Not My Office Mate’s Keeper: Avoiding Liability In Office Sharing Environments
Firm ManagementLawyers often share office space with no intent to form a partnership. Unfortunately, an actual partnership or a partnership by estoppel resulting in joint and several liability for malpractice claims can arise from office sharing operations. In addition, breaches of confidentiality can create liability even when lawyers successfully act in a manner that avoids partnership liability. This article looks at the legal basis for liability in office sharing relationships, and describes what lawyers can do to this avoid liability.
Vicarious Liability
No formal papers are required to form a partnership. The Uniform Partnership Act defines a partnership as “an association of two or more persons to carry on as co-owners of a business for profit.” Without a business structure and actions which make it clear that office sharing lawyers are not co-owners of a law practice, partnership liability can be imposed on office sharing lawyers. Partnership by estoppel arises under the Uniform Partnership Act when a lawyer represents or allows others to represent that a partnership exists, and another person reasonably relies on the representation. Clients may believe that office sharing lawyers are partners based on visual aspects of the office sharing arrangement, as well as written and spoken communications from lawyers and their employees. In some situations, clients might get the impression that one lawyer is the employee of another if the relationship is not explained.
Avoiding Partnership Liability
Avoiding liability for the work of other lawyers sharing office space requires advance planning. Ideally, lawyers sharing office space should enter into an office sharing agreement. The agreement itself can be evidence that lawyers are not partners. Following procedures spelled out by the agreement can prevent clients from getting the impression that lawyers are practicing as a team. A sample office sharing agreement based on one suggested by the Oregon State Bar Professional Liability Fund is a part of this newsletter (click here).
First impressions are very important in establishing the true relationship between lawyers in an office sharing practice. Under the Texas Disciplinary Rules of Professional Conduct Rule 7.01 (a), lawyers have an obligation to avoid practicing under “a name that is misleading as to the identity of the lawyer or lawyers practicing under such name….” Rule 7.01(d) further states that “(a) lawyer shall not hold himself or herself out as being a partner, shareholder, or associate with one or more other lawyers unless they are in fact partners, shareholders, or associates.” In Opinion 509, the Texas Committee on Professional Ethics found that use of a name such as “Smith, Jones and Washington, Law Offices of Independent Practitioners,” violates the disciplinary rules. The best approach to firm names is thus for each lawyer to avoid use of a single name in public for the office sharing arrangement.
Signs on the exterior of lawyers’ offices should indicate that separate law offices exist in the office space. If there is a receptionist, she should be instructed to answer any common phone line in a way that does not suggest a single law office, such as “Law offices.” Potential clients should be told that the lawyer is in an office sharing arrangement, and that other lawyers in the office are not their lawyer. Contracts or engagement letters should repeat this message. Clients should also be told to discuss representation matters only with the lawyer and his or her employees. Each lawyer should have his or her own letterhead.
Joint Work with Clients
At times, independent lawyers sharing office space may work together on matters. Every representation of this nature should be documented as an exception to the usual rules in engagement letters and contracts. The responsibilities of each lawyer should be detailed to the extent possible, and the compensation for each specifically defined. Each lawyer should continue to use separate letterhead and to bill separately.
Informal “bouncing ideas off of other lawyers” often occurs in an office sharing context. Great care should be used when doing this. Discussing hypotheticals is appropriate, provided that the identity of the client isn’t obvious from the hypothetical. If any confidential information identifiable to the client is to be shared, it is best that the consulted lawyer check conflicts before assisting the other lawyer. Sharing of confidential information in such a situation should be documented, even if no money will change hands, as an exception to the usual rules in the office.
Confidentiality
Breaches of confidentiality are a danger in shared offices. Use of a common fax machine or copier can result in copies of confidential information being left out for others to see. Files in unlocked areas and mail coming into the office can make it possible for people other than the lawyer working on the matter to see confidential information. Computer systems in which lawyers have access to each others information over a network can also result in breaches of confidence.
Office sharing lawyers cannot eliminate the possibility that confidences will be shared with other lawyers in the office. The risk can be minimized by keeping files in locked locations accessible only to the lawyers who need them, separating computer systems, and mindfulness of lawyers and employees about the need to return documents to locked areas.
Use of a common method accessible to all lawyers in the office for tracking conflicts is also advisable to avoid potentially conflicting representations. This may feel like an imposition on lawyers who are supposed to be independent of each other, but without a conflicts check the potential for breaches of confidence is significant in shared offices. It is conceivable that extra precautions might be taken when lawyers within the shared offices have a conflict, but the wiser course is usually to decline conflicting representation.
