Can a California lawyer concurrently be 'of counsel' to a law firm and run a separate solo practice, and use separate business cards and stationery for each capacity?
LACBA Formal Opinion 516 (Revised 2014): Of Counsel Affiliation While Maintaining a Solo Practice
Short answer: The opinion concludes a California lawyer is not ethically precluded from concurrently maintaining a solo practice and serving in an of-counsel capacity with a law firm. The lawyer may use separate business cards and stationery for the two practices, provided the relationship with the firm satisfies former Rule 1-400(E) standard (8)'s "close, personal, continuous, and regular" test, the lawyer discloses the dual capacity to actual and potential clients and takes reasonable steps to avoid confusion in subsequent communications, conflicts are checked across both practices under former Rule 3-310, and fee splitting complies with former Rule 2-200 unless the of-counsel is properly characterized as the firm's employee within Rule 1-100(B)(4).
Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the California Rules of Professional Conduct and are persuasive authority. This summary is for research purposes only and is not legal advice. Verify current rules before acting on any specific guidance.
About this page: The plain-English summary and Q&A below were written by Ezel based on the official opinion. We do not reproduce the opinion text on this page; follow the linked source for the official text, which controls.
Currency note
This opinion was issued in 2014 (revised), under the former California Rules of Professional Conduct (rule numbering 1-100 et seq.). California adopted a new numbering system effective November 1, 2018, mapping former Rule 1-400 (advertising and communications) to current Rule 7.1, former Rule 3-310 (conflicts) to current Rule 1.7 and Rule 1.10, and former Rule 2-200 (fee splitting) to current Rule 1.5.1. The substantive analysis in this opinion may carry forward in many respects, but verify against the current Rules before relying on any specific rule, deadline, or requirement mentioned here.
Plain-English summary
The inquirer is a solo practitioner offered an of-counsel position at a law firm. She wants to keep her solo practice and use one set of business cards for the firm engagement and another for the solo engagement. The committee addresses three asserted questions; the second and third (vicarious malpractice liability) are legal issues the committee declines to opine on, leaving the ethical question about Rule 1-400(E), standard (9).
On the of-counsel designation, the opinion concludes the title is permissible under California ethics standards only if the relationship satisfies the "close, personal, continuous, and regular" requirement of Rule 1-400(E), standard (8). The opinion cites People ex rel. Department of Corporations v. SpeeDee Oil Change Systems, Inc., 20 Cal.4th 1135 (1999), for the proposition that the of-counsel attorney's services must be reasonably available to the firm; merely collaborating on individual matters or referring business does not meet the standard. The opinion observes the lawyer may hold concurrent of-counsel designations and a solo practice so long as each relationship meets the qualitative test.
On the separate business cards, the opinion analyzes Rule 1-400(E), standard (9) (presumption that materially differing professional designations used by the same lawyer in the same community are misleading). The committee concludes that, although standard (9) was added primarily to address trade names, "of counsel" is a "professional designation" within the rule. The opinion concludes nonetheless that separate cards are not unethical so long as the lawyer (1) discloses the dual capacity at or before the start of any client engagement, (2) tells the client which capacity will handle the matter, and (3) takes reasonable steps thereafter to avoid client and public confusion. The opinion observes that the lawyer should use the appropriate card for the matter (solo card for solo-practice communications, firm card for firm-engagement communications) and may need to clarify or disclaim the affiliation where confusion is reasonably possible.
On conflicts (former Rule 3-310), the opinion concludes that under SpeeDee Oil, the of-counsel is treated as a member of the firm for conflict-imputation purposes. The lawyer and firm must therefore check conflicts both ways for the lawyer's solo clients and the firm's clients, and obtain informed written consent under Rule 3-310(C) or (E) where required. The opinion acknowledges that an effective ethical screen may, in appropriate circumstances, preclude disclosure of confidential information and protect against disqualification, citing the Second Circuit's analysis in Hempstead Video, Inc. v. Incorporated Village of Valley Stream, 409 F.3d 127 (2d Cir. 2005).
On fee splitting (former Rule 2-200), the opinion concludes that because Rule 1-400(E), standard (8) defines of-counsel by excluding partners, associates, and shareholders, an of-counsel attorney cannot ordinarily split fees with the firm without satisfying Rule 2-200's written-client-consent requirement. The opinion identifies an exception: if the of-counsel is properly characterized as the firm's "employee" within Rule 1-100(B)(4)'s definition of "associate" (a fact-specific determination turning on W-2 treatment and other indicia), Rule 2-200 may not apply.
In practice
Under this opinion, a California lawyer holding an of-counsel position alongside a solo practice should (per the opinion) confirm at the outset of each engagement which capacity will handle the matter and communicate that to the client in writing; check conflicts across both practices using a shared system with the firm; and ensure that fee-sharing arrangements satisfy Rule 2-200 (current Rule 1.5.1) unless the of-counsel is properly characterized as the firm's employee.
