The Florida Bar
(May 15, 1994)
(May 15, 1994)
HEADNOTE: Generally speaking, an attorney is not ethically precluded from practicing simultaneously in two separate, bona fide law firms. There are, however, ethical concerns that could arise as a result of an attorney's practice in more than one firm. These concerns include problems of deceptive conduct, misleading advertising, and attempts to evade rules imposing limitations on the division of contingent fees.
RPC: 4-1.5(f)(4)(D), 4-7.1, 4-7.7, 4-8.4(a)
Opinions: 76-7; ABA Informal Opinions 1253, 83-1499
Misc.: Handbook on Lawyer Advertising and Solicitation, Florida Bar Standing Committee on Advertising; Rule 4, Florida Bar Procedures for Ruling on Questions of Ethics
A member of The Florida Bar has requested an advisory ethics opinion. The operative facts as presented by the inquiring attorney are as follows.
The inquiring attorney has formed a professional association with another Florida attorney for the purpose of practicing entertainment law under a trade name. The second attorney is also the sole shareholder in a white collar criminal defense firm. The inquiring attorney requests an opinion on the ethical considerations involved in such an arrangement.
As a general rule, an attorney is not ethically precluded from practicing simultaneously in two bona fide law firms. See Florida Ethics Opinion 76-7; ABA Informal Opinions 83-1499 and 1253. There are however, particular circumstances under which ethical problems could arise as a result of an attorney's membership in two firms.
For example, the Supreme Court of Florida has mandated that, in personal injury-type cases (including medical malpractice cases) handled on a contingent fee basis, attorneys in different firms must obtain court approval if they wish to share the fees in a proportion other than 25%-75% (i.e., no more than 25% to the "secondary" firm and no less than 75% to the "primary" firm). Rule 4-1.5(f)(4)(D), Rules Regulating The Florida Bar. Under this rule, attorneys in two different firms may co- counsel a medical malpractice case and share the fee on, for example, a 50%-50% basis only with the court's approval. It would be improper for members of two different law firms to form a third firm for the sole purpose of evading this fee- division rule. See Rule 4-8.4(a). This does not appear to be an issue here since personal injury law is not involved.
Another example of how an attorney's membership in two firms might be ethically improper under some circumstances is the "parallel law firm" situation. In essence, this arrangement is used in order to hide the true nature of the firm and its members. The Florida Bar's Standing Committee on Advertising has concluded that such intentional misleading conduct violates Rules 4-7.1 and 4-7.7. In its Handbook on Lawyer Advertising and Solicitation, the Standing Committee on Advertising addressed the ethical considerations involved in a hypothetical firm arrangement by using the following example:
The law firm of "Smith & Brown" creates a professional association solely for the purpose of handling personal injury matters. "The Personal Injury Firm" would be wholly owned by "Smith & Brown" or the shareholders of "Smith & Brown." The personal injury practice would have its own letterhead, and pleadings would be signed in the name of the new entity. Business cards would contain the attorney's name and the new entity's name when the attorney is handling a personal injury matter. Separate books and records would be kept for the personal injury practice. "Smith & Brown" would agree to provide the new entity with employees, facilities, and equipment and in return the new entity would pay "Smith & Brown" a fee based on the amount of profit earned by the new entity. The new entity would be "parallel firm" to "Smith & Brown." The committee believes that the creation of a "parallel firm" appears contrary to 4-7.7 because it is deceptive and misleading contrary to 4- 7.1. Clients and prospe ctive clients should know the full extent of the nature of a firm's practice. Such considerations are matters that play a significant role when a prospective client decides which firm to hire. For example, an insurance company may not wish to retain a firm that represents personal injury plaintiffs, or vice versa.
A third example of potential impropriety could arise if a misleading trade name is used by the proposed new firm. Use of a trade name such as "Entertainment Law Center" [not the name proposed here] could be misleading, and thus violative of Rule 4-7.1 and 4-7.7, if it falsely suggests to the public that members of the trade name firm limit their practice to entertainment law. Prospective clients could then reasonably infer that the trade name firm's members possess special skills and qualifications in the area of entertainment law that may not be possessed by attorneys who have chosen not to limit their practice to one area of the law, or that clients will be dealing with a firm whose members concentrate their efforts totally in one area of the law, when in reality those attorneys handle not only entertainment law matters but other types of cases as well.
In view of the considerations discussed above, it can be concluded that it will be ethically permissible for the inquiring attorneys to participate in the proposed arrangement provided the new specialty firm actually is organized and operated as a separate, bona fide law firm in compliance with the attorney advertising rules and not for the sole purpose of evading the 25%-75% fee-division rule.
(Although advertising issues have been mentioned in this opinion for illustrative purposes, specific questions requiring interpretation or application of the advertising rules, Rules 4-7.1 through 4-7.7 of the Rules Regulating The Florida Bar, should be directed to the Bar's Standing Committee on Advertising. See Rule 4, Florida Bar Procedures for Ruling on Questions of Ethics.)