Rutgers School of Law, OAL case ACPE543

114 N.J.L.J. 387
October 11, 1984

ADVISORY COMMITTEE ON PROFESSIONAL ETHICS

Appointed by the New Jersey Supreme Court

OPINION 543

New Jersey Attorney
Employment With Out-of-State Firm

    The inquiry presented here once again asks this Committee to consider the ever-increasing pressures in the legal profession toward interstate or multi-state associations of lawyers.
The questions raised here are framed as follows:
    1.    May an attorney practice law in New Jersey as a salaried employee of an out-of-state law firm?

    2.    Does the use of the attorney-employee's name as the firm name in New Jersey violate DR 2-105(B);-?

    3.    Are fees earned in New Jersey matters properly distributed to the attorney-employee's firm?

    One may glean the hypothetical factual situation from the brief filed by the inquirer as required by R. 1:19-3: An attorney admitted to practice out of state and in New Jersey has entered into or intends to enter into a full-time salaried employment relationship with an out-of-state law firm. The law firm will be the attorney's bona fide and exclusive employer. The attorney will maintain an office in New Jersey and will keep the requisite separate financial accounts. (R. 1:21-l(a); R. 1:21-6). The attorney-employee will handle matters both in the foreign jurisdiction and in New Jersey; all office expenses and overhead are paid for or advanced by the firm; the attorney's compensation *now RPC 7.5(b)

is said to be independent of the fees generated or the jurisdiction in which he handles cases; and fee arrangements for New Jersey cases will follow New Jersey requirements. The New Jersey law office will be in the name of the New Jersey attorney-employee. However, the foreign firm's principals will be listed on the letterhead and, presumably, wherever listed, individually with appropriate jurisdictional limitations noted.
    The New Jersey Supreme Court in the case of In re Professional Ethics Advisory Committee Op. 475, 89, N.J. 74 (1982), app. dism. sub. nom. Jacoby and Meyers v. Supreme Court of New Jersey, U.S. 103 S. Ct. 285,74 L. Ed.2d 272 (1982),recognized the right of New Jersey attorneys to affiliate with a national law firm. Obviously, therefore, a New Jersey lawyer may affiliate with a law firm limiting its practice to only one or several foreign jurisdictions.
    This Committee held in Opinion 36, 87 N.J.L.J. 190 (1964), that a patent attorney admitted only to the Bar of the District of Columbia could not form an association with a New Jersey law firm restricted to the practice of patent law. However, we further said that if he were to join the New Jersey firm, his name could appear on the stationery of the New Jersey firm, not as a partner, but with the notation that he was admitted in Washington, D.C. only. In Opinion 223, 94 N.J.L.J. 1197 (1971), we said,"[t]he formation of partnerships between attorneys authorized to practice in different jurisdictions is not unethical... It is a matter of law, not of ethics, as to where an individual may practice law." The Committee took up a related issue in its Opinion 512, 111 N.J.L.J. 381 (1983), in which it relied on In re Professional Ethics Opinion 475, supra. We wrote that a New Jersey law firm with numerous partners admitted to bars in other states, including Pennsylvania, could show on its stationery its partnership affiliation with a Philadelphia law firm. However, the New Jersey firm is required to make clear that the out-of-state firm is not licensed to practice in this State.
    The issue presented here is slightly different from the situations dealt with by us in the Opinions referred to above. They all appear to have involved more that an employer-employee relationship which is contemplated here. Does that or should that distinction make a difference?
    We were asked in Opinion 103, 90 N.J.L.J. 49 (1967), to respond to the question whether a New Jersey attorney retained by a New York law firm to effect collections on promissory notes held by its New York client could remit all sums collected to his New York correspondent where the local attorney was paid on a salary basis for the client and would continue his individual practice. The answer given was that it would be improper to accept the retainer. The basis for the holding was that, since it is improper for an attorney to accept less for his services than is awarded and paid to his client, an intermediary - the New York attorneys - could not be used as a subterfuge to accomplish an improper result.
    The distinctions between this case and the factual situation set out in Opinion 103, supra, are that, in the earlier case, the New Jersey attorney had no bona fide employment or partnership relationship with the New York firm; was carrying on an individual practice in New Jersey; was collecting fees from debtors of the New York client based upon a provision in the notes between debtor and creditor; and was thereby taking a fee less than received and paying the difference to his forwarding attorney.
    However, out Supreme Court recently promulgated amendments to the Disciplinary Rules of the Code of Professional Responsibility effective January 16, 1984. DR 2-105(B) provides:
    Where the name of an attorney not licensed to practice in the State is used in a firm name, any advertisement, letterhead or other communication containing the firm name must include the name of at least one licensed New Jersey attorney who is responsible for the firm's New Jersey practice or the local office thereof.

    The facts presented here postulate a bona fide full time employment relationship and a bona fide law office here in New Jersey. In light of the recently developed and developing law in this area, this Committee is constrained to answer each of the inquiries in the affirmative. However, those who wish to affiliate under similar circumstances are cautioned that only bona fide associations are permissible; and the status of partners and associates should be made clear on letterhead and other listings.

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