RI-249

March 1, 1996

SYLLABUS

When lawyers who share office space, a receptionist, and secretaries, but maintain separate practices of law under their separate individual names and maintain separate telephone numbers and fax lines, this sharing relationship alone, without some additional factors, does not preclude one lawyer from representing private clients whose matters come before another office sharer serving as a public official.

When one office-sharer has a conflict of interest prohibiting representation of a private client, the conflict is not per se imputed to other office-sharers.

A part-time Friend of the Court referee is not per se disqualified from presiding in a matter in which the referee's office sharer appears. The referee may not allow the prestige of the public office to be used for the private interests of the office-sharer, and the office sharing arrangement may not be used to imply an ability to improperly influence the referee in the cases of the office sharer.

A public officer is not per se disqualified from participating in a matter in which the public officer's office-sharer represents a private client. The office sharing arrangement may not be used to imply an ability to improperly influence the public officer in the cases of the office sharer.

References: MRPC 1.6, 1.10(a), 1.11(a) and (c), 5.1, 5.3, 7.1, 7.5(d), 8.4(d); MCJC 2C, 5C(7); C-230; JI-19, JI-45, JI-77; RI-1, RI-59, RI-133, RI-118, RI-135; MCR 2.003(B)(5).

TEXT

Three lawyers practicing separately under their individual names share office space, the services of a receptionist, a fax line, and secretaries. The lawyer maintain different phone numbers. One office-sharer has been appointed Friend of the Court Referee. A second office-sharer's practice involves a significant amount of domestic relations work. A third office-sharer serves as Friend of the Court. The lawyers ask for guidance regarding conflicts of interest in the office-sharing arrangement, as follows:

1. Does a conflict exist when the referee presides in a matter in which an office-sharer represents a party?
2. What is the definition of "law firm" as described in RI-1?
3. Does the sharing of the office expenses in any way involve more than a de minimis indirect financial interest in the outcome of each other's cases?
4. What is allowed as far as an office sharing arrangement in the context of the cited circumstances?
5. Is it enough to notify each and every party in each individual case whereas lawyer A acts in an adjudicative capacity over lawyer B's cases and to require written consent hereto from all of the parties?

The facts as given state that the lawyers are mere office sharers operating independent law firms. The Comment to MRPC 1.0 under "Terminology" states:

"'Firm' or 'law firm' denotes a lawyer or lawyers in a private firm, lawyers employed in the legal department of a corporation, or other organization, and lawyers employed in a legal services organization, See comment, Rule 1.10."

The Comment to MRPC 1.10 states in pertinent part:

"For purposes of the Rules of Professional Conduct, the term "firm" includes lawyers in a private firm and lawyers employed 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 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 confidential 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 another."

The commonality under the current facts seems confined to shared responsibility for expenses for the fax line, the receptionist, the secretary and common office space. Those common ingredients alone do not lead to the conclusion that the setting constitutes a single law firm, as long as the parameters for segregating practices in office sharing arrangements are followed.

Parameters for office sharing include: (1) preservation of client confidences and secrets, (2) accuracy of communication about the relationship, (3) avoidance of improper solicitation of client referrals, (4) exercise of independent judgment regarding legal representation, (5) avoiding improper division of fees, and (6) avoiding conflicts of interest. RI-118, RI-135.

With regard to protecting confidences and secrets as required by MRPC 1.6, the office-sharers have separate phone lines but a common fax line. Clients, opposing counsel and others attempting to reach one of the office-sharers by fax on official business may reveal confidences and secrets when all office-sharers have access. Unless it is clear to all users that facsimile transmission is a public communication device and not segregated to a particular lawyer's business, sharing the fax line would be improper among office-sharers. Further, a Friend of the Court referee is considered a judge, and the conduct of the referee is governed by the Michigan Code of Judicial Conduct. See, JI-19 and JI-45. Pursuant to MCJC 5C(7), information gained as a judicial officer may not used or disclosed by the referee for any other purpose not related to judicial duties. Under MRPC 5.1 and 5.3, each lawyer must have in place reasonable procedures to ensure that nonlawyer employees, including the shared receptionist, understand the obligations of confidentiality and comply with them to the same extent as the lawyers themselves are obligated to do.

As for accuracy of communications, MRPC 7.1 and 7.5(d) prohibit lawyers from stating or implying they practice in a partnership or other organization when that is not the fact. The Comment to MRPC 7.5 states in pertinent part:

". . . [L]awyers sharing office facilities but who are not in fact partners, may not denominate themselves as, for example, 'Smith and Jones', for that title suggests partnership in the practice of law."

See also, C-230, RI-59; "Use of Joint Letterhead When Sharing Office Space," Vol 68 No 3 MBJ 245 (1989); "Groups of Unassociated Lawyers," Vol 71 No 6 MBJ 510 (1992). Thus the communications about the lawyers' firms, including letterhead, business cards, door signs, and the manner in which the telephone is answered, may not imply the lawyers are in practice together.

