Vol. 32, No. 4, 5. Special Considerations for Sole and Small Firm Practitioners.

• Author: By Sally E. Anderson

Wyoming Bar Journal

2009.

Vol. 32, No. 4, 5.

Special Considerations for Sole and Small Firm Practitioners

Wyoming LawyerIssue: August, 2009Special Considerations for Sole and Small Firm PractitionersBy Sally E. Anderson According to ABA statistics, most malpractice claims occur in firms of one to five lawyers. In and of itself this is not news because nearly 80 percent of lawyers in the United States currently practice in firms of this size. When these practitioners pause a moment to think about this reality, however, they become alarmed because the statistic is inconsistent with the attorney's self-image: "I am a servant of my loyal clients who would never make a claim against me." Statistics show that lawyers need to recognize that claims are made against attorneys, just like you, every day.

This article will look at several areas of special and current interest to the small firm practitioner seeking to avoid ethical and professional liability problems.

Office Sharing: Implied Partnership Can Constitute Liability

Lawyers know the economic benefits of office sharing. Overhead dollars go far further when sharing rent, library, fax, copier equipment and even personnel. Another well known benefit is simply having others with which to work, i.e., the social factor. A lawyer may appear to be having his or her cake and eating it too by gaining the benefit of apparent association, while still maintaining his or her own work schedule, clients and responsibilities.

A nasty surprise may await the lawyer practicing in a shared space arrangement when confronted with a legal malpractice case arising out of the negligence of an office "sharer," or worse, a lawsuit demanding recovery for fraud committed by a perceived "partner." Office sharers who share a trust account may be found to be responsible for the embezzlement of another lawyer. Missed statute of limitations on the part of one office sharer could result in malpractice claims against all office sharers. Claims of this kind may not be successfully defended unless each office sharer has informed all actual and potential clients that his or her practice is a separate professional entity.

What Does an Office Sharer Need to Consider?

There are a number of concerns, both ethical and practical, raised by an office sharing relationship. These concerns are also present where a lawyer is sharing offices with non-lawyers or where a lawyer is operating another business, such as a title insurance company, from a law office.

The Model Rules of Professional Conduct give lawyers some guidance. For example,§7.1 states that a lawyer is not allowed to make false or misleading communications about services being rendered. A communication is false or misleading if it contains a material misrepresentation or omits a necessary fact. In addition, firm names and letterheads cannot be misleading. Model Rule 7.5 provides that lawyers may state or imply a partnership practice or other arrangement only when this is true. Regarding communication, Model Rule§1.4(b) states that a lawyer must explain a matter to the extent that is reasonably necessary to permit the client to make an informed decision regarding representation, including the lawyer's status as a sole practitioner or as a member of a firm. A number of other rules also apply to office sharing, including confidentiality of client information (Model Rule§1.6) and conflict of interest (Model Rule §§1.7, 1.8 and 1.9).

Imputed disqualification rules may also apply to office sharing arrangements. The comment to Model Rule§1.10(a) states that two practitioners sharing office space who consult or assist each other occasionally would not ordinarily constitute a firm. If, however, the practitioners represent themselves to the public in a way that is suggestive of a law firm relationship or conduct themselves as a firm, they shall be regarded as a firm for purposes of the Model Rules. This implied law firm relationship is cited prominently in case law as well. The comments to the imputed disqualification rule make it clear that it is prudent for lawyers practicing in this kind of setting to have a formal office sharing agreement. This rule also serves as a reminder of the importance of safeguarding client confidentiality. These are practical, everyday concerns for office sharers and for their clients.

Some Practical Suggestions to Protect Office Sharing Status

Since the determining factor in both the case law and the Model Rules is grounded in perception, office sharers need to be vigilant with respect to common office situations.

* Name Plates: display separate name plates for each lawyer and explicit designation on the office door such as "a sole practitioner" or "not a partnership." * Printed Materials: Letterhead, business cards, invoices, brochures, etc. should be separate for each practitioner. * Telephone: Separate telephone lines with different telephone numbers is preferable to sharing a single line and using a generic greeting such as "law offices." * Standard Language: Engagement letters should include language indicating the lawyer is neither affiliated with nor responsible for other lawyers. * Notification: The difference between a partnership and an office sharing arrangement should be explained to new clients. * Referrals: When making referrals to an office sharer, a disclaimer should be included that states clearly the office sharer is neither a partner nor a professional associate; inclusion of attorneys other than office sharers in a referral is advisable. * Confidentiality: Office sharers must be cognizant of all aspects of confidentiality, including office design, acoustics, soundproofing, file access, whereabouts of unattended materials and shared personnel (see Wis. Formal Op. 86-13(1996) regarding supervising and instructing personnel about strict observance of ethical rules). * Avoid Obvious Conflicts: Opposing parties in a particular litigation should not be seated simultaneously in the same reception area. * Selection of Office Sharers: Selection of office sharers should include consideration of attitudes toward and willingness to adhere to proper ethical standards since office sharers will impact one's professional reputation. * Malpractice Insurance: All office sharers should have malpractice insurance and be adequately insured for the possible finding of a de facto partnership. * Office Sharing Agreement: All office sharers should partake in the drafting and annual review of their office sharing agreement and abide by its terms. * Be Prepared: Office sharers should anticipate and be prepared to establish, by client practices, business management, bank accounts, trust accounts, tax returns, etc. that they are not partners.

Maintaining Client Confidences

Maintaining confidences within a shared setting is critical. Office sharers must be extremely vigilant about making certain that procedures and...