Can a professional corporation be a partner in a law firm?

Plain-English summary

The committee began from the settled point that lawyers may practice as professional corporations to the extent the law permits (citing N.Y. State 369 and 381 and DR 2-102(B)). Whether a professional corporation can itself be a partner in a law firm, it said, is essentially a matter of law rather than ethics, and the committee noted the New York law was somewhat unclear and beyond its function to resolve (citing the Business Corporation Law).

Assuming state law permits the arrangement, the committee concluded the profession's ethics require only that the professional corporation's status and participation be clearly noted on letterheads, directories, and other listings that identify the partnership's members; where only the firm name is used, a legend should indicate the partnership includes one or more professional corporations. It addressed a contrary ABA opinion (ABA Inf. 1383 (1977)), which read EC 2-11 and DR 2-102(C) to forbid a professional corporation from being a law partner on the theory that the arrangement is a "hybrid" and not a true partnership with the attendant unlimited liability.

The committee found the ABA opinion grounded on too restrictive a reading of the Code: DR 2-102(C) only forbids lawyers from holding themselves out as partners when they are not in fact partners, while EC 2-11 and DR 2-102(B) recognize practicing in the name of a professional corporation where permitted by law. The "hybrid" objection loses force, it reasoned, once one assumes the substantive law sanctions the arrangement and defines its liability. The committee noted the ABA House of Delegates had since amended DR 2-102(C) to permit such partnerships, but said New York's unamended provision already did not prohibit the arrangement. The question was answered in the affirmative, subject to the disclosure qualification.

Currency note

This opinion was issued in 1979, before New York replaced the Code of Professional Responsibility with the Rules of Professional Conduct in 2009 (the firm-name and letterhead requirements now appear at Rule 7.5, and the rules on a firm's professional independence and form at Rule 5.4). Whether a professional corporation may be a law firm partner remains a question of state corporate and professional law, which has changed since 1979. Subsequent rule amendments or 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 Treat this page as historical context, not current guidance.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 professional corporation be a partner in a law firm?

A: Where state law permits it, yes. The committee held the question is mainly one of law, and that the Code does not bar the arrangement so long as the corporation's status is clearly disclosed.

Q: What disclosure did the committee require?

A: That the professional corporation's status and participation be clearly noted on letterheads, directories, and listings, with a legend on firm-name-only listings indicating the partnership includes one or more professional corporations.

Q: Why did the committee disagree with the ABA opinion?

A: It found ABA Inf. 1383's "hybrid" objection too restrictive a reading of DR 2-102(C), which only bars holding out non-partners as partners, and noted New York's rule did not prohibit the arrangement.

Background and rules framework

The opinion read EC 2-11 and DR 2-102(B) (practicing in a professional corporation's name where permitted by law) and DR 2-102(C) (not holding out non-partners as partners) to allow a professional corporation to be a law firm partner with proper disclosure. The closest current Model Rule analogues are Rule 7.5 (firm names and letterheads) and Rule 5.4 (professional independence and the form of practice).

Citations and references

Rules of Professional Conduct:

• MR 7.5 (firm names and letterheads)
• MR 5.4 (professional independence; form of practice)
• NY EC 2-11, DR 2-102(B), DR 2-102(C)

Statutes:

• N.Y. Business Corporation Law secs. 1500 et seq.

Other opinions cited:

• N.Y. State 369 (1974) and 381 (1975): lawyers may practice as professional corporations
• ABA Inf. 1383 (1977): contrary view, declined

See also

• No sibling opinions yet indexed.

Source

• Landing page: https://nysba.org/opinion-509/