Can a Michigan law firm franchise its trade name to other unaffiliated lawyers who would practice under that single firm name?

Plain-English summary

A law firm that specialized in representing men in divorce actions had developed a trade name, marketing methods, and office and accounting systems, and proposed to franchise the trade name and systems to other lawyers and firms. The franchise plan included exclusive territories, required advertising volumes and equipment, an initial fee that varied with territory size, and an ongoing royalty based on each franchisee's gross revenues, with termination rights for substandard performance or breach. The firm asked whether franchisor and franchisees could share the trade name, whether the fee and royalty were permissible, and whether the franchise had to be registered under MRPC 6.3(a).

The Committee applied MRPC 7.5(d), which permits lawyers to state or imply that they practice in a partnership or other organization only when that is the fact. Drawing on C-230 (lawyers in separate professional corporations could not use joint letterhead even with a disclaimer) and RI-45 (firm names and all communications must accurately describe the relationship among lawyers, so consumers know whom to look to and hold responsible), the Committee held that franchisees sharing one firm name while not actually in a partnership or professional corporation with the franchisor would misrepresent the firm structure.

The opinion concluded it is unethical for lawyers to offer or make an agreement to franchise a law firm name when the franchisees are not in fact in a partnership or professional corporation relationship with the franchisor. Because that resolved the matter, the Committee treated the remaining questions about fees, royalties, and MRPC 6.3(a) registration as moot.

Currency note

This opinion was issued in 1992 and interprets the Michigan Rules of Professional Conduct as they then stood. The MRPC have since been amended, and 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 Treat this page as historical context, not current guidance.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, deadline, or requirement mentioned here.

Common questions

Q: Can a law firm franchise its name to other lawyers?

A: Per the opinion, no, where the franchisees are not actually in a partnership or professional corporation with the franchisor. The Committee held that sharing one firm name in that situation misrepresents the firm relationship under MRPC 7.5(d).

Q: Why is sharing a single firm name the problem rather than the franchise fees?

A: The opinion concluded the firm-name misrepresentation was dispositive, so it did not reach the fee, royalty, or registration questions, treating them as moot once franchising the shared name was found unethical.

Background and rules framework

The opinion interprets MRPC 7.5(d) (Firm Names and Letterheads; the Model Rule 7.5 counterpart), which allows stating or implying a partnership or organization only when that is the fact. The Committee applied C-230 (no joint letterhead for separate professional corporations) and RI-45 (communications must accurately describe the lawyers' relationship).

Citations and references

Rules of Professional Conduct:

• MR 7.5 / MRPC 7.5(d) (firm names; stating an organization only when true)

Other opinions cited:

• C-230: separate professional corporations may not use joint letterhead
• RI-45: communications must accurately describe the relationship among lawyers
• RI-59; CI-111; CI-298: related firm-name and letterhead opinions

See also

• Mich Ethics Op. RI-173: Trade Name From a Historic Building
• Mich Ethics Op. RI-144: Firm Name Implying a Partnership
• Mich Ethics Op. RI-90: Retired Shareholder's Name in Firm Name
• Mich Ethics Op. RI-246: "Law Offices" on a Solo's Letterhead

Source

• Landing page: https://www.michbar.org/opinions/ethics/numbered_opinions?OpinionID=1000&Type=6

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

RI-130

April 27, 1992

SYLLABUS

A lawyer may not offer or make an agreement to franchise a trade name under which a number of lawyers who are not in fact in a partnership or professional corporation relationship with the franchisor hold themselves out as practicing under one firm name.

References: MRPC 7.5(d); RI-45; C-230.

TEXT

A law firm specializes in representing men in divorce actions and has established an expertise in this area of the law. The law firm has established methods for advertising and marketing its specialty under a trade name, and has established systems and procedures for its practice, including procedures for office structure and accounting.

The law firm proposes to franchise the use of the trade name and the developed systems to other lawyers or law firms ("franchisees"). The proposed franchise system includes the following: (a) the law firm will provide marketing plans and advertising materials and other aspects of its system to franchisees; (b) each franchisee will be given a territory in which no other person will be allowed to locate an office using the trade name; (c) each franchisee will be required to do a certain volume of advertising, maintain specific accounting systems, and acquire specific equipment; (d) each franchisee will be required to pay an initial fee and an ongoing royalty based upon the gross revenues of the franchise. The initial fee will vary depending on the size of the franchise's territory; and (e) each franchisee will be terminable by the franchisor if the franchisee has a substandard performance, fails to advertise as required, fails to pay royalty or other fees, or otherwise breaches the franchise agreement.

A lawyer from the firm asks whether the franchisor and its franchisees may share the same trade name and advertise and market legal services under that trade name; whether the franchisees may be charged an initial fee and an ongoing royalty based on gross revenues; and whether the franchise relationship must be registered pursuant to MRPC 6.3(a).

MRPC 7.5(d) states:

"Lawyers may state or imply that they practice in a partnership or other organization only when that is the fact." Emphasis added.

In C-230 lawyers who belonged to separate professional corporations, but from time to time worked on cases together on a contract basis, were prohibited from using joint letterhead, even with a disclaimer that the lawyers were "an association of professional corporations." See also, RI-59; CI-111, CI-298.

In RI-45 a partner-shareholder who left a partnership-professional corporation but continued to share office space with the firm, could not continue to be listed on the letterhead of the former partnership-professional corporation or be included in the former firm's firm name. The Committee reasoned:

"In sum, the rules require that lawyers be honest and clear in the representations which they make to the public regarding the nature of their practices. Firm names, letterhead, office signs, court pleadings, advertisements, and all other communications must accurately describe the nature of the relationship with other lawyers. Consumers of legal services have a right to understand what individual or entity they can look to for the provision of legal services and who they can hold responsible for the manner in which those services are provided." Emphasis added.

Thus, it is unethical for lawyers to offer or make an agreement to franchise a law firm name when the franchisees in fact are not in a partnership or professional corporation relationship with the franchisors. This being the case, the remaining questions are moot.