Perks, pitfalls of the ‘Of Counsel’ relationship

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Many lawyers and law firms are seeking the perks of entering into Of Counsel relationships without paying enough attention to some of the pitfalls.

A lawyer who is Of Counsel can get exposure at the same time as pursuing other ventures, or stay active in the law while easing into retirement. For a law firm that engages an Of Counsel attorney, the main benefit is to market itself as having an expert on hand in a certain practice area or geographic area.

State ethics opinions have established loose definitions for the Of Counsel relationship.

The term essentially says to the public that the attorney is available to consult on firm matters on an “ongoing and continuous basis,” said Mark Bassingthwaighte, a risk manager with Attorneys Liability Protection Society in Missoula, Mont.

But that means an Of Counsel attorney does “need to show up once in a while. It can’t just be a marketing ploy,” he added.

The Of Counsel relationship can also carry malpractice traps.

“Lawyers can find themselves very uninsured or underinsured,” Bassingthwaighte said.

That’s because many lawyers incorrectly assume their malpractice insurance covers all work they do as a lawyer.

However, legal malpractice policies actually cover work performed only for clients of the named insured, which is typically the attorney’s own law firm. Therefore, if a solo attorney becomes of counsel to ABC Law Firm and is sued for work he does on behalf of a client of ABC, the attorney is not covered under his own policy because the work was not completed on behalf of a client of his firm.

If two small firm lawyers become Of Counsel to each other’s firms, they should be named on each other’s malpractice policy to make sure there will be coverage, Bassingthwaighte recommended.

Another trap is for an Of Counsel attorney to have his or her name on the law firm’s letterhead without considering the consequences.

“Let’s say as an Of Counsel attorney I’m involved in 1 out of 100 cases at your firm,” said Bassingthwaighte. “I don’t want to be named [in a lawsuit] for all the other cases your firm is working on. But if you’re using letterhead that lists me every time, if and when someone makes a mistake, I’m going to be named, because everybody on the letterhead will be named.”

To prevent that, an Of Counsel lawyer should ask that his or her name be on the firm’s letterhead only for cases where he or she actually performs work.

That means if two small firm lawyers are Of Counsel to each other’s firms, there should be four sets of letterhead: regular letterhead for each firm that excludes the Of Counsel attorney and letterhead for each firm that includes the Of Counsel attorney.