Can a lawyer who moves out of state but keeps his New Jersey license take an 'of counsel' role with a New Jersey firm and share fees on a percentage basis?

Plain-English summary

The inquiry came from a New Jersey lawyer about to discontinue his practice and move his residence to California while keeping his license to practice in New Jersey. He planned to establish an "of counsel" relationship with a New Jersey firm that would complete his pending matters after his clients were notified of the termination of his practice and told they were free not to continue with the firm. His name would appear on the firm's stationery designated "of counsel," and the firm would pay him a percentage of the net fee on matters turned over to it and on new matters he referred. He would make periodic visits to New Jersey and otherwise stay in contact with clients by mail and telephone, using his license only for the "of counsel" relationship.

The Committee noted that it was beyond its jurisdiction to determine whether the plan met all the qualifications necessary to practice law in the state, particularly the rule requiring that a lawyer be domiciled in New Jersey or maintain his principal office there, and that the inquirer should have that question resolved by the Committee on the Unauthorized Practice of Law. Assuming the plan does meet those qualifications, the Committee concluded that the inquirer may ethically establish the proposed "of counsel" association with a New Jersey firm so long as he maintains the continuing relationship specified in DR 2-102(A)(4). It further concluded he may be compensated on a percentage-fee basis if the compensation is "made in proportion to the services performed and responsibility assumed," consistent with DR 2-107(A)(2) and provided he complies with all other provisions of DR 2-107(A).

Currency note

This opinion was issued on October 28, 1971, shortly after New Jersey's September 13, 1971 adoption of the Disciplinary Rules (Code of Professional Responsibility), and it applies DR 2-102 and DR 2-107. It predates the 1984 Rules of Professional Conduct and all later revisions, and the court rules it references have since been renumbered and amended. The "of counsel" designation and fee-division questions are now governed by RPC 7.5 and RPC 1.5(e). Treat this page as historical context, not current guidance.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 lawyer keep an "of counsel" tie to a New Jersey firm after moving out of state?

A: Yes, if he qualifies to practice here. The Committee said the of-counsel association is ethical so long as the qualifications to practice law in New Jersey are met and the continuing relationship in DR 2-102(A)(4) is maintained.

Q: Can the of-counsel lawyer be paid a percentage of the firm's fees?

A: Yes, if the compensation is in proportion to the services performed and responsibility assumed, consistent with DR 2-107(A)(2) and the rest of DR 2-107(A).

Q: Did the Committee decide whether his plan satisfied the practice rules?

A: No. It said determining whether the plan meets the qualifications to practice, including the domicile or principal-office requirement, was beyond its jurisdiction and belonged to the Committee on the Unauthorized Practice of Law.

Background and rules framework

The opinion applied DR 2-102 (professional notices and letterhead, including the "of counsel" designation) and DR 2-107 (division of fees among lawyers) of the Code of Professional Responsibility, while deferring the underlying right-to-practice question to the unauthorized-practice committee. In current New Jersey terms the of-counsel and fee-division questions fall under RPC 7.5 and RPC 1.5(e).

Citations and references

Rules of Professional Conduct:

• DR 2-102(A)(4) (of counsel designation); DR 2-107(A)(2) and DR 2-107(A) (division of fees), Code of Professional Responsibility; now MR 7.5 / 1.5 and NJ RPC 7.5 / 1.5(e)

Court rules:

• R. 1:21-1(a) (domicile or principal office); R. 1:21-6 and R. 4:88-4 (sharing of fees), Rules Governing the Courts of New Jersey

See also

• NJ ACPE Op. 223: Interstate Partnerships and Firm Names
• NJ ACPE Op. 224: Firm Name in the Name of One Partner
• NJ ACPE Op. 273: Sharing a Forwarding Fee With a Suspended Attorney

Source

• Full text (Justia mirror): https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2004/acp220-1.html
• Issuing authority: New Jersey Supreme Court Advisory Committee on Professional Ethics, via the NJ Courts Supreme Court Committees page

Original opinion text

Reproduced from a full-text mirror of the official opinion for research purposes. The linked official source controls. The mirror's copy of this opinion does not include the full enumerated list of the inquirer's questions; the Committee's reasoning and conclusion are reproduced as they appear.

94 N.J.L.J. 1002, October 28, 1971

OPINION 220

Non-resident of Counsel Division of Fees

This inquiry comes from an attorney-at-law of New Jersey who is about to discontinue his practice of law and move his residence from New Jersey to California. He intends to maintain his "license to practice in the State of New Jersey" and contemplates establishing an "of counsel" relationship with a law firm in this State. Said law firm will complete his pending matters after proper notification to his clients of the termination of his practice and the establishment of his "of counsel" relationship with the New Jersey law firm, making it clear to his clients there is no obligation that they continue with said firm. The attorney's name will appear on the firm's stationery designated as "of counsel." The firm will pay him a percentage of the net fee received in the matters turned over to it for completion and he will also receive a percentage of the net fee received by the firm on new matters referred to it by him. We are informed that he will make periodic visits to New Jersey, maintaining contact with many of his clients during the visits, as well as by mail and telephone and that the use of his New Jersey license to practice law will be limited to the "of counsel" relationship. He poses the following questions for our advisory opinion:

(4) He complies with the provisions of R. 1:21-6 and R. 4:88-4 (relating to sharing of fees) of the Rules Governing the Courts of the State of New Jersey.

It is beyond our jurisdiction to determine if the inquirer's plan meets all qualifications necessary to practice law in this State, particularly the provisions of R. 1:21-1(a) requiring that a lawyer either be domiciled in this State or maintain his principal office here. He should, therefore, have that question resolved by the Committee on the Unauthorized Practice of Law. If his plan does meet all qualifications necessary to practice law in this State then he may, in our opinion, ethically establish the proposed "of counsel" association with a law firm in New Jersey as long as he maintains the continuing relationship specified in DR 2-102(A)(4) above cited. He may also be compensated on a percentage fee basis if such compensation is "made in proportion to the services performed and responsibility assumed" consistent with DR 2-107(A)(2) and provided he complies with all other provisions of DR 2-107(A).