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                                         94 N.J.L.J. 1002
                                        October 28, 1971

ADVISORY COMMITTEE ON PROFESSIONAL ETHICS

Appointed by the New Jersey Supreme Court

OPINION 220

Non-resident of Counsel
Division of Fees

    This inquiry comes from an attorney-at-law of New Jersey who is about to discontinue his practice of law and move his residence from New Jersey to California. He intends to maintain his "license to practice in the State of New Jersey" and contemplates establishing an "of counsel" relationship with a law firm in this State. Said law firm will complete his pending matters after proper notification to his clients of the termination of his practice and the establishment of his "of counsel" relationship with the New Jersey law firm, making it clear to his clients there is no obligation that they continue with said firm. The attorney's name will appear on the firm's stationery designated as "of counsel." The firm will pay him a percentage of the net fee received in the matters turned over to it for completion and he will also receive a percentage of the net fee received by the firm on new matters referred to it by him. We are informed that he will make periodic visits to New Jersey, maintaining contact with many of his clients during the visits, as well as by mail and telephone and that the use of his New Jersey license to practice law will be limited to the "of counsel" relationship. He poses the following questions for our advisory opinion:

        May I establish and maintain, while residing in California an “of counsel” association with a law firm in ..., New Jersey? For services which I have rendered and for services which I will render during my “of counsel” association . . ., may the compensation to be paid to me by the New Jersey law firm be on a percentage fee basis rather than salary?

    The Disciplinary Rules of the Code of Professional Responsibility of the American Bar Association as amended by the Supreme Court of New Jersey and adopted on July 7, 1971, effective September 13, 1971, provide in DR 2-102(A)(4) that "[a] lawyer may be designed “Of Counsel” on a letterhead if he has a continuing relationship with a lawyer or law firm, other than as a partner or associate." And DR 2-107(A) provides as follows:
        A lawyer shall not divide a fee for legal services with another who is not a partner in or associate of his law firm or law office unless:

        (1)    The client consents to employment of the other lawyer after a full disclosure that a division of fees will be made.

        (2)    The division is made in proportion to the services performed and responsibility assumed by each.

        (3)    The total fee of the lawyers does not clearly exceed reasonable compensation for all legal services
            they rendered the client.

        (4)    He complies with the provisions of R. 1:21-6 and R. 4:88-4 (relating to sharing of fees) of the Rules Governing the Courts of the State of New Jersey.

    It is beyond our jurisdiction to determine if the inquirer's plan meets all qualifications necessary to practice law in this State, particularly the provisions of R.1:21-1(a) requiring that a lawyer either be domiciled in this State or maintain his principal office here. He should, therefore, have that question resolved by
the Committee on the Unauthorized Practice of Law. If his plan does meet all qualifications necessary to practice law in this State then he may, in our opinion, ethically establish the proposed "of counsel" association with a law firm in New Jersey as long as he maintains the continuing relationship specified in DR 2-102(A)(4) above cited. He may also be compensated on a percentage fee basis if such compensation is "made in proportion to the services performed and responsibility assumed" consistent with DR 2-107(A)(2) and provided he complies with all other provisions of DR 2-107(A).

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