Lawyer Firm Ownership: Can A Lawyer Own Two?

In California, a lawyer may be of counsel to multiple law firms without limit, provided that the association with each firm is close, personal, continuous, and regular. This means that a lawyer can practice law simultaneously in multiple firms, including those bearing their name, and even be a partner in two different firms. However, it is essential to note that the lawyer must ensure compliance with ethical standards and avoid any conflicts of interest that may arise from their involvement with multiple firms.

A lawyer can be a partner in two firms

In California, a lawyer may be "of counsel" to multiple law firms without limit, provided that the association with each firm is "close, regular, and personal." This view was established in 1990 by the American Bar Association Standing Committee on Ethics and Professional Responsibility, which concluded that the "close, regular, and personal" relationship required of "of counsel" relationships could not exist on a plural basis.

The California State Bar has adopted this reasoning, concluding that the number of "of counsel" relationships a lawyer may have is limited not by a numerical standard but by strict observance of the qualitative criteria that such relationships must be "close, personal, continuous, and regular." This means that a lawyer can be a partner in one law firm and "of counsel" to another.

The Ohio Supreme Court Board of Commissioners on Grievances and Discipline has also concluded that a lawyer in a law firm may be "of counsel" to another law firm, as long as the requisite continuing relationship exists between the lawyer and the law firm. This relationship must be "other than as a partner or associate or its equivalent" and must be more than a one-time or one-case relationship.

Furthermore, several ethics opinions have stated that a lawyer may be a partner in two different law firms. The prevailing view among various jurisdictions is that a lawyer is not prohibited from being a partner in more than one firm if the firms are treated as one for the imputation of conflicts. For example, the District of Columbia and Philadelphia Ethics Boards have both concluded that there is nothing unethical about an attorney practicing as a partner in more than one firm simultaneously.

In summary, a lawyer can be a partner in two firms as long as the firms are treated as one for the imputation of conflicts and the lawyer maintains a close, regular, and personal relationship with both firms.

A lawyer can represent two firms simultaneously

In California, a lawyer can represent two firms simultaneously, as long as there is no conflict of interest. Conflicts of interest are a part of the Code of Professional Conduct, which prohibits certain practices of attorneys, including representing two sides in a dispute where both have opposing interests. It is the ethical responsibility of attorneys to never have a conflict of interest, and loyalty and unimpaired judgment to a client are essential parts of the lawyer-client relationship. Failing to avoid a conflict of interest is a violation of the state bar.

An attorney cannot represent two clients with directly adverse interests, even if they are former clients. However, a written waiver of informed consent may allow an attorney to represent both parties, but the attorney must be confident they can effectively advocate for both. In some cases, a conflict waiver may not be enough to prevent a conflict of interest, and the attorney may be less able to do their job.

In the case of business transactions, it is generally advised that both parties do not hire the same attorney, as it creates an ethical conflict of interest. However, they can hire different attorneys from the same law firm. If a buyer and seller have the same attorney, the attorney will not be able to represent both parties adequately.

While it is possible for a client to be represented by multiple firms, it is important to note that the client would incur higher costs, as they would be paying both firms. Additionally, all attorneys involved must consent to the agreement, and the attorneys would need to work together.

Ethical considerations for multiple firm affiliations

The ethical considerations for lawyers with multiple firm affiliations centre on the duty to avoid conflicts of interest and to maintain loyalty and unimpaired judgement for clients.

In California, the State Bar has adopted the reasoning of the ABA Opinion 90-357, which states that a lawyer may be "of counsel" to multiple law firms without limit, provided that the association with each firm is "close, regular, and personal". This relationship must be more than a one-time advisor/consultant role. The California Formal Ethics Opinion further states that this relationship must be "continuing, close, personal, and regular".

The potential for conflict of interest is a key consideration for lawyers with multiple firm affiliations. If a lawyer is serving two parties with opposing interests, they cannot adhere to their obligations of loyalty and confidentiality. In such cases, the lawyer would be unable to effectively represent both parties. Even with a written waiver of informed consent, the lawyer must be sure they can advocate for both parties.

Additionally, ethical considerations may arise if a lawyer with multiple firm affiliations sends the most lucrative cases to one firm, potentially violating their fiduciary duty to the other firm. To navigate this, an approach for allocating new engagements and prospective clients should be agreed upon in advance. A carefully drafted side letter to the standard employment agreement may be necessary to allow an attorney to maintain multiple affiliations.

Overall, the ethical considerations for multiple firm affiliations centre on avoiding conflicts of interest, maintaining loyalty and unimpaired judgement, and ensuring transparency and agreement between all parties involved.

Compliance issues for lawyers in multiple firms

Lawyers working in multiple firms must navigate a complex web of compliance issues, especially if the firms are based in different jurisdictions. Compliance challenges can arise from evolving regulations, technological advancements, and changing client expectations. Lawyers must be diligent in maintaining ethical standards and avoiding conflicts of interest.

One of the critical aspects of compliance for lawyers is adhering to the CIA triad, which stands for confidentiality, integrity, and availability. Maintaining client confidentiality is not only an ethical duty but also a legal requirement in the legal industry. Violating the attorney-client privilege can lead to serious consequences, including legal malpractice claims, disciplinary actions, and even disbarment.

Additionally, lawyers in multiple firms must be cautious of potential conflicts of interest. It is the ethical responsibility of attorneys to never have a conflict of interest, whether it arises from multiple parties, current or former clients, or the attorney's personal interests. Loyalty and unimpaired judgment towards the client are essential. Representing clients with directly adverse interests is prohibited, and even with informed consent, attorneys must be confident in their ability to advocate effectively for both parties.

Furthermore, lawyers in different firms may encounter varying regulations and standards across jurisdictions. For instance, in California, specific rules and acts, such as the California Consumer Privacy Act (CCPA), the Health Insurance Portability and Accountability Act (HIPAA), and the Gramm-Leach-Bliley Act (GLBA), impact businesses operating within the state. Federal consumer laws, such as the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA), also come into play, adding another layer of compliance considerations for lawyers in multiple firms.

To navigate these compliance issues effectively, lawyers must have a comprehensive understanding of the rules of professional conduct, both locally and internationally. They should ensure their actions uphold ethical standards and maintain client confidentiality. By staying informed and proactive, lawyers in multiple firms can minimize compliance risks and uphold the integrity of their profession.

The California State Bar's adoption of ABA Opinion 90-357

In California, the conduct of attorneys is governed by the State Bar Act, the Rules of Professional Conduct, and various statutes, rather than by the American Bar Association (ABA) rules. The ABA code is not binding in California, but it can be persuasive in instances where there is no controlling rule of professional conduct, statute, or court ruling.

The California State Bar's adoption of this opinion means that there is no strict numerical limit to the number of "of counsel" relationships a lawyer can have with multiple law firms. However, it is recognized that maintaining the requisite closeness and regularity of the relationship may become difficult beyond a certain point. This interpretation allows for flexibility in the structure of legal practices, accommodating various scenarios such as part-time practitioners, retired partners, laterally-hired attorneys, and senior attorneys in non-partnership track positions.

It is important to note that while the ABA Opinion 90-357 provides guidance on the ethical considerations of "of counsel" relationships, it does not supersede the Rules of Professional Conduct or other applicable laws in California. Lawyers must still adhere to the ethical responsibilities outlined in the Rules of Professional Conduct, such as avoiding conflicts of interest and maintaining loyalty and unimpaired judgment when representing clients.

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