Ethics Opinions

Opinion No. 79-3

Summary: An out-of-state firm has solicited a local lawyer to enter an agreement whereby all of the firm's local business would be referred to the lawyer if the lawyer agreed to serve as local counsel. This agreement does not raise ethical problems per se, but such problems would arise if lack of ability, lack of time, or conflict of interest became involved on the part of the local lawyer.

Facts: An out-of-state law firm has solicited a Massachusetts lawyer to become part of "what will soon become the world's largest law firm." It proposes an agreement, cancellable on 30 days notice, by which the firm will establish a branch office at the office of local counsel and will agree to retain the Massachusetts lawyer as local counsel to assist on all matters in a given area. (Whether "area" is geographic or subject matter is unclear.) The firm also agrees to limit advertising in the local area to newspaper and telephone directory notices in its name. (There is a toll-free 800 number to call if in need of a lawyer anywhere in the United States.) The only agreement of the Massachusetts lawyer is to serve as local counsel. Fees will be divided on the basis of work done.

Discussion: We agree with ABA Opinion No. 316 that there is no ethical question as such raised by an association between lawyers to practice across state lines. Particular methods of carrying on that practice may raise ethical questions, for example, as to misleading the public regarding the nature of the association or with respect to methods of charging fees. Indeed, particular methods may raise legal questions regarding the unauthorized practice of law.
At the outset, we should note that we are not giving any opinion as to whether the establishment of a branch office in Massachusetts, without having any employees in this state, constitutes the unauthorized practice of law. See also DR 3-101(A), "A lawyer shall not aid a non-lawyer in the unauthorized practice of law." That question is beyond the jurisdiction of this committee.
We do wish to address certain ethical questions suggested by the documents that have been presented to us. In the first place, we wish to call attention to our previous Opinion No. 76-18 which sets forth our view of permissible and non-permissible descriptions of associations between firms on the letterhead of the Massachusetts firm.
A second question raised by the proposed agreement is whether it would involve the Massachusetts firm in solicitation of business contrary to the provisions of our Code of Professional Responsibility.
DR 2-103(B) states: "Except as permitted under DR 2-103(C) (referring to a bar association-sponsored lawyer referral service), a lawyer shall not compensate or give anything of value to a person or organization to recommend or secure his employment by a client ... ."
DR 2-103(D) states: "A lawyer shall not knowingly assist a person or organization that recommends, furnishes, or pays for legal services to promote the use of his services ... ." (The section then excepts cooperation with specified organizations that do not include private law firms.)
Even without the more permissive climate for advertising and solicitation that is the product of the recent decisions of the Supreme Court of the United States in Bates v. State Bar of Arizona, 433 U.S. 350 (1977), and especially those in Ohradlik v. Ohio State Bar Association, 98 S. Ct. 1912 (1978), and In re Primus, 98 S. Ct. 1893 (1978), we do not think that the proposed agreement should be viewed as violating those disciplinary rules. It is unrealistic to view the agreement as involving a "payment" by local counsel in the form of giving the outside law firm branch-office space in its office in return for a commitment to refer business. What is given is really only a recognition of the close association that has been effected. To forbid it would in effect forbid the establishment of the relationship.
There is one feature of the relationship, however, that does cause us concern. The agreement appears to require the outside law firm to refer, and the Massachusetts local counsel to accept, all local matters. There may be obvious reasons why local counsel ought not to handle a case: conflict of interest, lack of ability, or simply lack of time. In addition, however, the forwarding attorney's responsibility in a given matter is to the client and not to local counsel. It should be very careful about putting itself in a position where it refers a client to a minimally competent local counsel, instead of to another much more competent counsel, because it is bound to do so by agreement. The code has never been construed to impose an obligation on an individual lawyer to recommend a client to an "even more competent lawyer" than himself or herself, or even to recommend a client to the best tax lawyer when his or her own partner is a good tax lawyer. That has never been done, partly because the client has chosen the lawyer or the firm, and partly because we allow a certain loyalty to oneself and one's partners.
The client, however, puts a great deal of trust in the lawyer when asking for a recommendation outside that close circle. Here the outside law firm has deliberately chosen to avoid a partnership or employment status with local counsel. In that situation, binding oneself in advance to refer and accept employment seems dangerous, and we advise lawyers to be quite careful, when drafting agreements of the sort proposed here, to leave open an option for both firms to refer clients elsewhere when ethical considerations dictate such action.


Permission to publish granted by the Board of Delegates, 1979. As stated in the Rules of the Committee on Professional Ethics, this advice is that of a committee without official governmental status.
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