(Approved June 2, 2000)
Issue: Do the Utah Rules of Professional Conduct prohibit a lawyer licensed to practice in Utah from participating in an association of lawyers that would use joint letterhead, with a disclaimer that the association “is an affiliation of independent attorneys-not a partnership?”
Opinion: A lawyer does not violate the Utah Rules of Professional Conduct if he participates in an association or affiliation of individual lawyers and law firms, provided that he adheres to the applicable rules regarding conflicts of interest and disclosure of confidential information. However, it would be misleading, and therefore a violation of the Rules, for the lawyer to participate in such an association or affiliation if its members were to practice under a common firm name and were to use joint letterhead. The inclusion of a partnership disclaimer would not cure the misleading nature of the letterhead concerning the relationship among the attorneys.
Facts: A Utah lawyer desires to associate himself with lawyers who are licensed to practice law in various foreign countries. Under the proposed arrangement, the members of the association would not be partners, but would be independent practitioners. It is not clear from the facts whether the lawyers participating in the association would merely refer clients to each other or whether they would also have some kind of a financial arrangement. The lawyers would use joint letterhead, which would identify the association as follows:
A, B, C & D
A, Admitted: State,Country United Kingdom
B, Admitted: Country European Union
C, Admitted: Country Russia
D, Admitted: State, Country Asia
A,B,C & D is an affiliation of independent attorneys—not a partnership.
Analysis: A lawyer’s communications regarding the lawyer’s services, including the designation of the lawyer’s firm and the lawyer’s letterhead, must comply with the requirements of Rules 7.1, 7.4 and 7.5 of the Rules.
Rule 7.1 states that “A lawyer shall not make a false or misleading communication about the lawyer or the lawyer’s services.”1Rule 7.5 governs firm names and letterheads, and subsection (d) is applicable to the analysis in this case: “Lawyers may state or imply that they practice in a partnership or other organization only when that is the fact.”2The obligation of the lawyer not to mislead third parties is further delineated by Rule 7.4, which outlines the limits of the lawyer’s communication of his fields of practice and states that, while allowed to indicate that his practice is limited to specific areas of practice, a lawyer cannot communicate that he is a specialist, unless otherwise permitted by the rule.3
The practice of law has evolved from the traditional model of a partnership with a single law office to various, more fluid forms of relationships among lawyers, which range from structures similar in nature to a partnership to arrangements that merely contemplate mutual referrals. It has now become common practice for lawyers to associate or become affiliated with other lawyers or law firms in different states or countries by way of some form of strategic alliance or participation in national or international networks. While these creative forms of association may provide a legitimate service to clients in a shrinking world, nonetheless they remain circumscribed by the Rules. (more…)
(Approved January 24, 1997)
Issue: Is it permissible under the Utah Rules of Professional Conduct for an attorney practicing law in Utah to form a partnership or otherwise associate with one or more non-Utah lawyers or with legal practitioners from other countries?
Opinion: A Utah attorney may form a partnership or otherwise associate with individuals who are licensed to practice law in any jurisdiction within the United States or with persons qualified and authorized to engage in the functional equivalent of U.S. legal practice under the laws of a foreign country.
Analysis: The Utah Rules of Professional Conduct do not prevent a Utah lawyer from entering into a partnership with lawyers admitted in other jurisdictions for the purpose of practicing law in Utah. Rule 7.5(b) of the Utah Rules of Professional Conduct plainly contemplates that attorneys licensed to practice in different jurisdictions may nevertheless associate within a single firm and that the firm may establish offices in more than one jurisdiction.1This, of course, has become common practice in the United States with many law firms maintaining offices in several states.
