer in a law firm?
‘Of Counsel’ arrangements fall somewhere between that of associate and partner and can be quite mutually advantageous to the firm and the ‘Of Counsel’ lawyer.
The Path Forward
Aside from the traditional filling of the role by retiring partners, today, the position is commonly filled by former judges, politicians, and attorneys with a specialty that the firm can use without referring the matter to another practice.
As a Growth Tool:
Determine what the growth needs are of your firm, and if you need to increase staff without the financial burden of adding on a partner, ‘Of Counsel’ may be just right for your firm.
If your firm is faced with litigation that requires an area of expertise beyond your firm’s core competence, then serious consideration should be given to bringing on board an ‘Of Counsel’ specialist.
If the association with a former judge, politician, or government official can enhance the reputation of your firm, then bringing such a person on as ‘Of Counsel’ should be considered a valuable marketing tool.
The Ethics of ‘Of Counsel’:
In the ‘Of Counsel’ relationship, your first consideration must be to carefully screen for any possible conflict of interest issues that could arise, thereby jeopardizing both the standing of the firm and the ‘Of Counsel’ lawyer.