Freivogel on Conflicts

Of Counsel

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Law Firm Santo & Beckert (“S&B”) has a relationship with Kenneth Holtzman, who has his own boutique solo trademark practice.  S&B regularly sends it trademark work to Holtzman.  Holtzman regularly refers his clients to S&B for non-trademark work.  Each refers to the other on stationery, business cards, etc., as “of counsel.”  Holtzman has just been approached by Ajax Corp. to bring a trademark infringement action against Tiger Corp., one of S&B’s biggest clients.  Holtzman himself has never done work for Tiger.  Can he take the case?  Or, does his of counsel relationship with S&B prevent him from doing so?

        A good place to begin with those questions is ABA Op. 90-357 (1990).  The opinion purports to supersede a number of ABA Formal and Informal Opinions that preceded it.  It also purports to apply to both the older ABA Model Code as well as the newer ABA Model Rules.  The opinion says that it is appropriate to confer the title, "of counsel," where the lawyer in question is not an associate or partner, but the relationship between the law firm and the lawyer is "close, regular, [and] personal."  The Committee identified four classic situations where this is the case: (1) a part-time lawyer, (2) a retired partner, (3) a lateral on probation, and (4) someone between associate and partner.  The opinion goes on to say that the title is not appropriate where the relationship is the "occasional collaborative effort" or where the lawyer is merely a "forwarder or receiver" of business.  According to the opinion, when the relationship is close enough to justify the title, "of counsel," it follows that the of counsel and the firm are one for conflicts purposes.

        Assume that the relationship between Holtzman and S&B is close enough to justify their use of the term “of counsel.”  ABA Op. 90-357 would hold that Holtzman cannot take the case against Tiger; it’s as if Tiger were a current client of Holtzman.  Holtzman would need Tiger’s waiver.  Those cases that find a “close, regular, and personal” relationship conclude that the of counsel and firm are treated as one for conflicts purposes, e.g. People ex rel Dept. of Corporations v. SpeeDee Oil Change Systems, Inc., 980 P.2d 371, 384-385 (Cal. 1999) (citing ABA Op. 90-357) (other cases and opinions agreeing with SpeeDee Oil and ABA Op. 90-357 follow under “Other Opinions Finding Disqualification”).

        Here, things get sticky.  What if a lawyer and law firm use the term “of counsel,” but their relationship does not even approach that described in ABA Op. 90-357?  For example, the law firm, based in a county seat, allows a lawyer from a nearby town to use an empty office at the firm a few days a month when she has to go to court.  They do not share files or cases, and there is little opportunity to share their respective client’s confidences.  Yet, for vague, overly-optimistic, business-promotion reasons they decide the visiting lawyer should be deemed “of counsel.”  There is a line of cases that say where the relationship between the firm and the “of counsel” is “attenuated” (or words to that effect), they are not treated as one for conflicts purposes.  A leading example of such a case is  Hempstead Video, Inc. v. Village of Valley Stream, 409 F.3d 127, 136 (2d Cir. 2005) (other cases not following ABA Op. 90-357 follow under “Other Opinions Finding No Disqualification”).

        The disconnect here is between two unrelated sets of ethics rules: one dealing with false advertising; the other dealing with conflicts of interest.  ABA Op. 90-357 would hold that calling the visiting lawyer “of counsel” implies that the relationship between the firm and the lawyer was “close, regular, and personal,” which the relationship described just above is clearly not.  On the misleading aspect of this see, too, SpeeDee Oil, 980 P.2d at 383, which discusses the use of “of counsel” and California advertising rules.  Those cases, such as Hempstead, holding that the “of counsel” designation did not result in disqualification ignore the fact that the lawyers may be using the term unethically.  None of the cases finding no conflict, of which we are aware, discusses the misleading aspect of using the term “of counsel” when the relationship is “attenuated.”  Perhaps, those courts feel that it is a disciplinary matter and not their concern.

        Sands & Associates v. Juknavorian, 2012 Cal. App. LEXIS 1058 (Cal. App. Oct. 10, 2012).  Client brought a fee arbitration proceeding against Law Firm.  Law Firm won and is seeking attorneys fees as a "prevailing party" under the terms of the engagement agreement with Client.  The trial court, in confirming the arbitration award, granted fees to Law Firm.  In this opinion the appellate court reversed.  First, the court held that a law firm that represents itself cannot recover lawyers' fees as a prevailing party.  Second, the court held that Law Firm had represented itself in the arbitration because Law Firm was represented by two lawyers who were listed on Law Firm's letterhead as "of counsel."  Standard (8) under California Rule 1-400(E) states that to designate a lawyer as "of counsel" is to say that the relationship is "close, personal, continuous, and regular."

