If a Virginia lawyer is 'of counsel' to a firm, are the firm's clients and conflicts imputed to that lawyer?

Plain-English summary

A solo practitioner who handles tax and complex business and real-estate work wants to formalize his frequent collaboration with a firm, with the two jointly marketing him as "Of Counsel" or "Affiliated Attorney," joint billing on co-counsel matters, referral fees complying with Rule 1.5(e) on outright referrals, and a wall against sharing other clients' confidences. The committee answers by first defining the "of counsel" relationship and then applying the conflict, fee, and supervision rules.

The opinion defines "of counsel" as a close, continuing, and personal relationship between a lawyer and a firm, involving some element of the practice of law, that is not the relationship of partner, associate, or outside consultant; it cannot be a pure business affiliation, and the "of counsel" lawyer may not be merely a forwarder or receiver of business. Permissible forms include a retired partner who remains available, a part-time practitioner such as a retired judge, or a senior lawyer between associate and partner. An impermissible use is labeling a referral-only relationship with a national firm that makes geographic referrals "of counsel."

Applying those principles, the opinion holds that a lawyer who is "of counsel" is associated with the firm for purposes of the Rules, including fee-sharing and conflicts. Rule 1.5(e) (fee division between lawyers not in the same firm) does not apply to an "of counsel" lawyer's work with the firm, and under Rule 1.10(a) all conflicts are imputed both ways absolutely; this cannot be avoided by screening or limiting the lawyer's information. The lawyer also cannot escape imputation simply by declining the title if he holds himself out as closely associated or in fact is. To avoid imputation, the firm must instead keep the lawyer as an independent contractor sharing fees under Rule 1.5(e), working on specific matters with each client's consent and with access limited to those matters, applying the analysis of the lawyer-temp and outsourcing opinions (LEOs 1712, 1735, 1850). Finally, under Rule 5.1(c), an "of counsel" lawyer and the firm are generally not liable for each other's misconduct on matters they are not handling together, because neither orders, ratifies, nor supervises the other's conduct there.

In practice

Under the Virginia rules as they stood when the opinion issued, the opinion treats the "of counsel" label as carrying full association for conflict purposes. The opinion holds that an "of counsel" lawyer and firm impute all conflicts to each other under Rule 1.10(a), that screening does not cure that imputation, and that the same result follows from the substance of the relationship even without the title. It identifies the alternative the parties can choose, a limited independent-contractor arrangement with Rule 1.5(e) fee-sharing, per-matter client consent, and restricted information access, under which the lawyer is not associated with the firm for conflicts. It also reads Rule 5.1(c) to limit each side's responsibility for the other's misconduct to matters they handle together.

Common questions

Q: Does being "of counsel" to a Virginia firm impute the firm's conflicts to the lawyer?

A: Yes. The opinion holds that an "of counsel" lawyer is associated with the firm and that under Rule 1.10(a) conflicts are imputed both ways absolutely, an imputation that cannot be avoided by screening the lawyer or limiting his information.

Q: What counts as a true "of counsel" relationship?

A: The opinion defines it as a close, continuing, personal relationship involving the practice of law, not the relationship of partner, associate, or outside consultant, and not a pure business affiliation; the lawyer may not be merely a forwarder or receiver of legal business.

Q: Can the lawyer avoid imputation by refusing the "of counsel" title?

A: No. The opinion holds that if the lawyer holds himself out as closely associated with the firm, or in fact is closely and regularly associated, conflicts are imputed regardless of the title used. Avoiding imputation requires a genuinely limited independent-contractor arrangement under Rule 1.5(e) with access restricted to specific matters (citing LEOs 1712, 1735, 1850).

Q: Is an "of counsel" lawyer liable for the firm's misconduct on cases they are not handling together?

A: Generally no. The opinion reads Rule 5.1(c) to limit responsibility to circumstances where a lawyer orders or ratifies the conduct, or has supervisory authority and fails to take remedial action; absent shared work, neither supervises the other.

