Ethically Speaking: Ethical parameters of the ‘of counsel’ relationship

The “of counsel” relationship is not an uncommon one these days and many law firms have attorneys who are of counsel. But what does it mean to be of counsel to a firm? What are the ethical implications of this relationship? Can lawyers unknowingly violate the New York Rules of Professional Conduct (“Rules”) by improperly identifying an attorney as of counsel?

In September, the New York State Bar Association’s Committee on Professional Ethics addressed these very issues in Opinion 936 (Sept. 21). At issue was whether a law firm could ethically list a departing partner as “special counsel” on its letterhead.

At the outset, the committee addressed the term special counsel, concluding that it was essentially synonymous with of counsel in that the terms were virtually indistinguishable.

It then reviewed the Rule applicable to the of counsel relationship, Rule 7.5(a)(4), which provides in relevant part that “A lawyer or law firm may use … letterheads … provided the same do not violate any statute or court rule and are in accordance with Rule 7.1, including the following: …. (4) …. A lawyer or law firm may be designated ‘Of Counsel’ on a letterhead if there is a continuing relationship with a lawyer or law firm, other than as a partner or associate.”

Next, the committee explained that in the context of the facts presented, the term special counsel” is permissible only if “the departing lawyer’s actual practice includes the regular and continuing level of consultation and advice for the firm and its clients that is necessary to justify a ‘counsel’ designation. This conclusion does not depend on compensation arrangements …”

The committee noted that the primary concern was whether the special counsel designation was misleading and then offered a few examples to further clarify what constitutes a “regular and continuing level of consultation:” “If the departing lawyer is expected to, and ultimately does, represent a number of former clients in multiple matters on an ongoing basis, that might well justify designating him, on letterhead and otherwise, as Of Counsel (or if the firm wishes, Special Counsel, with or without an explanatory footnote). On the other hand, if the departing lawyer is expected to, and ultimately does, represent only a few former clients in a small number of matters or in very limited ways, then designation as Special Counsel could well be impermissibly misleading.”

Next, the committee turned to the issue of whether a lawyer with an of counsel relationship with a firm is sufficiently “associated” with the firm such that conflicts could be imputed to the firm because of the of counsel relationship.

The committee first reviewed a number of cases which held that, in some situations, an entire law firm would not necessarily be disqualified from representation in a litigation matter even where there existed conflicts which would personally disqualify an of counsel attorney from undertaking or continuing a particular representation.

Nevertheless, the committee concluded that although “ Judicial reluctance to disqualify an entire firm based on imputation of an Of Counsel lawyer’s conflict of interest, however, is not inconsistent with our view that such a lawyer’s conflicts are always imputed to an entire firm under Rule 1.10(a) … (An) Of Counsel (or Special Counsel) relationship between a lawyer with a conflict and a firm may not always justify the firm’s disqualification by imputation in litigation … as a matter of legal ethics, imputation is required when the lawyer’s conflict is one of the kinds specified in Rule 1.10(a). As a corollary, pursuant to Rule 1.10(e), a law firm that maintains a “counsel” relationship with a lawyer must check for conflicts with that lawyer and that lawyer’s firm, and vice versa.”

In other words, when it comes to an of counsel relationship, as is the case with most ethics issues, it is wise to tread carefully. Always ensure that the of counsel attorney has sufficient and continuous levels of consultation with the firm and/or its clients. And, err on the side of caution when conflict checking a matter and ensure that the of counsel relationship will not result in an inconvenient and untimely disqualification. After all, as I often say, better safe than sorry.

The Hon. John E. Bernacki is a Pittsford Town Court Justice. His law firm, John E. Bernacki Jr. PC, is located in Pittsford. He can be reached at www.johnbernackilaw.com.