Bar Rules

Formal Advisory Opinion No. 05-13

Ethics & Discipline / Advisory Opinions / Formal Advisory Opinions / Formal Advisory Opinion No. 05-13

Click here for an explanation regarding the history of this opinion.

STATE BAR OF GEORGIA
FORMAL ADVISORY OPINION NO. 05-13
Approved And Issued On June 21, 2007 Pursuant to Bar Rule 4-403
By Order Of The Supreme Court Of Georgia Thereby Replacing FAO No. 93-1
Supreme Court Docket No. S07U1159
           

QUESTION PRESENTED:


    (1) Whether the designation "Special Counsel" may be used to describe an attorney and/or law firm affiliated with another law firm for the specific purpose of providing consultation and advice to the other firm in specialized legal areas:  (2) and whether the ethical rules governing conflict of interest apply as if the firm, the affiliated attorney and the affiliated firm constitute a single firm.

SUMMARY ANSWER:

    It is not improper for a law firm to associate another lawyer or law firm for providing consultation and advice to the firm's clients on specialized matters and to identify that lawyer or law firm as "special counsel" for that specialized area of the law.  The relationship between the law firm and special counsel must be a bona fide relationship.  The vicarious disqualification rule requiring the additional disqualification of a partner or associate of a disqualified lawyer does apply to the outside associated lawyer or law firm.

OPINION:

    This opinion deals with the following questions:

  1. May a law firm which associates a lawyer for providing consultation and advice to the firm's clients on specialized matters identify that lawyer as being, for example, "Special Counsel for Trust and Estate and Industrial Tax Matters"?
  2. May a law firm which associates another law firm for providing consultation and advice to the firm's clients on specialized matters identify that law firm as being, for example, "Special Counsel for Tax and ERISA Matters"?
  3. Should Rule 1.10,[1]  the vicarious disqualification rule requiring the additional disqualification of a partner or associate of a disqualified lawyer, apply to outside associated lawyers and law firms?


    The problem should be viewed from the standpoint of clients.  Can the law firm render better service to its clients if it establishes such relationships?  If the answer is yes, there is no reason such relationships cannot be created and publicized.

    There is no Rule which would prohibit a law firm from associating either an individual lawyer or law firm as special counsel and such association may be required by Rule 1.1.;[2] While the American Bar Association has concluded that one firm may not serve as counsel for another (Formal Opinion No. 330, August 1972) this court declines to follow that precedent.  Moreover, a subsequent ABA opinion recognized that one firm may be associated or affiliated with another without being designated "of counsel."  (Formal Opinion No. 84-351, October 20, 1984).  In the view of this court, it is not improper to establish the type of relationship proposed.  If established, it must be identified and identified correctly so that clients and potential clients are fully aware of the nature of the relationship.

    Finally, the relationship between the law firm and special counsel (whether an individual lawyer or a law firm) must be a bona fide relationship that entails the use of special counsel's expertise.  The relationship cannot be established merely to serve as a referral source.  Any fees charged between special counsel and the law firm, of course, must be divided in accordance with the requirements of Rule 1.5.[3]

    The first two questions are answered in the affirmative.

    The third question presents a more complex issue.

    The Georgia vicarious disqualification rule is founded on the lawyer's duty of loyalty to the client.  This duty is expressed in the obligations to exercise independent professional judgment on behalf of the client, and to decline representation or withdraw if the ability to do so is adversely affected by the representation of another client.  Recognizing that the client is the client of the firm and that the duty of loyalty extends to all firm members, it follows that the duty to decline or withdraw extends to all firm members.  Rule 1.10.

    Identifying an associated firm or lawyer is calculated to raise the expectation in the mind of the client that the relationship is something more than casual.  Indeed it is calculated to convey to the client that the client's matter is being handled by a unit made up of the associating and associated firm or lawyer, so that the expertise of all can be brought to bear on the problem.  Accordingly, in the situation presupposed in the hypothetical, the clients of the associating firm become, for the purposes of Rule 1.10, the clients of the associated firm or lawyer and vice versa.  The unit as a whole has a duty of loyalty to the client and must exercise independent professional judgment on behalf of the client as an entirety.

    Reference should be made to Georgia Rules of Professional Conduct, Rule 1.10, imputed disqualification; General Rule.  Rule 1.10 discusses when an imputed disqualification can bar all attorneys at a firm or office from representing a particular client.

    Rule 1.10 and Comment 1 of the Rule make affiliations among lawyers or law firms less complex.  Rule 1.10 applies to entities other than associated lawyers and law firms to include in addition to lawyers in a private firm, lawyers in the legal department of a corporation or other organization, or in legal services organizations.