Background and rules framework

The opinion interprets Virginia Rules of Professional Conduct 1.5(e) (division of a fee between lawyers not in the same firm), 1.10(a) (imputed disqualification while lawyers are associated in a firm), 5.1(c) (responsibility for another lawyer's violation), and 7.5(d) (stating or implying a partnership or organization only when true). These correspond to ABA Model Rules 1.5, 1.10, 5.1, and 7.5. The opinion draws on the historical "of counsel" definition from ABA Formal Opinion 330 (1972, withdrawn 1990) and 90-357 (1990), and on Virginia LEOs 1293, 1554, 1712, 1735, and 1850.

Citations and references

Rules of Professional Conduct:

• MR 1.5 / Va. Rule 1.5(e) (fee division between lawyers not in the same firm)
• MR 1.10 / Va. Rule 1.10(a) (imputed disqualification)
• MR 5.1 / Va. Rule 5.1(c) (responsibility for another lawyer's violation)
• MR 7.5 / Va. Rule 7.5(d) (implying a partnership only when true)

Other opinions cited:

• ABA Formal Op. 330 (1972, withdrawn 1990) and 90-357 (1990): the "of counsel" designation.
• Va. LEOs 1293, 1554, 1712, 1735, 1850: "of counsel," lawyer temps, and outsourcing of legal services.

See also

• ABA Formal Op. 90-357: Use of the "Of Counsel" Designation
• ABA Formal Op. 94-388: Relationships Among Law Firms

Source

• Landing page: https://vsb.org/Site/about/rules-regulations/leo-opinions.aspx
• Original PDF: https://www.vsb.org/common/Uploaded%20files/LEOs/1866.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

LEGAL ETHICS OPINION 1866

"OF COUNSEL" RELATIONSHIP

In this hypothetical, a solo practitioner, the sole member of a professional limited liability
company (PLC), who specializes in federal and state income taxes and complex business and
real estate transactions wishes to formalize his relationship with a law firm that he works with
frequently. Currently, the firm associates him as co-counsel in cases that require his expertise,
and he associates with the firm or outright refers it cases that involve litigation or commercial
real estate transactions.
The parties wish to modify and formalize their arrangement as follows:
1. The firm and the lawyer will jointly market themselves and refer to the lawyer
as either "Of Counsel" or "Affiliated Attorney;"
2. In accordance with ABA Formal Opinion No. 330 (1972), the lawyer will be
individually designated as "Of Counsel" or "Affiliated Attorney," rather than
his PLC, and the lawyer will not enter into this arrangement with more than
two firms at any time;
3. When the firm and the lawyer act as co-counsel on a matter, they will provide
a joint bill to the client, accompanied by separate invoices of their individual
fees and expenses;
4. When the involvement is an outright referral, the referring firm will receive a
referral fee, which will comply with Rule 1.5(e); and
5. Other than these specific matters, neither the firm nor the lawyer will
communicate or reveal confidences or secrets of any other clients or permit
access to any documents or databases that would jeopardize other clients'
confidences or secrets.

QUESTIONS PRESENTED
1. Other than matters on which the firms are co-counsel, are any other clients of the firm
deemed to be clients of the solo practitioner for conflicts of interest and other purposes?
2. Other than matters on which the firms are co-counsel, is the referring firm responsible for
ethical breaches that may arise in the receiving firm's representation, and are clients that
are referred from the solo practitioner to the firm considered to be clients of the solo
practitioner for conflicts of interest and other purposes?
3. If the fee arrangement complies with Rule 1.5(e) (including client disclosure), is joint
marketing referring to the solo practitioner as either "Of Counsel" or "Affiliated
Attorney" permissible?

APPLICABLE RULES AND OPINIONS
The applicable Rules of Professional Conduct are Rule 1.5(e), Rule 1.10(a), Rule 5.1(c) and
Rule 7.5(d). Relevant legal ethics opinions are 1293, 1554, 1712, 1735 and 1850, along with
ABA Formal Opinions 330 (1972) (withdrawn 1990) and 90-357 (1990).

