Scruples. 'Of Counsel' Relationships

• Author: Michael Downey
• Pages: 64-64

Scruples

Published in Litigation, Volume 47, Number 4, Summer 2021. © 2021 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not

be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. 64

MICHAEL DOWNEY

The author is a legal ethics lawyer at Downey Law Group LLC, St. Louis.

“Would you let me know when you have

a few minutes to speak?” Paradox asked

from the hall outside Ethox’s office.

“Now is a good time,” Ethox responded.

“How can I help you?”

“We are considering having a law-

yer join the firm in an ‘of counsel’ role,”

Paradox responded. “Managing Partner

suggested I speak with you to make sure

we set up the relationship correctly.”

“Before we get into those details,” Ethox

replied, “the best place to start when con-

sidering having a lawyer associate with

a law firm is whether the lawyer will be

treated as inside or outside the firm for

ethics purposes.”

“What is the difference?” Paradox asked.

“When a lawyer is treated as inside the

firm,” Ethox responded, “that lawyer is

treated as a firm lawyer in all respects.

The clients and matters of the firm create

conflicts for the lawyer, and the lawyer’s

clients and matters generally impute—un-

less it is a personal interest conflict—to all

other lawyers in the firm, as ABA Model

Rule 1.10 provides.

“This can be a problem,” Ethox contin-

ued, “because it will require conflict checks

for all the firm’s matters across the lawyer’s

entire practice and for all the lawyer’s mat-

ters using the firm conflict-checking sys-

tem. However, there are also three major

advantages when a lawyer is ‘inside’ the

firm. First, the firm may freely share client

information with the lawyer. Second, the

firm may also share legal fees with the law-

yer without specific client consent, without

worrying about Rule 1.5(e). Third, the firm

may hold out or advertise the lawyer as a

firm lawyer in advertising and marketing

materials, without worrying about clarify-

ing the relationship.”

“And if the lawyer is ‘outside’ the firm?”

Paradox inquired.

“Then the situation is the opposite.

Conflicts generally would not impute

between the lawyer and the firm under

Rule 1.10,” Ethox answered. “Instead, the

associated lawyer and the firm would

share conflicts only on the matters where

they were working together or sharing

confidential information.

“Also, if the lawyer were treated as ‘out

-

side’ the firm, the firm would need per-

mission to share client confidences and

legal fees with that lawyer under Rules

1.5(e) and 1.6(a), and the firm would like-

ly need to clarify the firm’s and the law-

yer’s relationship in marketing and similar

communications.”

“Which do you think is better?” Paradox

asked.

“One choice is not necessarily bet-

ter than the other,” Ethox responded.

“However, it is good to make the decision

up front so that the lawyer’s and the firm’s

arrangements with each other and with

clients can address the ethical issues that

would arise.

“For example, if the lawyer is going

to be ‘outside’ the firm,” Ethox offered,

“normally the firm would want to make

sure the lawyer does not have general ac-

cess to the firm’s computer system. Also,

engagement agreements on the matters

where the lawyer and the firm would be

working together should disclose that the

firm intends to share information and fees

with the lawyer so the firm can secure

the clients’ informed consent to those

arrangements.”

“That makes sense,” Paradox agreed.

“There is one thing to be mindful

about,” Ethox added. “Ethics authorities

often reserve the use of the term ‘of coun-

sel’ to lawyers who are ‘inside’ the firm.

Therefore, if you do not want the lawyer

to be seen as ‘inside’ the firm, you prob-

ably need a different term to describe the

relationship. Otherwise, confusion may

result, possibly creating headaches for the

lawyer and the firm.”

“Thanks for that warning,” Paradox said.

“I guess we need to know what we want be-

fore we start giving the relationship a label.”

“Precisely,” Ethox answered. q

“OF COUNSEL”

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