When a law firm adds a name partner, must it discard old letterhead and open a new trust account?

Plain-English summary

A lawyer (Z) joined a firm, W, X & Y, P.C., as a partner, and the firm wanted to add Z's name to become W, X, Y & Z, P.C. The firm asked whether it must discard its existing letterhead and stationery, and whether it must open a new checking account or could keep using the original account and checks until they ran out (¶¶ 1-2).

The committee began by noting that the threshold questions, whether the firm has merely changed its name or is a new entity, and whether a new entity succeeded to the original firm's rights, accounts, and liabilities, are legal questions beyond its jurisdiction. It observed that in its experience a professional corporation adding a name partner commonly amends its certificate of incorporation to change its name, so the firm here is the same firm (¶ 3).

On letterhead, the committee applied Rule 7.5 (which requires that letterheads not be false, deceptive, or misleading and that a firm not practice under a misleading name) and Rule 8.4(c) (prohibiting dishonesty, fraud, deceit, or misrepresentation). Because it is common for firms to add partners and for firm names not to list every partner, the committee concluded that, assuming the firm is the same or a legal successor and all necessary filings are made, using the old letterhead while the stock is depleted is not misleading merely because it omits the new name (¶¶ 4-5).

On the trust account, the committee read Rule 1.15(b)(1), which requires client funds to be held in an account in the name of the lawyer or the firm. Whether the existing account qualifies depends on the legal question of whether the new firm is the same as or a successor to the original. If the account is or becomes the successor firm's, and the firm takes the steps the bank requires to reflect the changes, the firm may continue using the trust account and its checks without violating Rule 1.15(b)(1); the same reasoning applies to the general operating account under Rule 8.4(c). In each case the committee said indicating the new name on old checks is desirable (¶¶ 6-9).

In practice

Under the New York rules as they stood at the time of the opinion, the opinion holds that, where the firm is the same entity or a legal successor and has made the necessary corporate filings and bank changes, it may use up old letterhead and continue using the existing trust and operating accounts and their checks. Per the opinion, whether the firm is the same or a successor is a legal question the committee did not resolve. The committee characterized noting the new firm name on the old checks as "desirable," and flagged that it might reach a different result for a firm that lost a name partner through retirement or departure, depending on context.

Common questions

Q: Must a firm throw out old letterhead when it adds a name partner?

A: No. Assuming the firm is the same or a legal successor and has made the necessary filings, the committee concluded using the old letterhead while the stock is depleted is not misleading merely because it omits the new name (¶ 5).

Q: Can the firm keep using the old trust account and checks?

A: Yes, if the existing account is or becomes the successor firm's and the firm makes the changes the bank requires; the committee found no violation of Rule 1.15(b)(1) (¶ 7).

Q: Should anything be added to the old checks?

A: The committee said it would be "desirable" to indicate the change in firm name on the old checks, for both the trust account and the general account (¶¶ 7-8).

Q: Would the answer be the same if a name partner left or retired?

A: Not necessarily. The committee noted it might not reach the same conclusion for a firm that lost a name partner through retirement or other departure, depending on the context (¶ 5 n.2).

Background and rules framework

The opinion interprets New York Rule 1.15(b) (preserving client funds in a properly named account), Rule 7.5(b) (firm names and letterheads), and Rule 8.4(c) (conduct involving dishonesty or misrepresentation), corresponding to ABA Model Rules 1.15, 7.5, and 8.4. The analysis turns on the legal question, outside the committee's jurisdiction, of whether the renamed firm is the same entity or a legal successor to the original.

Citations and references

Rules of Professional Conduct:

• MR 1.15 / NY RPC 1.15(b)(1) (client funds held in the firm's name)
• MR 7.5 / NY RPC 7.5(b) (firm names and letterheads)
• MR 8.4 / NY RPC 8.4(c) (dishonesty, fraud, deceit, or misrepresentation)

Statutes:

• N.Y. Business Corporation Law sections 801(b)(1), Article 15 (amending a professional corporation's certificate to change its name)

See also

• NY State Bar Op. 1028: Firm name, letterhead, and business card designations
• NY State Bar Op. 1095: Updating advertising after a firm name change
• NY State Bar Op. 1114: Electronic signatures on trust account checks

Source

• Landing page: https://nysba.org/ethics-opinion-1030/