Common questions
Q: Can a California lawyer be of-counsel to a firm and run a separate solo practice?
A: The opinion concludes yes, provided the of-counsel relationship satisfies the "close, personal, continuous, and regular" standard of former Rule 1-400(E) standard (8) (now mirrored in current Rule 7.5). The opinion observes the lawyer may even hold multiple concurrent of-counsel positions if each meets the qualitative test.
Q: Can the lawyer use two sets of business cards and stationery?
A: The opinion concludes yes. Although Rule 1-400(E) standard (9) creates a presumption that materially differing designations are misleading, the opinion concludes that with proper disclosure to clients about the dual capacity and reasonable steps to avoid public confusion, separate cards do not violate the rule. The opinion recommends using the appropriate set for each engagement and clarifying affiliation where confusion is possible.
Q: How are conflicts handled across the two practices?
A: Per the opinion (citing SpeeDee Oil), the of-counsel is treated as a member of the firm for conflict-imputation purposes. Conflicts must be checked across the lawyer's solo clients and the firm's clients in both directions, and informed written consent must be obtained where required under former Rule 3-310 (now Rule 1.7).
Q: Does fee splitting with the firm require client consent?
A: The opinion concludes that because Rule 1-400(E) standard (8) defines of-counsel as not a partner, associate, or shareholder, fee splitting between the lawyer and the firm must satisfy former Rule 2-200's written-consent requirement, unless the of-counsel is properly characterized as the firm's "employee" within Rule 1-100(B)(4).
Q: Does an ethical screen prevent imputation between the of-counsel and the firm?
A: The opinion identifies the screen option as available in appropriate circumstances, citing the Second Circuit's Hempstead Video analysis. The opinion observes that no California appellate decision has specifically approved screening for an of-counsel attorney moving between private practices, so the option carries some uncertainty.
Background and rules framework
The opinion interprets former California Rules of Professional Conduct 1-100(B)(4) (defining "associate"), 1-400(A) (defining "communication"), 1-400(D) (no false, deceptive, misleading, or confusing communications), 1-400(E) (standards, including standard (8) on of-counsel and standard (9) on materially differing designations), 2-200 (fee splitting with non-firm lawyers), and 3-310(C) and (E) (conflicts of interest, including informed written consent). Business & Professions Code §§ 6068(e)(1) (confidences) and 6160-6172 (professional law corporations) are also cited.
Citations and references
Rules of Professional Conduct (former numbering):
- California RPC 1-100(B)(4) (definition of "associate")
- California RPC 1-400(A), (D), (E), standards (6), (7), (8), (9) (communications and presumptive violations)
- California RPC 2-200 (fee splitting with non-firm lawyers)
- California RPC 3-310(C), (E) (conflicts: informed written consent)
Statutes:
- Cal. Bus. & Prof. Code § 6068(e)(1) (duty to maintain confidences)
- Cal. Bus. & Prof. Code §§ 6160-6172 (professional law corporations)
- Cal. Evid. Code §§ 605, 606 (presumptions affecting the burden of proof)
Cases:
- People ex rel. Department of Corporations v. SpeeDee Oil Change Systems, Inc., 20 Cal.4th 1135 (1999), cited on of-counsel imputation and the "close, personal, continuous, and regular" standard.
- City of Santa Barbara v. Superior Court, 122 Cal.App.4th 17 (2004), cited on screening in public law offices.
- Goldberg v. Warner Chappell Music Inc., 125 Cal.App.4th 752 (2005), cited on SpeeDee Oil's reach.
- Chambers v. Kay, 29 Cal.4th 142 (2002), cited on the unenforceability of fee-sharing agreements without written client consent.
- Streit v. Covington & Crowe, 82 Cal.App.4th 441 (2000), cited on specially appearing counsel.
- Hempstead Video, Inc. v. Incorporated Village of Valley Stream, 409 F.3d 127 (2d Cir. 2005), cited on the functional approach to imputation.
- Stichting Ter Behartiging Van de Belangen Van Oudaandeelhouders In Het Kapitaal Van Saybolt International B.V. v. Schreiber, 407 F.3d 34 (2d Cir. 2005), cited on of-counsel malpractice claims.
Other opinions cited:
- ABA Formal Opinion 90-357 (1990): the of-counsel designation.
- ABA Formal Opinion 84-351 (1984): the of-counsel designation.
- California Formal Opinions 2004-167, 1993-129, 1986-88.
- LACBA Formal Opinion 470 (1993): client consent for year-end bonuses to of-counsel.
- LACBA Formal Opinion 386 (1980).
- San Diego County Bar Formal Opinion 1996-1 (1996).
- San Francisco County Bar Formal Opinion 1985-1 (1985).
See also
Source
- Landing page: https://lacba.org/?pg=ethics-opinions
- Original PDF: https://lacba.org/docDownload/2010587