With regard to the financial arrangement, it is primarily a matter of business contract. MRPC 1.5(e), 5.4(a) and (c), and 7.2(c) do prohibit certain types of fee splitting, but no facts have been presented which trigger those rules. RI-133 concluded that a lawyer may rent office space and share the expense of utilities, equipment and a secretary, under an arrangement to pay rent calculated on the lawyer's gross income from the law practice, as long as client confidences are not violated in determining the amount of the rent. Whether a particular financial arrangement amounts to a lawyer having a "financial interest" in the outcome of an office-sharer's representation is a conflict question which must be addressed under those rules.

With regard to conflicts of interest, each office sharer has separate responsibility to ensure that work undertaken does not conflict with other duties and obligations. Cf MRPC 1.7, 1.8, 1.9, 1.10, 1.11. Whether it is necessary to disclose to potential clients the public responsibilities of the office sharers or the details of the office sharing arrangement will depend upon the facts of a particular case. Since no specific representation situations have been provided in this inquiry, no further guidance can be given at this time. In any case, client consent does not always act as a waiver.

A lawyer is not prohibited from undertaking representation when the case will be assigned for hearing by the referee office-sharer, and the referee is not automatically disqualified from presiding in the case. Disqualification may, however, be required on the facts of a particular case, such as the referee inadvertently intercepting a fax intended for the office-sharer and involving a matter pending before the referee. See RI-1.

When serving as referee, the referee is governed by MCJC 2C, which prohibits a judge from allowing private relationships, such as the office sharing arrangement, from influencing the referee's judgment. The Canon also warns against the referee allowing the prestige of the public office from being used to advance the business interests of others. The office sharers should take steps to ensure that clients do not perceive they will get special attention or service from the referee if they hire the referee's office sharer to represent them.

When serving as referee, the referee is governed by MCR 2.003(B) and its disqualification provisions, as well as by MRPC 1.11 and 1.12 regarding movement to and from private and public practice. These rules must be applied on the facts of a particular case. MCR 2.003(B)(5), for example, states:

"A judge is disqualified when the judge cannot impartially hear a case, including but not limited to instances in which:

". . .

"(5) The judge knows that he or she, individually or as a fiduciary, or the judge's spouse, parent or child wherever residing, or any other member of the judge's family residing in the judge's household, has an economic interest in the subject matter in controversy or in a party to the proceeding or has any other more than de minimis interest that could be substantially affected by the proceeding; . . . ."

The office sharing arrangement proposed does not give the referee an "economic interest" in the subject matter or in a party of the domestic relations matter the office sharer may undertake. We have no figures addressing the financial responsibilities among the office sharers, and without those details we cannot conclude that the financial arrangement would be "substantially affected" by the results in a particular domestic relations matter. The obligations determined by the Friend of the Court or the referee regarding the positions of the parties does not financially affect the advocate or other office sharers. We could hypothesize a situation in which a particular case monopolizes the time of the shared staff or equipment to the temporary detriment of other office sharers. Such situations affect the viability of the office sharing financial arrangement only rarely, and recusal of the referee is still a viable option.

Applying the rules generally, RI-1 concluded that a lawyer who is a part-time domestic relations referee may represent clients in connection with a matter in which the lawyer participated personally and substantially as referee, provided that all parties consent. A part-time referee may not hear matters in which the referee participated personally and substantially as a lawyer, and is disqualified from hearing matters presented by the referee's "law firm." Similar guidelines were described more fully in JI-77, addressing part-time magistrates.

Unlike the referee, the Friend of the Court is not engaged in an adjudicative position, and thus MCR 2.003(B) does not apply to activities of the Friend of the Court. Nevertheless, the Friend of the Court is a "public officer" under MRPC 1.11. Under MRPC 1.11(a), the Friend of the Court may not represent a "private client in connection with a matter in which the lawyer participated personally and substantially as [Friend of the Court] unless the government agency consents after consultation." Under MRPC 1.11(c), the Friend of the Court may not "participate in a matter in which the lawyer participated personally and substantially while in private practice, unless under applicable law no one is, or by lawful delegation may be, authorized to act in the lawyer's stead in the matter."

MRPC 8.4(d) prohibits a lawyer from stating or implying an ability to influence improperly a government agency or official. It must be clear in the office sharing arrangement that the private practitioner cannot improperly influence the referee or the Friend of the Court in the exercise of their public duties, merely because they are office sharing.

If either the Friend of the Court or the referee has a conflict preventing their direct representation of a private client, is the conflict imputed to the other office-sharer? MRPC 1.10(a) states:

"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, 1.8(c), 1.9(a) or (c), or 2.2." Emphasis added.

It is clear from the rule that a conflict of one office sharer is not imputed to the others unless they are deemed to be "associated in a firm." Even if office-sharers were considered a "firm" under particular circumstances, a disqualification would not be imputed to other office sharers if the disqualification arose under MRPC 1.11, 1.12 or MCR 2.003(B), since those provisions are not enumerated in the Rule.