Can a Kentucky lawyer form an interstate law partnership, and can he list an out-of-state lawyer as an associate when their deal is really just fee-split referrals?

Plain-English summary

The committee answered two questions about a Kentucky attorney forming a law partnership with an attorney in another state. On the first, the general propriety of an interstate partnership, it answered yes; on the second, a "limited partnership" listing the out-of-state attorney as an "associate" on the letterhead, it answered no.

The governing rules were DR 2-102(B) (no name misleading as to the identity of the lawyers practicing under it), DR 2-102(C) (no holding out as a partnership unless the lawyers are in fact partners), and DR 2-102(D), which addresses partnerships among lawyers licensed in different jurisdictions and requires that all enumerations of members and associates make clear the jurisdictional limitations of those not licensed in all listed jurisdictions, while allowing the same firm name in each jurisdiction. Relying on ABA Formal Opinions 256 and 316, the committee concluded a Kentucky attorney may enter an interstate partnership so long as a partnership is not implied where none exists and the jurisdictional limitations on the members are made clear on all letterheads and representations to the public.

On the second question, the committee assumed that "limited partnership" meant the referral of specified business and the division of fees from that business. It held this is not a true partnership. Citing ABA Formal Opinions 115 and 277, it found that an arrangement involving only referral of specified business, without a general division of the firm's fees and responsibility for its actions, is not a partnership at all, and holding it out as one would misrepresent the firm to the public in violation of DR 2-102. The committee also found that designating the out-of-state attorney an "associate" was misleading: under ABA Formal Opinion 310 it is improper to designate a partner as an associate, and here the attorney was not in reality an associate (he devoted only part of his time to the firm) yet professed to be a partner, so either designation would mislead.

Currency note

This opinion was issued in 1974 under Kentucky's former Code of Professional Responsibility (in effect 1971 to 1990), before the Kentucky Bar Association's 1990 adoption of the Rules of Professional Conduct (SCR 3.130) and the substantial 2009 revisions to those rules. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against the current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a Kentucky lawyer form a partnership with a lawyer in another state?

A: Yes. The committee held an interstate partnership is proper so long as no partnership is implied where none exists and the members' jurisdictional limitations are made clear on all letterheads and public representations.

Q: What must an interstate firm's letterhead show?

A: Under DR 2-102(D), all enumerations of members and associates must make clear the jurisdictional limitations of those not licensed in all listed jurisdictions; the same firm name may be used in each jurisdiction.

Q: Can lawyers call a referral-and-fee-split deal a partnership?

A: No. The committee held that an arrangement involving only referral of specified business, without a general division of fees and shared responsibility, is not a partnership, and holding it out as one misrepresents the firm in violation of DR 2-102.

Q: Can the out-of-state lawyer be listed as an "associate"?

A: No. The committee held the designation misleading: under ABA Formal Opinion 310 a partner may not be designated an associate, and the attorney was not in reality an associate, so either label would mislead.

Background and rules framework

The opinion applied DR 2-102(B), (C), and (D) of the former Code of Professional Responsibility, governing misleading firm names, holding out as partners, and the disclosure of jurisdictional limits in interstate firms. The modern analogs are Model Rule 5.5 (multijurisdictional practice) and Model Rule 7.5 (firm names and letterheads, including jurisdictional limitations).

Citations and references

Rules of Professional Conduct:

• DR 2-102(B), (C), (D) (misleading names; holding out as partners; jurisdictional limits in interstate firms); modern analogs Model Rules 7.5 and 5.5

Other opinions cited:

• ABA Formal Opinion 256 (Dec. 17, 1943) (a partner admitted only where a branch office is located is permissible if the letterhead discloses where members are licensed)
• ABA Formal Opinion 316 (Jan. 18, 1967) (partners need not practice in the same state if limitations are disclosed and the local member vouches for the others)
• ABA Formal Opinion 115 (Aug. 27, 1934) (improper to hold out as partners in different states when fees are divided only on forwarded cases)
• ABA Formal Opinion 277 (June 26, 1948) (a referral-only "partnership" is unethical)
• ABA Formal Opinion 310 (June 20, 1963) (improper to designate a partner as an associate)

See also

• KBA Ethics Op. E-163: Multistate Firm Letterheads
• KBA Ethics Op. E-85: Branch Office in Another County
• KBA Ethics Op. E-83: Deceased Lawyer's Name in Firm

Source

• Landing page: https://kybar.org/For-Members/Rules-Ethics-Information/Ethics-Opinions
• Original PDF: https://kybar.org/Portals/0/Admin/Ethics%20Opinions/KBA_E-092.pdf

Original opinion text

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

KENTUCKY BAR ASSOCIATION
Ethics Opinion KBA E-92
Issued: March 1974

This opinion was decided under the Code of Professional Responsibility, which was in effect from 1971 to 1990. Lawyers should consult the current version of the Rules of Professional Conduct and Comments, SCR 3.130 (available at http://www.kybar.org), especially Rules 7.01-7.50 and the Attorneys' Advertising Commission Regulations, before relying on this opinion.

