Ezel / Ethics Opinions / COBAR
COBAR December 30, 2019

Do Colorado's fee-division rules apply when a firm shares fees with an 'of counsel' lawyer, and can a lawyer be 'of counsel' to two firms?

Short answer: No special fee-split rules, but watch conflicts. The opinion concludes that a lawyer who is genuinely 'of counsel' (a close, regular, personal association) is treated as in the same firm, so Rule 1.5(d)(1)-(3)'s requirements for dividing fees between different firms do not apply. A lawyer may be 'of counsel' to more than one firm, but conflicts are imputed across all associated firms under Rule 1.10, which sharply limits such arrangements.

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This page answers the general question as of 2019. Ezel answers yours: whether it's allowed on your facts, under the current rules of professional conduct in your state, with citations.

Currency note: this opinion is from 2019
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Plain-English summary

Opinion 139 answers two questions: whether a law firm must comply with Rule 1.5(d)(1)-(3) when dividing fees with an "of counsel" lawyer, and whether a lawyer may be "of counsel" to more than one firm at the same time. Neither the Model Rules nor the Colorado Rules define "of counsel," so the Committee, following ABA Formal Op. 90-357, treats the term (and "special counsel," "senior counsel," and similar labels) as denoting a close, regular, personal relationship between the lawyer and the firm, a genuine form of association rather than a mere referral source, single-case collaboration, or outside-consultant arrangement.

From that premise, the opinion draws a paired conclusion. Because an "of counsel" lawyer is considered to be "in the same firm" for fee purposes, the firm and the lawyer may share legal fees without meeting Rule 1.5(d)'s conditions for dividing fees between lawyers who are not in the same firm (proportional services or joint responsibility, client agreement confirmed in writing, and a reasonable total fee). The corollary is that the same lawyer must be counted for conflict-imputation purposes: under Rule 1.10(a), conflicts that would bar one lawyer in the firm are imputed to the others, so an "of counsel" lawyer's conflicts are imputed to the firm and vice versa.

The opinion then explains why being "of counsel" to multiple firms is practically constrained. If a lawyer is "of counsel" to Firm A and Firm B, the firms effectively become one firm for imputation, so a conflict in Firm A is imputed to Firm B under Rule 1.10(a). Clearing those conflicts runs into Rule 1.6: Rule 1.6(b)(7) lets a lawyer disclose limited information to detect and resolve conflicts arising from a change of employment, but the Committee reads it as not authorizing Firm A and Firm B to share client information with each other to clear the imputed conflicts created by their shared "of counsel" lawyer. The Committee therefore concludes the associated firms should obtain informed client consent before exchanging information to identify or resolve conflicts, which means a lawyer might maintain an "of counsel" relationship alongside a solo practice, but the conflict-screening and confidentiality requirements impose real limits on associating "of counsel" with more than one firm.

In practice

The opinion holds that, under the Colorado rules as they stood at the time of the opinion, the fee-division formalities of Rule 1.5(d) do not apply to a true "of counsel" relationship, because such a lawyer is "in the same firm." Per the opinion, the same characterization carries a cost: the lawyer's conflicts are imputed to the firm (and, where the lawyer is "of counsel" to two firms, across both) under Rule 1.10(a), and the confidentiality limits of Rule 1.6, including the Committee's narrow reading of Rule 1.6(b)(7), mean firms generally need informed client consent to share the information needed to clear those imputed conflicts. The opinion cautions that "of counsel" must reflect a close, regular, personal association; using the label for a lawyer who merely refers or receives work, collaborates on a single case, or acts as an outside consultant is misleading and improper.

Common questions

Q: Does my firm have to follow the fee-splitting rules to pay an "of counsel" lawyer a share of a fee?

A: No, for a genuine "of counsel" relationship. The opinion concludes that because such a lawyer is "in the same firm," the firm need not comply with Rule 1.5(d)(1)-(3), which governs dividing fees between lawyers who are not in the same firm.

Q: What actually makes someone "of counsel"?

A: A close, regular, personal relationship with the firm. Following ABA Formal Op. 90-357, the opinion says the term covers relationships like a part-time or retired-but-available lawyer or a lawyer expected to become a partner, but not a mere referral source, single-case collaborator, or outside consultant.

Q: Can a lawyer be "of counsel" to more than one firm?

A: Yes, but it is constrained. The opinion concludes there is no flat prohibition, but conflicts are imputed across all associated firms under Rule 1.10(a), effectively treating them as one firm for conflict purposes.

Q: Can the firms just share client information to run the conflict checks?

A: Not freely. The opinion reads Rule 1.6(b)(7) as not authorizing the associated firms to share client information to clear the imputed conflicts, and concludes the firms should obtain informed client consent before exchanging that information.

Background and rules framework

The opinion interprets Colo. RPC 1.5(d) (division of fees between lawyers not in the same firm) and Rule 1.10(a) (imputation of conflicts within a firm), read together with Rule 1.6 (confidentiality, including the 1.6(b)(7) exception for detecting and resolving conflicts on a change of employment and Comment [13]) and the underlying conflict Rules 1.7 and 1.9. It adopts the definition of "of counsel" from ABA Formal Op. 90-357 and relies on the Committee's earlier Formal Op. 105 distinguishing "of counsel" from temporary lawyers.

Citations and references

Rules of Professional Conduct:

  • Colo. RPC 1.5(d) / Model Rule 1.5(d) (dividing fees between lawyers not in the same firm)
  • Colo. RPC 1.10(a) / Model Rule 1.10(a) (imputation of conflicts of interest within a firm)
  • Colo. RPC 1.6, including 1.6(b)(7) and Comment [13] / Model Rule 1.6 (confidentiality; conflict-detection disclosures)
  • Colo. RPC 1.7 and 1.9 / Model Rules 1.7, 1.9 (concurrent and former-client conflicts)

Other opinions cited:

  • ABA Formal Op. 90-357 (1990): use of the designation "of counsel"
  • CBA Formal Op. 105 (1999): opinion on temporary lawyers
  • Philadelphia Bar Op. 2001-5; South Carolina Bar Ethics Advisory Op. 10-06: conflict-clearing disclosures among associated firms

See also

Source

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