Can a New Jersey lawyer be a partner in more than one firm and form a partnership with out-of-state attorneys to share fees?

Plain-English summary

A New Jersey sole practitioner ("A") proposed forming a partnership ("A, B & C") with two New York attorneys ("B and C") who are partners in an existing New York firm and are not admitted in New Jersey. The new firm would use A's New Jersey office as its address, list each attorney's jurisdictional limitations and the New York office on its letterhead, and divide fees under a written partnership agreement. The Committee on Attorney Advertising had approved the arrangement subject to the relationships being proper, but was concerned the partnership might be a device to circumvent RPC 1.5(e), which restricts fee division among lawyers who are not in the same firm.

The Committee concluded there is no legal or ethical impediment to forming partnerships between attorneys admitted in different jurisdictions, nor to a New Jersey attorney affiliating with an out-of-state attorney, nor to a lawyer being a member of more than one law firm. It anchored each point in prior authority (Opinion 223; Opinion 443; the Jacoby and Meyers line of cases). Because RPC 1.5(e)'s conditions are directed only at lawyers who are not in the same firm, the Committee reasoned that so long as A, B and C are genuinely partners, there is no fee-division impediment. Having answered the first question affirmatively, the Committee found no need to reach the letterhead question.

The Committee cautioned that its approval was limited to the facts submitted and only where a bona fide partnership exists. It added that multiple-firm partnerships must not be used to violate RPC 8.4(c), and that lawyers who are members of more than one firm bear the same supervisory duties as partners in a single firm under RPC 5.1.

Currency note

This opinion was issued in 1990, before New Jersey's adoption of the 2004 revisions to the Rules of Professional Conduct, and rules on fee division and firm names have developed since. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule mentioned here.

Common questions

Q: Can a New Jersey lawyer be a partner in more than one law firm at the same time?

A: Per the opinion, yes. The Committee noted "there is also nothing prohibiting an attorney from being a member of more than one law firm," citing Opinion 443.

Q: Does the RPC 1.5(e) fee-division rule limit how true partners split their fees?

A: No. The Committee read RPC 1.5(e)'s conditions as "directed or limited to lawyers who are not in the firm," so where A, B and C are genuinely partners, there is no impediment to their dividing fees as agreed.

Q: May a New Jersey attorney form a partnership with attorneys admitted only in another state?

A: Yes, on these facts. The Committee found "no legal or ethical impediment to the formation of partnerships between attorneys authorized to practice in different jurisdictions," provided a bona fide partnership exists and the firm name reflects an actual partnership under RPC 7.5(d).

Background and rules framework

The opinion construes NJ RPC 1.5(e) (conditions on dividing a fee between lawyers not in the same firm), RPC 7.5(d) (lawyers may state or imply a partnership only when it is a fact), RPC 8.4(c) (conduct involving dishonesty), and RPC 5.1 (supervisory responsibilities); the corresponding Model Rules are 1.5, 7.5, and 5.1. It also recalls the prior DR 2-102(B) prohibition on misleading firm names and the Supreme Court's discussion of what a firm name conveys in In re Weiss, Healy and Rea.

Citations and references

Rules of Professional Conduct:

• MR 1.5 / NJ RPC 1.5(e) (division of fees between lawyers not in the same firm)
• MR 7.5 / NJ RPC 7.5(d) (stating or implying a partnership only when it is a fact)
• NJ RPC 8.4(c) (conduct involving dishonesty, fraud, deceit, or misrepresentation)
• MR 5.1 / NJ RPC 5.1 (responsibilities of partners and supervisory lawyers)
• DR 2-102(B) (former prohibition on misleading firm names)

Cases:

• In re Weiss, Healy and Rea, 109 N.J. 246 (1988), what a firm name conveys to the public
• In re Professional Ethics Advisory Committee Op. 475, 89 N.J. 74 (1982), app. dism. sub nom. Jacoby and Meyers v. Supreme Court of New Jersey, 459 U.S. 962 (1982)

Other opinions cited:

• ACPE Opinion 105, 90 N.J.L.J. 53 (firm may not use a partnership name when no partnership exists)
• ACPE Opinion 223, 94 N.J.L.J. 1197 (1971) (partnerships across jurisdictions)
• ACPE Opinion 443, 104 N.J.L.J. 561 (1979) (membership in more than one firm)
• ABA Committee on Professional Ethics Opinion 316 (1967)

See also

• NJ ACPE Op. 681: Affiliation With a Foreign Law Firm Based on Client Referrals
• NJ ACPE Op. 694: Affiliation as a Description of a Law-Firm Relationship and Fee Sharing
• NJ ACPE Op. 689: Law Firm Retaining a Second Firm for Client Work

Source

• Full text (Justia mirror): https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2004/acp637-1.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.

125 N.J.L.J. 512, March 1, 1990

OPINION 637

Division of Fees - Partnership Between New Jersey Attorney and Out-of-State Attorneys with New Jersey Office

Once again, this Committee's opinion is sought relative to ethical questions arising out of a New Jersey attorney's affiliation with out-of-state attorneys.

This inquiry was initially submitted to the Committee on Attorney Advertising with the following questions presented:

1. Whether an Attorney may be a Partner in more than one law firm within the State, practicing law under different firm names, at the same location.