Question 1:

May a Kentucky attorney ethically form a partnership with an attorney in another state for the operation of law offices in both states?

Answer 1:

Yes.

Question 2:

May a Kentucky attorney ethically form a limited partnership with an attorney in another state for the operation of law offices in both states, listing the other attorney as an associate on his letterhead?

Answer 2:

No.

References:

DR 2-102(B)(C) and (D)

OPINION

A Kentucky attorney has posed a question concerning the formation of a partnership with an attorney in another state. For purposes of this Opinion, the Committee will consider first the general propriety of interstate partnerships and will then review the specific inquiry addressed to us by the attorney.

The ethical rules material to this inquiry are found in DR 2-102(B), 2-102(C) and 2-102(D). DR 2-102(B) provides that a lawyer in private practice shall not practice under a name that is misleading as to the identity of the lawyer or lawyers practicing under that name. An attorney is required by DR 2-102(C) not to hold himself out as having a partnership with one or more other lawyers unless they are in fact partners. In DR 2-102(D) we find specific reference to partnerships between lawyers in different jurisdictions:

A partnership shall not be formed or continued between or among lawyers licensed in different jurisdictions unless all enumerations of the members and associates of the firm on its letterhead and in other permissible listings make clear the jurisdictional limitations on those members and associates of the firm not licensed to practice in all listed jurisdictions; however, the same firm name may be used in each jurisdiction.

These rules had their counterparts under the old canons in effect prior to adoption of the Code of Professional Responsibility and have been interpreted on several occasions. In ABA Formal Opinion 256 (dated December 17, 1943), it was noted that there is nothing wrong in having in a firm name a partner admitted to practice only in a state where a branch office of the firm is located, so long as all letterheads and representations to the public make it clear in which states the members are licensed to practice. More recently, the ABA Committee ruled in ABA Formal Opinion 316 (dated January 18, 1967) that the members of a partnership are neither required to practice nor maintain offices in the same state, if they indicate the limitations on their practice in a manner consistent with the Canons and if the person admitted only in a particular state must vouch for the work of all the others. The Committee stressed, however, that in any interstate partnership or association the local man must be admitted to practice in the state and must have the ability to make and be responsible for making decisions for the lawyer group.

The Ethics Committee has not previously had occasion to consider this matter, but we are persuaded that the opinions cited above correctly stated the applicable rules. From this it follows that a Kentucky attorney may properly enter into a partnership arrangement with an attorney from another state (a) so long as a partnership is not implied where none exists and (b) the jurisdictional limitations on the members are made clear in all letterheads and representations to the public.

The second question presents different considerations. While the inquiry does not indicate, for purposes of our reply we assume that by "limited partnership" with an attorney in another state is meant the referral of specified business to such attorney and the division of fees earned from that business on a stated basis. This practice has received repeated condemnation. In ABA Formal Opinion 115 (dated August 27, 1934), it was found improper for two attorneys to hold themselves out as partners in different states when there was not division of fees except on cases forwarded from one to the other. Later, a proposed partnership between attorneys in different cities which contemplated only a referral arrangement in certain types of cases was found unethical (ABA Formal Opinion 277, dated June 26, 1948).

The Ethics Committee has carefully considered and fully subscribes to these opinions. An arrangement which involved only the referral of specified business to an attorney in another state, without a general division of fees earned by the firm and responsibility for its actions, would not in reality be a partnership at all. For the attorneys to indicate otherwise would be a misrepresentation to the public in clear violation of DR 2-102.

We also find the designation of the out-of-state attorney as "associate" to be misleading. Such practice was specifically condemned in ABA Formal Opinion 310 (dated June 20, 1963), where it was said to be improper to designate as associate any attorney who is a partner. Here, the attorney is not in reality an associate, since no more than a portion of his time is devoted to the business of the firm. Moreover, he professes to be a partner and not an associate. Regardless of which we consider him, such designation is misleading.

Note to Reader

This ethics opinion has been formally adopted by the Board of Governors of the Kentucky Bar Association under the provisions of Kentucky Supreme Court Rule 3.530 (or its predecessor rule). The Rule provides that formal opinions are advisory only.