    As set forth in Comment 1,[4] two practitioners who share office space and who occasionally assist each other in representation of clients, may not regard themselves as a law firm.  However, if they present themselves to the public suggesting that they are indeed a firm, they may be regarded as a firm for purposes of these Rules.  Factors such as formal agreements between associated lawyers, as well as maintenance of mutual access to information concerning clients, may be relevant in determining whether practitioners who are sharing space may be considered a firm under the Rule.

    The third question is answered in the affirmative.  In light of the adoption of Rule 1.1, ethical rules governing conflict of interest apply to entities and affiliations of lawyers in a broader sense than what has traditionally been considered a "law firm."

1. Rule 1.10
    (a) While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1.7: Conflict of Interest: General Rule, 1.8(c): Conflict of Interest: Prohibited Transactions, 1.9: Former Client or 2.2: Intermediary.
    (b) When a lawyer has terminated an association with a firm, the firm is not prohibited from thereafter representing a person with interests materially adverse to those of a client represented by the formerly associated lawyer unless:

    (1) the matter is the same or substantially related to that in which the formerly associated lawyer represented the client; and
    (2) any lawyer remaining in the firm has information protected by Rules 1.6: Confidentiality of Information and 1.9(c): Conflict of Interest: Former Client that is material to the matter.

    (c) A disqualification prescribed by this rule may be waived by the affected client under the conditions stated in Rule 1.7: Conflict of Interest: General Rule. The maximum penalty for a violation of this Rule is disbarment.

2. Rule 1.1
    A lawyer shall provide competent representation to a client. Competent representation as used in this Rule means that a lawyer shall not handle a matter which the lawyer knows or should know to be beyond the lawyer's level of competence without associating another lawyer who the original lawyer reasonably believes to be competent to handle the matter in question. Competence requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation. The maximum penalty for a violation of this Rule is disbarment.

3. Rule 1.5
    (a) A lawyer's fee shall be reasonable. The factors to be considered in determining the reasonableness of a fee include the following:

    (1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
    (2) the likelihood that the acceptance of the particular employment will preclude other employment by the lawyer;
    (3) the fee customarily charged in the locality for similar legal services;

    (4) the amount involved and the results obtained;
    (5) the time limitations imposed by the client or by the circumstances;

    (6) the nature and length of the professional relationship with the client;
    (7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
    (8) whether the fee is fixed or contingent.

    (b) When the lawyer has not regularly represented the client, the basis or rate of the fee shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation.
    (c) (1) A fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) or other law. A contingent fee agreement shall be in writing and shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal, litigation and other expenses to be deducted from the recovery, and whether such expenses are to be deducted before or after the contingent fee is calculated. (2) Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement stating the following:

    (i) the outcome of the matter; and,
    (ii) if there is a recovery, showing the:

        (A) remittance to the client;
        (B) the method of its determination;
        (C) the amount of the attorney fee; and
        (D) if the attorney's fee is divided with another lawyer who is not a partner in or an associate of the lawyer's firm or law office, the amount of fee received by each and the manner in which the division is determined.

    (d) A lawyer shall not enter into an arrangement for, charge, or collect:

    (1) any fee in a domestic relations matter, the payment or amount of which is contingent upon the securing of a divorce or upon the amount of alimony or support, or property settlement in lieu thereof; or
    (2) a contingent fee for representing a defendant in a criminal case.

    (e) A division of a fee between lawyers who are not in the same firm may be made only if:

    (1) the division is in proportion to the services performed by each lawyer or, by written agreement with the client, each lawyer assumes joint responsibility for the representation;
    (2) the client is advised of the share that each lawyer is to receive and does not object to the participation of all the lawyers involved; and
    (3) the total fee is reasonable. The maximum penalty for a violation of this Rule is a public reprimand.

4. Comment 1 of Rule 1.10

    [1] For purposes of these Rules, the term "firm" includes lawyers in a private firm, and lawyers in the legal department of a corporation or other organization, or in a legal services organization. Whether two or more lawyers constitute a firm within this definition can depend on the specific facts. For example, two practitioners who share office space and occasionally consult or assist each other ordinarily would not be regarded as constituting a firm. However, if they present themselves to the public in a way suggesting that they are a firm or conduct themselves as a firm, they should be regarded as a firm for the purposes of the Rules. The terms of any formal agreement between associated lawyers are relevant in determining whether they are a firm, as is the fact that they have mutual access to information concerning the clients they serve. Furthermore, it is relevant in doubtful cases to consider the underlying purpose of the Rule that is involved. A group of lawyers could be regarded as a firm for purposes of the rule that the same lawyer should not represent opposing parties in litigation, while it might not be so regarded for purposes of the rule that information acquired by one lawyer is attributed to the other.



GO TO Formal Advisory Opinion No. 05-12
GO TO Formal Advisory Opinion No. 07-1
Return to handbook browser.