ANALYSIS
In order to answer your specific inquiry, the Committee must first review and refine the
principles applicable to the "of counsel" relationship. The Committee has consistently defined
the "of counsel" relationship as a close, continuing, and personal relationship between a lawyer
and a firm that is not the relationship of a partner, associate, or outside consultant. The
relationship must involve some element of the practice of law, and cannot be limited to a pure
business affiliation; the "of counsel" may not simply be a forwarder or receiver of legal business
to or from the firm.
The "of counsel" designation is commonly used to describe several different types of
relationships, including a retired partner of the firm who continues to be associated with the firm
and available for consultations either with members of the firm or with clients directly, a part-time practitioner who has a different status than other members of the firm, such as a retired
judge or former government official, or regular employees of the firm who occupy a status
between partner and associate (typically lawyers who are too experienced to be considered
associates, but who are not going to become partners for lifestyle or practice reasons). All of
these uses of the term are permissible, since each arrangement involves a close, continuing
relationship with the firm.
The term is also commonly used in a way that is not permissible: to describe the
relationship between a lawyer or firm and a national law firm that solicits cases throughout the
country and then makes geographically-based referrals to its designated lawyer or firm in each
state. In this case, it is not appropriate for the lawyer to be designated as "of counsel" to the
national law firm, because the relationship consists only of forwarding/receiving business and
there is otherwise no relationship between the lawyer and the national firm.
Accordingly, a lawyer who is "of counsel" to a firm is associated with that firm for the
purposes of the Rules of Professional Conduct, including the fee-sharing and conflict of interest
rules. Rule 1.5(e) addressing fee-sharing between lawyers not in the same firm does not apply to
the firm's relationship with a lawyer serving as "of counsel." When a lawyer becomes of counsel
to a firm, all conflicts are imputed from the lawyer to the firm and vice versa. This imputation
cannot be avoided by screening the lawyer from other cases in the firm or otherwise limiting the
information available to him; Rule 1.10(a) provides for an absolute imputation of conflicts
between lawyers who are currently associated in a firm.
Applying these general principles to the hypothetical situation presented, it is clear that
the lawyer and firm may either have an occasional relationship in which conflicts are not
imputed beyond specific cases and fee-sharing must be done in accordance with Rule 1.5(e), or
the lawyer may become "of counsel" to the firm, which would impute all conflicts of the firm to
the lawyer. Once the lawyer and the firm begin to hold the lawyer out as "of counsel" to the firm,
conflicts will be imputed between the two regardless of whether the lawyer actually has any
information about the clients of the firm or vice versa. However, the lawyer also cannot avoid the
imputation of conflicts merely by refusing the title "of counsel;" if the lawyer holds himself out
to potential clients as being closely associated with the firm, or if he in fact is closely and
regularly associated with the firm, then conflicts will be imputed to him regardless of the title he
uses. Likewise, Rule 7.5(d) permits the lawyer and firm to describe their relationship as an "of
counsel" relationship if that is the case.
In order to avoid association with the firm for conflicts purposes, the firm may limit the
lawyer's relationship to that of an independent contractor, sharing fees with the firm pursuant to
Rule 1.5(e), and working on specific matters in which the firm's clients require his specialized
skills with each client's consent to the lawyer's participation at the outset of the representation.
This relationship must remain limited though, in order to avoid imputation of conflicts. If the
relationship between the lawyer and the firm is limited in this way, then the lawyer and firm
would apply the analysis of LEOs 1712, 1735, and 1850, governing lawyer temps and other
forms of "outsourcing" of legal services, in determining whether and to what extent the lawyer
would be considered to be associated with the firm for conflicts purposes. For example, if the
lawyer's access to information is restricted solely to those matters on which he or she is working
on a temporary or occasional basis, the lawyer would not be considered associated with the firm
for conflicts purposes.
Although conflicts would be imputed between the firm and any lawyer who is "of
counsel" to that firm, the lawyer and firm would not generally be liable for one another's ethical
misconduct on cases that they were not handling together. Rule 5.1(c) limits a lawyer's
responsibility for another lawyer's ethical misconduct to circumstances where the lawyer knew
about the other lawyer's conduct and either ordered or ratified it, or was in a supervisory position
over the other lawyer and failed to take remedial actions. When the "of counsel" lawyer and the
firm are not working together on cases, neither the lawyer nor the firm is supervising or directing
the other's behavior, and generally will not be aware of one another's actions. There would
therefore be no basis for holding the lawyer or the firm responsible for one another's actions
when they are not associated on a particular case.
This opinion is advisory only and is not binding on any court or tribunal.
Committee Opinion
July 26, 2012