Ezel / Ethics Opinions / LACBA
LACBA May 23, 2018

May a California law corporation or LLP keep a former partner's or shareholder's name in the firm name when that lawyer no longer holds equity but remains employed at the firm?

Short answer: Yes. Under former Rule 1-400 it is not misleading to the public for a law corporation or LLP to retain in the firm name an attorney who has given up equity but continues to practice at the firm.

Apply this to your situation

This page answers the general question as of 2018. Ezel answers yours: whether it's allowed on your facts, under the current California Rules of Professional Conduct, with citations.

Currency note: this opinion is from 2018
Subsequent statutory amendments, court decisions, or later opinions or rule amendments may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Disclaimer: Advisory only. Not binding precedent.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked on this page as a PDF) is the authoritative source for any reliance.
View original ethics opinion (PDF)

Plain-English summary

The opinion considers two factually similar scenarios: a law corporation "A, B & C, Inc." after C sells her shares back but remains an employed attorney, and a limited liability partnership "A, B & C, LLP" after C is no longer a partner but remains an employed attorney. The question is whether keeping the firm name violates former California Rule 1-400's prohibition on false or misleading communications about a lawyer's services.

The committee concludes the firm name is not misleading. It reasons that the State Bar Act and the State Bar's law-corporation rules permit a law corporation to use the registered name so long as it accurately describes the firm, and that the public typically understands a firm name does not necessarily mean every named lawyer is still an owner. The committee draws on the line of First Amendment lawyer-advertising cases (Bates v. State Bar of Arizona, Jacoby v. State Bar, Zauderer, Shapero) to read Rule 1-400's "false, deceptive, or which tends to confuse, deceive or mislead the public" standard narrowly.

The committee also notes a corollary that becomes important on departure: once the named lawyer is no longer practicing at the firm at all, the analysis changes and the firm name may need to be revised; that question is not the one before the committee.

In practice

The opinion holds that, under California Rule 1-400 as it stood in 2018 (before California's November 1, 2018 adoption of new ABA-style rules), a firm name does not become misleading simply because a named lawyer has given up equity while continuing to work at the firm. Both law corporations and LLPs are covered by the same analysis.

The opinion's analysis predates current California Rule 7.5 (which replaced Rule 1-400 for firm-name questions); a reader applying it today should also consult the current rule and any superseding opinions.

Common questions

Q: We're a law corporation. Our founder sold her shares back but still works for us as an employed attorney. Do we have to change the firm name?

A: No, per the opinion. The committee concludes the firm name is not misleading under former Rule 1-400 because the named lawyer continues to practice at the firm.

Q: Does the same answer apply to an LLP?

A: Yes. The opinion analyzes both scenarios together and reaches the same conclusion.

Q: What if the named lawyer leaves the firm entirely?

A: The opinion does not decide this. The committee limits its conclusion to the scenario where the lawyer remains employed by the firm.

Q: Does this analysis apply under the current California Rules?

A: The opinion interprets former Rule 1-400, which was replaced effective November 1, 2018, by the new California rules (including Rule 7.5 on firm names). The conversion notice on the LACBA ethics-opinions index page cautions that pre-November 2018 opinions reference the former rule numbers.

Background and rules framework

The opinion interprets former California Rule of Professional Conduct 1-400, which governed communications about a lawyer's services, including firm names. Standard (7) under former Rule 1-400 deemed certain communications presumptively misleading. The opinion treats the firm-name question as a Rule 1-400 communications issue rather than a separate firm-name rule. It also draws on Bus. & Prof. Code sections 6150-6172 (law corporations) and Corporations Code section 16306 (LLP partner liability), plus the State Bar Law Corporation Rules 3.152 and 3.154.

Citations and references

Rules of Professional Conduct:

  • Former California Rule 1-400 (advertising and solicitation), Standard (7)

Statutes:

  • Bus. & Prof. Code sections 6150-6159.2 (advertising and solicitation)
  • Bus. & Prof. Code sections 6160-6172 (law corporations)
  • Corporations Code section 16306 (LLP partner liability)

Cases:

  • Bates v. State Bar of Arizona, 433 U.S. 350 (U.S. 1977), First Amendment limits on lawyer-advertising restrictions
  • Jacoby v. State Bar, 19 Cal.3d 359 (Cal. 1977), California application of Bates
  • Shapero v. Kentucky Bar Assn., 486 U.S. 466 (U.S. 1988), targeted direct-mail solicitation
  • T & R Foods, Inc. v. Rose, 47 Cal.App.4th Supp. 1 (1996)
  • Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (U.S. 1985), commercial speech and lawyer advertising

Other opinions cited:

  • California State Bar Formal Opinion 1986-90
  • California State Bar Formal Opinion 1987-91
  • LACBA Formal Opinion 421 (1983): firm name questions

See also

  • No sibling opinions yet indexed.

Source

Get today's answer for your situation

You just read a 2018 opinion on this question. Ezel checks the current California Rules of Professional Conduct and answers your specific situation, with citations.

Opens in Ezel Pro. Every answer cites the rules it relies on.