2. In the event that Question #1 is answered in the negative, can an Attorney form an association with a New York Law Firm, pursuant to a valid Partnership Agreement, and list that Association on its letterhead.

Inquirer states that the attorney, "A," in question #1 is admitted only to the New Jersey Bar. He is a sole practitioner with an office located in the northern part of the State. "B" and "C" are attorneys who are only admitted to the New York Bar. They are the only partners of a New York law firm known as "B & C." They do not currently have a New Jersey office.

B and C have approached A with a proposal to enter into a partnership agreement with him and thereby form a new firm. This law firm, to be known as "A, B & C," would list as its address the location where A currently maintains his office. The new firm's letterhead would list the attorneys' jurisdictional limitations as well as the address of its New York office, which would be the same as the office of "B & C."

The partners would execute a formal partnership agreement which would provide, inter alia, the manner in which the partners would divide the fees received by the partnership. It is understood that B and C would not be partners in the existing firm of A, and A would not be a partner in the existing firm of B & C.

According to the inquirer, B and C are interested in forming the proposed partnership in order to better service their existing clients. Experienced practitioners in the field of commercial collection law, B and C represent many clients who conduct business in several states. Because of their jurisdictional limitations, they are obligated to refer their clients' New Jersey matters to New Jersey law firms, over which they cannot "exercise proper supervision" or control. The formation of the partnership, for which they would generate clients, would enable B and C to manage these clients' New Jersey matters.

As to the name under which such a firm may practice, in the case of In re Weiss, Healy and Rea, 109 N.J. 246 (1988), our Supreme Court stated:

We believe that the message conveyed by the firm name "A, B & C" is that the three persons designated are engaged in the general practice of law in New Jersey as partners. Such partnership implies the full financial and professional responsibility of a law firm that has pooled its resources of intellect and capital to serve a general clientele. [Id. at 252].

The pertinent part of DR 2-102(B) provides:

'A lawyer in private practice shall not practice under a trade name, a name that is misleading as to the identity of the lawyer or lawyers practicing under such name, or a firm name containing names other than those of one or more lawyers in the firm.***'

New Jersey Supreme Court Advisory Committee on Professional Ethics, Opinion 105, 90 N.J.L.J. 53 (1953), states that a firm may not use a partnership name when in fact no partnership exists. The essence of the opinion is that attorneys may not hold themselves out as partners when the work of the attorneys is not done in the partnership form.

Similarly, RPC 7.5(d) currently provides:

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

In the instant matter, the inquirer specifically states that the partners would execute a formal partnership agreement setting forth the division of fees. According to this agreement, A would receive 50%, and B and C 25% each, of all non-contingent fee income. In contingent fee matters, A would receive 66.6% and B and C 16.7% each of all such income. This distribution of fees would be based upon and recognize the fact that A would be managing partner of the new firm. The inquirer did not specify how the partnership's expenses or losses would be shared.

Upon completing its review of this inquiry, the Committee on Attorney Advertising advised the inquirer that it had approved both proposals, assuming that the underlying associations or business relationships were proper. Specifically, that Committee was concerned that the proposed partnership might constitute an attempt to circumvent the proscribed conduct set forth in RPC 1.5(e).

RPC 1.5(e) stipulates:

Except as otherwise provided by the Court Rules, a division of fee between lawyers who are not in the same firm may be made only if:

(1) the division is in proportion to the services performed by each lawyer, or by written agreement with the client, each lawyer assumes joint responsibility for the representation; and

(2) the client consents to the participation of all the lawyers involved; and

(3) the total fee is reasonable. [Emphasis supplied].

In addressing the inquirer's first question, we note that there is no legal or ethical impediment to the formation of partnerships between attorneys authorized to practice in different jurisdictions. Opinion 223, 94 N.J.L.J. 1197 (1971); American Bar Association Committee on Professional Ethics Opinion 316 (1967). Nor is there any impediment to a New Jersey attorney becoming affiliated with an out-of-state attorney. In re Professional Ethics Advisory Committee Op. 475, 89 N.J. 74 (1982), app. dism. sub nom. Jacoby and Meyers v. Supreme Court of New Jersey, et al., 459 U.S. 962, 103 S. Ct. 285, 74 L. Ed. 2nd 272 (1982). There is also nothing prohibiting an attorney from being a member of more than one law firm. Opinion 443, 104 N.J.L.J. 561 (1979).

The conditions under which the division of fees may be accomplished, as set forth in RPC 1.5(e), are directed or limited to lawyers who are not in the firm. Here, so long as A, B and C would, in the truest sense, be partners, there is no impediment to their division of fees. Having thus answered inquirer's first question in the affirmative, there is no need to address the second question.

Nothing in this opinion should be interpreted as condoning any activity involving multiple partnerships which may constitute a violation of RPC 8.4(c). Lawyers who are members of more than one law firm are charged with the same duties and responsibilities that partners in a single firm are obligated to observe. RPC 5.1.

Nor should the within opinion be considered a blanket approval of all multiple law firm partnerships or associations. It is essentially limited to the facts submitted by the inquirer and only where a bona fide law partnership exists.