Link to original WordPerfect Document

ADVISORY COMMITTEE ON PROFESSIONAL ETHICS

Appointed by the New Jersey Supreme Court

OPINION 689

Law Firm Retaining a
Second Firm to Perform
Legal Services for its Clients

    The Advisory Committee on Professional Ethics has been asked whether a law firm may retain a second firm to perform estate related services for its clients. In the circumstances presented, the contracting firm's client, who would most likely be the executor or administrator of an estate, would not be aware of the contractual relationship between the two firms and there would be no direct contact between the performing firm and the client. Additionally, billing submitted to the client by the contracting firm and applications for court approval of counsel fees would not disclose that legal services were performed, in whole or in part, by the performing firm.
    The performing firm's status in the above-described relationship would be much akin to that of a “temporary lawyer” or “contract attorney.” As this Committee has previously held, there is no legal or ethical prohibition against working for more than one law firm, even simultaneously, provided there are no conflicts of interests and the attorney is not exposed to information in one firm that would be detrimental to the clients of the other. Opinion 632, 124 N.J.L.J. 926 (1989), citing Opinion 469, 107 N.J.L.J. 113 (1981). Stated another way, an attorney may work as a temporary or contract lawyer for one firm while at the same time or thereafter performing legal services for another law firm provided the contract lawyer and the law firms by which the lawyer is employed comply with the Rules of Professional Conduct.See footnote 1 1
    Depending upon the nature of the contractual relationship between the contracting and performing law firms, disclosure of the relationship may be required. RPC 7.1(a)(1) prohibits a lawyer from making false or misleading communications about the lawyer or the lawyer's services. A communication will be considered false or misleading if it “contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading.” Id.
    Moreover, RPC 7.5(d) prohibits lawyers from stating or implying that they practice in a partnership or other organization when they do not. Although RPC 7.5 is not within this Committee's jurisdiction, R. 1:19-2, “the policy underlying the rule is that a client in retaining a firm has selected the attorney or attorneys the client wants to represent him or her and is entitled to know who or what entity is undertaking the representation.” Opinion 632, supra, 124 N.J.L.J. 926.

    The client who retains a law firm expects that legal services will be rendered by the lawyers and other personnel of that firm. With the execution of the retainer agreement, the client expressly or implicitly consents to the involvement of firm personnel and the disclosure to those persons employed by the firm of confidential information that is necessary for the representation. ABA Comm. on Ethics and Professional Responsibility Formal Opinion 88-356 (1988). However, a client “by retaining the firm, cannot reasonably be deemed to have consented to the involvement of an independent lawyer.” Id. Consequently, the contracting firm may be under an affirmative duty to disclose its relationship with the performing firm to the client.See footnote 2 2
    The obligation of the contracting law firm to advise its clients that an independent lawyer will be working on a given matter will depend upon the degree of supervision the attorney will be receiving from the firm. Where the temporary lawyer will be working independently without the close supervision of a lawyer associated with the contracting firm, disclosure to the client will be necessary. On the other hand, where the temporary lawyer will be working under the direction and supervision of a lawyer in the contracting firm, the firm will not be required to disclose to the client that the temporary lawyer is working on the client's matter. Opinion 632, supra, 124 N.J.L.J. 926, citing ABA Formal Opinion 88- 356, supra, at 10. Accord, Alaska Bar Ass'n. Ethics Comm. Op. No. 96-01 (1996) and Illinois State Bar Ass'n. Adv. Op. 98-02 (1998).
    We note that in those situations where there is fee sharing, not involved in this inquiry, RPC 1.5(e) would also compel disclosure of the relationship to the client. This rule provides that, subject to certain exceptions found in the Court Rules,
        a division of fee between lawyers who are not in the same firm may be made only if:
            (1) the division is in proportion to the services performed by each lawyer, or, by written agreement with the client, each lawyer assumes joint responsibility for the representation; and
            (2) the client consents to the participation of all the lawyers involved; and
            (3) the total fee is reasonable.

