A lawyer-shareholder of a professional corporation may provide legal services other than as an employee of the corporation.
Facts: An attorney is a shareholder and employee of a professional corporation established under Chapter 156A and Rule 3:18 of the Supreme Judicial Court. He inquires whether he may accept clients outside the corporate framework or is limited to providing legal services solely as an employee of the corporation.
Discussion: The opinions of this committee are limited to discussions of the Code of Professional Responsibility as adopted by the Supreme Judicial Court in Rule 3:22. We find nothing in that rule requiring that a lawyer render services to the public through only one organization such as a partnership or a professional corporation. The code does not discuss the question directly.
In Opinion 192 issued by the American Bar Association's Committee on Ethics in February 1939 it was held that a firm member who accepts full time employment with a private employer or government agency may continue to serve the firm, and the firm may continue to use his name. In Informal Opinion No. 1253 of the American Bar Association, issued December 15, 1972, and in Opinion 561 of the Bar Association of the City of New York, issued January 8, 1941, it was held that an attorney may be a member of two law partnerships at the same time. We note also that Section 8 of Chapter 156A was amended in 1971 to authorize a person to be a shareholder of two professional corporations at the same time.
We would emphasize, however, that the Restatement of Agency 2d, S393 provides: "Unless otherwise agreed, an agent is subject to a duty not to compete with the principal concerning the subject matter of the agency." That this applies to the shareholders of a professional corporation is shown by the provisions of SJC General Rule 3:18 (2) (a): "All shareholders of the [professional] corporation shall be [members of the Massachusetts bar in good standing and] shall be individuals who, except for temporary absence ... are actively engaged in the practice of law in the Commonwealth as employees of the corporation." (Italics added.) Providing legal services other than as such an employee of the corporation, if it competes with the business of the corporation, would therefore be improper, unless pursuant to agreement between the lawyer employee and the corporation. (A similar result would be reached if the lawyer were a partner, associate or other employee of a firm or sole practitioner.)
Permission to publish granted by the Board of Delegates, 1976. As stated in the Rules of the Committee on Professional Ethics, this advice is that of a committee without official governmental status.