Can a firm list independent lawyers who only take forwarded work as 'Of Counsel,' and can it pay them a referral fee on those matters?

Plain-English summary

A firm's letterhead and exterior door listing showed two lawyers as "Of Counsel." Those two lawyers kept separate offices and practices, working with the firm only on particular matters; the firm retained full and final responsibility to the client for the timing, cost, and quality of their work. The "Of Counsel" lawyers billed the firm at hourly rates about 20 percent below what they would charge their own clients, and the firm then billed the client at roughly the rate those lawyers would normally have charged directly, plus the firm's own time. The firm asked whether the "Of Counsel" designation and the billing were proper.

On the designation, the committee reviewed former DR 2-102(A)(4) (a lawyer may be "Of Counsel" if he has a continuing relationship with a firm other than as partner or associate), Opinion 373 (the term describes a former partner on retirement or similar who remains available for consultation, and a lawyer with an independent office and practice may not be shown as "Of Counsel"), ABA Formal Opinion 330 (the relationship must be close, regular, and personal, not that of a forwarder-receiver of business), and ABA Informal Opinion 1378 and EC 2-13 (a lawyer must be scrupulous about his professional status). Because the two lawyers maintained separate offices, appeared to be receivers of forwarded business, and were compensated more like outside consultants than members of the firm, the committee concluded no "Of Counsel" relationship existed and the firm could not show them as "Of Counsel" on its letterhead, door listing, or elsewhere.

On the billing, the committee turned to Rule 2-107(a), which permits dividing a fee with a lawyer who is not a partner or associate if the client consents in writing after written disclosure, the division is proportional to services and responsibility (except where one lawyer refers work to another), and the total fee is reasonable. The committee explained that Rule 2-107(a) expressly sanctions paying a referral fee to a lawyer who takes no part in handling the case, so long as the referring lawyer assumes responsibility as if a partner and the total fee is reasonable, serving the public by encouraging referrals to better-suited lawyers. The fee arrangement was therefore permissible so long as the client consented in writing after written disclosure of the pertinent facts, and the receiving lawyer disclosed that the referring lawyer would receive a referral fee.

Currency note

This opinion was issued in 1982, under the former Illinois Code of Professional Responsibility and before Illinois adopted the 2010 Rules of Professional Conduct. The ISBA Board of Governors affirmed the opinion in January 2010 as generally consistent with the 2010 Rule (Rule 1.5(e)), noting ABA Formal Opinion 90-357, while cautioning that the specific standards referenced may differ from the 2010 Rules. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule or requirement mentioned here.

Common questions

Q: Can a firm list a lawyer who only takes forwarded work as "Of Counsel"?

A: The opinion concluded no; a lawyer with a separate office and practice who is essentially a receiver of forwarded business does not have the close, continuing relationship the "Of Counsel" designation requires, so showing it would be misleading.

Q: Can the firm still pay that lawyer a referral fee?

A: Per the opinion, yes, under Rule 2-107(a), so long as the client consents in writing after disclosure, the referring lawyer retains responsibility, and the total fee is reasonable.

Q: What distinguishes "Of Counsel" from a forwarder-receiver relationship?

A: The committee, citing ABA Formal Opinion 330, said "Of Counsel" requires a close, regular, personal relationship in which the lawyer is a component part of the office, not merely a lawyer who forwards or receives business.

Background and rules framework

The opinion applied former Illinois Code DR 2-102(A)(4) and EC 2-13 (accurate representation of professional status and the "Of Counsel" designation) and Rule 2-107(a) (dividing fees with an outside lawyer on client consent, retained responsibility, and a reasonable total fee), drawing on Opinion 373, ABA Formal Opinion 330, and ABA Informal Opinion 1378. The Board's 2010 affirmation maps the billing analysis to current Illinois Rule of Professional Conduct 1.5(e) (division of fees between lawyers not in the same firm), corresponding to ABA Model Rule 1.5, with the firm-name and "Of Counsel" dimension in Model Rule 7.5.

Citations and references

Rules of Professional Conduct:

• Illinois Code DR 2-102(A)(4); EC 2-13; Rule 2-107(a) (applied in the opinion)
• Illinois RPC 1.5(e) (2010 equivalent per the Board's affirmation)
• MR 1.5 (fees, including division between lawyers under 1.5(e)); MR 7.5 (firm names and "Of Counsel")

Other opinions cited:

• ISBA Opinion 373: a lawyer with an independent office and practice may not be shown as "Of Counsel"
• ABA Formal Opinion 330: the "Of Counsel" relationship must be close and continuing, not a forwarder-receiver relationship
• ABA Informal Opinion 1378: separate firms may not portray a misleading close relationship on stationery

See also

• ISBA Ethics Op. 03-02: Firm Names and Of Counsel
• ISBA Ethics Op. 764: Shared Office, Common Letterhead
• ISBA Ethics Op. 10-02: Reciprocal Referral Deals

Source

• Landing page: https://www.isba.org/ethics/opinions/776