Clearly, there can be no written agreement regarding joint responsibility with or informed consent by the client absent disclosure of the contractual relationship.
    Just as there is an obligation to advise a client that an independent lawyer will be working on the client's matter, there is an obligation to disclose to the court, in an application for approval of attorney's fees, the fact that an independent lawyer performed work on the matter for the applicant's client. R. 4:42-9 provides, in pertinent part, that
        ... all applications for the allowance of fees shall be supported by an affidavit     of services addressing the factors enumerated by RPC 1.5(a). The affidavit shall also include a recitation of other factors pertinent in the evaluation of the services rendered, the amount of the allowance applied for, and an itemization of disbursements for which reimbursement is sought. If the court is requested to consider the rendition of paraprofessional services in making a fee allowance, the affidavit shall include a detailed statement of the time spent and services rendered by paraprofessionals, a summary of the paraprofessionals' qualifications, and the attorney's billing rate for paraprofessional services to clients generally.

     R. 4:42-9 was amended in September 1971 to add to the information to be included in the affidavit the amount of the estate or fund, the responsibility assumed, the results obtained, the time spent by paraprofessionals and other pertinent factors. The purpose of the amendment was “to provide a more accurate catalogue of the factors to be considered by the court in fixing the fee” in a given matter. Pressler, Current N.J. Court Rules (Gann), Comment to R. 4:42-9.
    Additionally, R. 4:88-4 provides
        On every application for attorney's fees, the attorney shall file with the court at least 20 days prior to the day on which the account is settled an affidavit stating, in addition to the information required by R. 4:42-9(b), whether any part of the requested fee is to be paid to or shared with an attorney or firm of attorneys of another state or jurisdiction and if so, the amount to be paid or the manner in which the fee is to be shared shall be set forth and shall be supported by an accompanying affidavit of the foreign attorney or attorneys stating in detail the nature of the services rendered. The allowance shall be payable to the New Jersey attorney, and shall state what part, if any, of said allowance is to be paid to or shared with the foreign attorney or attorneys.

