Can a New Jersey lawyer list himself as 'Of Counsel' to a multistate marketing firm that takes a percentage of referred-matter fees and runs group advertising?

Plain-English summary

The inquiry concerned the proposed use of "Of Counsel, Nationwide Law Firm" (NLF) on New Jersey firm letterheads. A participating attorney would obtain the designation by paying NLF a yearly fee and agreeing to pay NLF 20% of fees received on matters referred to him by or through NLF, and would benefit from NLF advertising; each "Of Counsel" firm was assigned a geographic area and one or more fields of law. NLF also offered "managing partner" status, listed on its letterhead with a New York principal office, entitling those partners to share in NLF profits and losses.

The Committee recalled Opinion 383, which had allowed a New Jersey attorney to associate with a California firm formed to provide legal services to members of employment or service groups, subject to the restrictions on associations with out-of-state firms. It pointed to R. 1:21-6, which precludes sharing fees with out-of-state lawyers unless the division complies with DR 2-107 and is made in proportion to services rendered. Because NLF's method of fee division was an arbitrary percentage bearing no relation to services performed, the Committee found the proposed arrangement improper.

The Committee added that under DR 2-103, an organization that seeks to promote the use of an attorney's services must be registered with the Supreme Court and comply with that rule's detailed requirements. Because NLF was an organization designed and operated to bring clients to participating lawyers through group advertising, with profits going to the managing partners, the Committee concluded NLF was unable to qualify under DR 2-103.

Currency note

This opinion was issued in 1981, before New Jersey's adoption of the 2004 revisions to the Rules of Professional Conduct, and predates the 1984 replacement of the Disciplinary Rules by the RPCs. The fee-division, firm-name, and recommendation rules it applied (R. 1:21-6, DR 2-102, DR 2-103, DR 2-107) now correspond broadly to RPC 7.5, RPC 7.2, and RPC 5.4. Treat this page as historical context, not current guidance.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: Could a New Jersey lawyer be listed as "Of Counsel" to the Nationwide Law Firm?

A: No. The opinion concluded the arrangement was improper, because the 20% fee division was unrelated to services performed and the firm was an unregistered referral organization.

Q: What made the fee split improper?

A: The opinion held that R. 1:21-6 allows fee sharing with out-of-state lawyers only in proportion to services rendered, and NLF's flat percentage bore no relation to services.

Q: Why couldn't the firm qualify as a permitted organization?

A: Because DR 2-103 requires a recommending organization to be registered with the Supreme Court, and NLF was a profit-driven group-advertising scheme that could not qualify.

Background and rules framework

The opinion applied R. 1:21-6 and DR 2-107 on fee division in proportion to services, DR 2-102 on firm designations, and DR 2-103 on organizations that recommend a lawyer's services. In current New Jersey terms the analysis maps onto RPC 7.5 (firm names and "of counsel" designations), RPC 7.2 (referral arrangements), and RPC 5.4 (professional independence and fee sharing). The controlling defects were a fee split untied to services and an unregistered referral organization.

Citations and references

Rules of Professional Conduct:

• MR 7.5 / NJ RPC 7.5 (firm names and letterheads); decided under former DR 2-102
• MR 7.2 / NJ RPC 7.2 (referral arrangements); decided under former DR 2-103
• MR 5.4 / NJ RPC 5.4 (professional independence; fee division); decided under former R. 1:21-6 and DR 2-107

Court rules:

• R. 1:21-6 (sharing fees with out-of-state lawyers only in proportion to services)

Other opinions cited:

• NJ ACPE Opinion 383, 100 N.J.L.J. 1205 (1977) (association with out-of-state firm, subject to restrictions)
• NJ ACPE Opinion 220, 94 N.J.L.J. 1002 (1971)

See also

• NJ ACPE Op. 475: Interstate Firm Name Used in a Local Office
• NJ ACPE Op. 481: For-Profit Referral Services and Lay-Owned Advertising Programs
• NJ ACPE Op. 512: Letterhead of an Interstate Partnership and Affiliated Firm

Source

• Full text (Justia mirror): https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2004/acp476-1.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.

107 N.J.L.J. 321, April 16, 1981

OPINION 476

Local Attorneys "Of Counsel, The Nationwide Law Firm"

This inquiry asks about the proposed use of the name "The Nationwide Law Firm" - in the practice of New Jersey attorneys by the designation - "Of Counsel, Nationwide Law Firm" to be printed or typed on the New Jersey law firm letterhead.

An "Of Counsel" attorney will obtain the right to use this designation by paying a yearly fee to NLF under an agreement to pay NLF 20% of fees received on matters referred to that attorney by or through NLF. In addition, a cooperating attorney will benefit from advertising by NLF. The "Of Counsel" firm will be assigned a specific geographical area, apparently on a county zip code basis and in one or more particular fields of law.

Further, NLF will accept affiliation of "managing partners" in addition to those presently associated with it. This status will permit a contribution to the New Jersey print advertising budget and entitle them to share in the NLF profits and losses. All "managing" partners are listed on the NLF letterhead with a New York address as the principal office. The managers presently are from Connecticut, Massachusetts, New Jersey, New York and Pennsylvania and are 20 in number. The exhibited materials include application for participation that requires identification of the malpractice insurance carrier and an agreement to provide NLF clients an initial consultation without charge. The clients' retainer form gives NLF exclusive representation and covers the division of fees with local "Of Counsel." The participation agreement promises exclusive representation of clients brought in by advertising by zip code area for one or more legal fields.

In our Opinion 383, 100 N.J.L.J. 1205 (1977), we held that a New Jersey attorney may ethically associate with a California firm formed for the purpose of providing legal services to individual members of employment or service groups. That opinion required observance of the restrictions on associations with out-of-state firms. See R. 1:21-6 and DR 2-102. R. 1:21-6 precludes sharing fees with out-of-state lawyers unless the division complies with DR 2-107 and is made in proportion to services rendered. Since the method of fee division for NLF is an arbitrary percentage bearing no relation to services performed, it is our opinion that the proposed arrangement with NLF is improper. Cf. Opinion 220, 94 N.J.L.J. 1002 (1971). Under DR 2-103 an organization that seeks to promote the use of an attorney's services must be registered with the Supreme Court and comply with the detailed requirements of that rule. The facts offered indicate that NLF is an organization designed and operated to bring law clients to the participating lawyers through advertising on a group basis. The profits go to the managing partners and hence render NLF unable to qualify under DR 2-103.