        Let’s revisit our trademark friend, Holtzman.  Is his relationship with S&B “close, regular, and personal” as defined by ABA Op. 90-357?  If so, most courts would find that he would have a conflict if he took on Ajax v. Tiger.  Or, is the relationship a lesser one (“attenuated”)?  If so, many courts would allow him to take the case.  

        All of which suggests that law firms should have a good reason for designating someone as “of counsel.”  Otherwise, they may find themselves in potential conflict situations where they simply cannot predict where the matter will end up.

        The June 20, 2012 edition of the ABA/BNA Lawyers' Manual on Professional Conduct Current Report contains the newly re-written section on of counsels.  This can be found in the Manual at Types of Practice/Private Practice/Of Counsel.  It is excellent.  We were able to update substantially this page with material contained in the Manual.

        Treatise.  Jean L. Batman, Beverly J. Glascock & Harold G. Wren, Of Counsel, a Guide for Law Firms and Practitioners (2nd Ed. 2013) (ABA).

Other Opinions Finding Disqualification

Note: Many of the opinions cited here were taken from the above ABA/BNA Lawyers Manual on Professional Conduct article on of counsels.         

        Atasi Corp. v Seagate Technology
, 847 F.2d 826 (Fed. Cir. 1988); Cinema 5 Ltd. v. Cinerama, Inc., 528 F.2d 1384 (2d Cir. 1976) (partner in two firms causes disqualification); LoPorto v. County of Rensselaer, No. 1:15-CV-0866 (LEK/DJS) (N.D.N.Y. Nov. 16, 2016); Glenn v. Nasscond, Inc., 2016 WL 409409 (E.D. Mich. Feb. 3, 2016); Leathermon v. Grandview Mem'l Gardens Inc., 2010 WL 72427 (S.D. Ind. Mar. 31, 2010); Smith & Nephew Inc. v. Ethicon Inc., 98 F. Supp.2d 106 (D. Mass. 2000); Schwed v. Gen. Elec. Co., 990 F. Supp. 113 (N.D.N.Y. 1998); McKenzie Constr. v. St. Croix Storage Corp., 961 F. Supp. 857 (D.V.I. 1997); In Re Mortgage & Realty Trust (Value Prop. Trust v. Zim Co.), 195 B.R. 740 (C.D. Cal. 1995); Mustang Enterprises, Inc. v. Plug-In Storage Systems, Inc., 874 F. Supp. 881 (N.D. Ill. 1995); Roberts & Schaefer Co. v. San-Con Inc., 898 F. Supp. 356 (S.D. W. Va. 1995); In re Tinley Plaza Assocs. LP, 142 B.R. 272 (N.D. Ill. 1992); In re Wells Benrus Corp., 48 B.R. 196 (D. Conn. 1985); Cho v. Superior Court, 45 Cal. Rptr.2d 863 (Cal. App. 1995); Monroe v. City of Topeka, 988 P.2d 228 (Kan. 1999); In re Fuerst, 2014 La. LEXIS 2622 (La. Dec. 9, 2014); Schneider v. City of Orchard Lake Village, No. 347202 (Mich. App. May 14, 2020); Phoenix Elec. Contracting Corp. v. New York Tel. Co., 587 N.Y.S.2d 485 (N.Y. Sup. Ct. 1992); Courtney v. Edelschick, 550 N.Y.S.2d 415 (N.Y. App. Div. 1990); Nemet v. Nemet, 491 N.Y.S.2d 810 (N.Y. App. Div. 1985); Figaro NYC, LLC v. 186 Bleecker Prop. Owner, LLC, Index No. 150333/2023 (N.Y. Sup. Ct. N.Y. County Jan. 16, 2024).

        Brown v. City of Syracuse, 2013 U.S. Dist. LEXIS 78810 (N.D.N.Y. June 4, 2013).  Law Firm represents Plaintiff in an unlawful arrest case against City, City PD, and two officers.  Lawyer has dual professions, one as employee of Law Firm, the other as a police officer with City PD.  Lawyer has nothing to do with this case, knows nothing about City PD's involvement, and has not revealed anything about it to Law Firm.  In this opinion the court denied Defendant's motion to disqualify Law Firm.