There is no ethical prohibition against forming a partnership or sharing revenue from legal practice with non-Utah lawyers. Although not necessarily licensed to practice law in this jurisdiction, a non-resident lawyer is not considered a “nonlawyer” for purposes of the Utah rules against fee splitting and formation of partnerships with lay persons. Black’s Law Dictionary defines a “lawyer” in part as “a person learned in the law’ as an attorney, counsel, or solicitor; a person licensed to practice law. . . .”2Read in conjunction with Rule 7.5(b), the prohibitions of Rule 5.4(a) against fee sharing with a “nonlawyer” and of Rule 5.4(b) against forming a partnership with a “nonlawyer” for the purpose of practicing law do not logically extend to persons who are not Utah lawyers but are authorized to practice law in other jurisdictions.
Subject to certain ethical constraints that must be followed, it has long been recognized as permissible to staff multi-state offices with attorneys admitted to practice in different states.
The Canons of Ethics do not prohibit a lawyer in State I from entering into an arrangement with a lawyer in State II for the practice of law by which they share in the responsibility and liability of each other, if they indicate the limitations on their practice in a manner consistent with the canons. Subject to the same limitations, offices of the firm could be opened in both states. Of course, only the individuals permitted by the laws of their respective states to practice law there would be permitted to do the acts defined by the state as the practice of law in that state, but there are no ethical barriers to carrying on the practice by such a firm in each state so long as the particular person admitted in that state is the person who, on behalf of the firm, vouched for the work of all of the others and, with the client and in the courts, did the legal acts defined by that state as the practice of law.3 (more…)
(Approved April 28, 1995)
Issue: May a lawyer or a law firm enter a franchise agreement with a firm that provides marketing and other service arrangements?
Opinion: It is unethical for a lawyer or a law firm to enter into a franchise agreement when the franchisee is not in a partnership or professional corporation relationship with the franchisor.1
Analysis: This request was submitted by a solo practitioner who desires to enter a franchise arrangement with an out-of-state firm that provides a trade name, marketing and other service arrangements for franchisees. Because of the multiplicity of potential relationships or affiliations among law firms, this Opinion is limited to consideration of a “franchise” arrangement having as its essential element the marketing of legal services under a common trade name. We do not address the many issues that could arise if the franchisor had the ability through the agreement to prescribe methods and processes for the franchisee or otherwise affect the independent professional judgment of the lawyer. 2 We assume the franchise arrangement provides for lower operating costs without an impact on individual firm autonomy and that the relationship does not provide for a partnership or professional corporation arrangement between the franchisee and the franchisor. The franchisee firm and the franchisor firm will be marketed on letterhead, in law directories, etc., using a common trade name.
Although the subject of a law firm’s entering into a franchise agreement is a matter of first impression for this Committee, the general theme of using a firm name that implies a misleading relationship is not new.3As a survey of other jurisdictions that have considered the question of franchising indicates, the application of Rules 7.5(a) and 7.1 of the Utah Rules of Professional Conduct is most appropriate. Rule 7.5(a) provides: “A lawyer shall not use a firm name, letterhead, or other professional designation that violates Rule 7.1.” Rule 7.1 sets out that:
A lawyer shall not make a false or misleading communication about the lawyer or the lawyer’s services. A communication is false or misleading if it:
(a) Contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading;
(b) Is likely to create an unjustified expectation about results the lawyer can achieve, or states or implies that the lawyer can achieve results by means that violate the Rules of Professional Conduct or other law; or
(c) Compares the lawyer’s services with other lawyer’s services, unless the comparison can be factually substantiated.
(d) Lawyers may state or imply that they practice in a partnership or other organization only when it is the fact.
This Committee’s Opinion No. 139 applied the rules above to a particular misleading firm name, but other jurisdictions have specifically applied analogues of Utah Rules 7.1 and 7.5(a) in determining that a franchise system as described above would be unethical.
The State Bar of Michigan Standing Committee on Professional and Judicial Ethics issued an opinion that “it is unethical for lawyers to offer or make an agreement to franchise a law firm name when the franchisees in fact are not in a partnership or professional corporation relationship with the franchisors.”4 The Michigan Bar determined that a franchise arrangement which facilitated the use of a trade name, common marketing plans and other services to the franchisee implied a partnership or professional corporation when none existed, and that the franchise arrangement, therefore, violated Michigan’s Rule 7.5(d).5