    Clearly, the policy behind these two Rules of Court is to ensure that the court is provided with sufficient information to adjudge the reasonableness and propriety of attorneys fees in a matter involving a decedent's estate. Even though neither of these two rules expressly requires the applicant to disclose that part of the requested fee is to be paid to an independent New Jersey- admitted attorney who worked on the matter, the same policy considerations should require such a disclosure. Without disclosure and the independent attorney's affidavit prepared in accordance with the governing court rules stating in detail the nature of the services rendered and the amount of time spent performing those services, the court will be unable to determine the reasonableness of the fee requested.
    Even in the absence of a Rule of Court expressly requiring disclosure of this information, RPC 3.3, “Candor Toward the Tribunal,” would compel it. RPC 3.3(a)(1) provides that “A lawyer shall not knowingly make a false statement of material fact or law to a tribunal.” RPC 3.3(a)(5), in turn, states that the lawyer shall not knowingly “fail to disclose to the tribunal a material fact with knowledge that the tribunal may tend to be misled by such failure.” Under the contemplated arrangement, where the performing attorney will have worked independently without the supervision of the contracting firm, that firm will be unable to certify that all of the work set forth in the affidavit has, in fact, been performed, much less that it has been performed by the firm. Were the contracting firm to so certify, it would be in violation of RPC 3.3, as well as RPC 8.4(c).
    In the alternative, the inquirer proposes that the contracting firm and that firm's client jointly contract, in writing, with the performing firm. The contract would provide that payment for services rendered by the performing firm would be made by either the contracting firm or the client. All bills for legal services and applications to the court for approval of counsel fees would bear the name of the performing firm.
    There does not appear to be any ethical impediment to this arrangement since the temporary lawyer or law firm would be entering into a direct contract with the client and an attorney- client relationship would be established. The client would know at the outset that the temporary lawyer would not be working under the direction and close supervision of the contracting firm which was initially retained. Assuming full and complete disclosure, the client would be free to accept or reject the arrangement.
    Nor would this arrangement be violative of RPC 3.3(a)(1) or (5). As proposed, the temporary lawyer's or law firm's name would appear on all applications to the court for approval of counsel fees. More importantly, the performing lawyer or lawyers would be required to submit an affidavit specifying the services rendered and the amount of attorneys fees being sought. R. 4:42-9. As a result, the contracting firm will not be constrained to provide the court with what is, in essence, hearsay evidence to support an application for fees and the court will not be actually or potentially misled by such evidence. Consequently, the contracting and performing firms may enter into this particular arrangement.
    Before we close, we would be remiss if we did not point out that there is also a third type of arrangement available to the contracting and performing firms that would not in any way be problematic. The performing firm or attorney could be designated and appear on the contracting firm's letterhead as of counsel to that firm.
    The American Bar Association has defined the of counsel relationship as one where there will be “a close, regular, personal relationship; but a relationship which is neither that of a partner or its equivalent, a principal of a professional corporation, with the shared liability and/or managerial responsibility implied by the term; nor, on the other hand, status ordinarily conveyed by the term 'associate,' which is to say a junior non-partner lawyer, regularly employed by the firm.” ABA Formal Opinion 90-357 (1990). Consultation or occasional collaboration is not sufficient. Ibid.
    Committees such as ours in other jurisdictions have similarly described the relationship as being “close, ongoing, regular, and involving frequent contact for the purpose of providing consultation and advice. The of counsel lawyer must be more than an outside consultant, or an adviser on only one case, or a mere forwarder or receiver of legal business.” ABA/BNA Lawyers' Manual on Professional Conduct, §91:502 (1990), citing Arizona Ethics Opinion 87-24 (1987); Michigan Informal Ethics Opinion CI-1167 (1987); Ohio (Supreme Court) Ethics Opinion 88-23 (1988); Pennsylvania Ethics Opinion 89-98 (1989); and Virginia Ethics Opinion 1293 (1989). More recently, our own Committee on Attorney Advertising concluded that an attorney designated as of counsel to another firm “will have hands-on responsibility for, or will frequently render advice on, a law firm's matters.” CAA Opinion 21, 147 N.J.L.J. 979, 6 N.J.L. 475 (1997).
    We, too, have addressed the of counsel relationship in three prior opinions. In Opinion 443, 104 N.J.L.J. 561 (1979), this Committee held that there was no legal or ethical prohibition against a lawyer contemporaneously acting as of counsel to more than one firm, provided that the association complied with all applicable disciplinary rules.
    In Opinion 444, 104 N.J.L.J. 567 (1979), we determined that two partners in the same firm could appear as of counsel on the letterhead of a sole practitioner whose office was located in another county, and that the sole practitioner's name could appear on their letterhead as well. In arriving at this decision, we assumed that the attorneys designated as of counsel would be available to clients of the other firm and that any division of fees would not offend DR 2-107(A), the then applicable disciplinary rule. Since the proposed designation appeared to accurately portray the relationship to the public and was in no way misleading, it was deemed to be proper.
    Yet, in Opinion 522, 112 N.J.L.J. 384 (1983), we denied a New Jersey firm's request to list a Pennsylvania law firm on it's letterhead as of counsel because the relationship between the firms consisted of referring legal matters to one another. Neither firm had hands-on responsibility for the cases of the other. Consequently, we prohibited the listing of the Pennsylvania firm as of counsel on the New Jersey firm's letterhead as misleading, because it implied that the Pennsylvania firm had an actual relationship with the firm, which was not the case.
    There can be no doubt that the arrangement contemplated by these two firms would more than qualify as one establishing an of counsel relationship. The relationship between the firms will be close, on-going and involve frequent contact. In fact, the performing firm will regularly have hands-on responsibility for, or will frequently render advice on, the contracting firm's matters. Moreover, since the performing lawyer's name will be on the contracting firm's letterhead, business cards and related communications, disclosure to the client will not be in issue. Nor will candor toward the tribunal be a cause for concern. Consequently, although we have dealt exclusively with the ethical considerations, and have not addressed any substantive considerations, we would suggest that the inquiring firm, if it has not already done so, consider designating the attorney in question as of counsel to the firm.
    In conclusion, we reiterate that an attorney may work as a temporary or contract lawyer for one firm while at the same time or thereafter performing legal services for another law firm provided the contract lawyer and the law firms by which the lawyer is employed comply with the Rules of Professional Conduct as discussed above.

* * *

Footnote: 1    1

The Rules of Professional Conduct concerning confidentiality of information (RPC 1.6), conflicts of interest (RPC's 1.7, 1.8 and 1.9) and imputed disqualification (RPC 1.10), insofar as they relate to temporary attorneys and the firms by which they are employed, were previously addressed by the Committee in Opinion 632, supra, 124 N.J.L.J. 926.
Footnote: 2    2
This duty will be absolute if the client has expressly requested that only a certain attorney or attorneys work on the client's file.

This archive is a service of Rutgers University School of Law - Camden