        Jang v. Woo Lae Oak, Inc. Chicago, 2013 U.S. Dist. LEXIS 90345 (N.D. Ill. June 27, 2013).  In analyzing a conflict, the court held that an "of counsel" was subject to imputation rules.  The court cited Northern District of Illinois Local Rule 83.51.10 (a version of Model Rule 1.10), the comment to which said as much.  The problem is that the Northern District's ethics rules, including Rule 83.51.10, were replaced in June 2011 by an order adopting the ABA Model Rules, and, where inconsistent, the Illinois Rules.  Both the ABA Rules and the Illinois Rules, at Comments [2]-[4] to Rule 1.0, are much more flexible as to imputation and lawyers such as "of counsels."  Much of the conduct in question in this case occurred after June 2011.

        Discipline. In re Chirico, No. 2019-10498 (N.Y. App. Div. Aug. 26, 2020). Chirico, a lawyer, had been suspended for three months by the N.J. Supreme Court. In this reciprocal proceeding the N.Y. Appellate Division ordered Chirico suspended for three months. The problem was that Chirico represented a structured settlement company in purchasing settlement payments from Richard Heckel who was disabled at birth due to medical malpractice. Heckel's lawyer, Gregory Mueller, was of counsel to Chirico's law firm, and Chirico was of counsel to Mueller's law firm. Those relationships constituted a conflict of interest under N.J. Rule 1.7(a)(2). Plus, Chirico's false statements regarding those relationships constituted a violation of N.J. Rule 3.3(a)(1) and (5). There were other violations, as well.

        Ethics Opinions.  ABA Op. 1990-357;  Cal. Op. 1993-129; L.A. County Op. 516 (2006); D.C. Ops. 338 (2007), 162 (1988) & 247 (1994);  Fl. Op. 72-41 (1993); Ga. Ops.  05-13 (2007), 98-4 (1988) & 93-1 (1993); Ky. Op. E-357 (1993); Me. Ops. 175 (2001) & 142 (1994); Mass. Op. 01-1 (2001); Mich. Ops. RI-236 (1995) & RI-21 (1989); Mo. Op. 980143; N.Y. Ops. 773 & 793 (March 2006); Nassau County Ops. 91-25 & 91-6 (1991); NYC Ops. 2003-03, 1996-8 (1996) & 1995-8 (1995); Ohio Ops. 2008-1 (2008) & 2004-11 (2004); Ore. Op. 2005-155 (2005); Pa. Ops. 2008-18 (2008) & 88-6; Phila. Op. 2001-5 (2001); Tex. Op. 445 (1987); Va. Op. 1735 (1999); Wash. Op. 2130 (2006).

        NYC Op. 2013-3 (undated).  In this opinion the committee opined that a N.Y. law firm may designate an overseas lawyer as “of counsel” provided that lawyer is admitted in N.Y., is not violating UPL rules where he or she practices, and the relationship is otherwise one that will justify the title, “of counsel.”

        Ohio Op. 2013-1 (April 4, 2013) The Board of Commissioners on Grievances & Discipline of the Supreme Court of Ohio has opined that a lawyer may be associated with more than one law firm.  It had previously opined otherwise, and prior, inconsistent, opinions were withdrawn in this opinion.  The Board did caution lawyers that their conflicts of interest would span all their associated firms, and a conflicts check of all the firms' clients would be required.  Further, the lawyer's conflicts would be imputed to all lawyers in the associated firms.  Good review of opinions from the ABA and other states.

        Treatise.  Hazard, Hodes & Jarvis §14.5.

        Restatement § 123, cmt. c(ii).

        In Cohen v. Strouch, 2011 U.S. Dist. LEXIS 30778 (S.D.N.Y. March 24, 2011), the relationship between the law firm and the of counsel was so close, the parties did not contest that they were one for conflicts purposes.

Other Opinions Finding No Disqualification

          Regal Marketing Inc. v. Sonny & Son Produce Corp., 2002 U.S. Dist. LEXIS 14069 (S.D.N.Y. July 31, 2002) (relationship “too attenuated”); Gray v. Memorial Med. Center, Inc. v. Dekle, 855 F. Supp. 377 (S.D. Ga. 1994) (of counsel in “another town,” contacts sporadic, no mention of ABA Op 90-357); Renz v. Beeman, 1989 U.S. Dist. LEXIS 1784 (N.D.N.Y. Feb. 21, 1989); United States for Use and Benefit of Lord Electric Co., Inc. v. Titan Pac. Constr. Corp., 637 F. Supp. 1556 (W.D. Wa. 1986); Jenson v. Touche Ross & Co., 335 N.W.2d 720 (Minn. 1982); Calandriello v. Calandriello, 819 N.Y.S.2d 569 (N.Y. App. 2006) (merely had office space); R.I. Op. 99-09 (1999) (separate offices, separate practices, and no access to each other's files).

