Can two separate law firms form a joint venture to handle personal injury and wrongful death cases together?

Plain-English summary

Two separate firms, each handling general civil litigation including personal injury and wrongful death, asked whether they could join as a joint venture for the limited purpose of providing combined legal services in personal injury and wrongful death matters while otherwise remaining separate, operating under a joint-venture name with offices in two cities. The committee began by noting that neither the rules nor its opinions contemplate joint venture arrangements between law firms, while observing that this does not preclude a lawyer from practicing simultaneously in two bona fide firms.

The committee then walked through the same concerns it addressed in companion Opinion 93-7. In contingent-fee personal injury matters, lawyers in different firms must obtain court approval to divide a fee other than 25%/75% (Rule 4-1.5(f)(4)(D)), and it would be improper to form a third firm solely to evade that rule (Rule 4-8.4(a)). It described the "parallel law firm" device used to hide the true nature of a firm and its members, which the Standing Committee on Advertising had found to be intentionally misleading conduct violating the advertising rules (Rules 4-7.1 and 4-7.7), and it cautioned that a misleading trade name (such as one falsely suggesting the firm limits its practice to medical malpractice) could violate those rules.

The committee concluded it would be permissible for the inquirer's firm to participate in the proposed arrangement provided the new specialty firm is actually organized and operated as a separate, bona fide firm in compliance with the advertising rules and not for the sole purpose of evading the 25%/75% fee-division rule. Specific advertising questions, it noted, should be directed to the Standing Committee on Advertising.

Currency note

This opinion was issued in 1994, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can two firms form a joint venture to handle a category of cases together?

A: Under this opinion, the rules and committee opinions do not contemplate joint venture arrangements between firms; the committee analyzed the proposal as a separate-firm arrangement instead.

Q: Is it permissible to form a new combined firm for personal injury work?

A: Per the opinion, it can be, provided the new firm is a genuine, separate, bona fide firm complying with the advertising rules and is not formed solely to evade the 25%/75% contingent-fee division rule.

Q: What makes such an arrangement improper?

A: The committee pointed to forming a firm solely to evade the fee-division rule (Rule 4-8.4(a)) and to "parallel firm" or misleading trade-name devices that violate the advertising rules.

Background and rules framework

The opinion applied the advertising and trade-name rules (Rules 4-7.1 and 4-7.7; Model Rules 7.1 and 7.5), the contingent-fee division rule (Rule 4-1.5(f)(4)(D); Model Rule 1.5), and the prohibition on violating the rules through the acts of another (Rule 4-8.4(a); Model Rule 8.4).

Citations and references

Rules of Professional Conduct:

• Model Rule 7.1 / Fla. Rule 4-7.1 (misleading communications)
• Model Rule 7.5 / Fla. Rule 4-7.7 (trade names)
• Model Rule 1.5 / Fla. Rule 4-1.5(f)(4)(D) (contingent-fee division in personal injury matters)
• Model Rule 8.4 / Fla. Rule 4-8.4(a) (violating the rules through the acts of another)

Other opinions cited:

• Fla. Ethics Op. 76-7; ABA Informal Opinions 1253, 83-1499

See also

• FL Bar Ethics Op. 93-7: Practicing Simultaneously in Two Law Firms
• FL Bar Ethics Op. 94-7: When the Fee-Division Rules Apply to an "Of Counsel" Lawyer
• FL Bar Ethics Op. 94-6: Operating a Mediation Department Within a Law Firm

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-93-6/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-93-6.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

FLORIDA BAR ETHICS OPINION
OPINION 93-6
May 15, 1994
Advisory ethics opinions are not binding.
Neither the Rules Regulating The Florida Bar nor Professional Ethics Committee opinions contemplate joint venture arrangements between law firms. It would be improper for members of two different law firms to form a third firm for the sole purpose of evading Rule 4-1.5(f)(4)(D), which imposes limitations on the division of contingent fees in personal injury-type cases.
RPC: 4-1.5(f)(4)(D), 4-7.1, 4-7.7, 4-8.4(a)
Opinions: 76-7; ABA Informal Opinions 1253, 83-1499
Misc.: Handbook on Lawyer Advertising and Solicitation, Florida Bar Standing Committee on Advertising; Rule 4, Florida Bar Procedures for Ruling on Questions of Ethics

A member of The Florida Bar has requested an advisory ethics opinion. The operative facts as presented by the inquiring attorney are as follows:

We respectfully request a response to the following question:
May two distinct law firms join together as a joint venture for the specific limited purpose of providing limited legal services to their joint clientele, i.e. personal injury and wrongful death matters?

