OF COUNSEL
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Law Firm Santo & Beckert (“S&B”) has a
relationship with Kenneth Holtzman, who has his own boutique solo trademark
practice. S&B regularly sends
it trademark work to Holtzman. Holtzman
regularly refers his clients to S&B for non-trademark work.
Each refers to the other on stationery, business cards, etc., as “of
counsel.” Holtzman has just been
approached by Ajax Corp. to bring a trademark infringement action against Tiger
Corp., one of S&B’s biggest clients.
Holtzman himself has never done work for Tiger.
Can he take the case? Or,
does his of counsel relationship with S&B prevent him from doing so?
A good place to begin with those
questions is ABA Op. 90-357 (1990). The
opinion purports to supersede a number of ABA Formal and Informal Opinions that
preceded it. It also purports to apply to both the older ABA Model Code as
well as the newer ABA Model Rules. The opinion says that it is appropriate
to confer the title, "of counsel," where the lawyer in question is not
an associate or partner, but the relationship between the law firm and the
lawyer is "close, regular, [and] personal." The Committee
identified four classic situations where this is the case: (1) a part-time
lawyer, (2) a retired partner, (3) a lateral on probation, and (4) someone
between associate and partner. The opinion goes on to say that the title
is not appropriate where the relationship is the "occasional collaborative
effort" or where the lawyer is merely a "forwarder or receiver"
of business. According to the opinion, when the relationship is close
enough to justify the title, "of counsel," it follows that the of
counsel and the firm are one for conflicts purposes.
Assume that the relationship
between Holtzman and S&B is close enough to justify their use of the term
“of counsel.” ABA Op. 90-357
would hold that Holtzman cannot take the case against Tiger; it’s as if Tiger
were a current client of Holtzman. Holtzman
would need Tiger’s waiver. Those
cases that find a “close, regular, and personal” relationship conclude that
the of counsel and firm are treated as one for conflicts purposes, e.g.
People ex rel Dept. of Corporations v. SpeeDee Oil Change Systems, Inc.,
980 P.2d 371, 384-385 (Cal. 1999) (citing ABA Op. 90-357) (other cases and
opinions agreeing with SpeeDee Oil and
ABA Op. 90-357 follow under “Other Opinions Finding Disqualification”).
Here, things get sticky.
What if a lawyer and law firm use the term “of counsel,” but their
relationship does not even approach that described in ABA Op. 90-357?
For example, the law firm, based in a county seat, allows a lawyer from a
nearby town to use an empty office at the firm a few days a month when she has
to go to court. They do not share
files or cases, and there is little opportunity to share their respective
client’s confidences. Yet, for
vague, overly-optimistic, business-promotion reasons they decide the visiting
lawyer should be deemed “of counsel.” There
is a line of cases that say where the relationship between the firm and the
“of counsel” is “attenuated” (or words to that effect), they are not
treated as one for conflicts purposes. A
leading example of such a case is Hempstead
Video, Inc. v. Village of Valley Stream, 409 F.3d 127, 136 (2d Cir. 2005) (other cases not following ABA Op.
90-357 follow under “Other Opinions Finding No Disqualification”).
The disconnect here is between two unrelated sets of ethics rules: one
dealing with false advertising; the other dealing with conflicts of interest.
ABA Op. 90-357 would hold that calling the visiting lawyer “of
counsel” implies that the relationship between the firm and the lawyer was
“close, regular, and personal,” which the relationship described just above
is clearly not. On the misleading aspect of this see, too, SpeeDee Oil, 980
P.2d at 383, which discusses the use of “of counsel” and California
advertising rules. Those cases,
such as Hempstead, holding that the
“of counsel” designation did not result in disqualification ignore the fact
that the lawyers may be using the term unethically.
None of the cases finding no conflict, of which we are aware, discusses
the misleading aspect of using the term “of counsel” when the relationship
is “attenuated.” Perhaps, those
courts feel that it is a disciplinary matter and not their concern.