        Brown v. Fla. Dep't Highway Safety & Motor Vehicles, No. 4:09-cv-171-RS-CAS (N.D. Fla. Oct. 5, 2012).  Lawyer worked for State on Case.  Lawyer left State and, working from home, did odd legal jobs for Law Firm, but nothing on Case.  Law Firm is opposite State on Case.  The court ruled Law Firm should not be disqualified.

        Gen. Sec., Inc. v. Commercial Fire & Sec., Inc., 2017 WL 4119622 (E.D.N.Y. Sept. 15, 2017). Law Firm represents Defendants in this commercial litigation. Lawyer is held out as "of counsel" to Law Firm. Plaintiff moved to disqualify Law Firm because of Lawyer's various relationships. We will not detail those relationships. In short, the magistrate judge, in this opinion, denied the motion to disqualify, finding that Lawyer's various relationships did not create a conflict. Of particular interest to this audience is the court's discussion of whether an of counsel's conflict would be imputed to Law Firm. The court ducked making a decision on that point. However, the court noted, and discussed, those authorities holding that not all of counsel relationships are imputed to the law firm. The court said the issue required a "case-by-case" analysis, in part examining the nature of the matter and the extent to which the of counsel was integrated into the law firm.

        1162740 Ont. Ltd. v. Pingue, 2013 ONSC 5577 (CanLII) (Super. Ct. Ont. Sept. 12, 2013).  Lawyer represented the defendants in this case on several matters, but not on this case.  Lawyer now shares an office with the lawyers representing the plaintiffs in this case.  Lawyer is also "of counsel" to the plaintiffs' lawyers.  While they share a waiting room and receptionist, everything else is separate.  The defendants moved to disqualify the plaintiffs' lawyers.  In this opinion the court denied the motion.

        Lee v. Ryoo, 2023 WL 7855056 (Cal. App. Unpub. 6th Dist. Nov. 16, 2023). Plaintiff is suing Defendant (not Plaintiff's wife) for breach of contract, elder abuse, and fraud. Plaintiff, represented by Divorce Lawyer, is also engaged in litigation against his wife (not this case). The problem here is that the law firm for Defendant in this case ("Law Firm") obtained a declaration from Divorce Lawyer on a tangential briefing issue in this case. Plaintiff moved to disqualify Law Firm, in part claiming that Divorce Lawyer became "affiliated" with Law Firm and that Divorce Lawyer's conflict should be imputed to Law Firm. The trial court denied the motion to disqualify. In this unpublished opinion the appellate court affirmed. First, the court noted that Plaintiff failed to show that Divorce Lawyer gave Law Firm any of Plaintiff's confidential information relating to this case. Second, the court held that whatever relationship there was between Divorce Lawyer and Law Firm was not sufficient to trigger imputation. Given the "unpublished" nature of this opinion and its questionable precedential value, we will not discuss that issue further, or other issues in the case. To us, the closest analogy is to the "of counsel" cases (At this site, see "Of Counsel"). However, the term "of counsel" does not appear in the opinion.

        Restatement.  See § 124, cmt. c(ii) on of counsels.

        Treatise.  Rotunda & Dzienkowski § 1.10-5(d).

        "Special Counsel."  Bison Plumbing City, Inc. v. Benderson, 722 N.Y.S.2d 660 (N.Y. App. 2001).  Court held that lawyer designated by a law firm as "special counsel" is not necessarily a member of the firm for conflict of interest purposes.

Of Counsel and Fee Sharing

Ariz. Op. 16-01 (April 2016). This opinion holds that two law firms having a true of counsel relationship may share fees without running afoul of the fee-sharing provisions of Rule 1.5. According to the April 20, 2016 Current report of the ABA/BNA Lawyers’ Manual on Professional Responsibility, the Arizona opinion is consistent with the following: Maine Op. 175 (2001); NYC Op. 1996-8 (1996); Ohio Op. 2004-11 (2004); Tex. Op. 450 (1987); and Va. Op. 1866 (2012).

