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                                         118 N.J.L.J. 580
                                        October 30, 1986


Appointed by the Supreme Court of New Jersey


Limitations on Firm Names -
Associates, Employees, and
In-House Counsel Appearing
in a Law Firm's Name

    We have three inquiries dealing with the proper designation of a law firm on its letterhead. Two of them concern attorneys who are employed by insurance companies on salary to represent the assureds of each carrier exclusively:
    1. The first office is formed of a number of attorneys each of them full-time employees of an insurance carrier. The senior in that office is in charge of internal management and case coordination with some trial work. He is the Regional Manager for Legal Services in New Jersey for that company. In that role he plans budgets, personnel management, procedures, hires, and fires. Another attorney acts as senior trial attorney and runs a trial team for a particular area. A third attorney supervises a trial team for defense work in a different geographical area and assumes some of the management functions of the senior during the latter's absence. These three attorneys and the other employees working under them limit their work to one insurance carrier except that each may undertake representation for close family members. The three seniors claim they conduct the office in partnership form because of the manner in which the three seniors share responsibilities and cover each other's work. There is no written agreement. The carrier pays all expenses.
    The proposal of these three senior employees of this office is that they be permitted to use a firm name consisting of their three names, even though they are in fact employees of their single client.
    2. The second inquiry is from an office that also works exclusively for one insurance carrier. The office name presently has only one title name - that of the senior of the group. All attorneys are on the payroll of the insurance carrier. All office expenses and overhead are paid by the carrier.
    Here again there is no partnership agreement. Although all employees share the legal work, they do not share expenses or income. This inquiry asks whether or not that office may use an office name consisting of all of the employees along with the qualification:
        "An organization of attorneys, not a partnership."
    The reasons given for this request are: to consolidate the efforts of the staff; to make staff function more as a unified force; to recognize past efforts of staff by including staff names on the letterhead and to enhance the prestige of the office in general.
    3. The third inquiry does not concern "in-house" counsel: A sole practitioner seeks to include the names of his employees in his office letterhead in order to recognize their achievements in the firm. They work full time with no outside practice. He admits that "... technically (they) are not partners." They are paid salaries plus percentages of the fees produced by their work as well as a percentage of fees on matters brought to the office by them but performed by others. In addition these employees "... participate in decisions made by the firm... " It is urged that because of the participation in fees earned by the office, and because of the participation in decisions, these employees should be considered partners or members of the firm under RPC 7.5(a).
    In the first two inquiries, the lawyers are fully paid employees of a single client. In effect they constitute the legal defense department for the client's insureds in specific geographic areas.
    In the last case, the staff are employees of a sole practitioner with a general practice. While each group is organized so an attorney's work is covered by a fellow-employee, there is no partnership in the legal sense. As employees of insurance carriers, the first two law offices lack the quality of independence - an important characteristic of a law partnership. The staff of the sole practitioner in their capacity as his employees similarly lack the ability to function as independent practitioners.
    In all three cases, the organization is not that of partners sharing expenses, income, responsibility and otherwise.
    By custom and tradition, the use of two or more last names on a letterhead to identify a law office implies that the persons so named are organized as a partnership.
    Hence, the proposed inclusion of employees' names in the office names does not meet the requirements of RPC 7.5. See our Opinion 479, 107 N.J.L.J. 329 (1981); Opinion 224, 94 N.J.L.J. 1206, (1971); and particularly, Opinion 497, 109 N.J.L.J. 393 (1982) where we held that attorneys who are not partners may not hold themselves out as practicing in partnership form.
    Our RPC 7.5(d) may be compared to Rule 7.5(d) proposed in the A.B.A. Model Rules of Professional Conduct, May 20, 1981:
        "(d)    Lawyers shall not hold themselves out as practicing in a law firm unless the association is in fact a firm."

    In 1983, the A.B.A. adopted Rule 7.5(d) which is identical to the New Jersey Rule:
        "(d)    Lawyers may state or imply that they practice in a partnership or other organization only when that is the fact."

