Can a law firm use a made-up surname trade name, keep a non-working lawyer as a fee-sharing 'silent partner,' or pay a nonlawyer consulting firm based on the firm's increased fee income?

Plain-English summary

The inquirer posed three questions. First, may a law firm adopt a trade name that would appear to the public to consist of the surnames of individual lawyers where none of the lawyers now practicing or who ever practiced with the firm has or had any of those surnames. Second, may a lawyer share in the net revenues or profits of a law firm if he does no legal work for the firm, that is, may a lawyer be a "silent partner." Third, may a firm hire, at arm's length, an entity composed of nonlawyers to provide administrative and business consulting services and base that entity's remuneration partly or wholly on profits realized through the firm's improved administration and more efficient practice of law.

The committee answered each question no. On the first, it said that because there is a substantial risk of the public being misled, a firm may not adopt a trade name that would appear to the public to consist of the surnames of individual lawyers, for example "John Smith," where none of the lawyers now practicing or who ever practiced with the firm has or had any of the surnames. On the second, it said a lawyer may not share fees of a firm where the lawyer is not now an active practicing member and has not been one in the past, but is now only contributing capital. On the third, it said that if a firm hires an entity composed of nonlawyers to provide administrative and business consulting services, the firm may not base the entity's remuneration partly or wholly on increased fee income.

Currency note

This opinion was issued in 2003, before the Washington State Bar Association's adoption of the 2006 revisions to the Rules of Professional Conduct, which revised the firm-name and fee-sharing rules. 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 Treat this page as historical context, not current guidance.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.

In practice

Under the Washington rules as they stood at the time of the opinion, the committee treated each of the three arrangements as impermissible. Per the opinion, a trade name resembling lawyers' surnames that match no current or former member of the firm carries a substantial risk of misleading the public; a "silent partner" who only contributes capital and does no legal work may not share the firm's fees; and a nonlawyer consulting entity's pay may not be tied, in whole or in part, to the firm's increased fee income.

Common questions

Q: Can a firm use a trade name that sounds like lawyers' surnames when no such lawyers are with the firm?

A: No. The committee said that because there is a substantial risk of misleading the public, a firm may not adopt a trade name that would appear to consist of the surnames of individual lawyers where none of the firm's current or former lawyers has or had those surnames.

Q: Can a lawyer be a "silent partner" who shares the firm's profits without doing legal work?

A: No. The committee said a lawyer who is not now an active practicing member of the firm and has not been one in the past, but is now only contributing capital, may not share the firm's fees.

Q: Can a firm pay a nonlawyer consulting company a share of the firm's increased fee income?

A: No. The committee said that if a firm hires a nonlawyer entity to provide administrative and business consulting services, it may not base that entity's remuneration partly or wholly on increased fee income.

Background and rules framework

The three questions implicate Washington's firm-name and fee-sharing rules. RPC 7.1 (corresponding to Model Rule 7.1) prohibits false or misleading communications about a lawyer's services, and RPC 7.5 (corresponding to Model Rule 7.5) governs firm names and trade names, including the bar on names that mislead the public; the committee resolved the trade-name question on the misleading-the-public risk. RPC 5.4 (corresponding to Model Rule 5.4) protects the lawyer's professional independence and restricts the sharing of legal fees, which the committee applied to both the non-practicing "silent partner" and the nonlawyer consulting entity paid out of fee income. Rule numbers reflect Washington's pre-2006 numbering.

Citations and references

Rules of Professional Conduct:

• Model Rule 7.5 / Washington RPC 7.5 (firm names and trade names)
• Model Rule 7.1 / Washington RPC 7.1 (false or misleading communications about a lawyer's services)
• Model Rule 5.4 / Washington RPC 5.4 (professional independence; sharing of legal fees)

See also

• WSBA Ethics Op. 1005: Non-Partner in the Firm Name
• WSBA Ethics Op. 1211: Fee Splits With a Service Center
• WSBA Ethics Op. 1184: Lawyer as a Corporate Consultant

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=1256

Original opinion text

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

Advisory Opinion: 2009
Year Issued: 2003
RPC(s):
Subject: trade names, silent partner in firm, renumeration of nonlawyers by profit

The inquirer asked the following questions:

1. May a law firm adopt a trade name that would appear to the public to consist of the surnames of individual lawyers where in fact none of the lawyers who are now practicing, or have ever practiced with the firm, has or had any of the surnames? 2. May a lawyer share in the net revenues or profits of a law firm if he does not do any legal work for the firm? In other words, may a lawyer be a “silent partner” in a law firm? 3. May a law firm hire, at arm’s length, an entity composed of nonlawyers to provide administrative and business consulting services and base the remuneration of the entity partly or wholly on profits realized through the law firm’s improved administration and more efficient practice of law?

The committee responded as follows to each question:

1. Because there is a substantial risk of the public being misled, a law firm may not adopt a trade name that would appear to the public to consist of the surnames of individual lawyers, e.g., John Smith, where none of the lawyers who are now practicing, or have ever practiced, with the firm, has or had any of the surnames. 2. A lawyer may not share fees of a law firm who is not now an active practicing member of the firm or has not done so in the past, but is now only contributing capital. 3. If a law firm hires an entity composed of nonlawyers that provides administrative and business consulting services, the law firm may not base the remuneration of the entity partly or wholly on increased fee income.