Sixth Amendment
        United States v. Kilpatrick
, 2015 WL 4774914 (6th Cir. Aug. 14, 2015). While we rarely cover criminal cases, this one, involving the former mayor of Detroit (“Mayor”) as defendant, has several aspects of possible interest to this audience. Mayor was represented in the criminal case by Lawyers A & B. At the same time, Mayor was being sued in a civil case related to the criminal charges in this case. Law Firm represented Plaintiff in the civil case. Prior to the criminal trial, Lawyers A & B became “of counsel” to Law Firm. However, A & B remained geographically remote from Law Firm, their respective files and computer systems remained separate, and A & B were not sharing fees from the civil case. Mayor was convicted. Mayor sought a new trial, in part because he was deprived of conflicts-free counsel in Violation of the Sixth Amendment. The trial court denied the motion. In this opinion the Sixth Circuit affirmed, finding that the trial court’s ruling was not clearly erroneous.

Office Sharing

        When do lawyers practicing independently, but sharing office space, become disqualified from being on opposite sides of a matter?  The cases, a few of which are cited below, can be inconsistent.  [Caution: we have not attempted to gather all cases or ethics opinions on office sharing.]  Cmt. e to Restatement § 123 seems to strike just the right balance:

The key inquiry is whether the physical organization and actual operation of the office space is such that the confidential information of each lawyer is secure from the others.?

        The November 25, 2009 issue of the Current Reports of  the ABA/BNA Lawyers' Manual on Professional Conduct reported the publication of Supplement 328, which contains an update on authorities in an article entitled "Sharing Office Space."  It is exhaustive and current.  To find it in the main volume go to "Practice Guides," then "Sharing Office Space."

        Cases holding no disqualification: United States v. Bell, 506 F.2d 207 (D.C. Cir. 1974) (criminal case; no finding of ineffective assistance under Sixth Amendment); and, Custody of a Minor, 432 N.E.2d 546 (Mass. App. 1982).

        1162740 Ont. Ltd. v. Pingue, 2013 ONSC 5577 (CanLII) (Super. Ct. Ont. Sept. 12, 2013).  Involved both "of counsel" designation and office sharing.  Discussed above under "Of Counsel."

        "In Association."  Jajj v. 100337 Can. Ltd., 2013 ONSC 5743 (CanLII) (Super. Ct. Ont. Sept. 20, 2013).  Defendant met with Lawyer A to discuss the circumstances of this case.  Lawyer B appeared as a lawyer for Plaintiff.  Lawyers A and B were practicing "in association" but had "separate practices" (master's words).  Defendant moved to disqualify Lawyer B.  In this opinion the master denied the motion.  [Note: we do not see the phrase "in association" in the United States.  The concept "of counsel" seems close.] 

        Cases finding need for disqualification: O'Malley v. Novoselsky, 2011 U.S. Dist. LEXIS 66406 (N.D. Ill. June 14, 2011) (two lawyers shared same office suite and telephone number, and frequently worked on cases together); Skokie Gold Standard Liquors v. Joseph E. Seagram & Sons, Inc., 452 N.E.2d 804 (Ill. App. 1983); State v. Bryan, 2000 Tenn. Crim. App. LEXIS 605 (Tenn. Crim. App. 2000); Winblad v. Deskins, 782 N.E.2d 160 (Ohio App. 2002).

        In re Galloway, 2014 Bankr. LEXIS 3715 (9th Cir. BAP Aug. 27, 2014). Chapter 7 trustee had her office in the same building as the lawyer for parties adverse to the trustee. They shared nothing but the address. Debtors claimed this was a conflict of interest. In this opinion the appellate panel held it was not.

        Malpractice Case: How not to Structure an Office-Sharing Arrangement
. Law Office of Oscar C. Gonzalez, Inc. v. Sloan, 2014 Tex. App. LEXIS 9743 (Tex. App. Aug. 29, 2014). Lawyer A shared an office suite with Lawyer B. While maintaining separate practices, they handled many matters, including this one, so that B’s matters appeared to be A’s as well. Moreover, A knew B had a proclivity to misuse client funds. As a result, in this case, the trial and the appellate courts imputed B’s malpractice to A.

        Criminal Case. United States v. Sargent, 2018 WL 1774554 (E.D. Ky. April 13, 2018). Criminal case with three co-defendants. They each have separate lawyers, but the lawyers have offices in the same building. In order to avoid Sixth Amendment conflicts issues, the court conducted a hearing to determine if they are a "firm." The court noted that the lawyers had separate offices, computer systems, insurance coverage, and "tax compliance." There was also no sharing of "core . . . personnel." As a result, the court held there was no Sixth Amendment issue, and the lawyers could continue. The court was guided, in part, by Ky. Op. E-418 (2001), which deals with what lawyers sharing space must do to avoid conflicts issues.

        Ethics opinions on office sharing.  D.C. Op. 303 (2001); Ky. Op. E-418 (2001).. 

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