Let’s revisit our trademark friend, Holtzman. Is his relationship with S&B “close, regular, and
personal” as defined by ABA Op. 90-357? If
so, most courts would find that he would have a conflict if he took on Ajax
v. Tiger. Or, is the relationship a lesser one (“attenuated”)?
If so, many courts would allow him to take the case.
All of which suggests that law firms should have a good reason for
designating someone as “of counsel.” Otherwise,
they may find themselves in potential conflict situations where they simply
cannot predict where the matter will end up.
Other Opinions Finding
Disqualification
Atasi Corp. v Seagate
Technology, 847 F.2d 826 (Fed. Cir. 1988); In Re Mortgage & Realty
Trust (Value Prop. Trust v. Zim Co.), 195 B.R. 740 (C.D. Cal. 1995); Mustang
Enterprises, Inc. v. Plug-In Storage Systems, Inc., 874 F. Supp. 881 (N.D.
Ill. 1995); (March 2006); Monroe v. City of Topeka, 988 P.2d 228 (Kan.
1999): ABA Op. 1990-357; Cal. Op. 1993-129; L.A. County Op. 516 (2006); D.C. Op.
247 (1994); Ga. Op. 93-1 (1993); Mass. Op. 01-1 (2001); Mich. RI Op. 236 (1995);
Mich. Op. RI-21 (1989); N.Y. Ops. 773 & 793 (March 2006); and Phila. Op.
2001-5 (2001).
Other Opinions Finding No Disqualification
Regal Marketing Inc. v. Sonny
& Son Produce Corp., 2002 U.S. Dist. LEXIS 14069 (S.D.N.Y. July 31,
2002) (relationship “too attenuated”); Gray v. Memorial Med. Center, Inc.
v. Dekle, 855 F. Supp. 377 (S.D. Ga. 1994) (of counsel in “another
town,” contacts sporadic, no mention of ABA Op 90-357); United States for
Use and Benefit of Lord Electric Co., Inc. v. Titan Pac. Constr. Corp., 637
F. Supp. 1556 (W.D. Wa. 1986); Jenson v. Touche Ross & Co., 335
N.W.2d 720 (Minn. 1982); Calandriello v.
Calandriello, 819 N.Y.S.2d 569 (N.Y. App. 2006)
(merely had office space); R.I. Op. 99-09 (1999) (separate offices, separate
practices, and no access to each other's files).
Restatement.
See § 124, cmt. c(ii) on of counsels.
Treatise. Rotunda & Dzienkowski §
1.10-5(d).
"Special Counsel." Bison Plumbing
City, Inc. v. Benderson, 722 N.Y.S.2d 660 (N.Y. App. 2001). Court held
that lawyer designated by a law firm as "special counsel" is not
necessarily a member of the firm for conflict of interest purposes.
Office Sharing
When do lawyers
practicing independently, but sharing office space, become disqualified from
being on opposite sides of a matter? The
cases, a few of which are cited below, can be inconsistent.
[Caution: we have not
attempted to gather all cases or ethics opinions on office sharing.]
Cmt. e to Restatement
§ 123 seems to strike just the right balance:
The key inquiry is whether the physical organization and actual operation of
the office space is such that the confidential information of each lawyer is
secure from the others.
Cases
holding no disqualification: United
States v. Bell, 506 F.2d 207 (D.C. Cir. 1974) (criminal case; no finding of
ineffective assistance under Sixth Amendment); and, Custody of a Minor, 432
N.E.2d 546 (Mass. App. 1982)
Cases
finding need for disqualification: Skokie Gold Standard Liquors v. Joseph E.
Seagram & Sons, Inc., 452
N.E.2d 804 (Ill. App. 1983); State v. Bryan,
2000 Tenn. Crim. App. LEXIS 605 (Tenn. Crim. App. 2000); Winblad
v. Deskins, 782 N.E.2d
160 (Ohio App. 2002).
Ethics
opinions on office sharing. D.C.
Op. 303 (2001); Ky. Op. E-418 (2001) (where group appeared to be one firm,
conflict rules kicked in).
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