Both law firms are separate and distinct and maintain their separate legal offices. Each provides general civil litigation, including personal injury and wrongful death matters to their respective clientele. However, the firms have a good working relationship and wish to join for the specific purpose of providing combined legal services in the specialty of personal injury and wrongful death matters, but otherwise remain separate and distinct. The joint venture intends to conduct the personal injury and wrongful death practice at offices both in West Palm Beach and in Fort Lauderdale. The joint venture will be known as [S and G], a joint venture consisting of [the two P.A.s].

Initially it must be noted that neither the Rules Regulating The Florida Bar nor opinions issued by the Professional Ethics Committee of The Florida Bar contemplate joint venture arrangements between law firms. This does not mean, however, that an attorney is ethically precluded from practicing simultaneously in two bona fide law firms. See Florida Ethics Opinion 76-7; ABA Informal Opinions 83-1499 and 1253. Nevertheless, there are particular circumstances under which ethical problems could arise as a result of an attorney's membership in two firms.

For example, the Supreme Court of Florida has mandated that, in personal injury-type cases (including medical malpractice cases) handled on a contingent fee basis, attorneys in different firms must obtain court approval if they wish to share the fees in a proportion other than 25%-75% (i.e., no more than 25% to the "secondary" firm and no less than 75% to the "primary" firm). Rule 4-1.5(f)(4)(D), Rules Regulating The Florida Bar. Under this rule, attorneys in two different firms may co-counsel a medical malpractice case and share the fee on, for example, a 50%-50% basis only with the court's approval. It would be improper for members of two different law firms to form a third firm for the sole purpose of evading this fee-division rule. See Rule 4-8.4(a).

Another example of how an attorney's membership in two firms might be ethically improper under some circumstances is the "parallel law firm" situation. In essence, this arrangement is used in order to hide the true nature of the firm and its members. The Florida Bar's Standing Committee on Advertising has concluded that such intentionally misleading conduct violates Rules 4-7.1 and 4-7.7. In its Handbook on Lawyer Advertising and Solicitation, the Standing Committee on Advertising addressed the ethical considerations involved in a hypothetical firm arrangement by using the following example:

The law firm of "Smith & Brown" creates a professional association solely for the purpose of handling personal injury matters. "The Personal Injury Firm" would be wholly owned by "Smith & Brown" or the shareholders of "Smith & Brown." The personal injury practice would have its own letterhead, and pleadings would be signed in the name of the new entity. Business cards would contain the attorney's name and the new entity's name when the attorney is handling a personal injury matter. Separate books and records would be kept for the personal injury practice. "Smith & Brown" would agree to provide the new entity with employees, facilities, and equipment and in return the new entity would pay "Smith & Brown" a fee based on the amount of profit earned by the new entity. The new entity would be a "parallel firm" to "Smith & Brown." The committee believes that the creation of a "parallel firm" appears contrary to 4-7.7 because it is deceptive and misleading contrary to 4-7.1. Clients and prospective clients should know the full extent of the nature of a firm's practice. Such considerations are matters that play a significant role when a prospective client decides which firm to hire. For example, an insurance company may not wish to retain a firm that represents personal injury plaintiffs, or vice versa.

A third example of potential impropriety could arise if a misleading trade name is used by the proposed new firm. Use of a trade name such as "Medical Malpractice Law Center" could be misleading, and thus violative of Rule 4-7.1 and 4-7.7, if it falsely suggests to the public that members of the trade name firm limit their practice to medical malpractice cases. Prospective clients could then reasonably infer that the trade name firm's members possess special skills and qualifications in the area of medical malpractice that may not be possessed by attorneys who have chosen not to limit their practice to one area of the law, or that clients will be dealing with a firm whose members concentrate their efforts totally in one area of the law, when in reality those attorneys handle not only medical malpractice but other types of cases as well.

In view of the considerations discussed above, it can be concluded that it will be ethically permissible for the inquiring attorney's firm to participate in the proposed arrangement provided the new specialty firm actually is organized and operated as a separate, bona fide law firm in compliance with the attorney advertising rules and not for the sole purpose of evading the 25%-75% fee-division rule.

(Although advertising issues have been mentioned in this opinion for illustrative purposes, specific questions requiring interpretation or application of the advertising rules, Rules 4-7.1 through 4-7.7 of the Rules Regulating The Florida Bar, should be directed to the Bar's Standing Committee on Advertising. See Rule 4, Florida Bar Procedures for Ruling on Questions of Ethics.)