Tips and Traps in “Of Counsel” Relationships

Raise your hand if you’re clear on what “of counsel” really means.

To different lawyers it means different things.

Typically, the designation “of counsel” means an attorney who is employed by a firm but not as an associate or partner.

Often the designee is a former judge or government official transitioning to private practice. Sometimes they have caseloads and busy calendars. Other times they might come into the office to chat and check their mail but that’s about it. They are there primarily for star power.

A growing trend is for solos and small firms to team up with of counsel lawyers in specific practice areas – patent law, for instance, or immigration – so that clients don’t have to be turned away or referred out.

The State Bar addressed the issue in RPC 34: “[A]n attorney may be designated as ‘of counsel’ to a North Carolina law firm so long as the attorney is licensed in North Carolina and will have a close, in-house association with the firm which does not involve conflicts of Interest.

The American Bar Association in Formal Opinion 90-357 provided four different definitions:

• A part-time practitioner who practices law in association with a firm, but on a basis different from that of the mainstream lawyers in the firm. Such part-time practitioners are sometimes lawyers who have decided to change from a full-time practice, either with that firm or with another, to a part-time one, or sometimes lawyers who have changed careers entirely, as for example former judges or government officials, or attorneys who transition from corporate/in-house practice to law firm practice.
• A retired partner of the firm who, although not actively practicing law, nonetheless remains associated with the firm and available for occasional consultation.
• A lawyer who is, in effect, a probationary partner-to-be: usually a lawyer brought into the firm laterally with the expectation of becoming partner after a relatively short period of time.
• A permanent status in between those of partner and associate, having the quality of tenure or something close to it, and lacking that of an expectation of likely promotion to full partner status.

The bottom line: any lawyer who has (a) a valid North Carolina license, (b) a “close, in-house” connection to your firm – whatever that means – and (c) no conflicts of interest can be added of counsel to your office.

But you would also be wise to do the following before printing new letterhead:

* Recruit with due diligence. Know who and what you’re getting. Does the of counsel prospect come with their own professional liability insurance coverage or a tail policy? What is their claims history? Any pending or potential problems? If so, you might be inheriting them.

* Make it clear to clients. If lawyers are sometimes confused about what of counsel means, how do you think clients feel? Explain who will be handling their case and who to contact with questions or problems. They might have come to the firm because of an of counsel name on the shingle. Make sure they understand the extent to which that lawyer will be involved in their case.

* Notify your insurance carrier. In its professional liability insurance application, Lawyers Mutual asks it insureds to identify all persons acting as of counsel “in or to” the firm. It also asks if any lawyer in the firm is of counsel to another firm. There is a good reason for wanting this information. The company has been hit with claims based on of counsel connections.

* Pick good friends. It might be tempting to add an “of counsel” lawyer based on status, popularity and name recognition. That’s fine. Just be careful you’re not getting more than you bargained for.

Ernest (Jay) Reeves Jr. is an attorney licensed in North Carolina and South Carolina. He has practiced in both states and was Legal Editor at Lawyers Weekly and Risk Manager at Lawyers Mutual. He writes the Risk Man column of practice pointers and risk management tips. Contact jay.reeves@ymail.com or phone 919-619-2441.