    The A.B.A. Comment on (d) says:

        ... lawyers sharing office facilities, but who are not, in fact, partners may not denominate themselves as, for example, "Smith and Jones" for that title suggests partnership in the practice of law.

    RPC 7.5(d) as finally adopted follows the sense of the comparable provision of the A.B.A. Model Code above; the reference to "... partnership... " clearly states the rule more stringently, and leaves no doubt that in RPC 7.5, a law firm listing the names of individuals implies the existence of a partnership.
    There arises the question whether or not to approve a qualifying set of words by way of disclaiming partnership organization and to avoid the misrepresentation; for example, by adding such words as:

    - "an association of attorneys"
    - "an association of attorneys, not a partnership"
    - "in-house counsel for A.B. Corp."
    - "litigation attorneys for policyholders of A.B. Corp."
or similar language designed to disclaim partnership.
    Compare DR 2-102(C) which we quoted in our Opinion 497, supra:
        a lawyer or professional corporation shall not hold himself or itself out as having a partnership with one or more lawyers or professional corporations unless they are in fact partners...

    These inquiries raise the question whether or not the words "or other organization" in RPC 7.5(d) are broad enough as used in RPC 7.5 to permit a variety of organizations other than partnership.
    We hold that "other organization" in RPC 7.5(d) refers to a professional service corporation or partnership of corporations organized under N.J.S.A. 14A:17-1 et seq., and subject to R. 1:21-lA as well as RPC 7.5. We further hold that such words "other organization" do not contemplate the use of explanatory words of disclaimer.
    In coming to these conclusions we note that in at least two states the use of such disclaimers has been considered.
    The Board of Professional Responsibility of the Supreme Court o£ Tennessee in its Formal Ethics Opinion 84F-82 (November 1984) has held that the use of words: "An Association of Attorneys" following the names of the lawyers in the title is a proper method of identifying that the persons in a law office are not partners; and that there is no need for the additional disclaimers: "not a partnership".
    In reaching this conclusion, the Tennessee opinion vacated a prior dictum in its Formal Ethics Opinion 84-F-64 (January 1984) which had required the additional disclaimers. The Tennessee Opinion 84F-82 said:
        ... the general public will be better served having a reasonable rule of only requiring the designation of "an Association of Attorneys" that will be followed and enforced when no partnership exists, rather than having a harsh rule requiring the additional disclaimer which may be ignored and unenforced.

    On the other hand, the Advisory Committee appointed by the Nebraska Supreme Court for the Nebraska State Bar Association has taken a position contrary to that of Tennessee. The Nebraska Committee held that the disclaimer "not a partnership" does not eliminate the impropriety in the use of an office name "the Law Firm of S & J" by individuals who in fact are not partners, under Nebraska DR 2-102(C) which provides:
        a lawyer shall not hold himself out as having a partnership with one or more other lawyers unless they are in fact partners.

    The Nebraska Committee reasoned that such a title, especially when preceded by the words, "Law Firm", indicates a partnership relation implying sharing of liability and responsibility; and further that it would be impractical and virtually impossible to use the disclaimer wherever and whenever the "firm" name is mentioned. Nebraska State Bar Association Opinion of Advisory Committee, #80-10 (undated).
    We agree with the Nebraska Committee; and we hold that in each of the three inquiries stated above, attorneys who are not partners may not combine their names for an office designation that implies a partnership practice; and that, the use of disclaimers to rebut the inference of partnership is impractical, does not serve to correct the misleading nature of such office designation and is not appropriate within the requirements of RPC 7.5.
    Law offices have long functioned in a tradition that encourages associates/employees to demonstrate their abilities to develop salient facts, research applicable law, plan and communicate effective use of such facts and law in resolving social, economic, and political concerns. As these lawyer-skills are exercised, seniors come to respect an associate's sense of responsibility and commitment to the practice of law. The seniors' interest in building or maintaining an economically effective firm then joins in motivating the invitation to partnership.
    The appropriate means of recognizing achievements of professional staff is best realized by invitation to partnership.
    We see every reason to encourage that tradition.

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