When a partner retires and surrenders his license, may the firm keep his name, how must the letterhead show his status, and may the firm pay him a share of fees as a retirement benefit?

Plain-English summary

Partners A, B, and C practiced as Law Firm ABC. Partner A wanted to retire early at 60; B and C were willing to pay A for his partnership interest but wanted assurance A would not keep representing some of the firm's better clients, who were A's close friends. They agreed to pay A for his interest if A voluntarily surrendered his North Carolina law license. The inquiry posed three questions: whether the firm could keep the name "ABC," whether the letterhead had to show A as retired, and whether the firm could pay A over time a sum or percentage based on fees from A's former clients or all clients.

The opinion concluded: (1) the firm may continue to include a retired attorney's name in the firm name, and continued use of "Law Firm ABC" violates none of Rule 2.3(a), Rule 2.1, or Rule 2.2; (2) if A's name is listed individually among firm members, the firm must indicate he is retired, because listing him without that indication could be misleading under Rule 2.3(a) and Rule 2.1; and (3) the firm may pay A a percentage of fees, based on specific or all clients, in view of his contribution to the firm's development. Rule 2.7(a) forbids agreements restricting a lawyer's right to practice after termination "except as a condition to payment of retirement benefits," so a reasonable agreement may restrict A's practice as a condition of retirement benefits. On retirement, A would be placed on inactive status under G.S. Section 84-16, and Rule 3.2 (fee division with nonlawyers) does not apply because inactive attorneys are not considered nonlawyers.

Currency note

This opinion was issued in 1986, before the North Carolina State Bar's adoption of the 2003 revisions to the Rules of Professional Conduct. The provisions it applies (Rule 2.7(a) on restrictions on the right to practice, Rule 2.3/2.1/2.2 on firm names and letterheads, and Rule 3.2 on fee division with nonlawyers) have since been renumbered and revised (the corresponding Model Rules are 5.6, 7.5, 7.1, and 5.4). 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 Treat this page as historical context, not current guidance.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 a firm keep a retired partner's name in the firm name?

A: Yes. The opinion concluded a firm may continue to include the name of an attorney who practiced with it up to retirement, without violating Rule 2.3(a), 2.1, or 2.2.

Q: Must the letterhead show that the named lawyer is retired?

A: Yes, where he is listed individually among firm members. The opinion concluded that listing him without indicating retirement could be misleading under Rule 2.3(a) and Rule 2.1.

Q: Can the firm pay a retired partner a share of future fees?

A: Yes. The opinion concluded the firm may pay a percentage of fees as a retirement benefit, and may restrict the retired lawyer's practice as a condition of those benefits under Rule 2.7(a); Rule 3.2 does not apply because an inactive attorney is not a nonlawyer.

Background and rules framework

The opinion applied North Carolina Rule 2.7(a) on restrictions on the right to practice after termination (corresponding to Model Rule 5.6), Rules 2.3(a), 2.1, and 2.2 on firm names and misleading communications (corresponding to Model Rules 7.5 and 7.1), and Rule 3.2 on fee division with nonlawyers (corresponding to Model Rule 5.4). The analysis turned on the retirement-benefits exception to the bar on practice restrictions and on the inactive (not nonlawyer) status of the retiring partner.

Citations and references

Rules of Professional Conduct:

• North Carolina Rule 2.7(a) (restrictions on the right to practice)
• North Carolina Rule 2.3(a), 2.1, 2.2 (firm names; misleading communications)
• North Carolina Rule 3.2 (fee division with nonlawyers)
• MR 5.6 (restrictions on right to practice); MR 7.5 (firm names); MR 7.1 (communications about services); MR 5.4 (professional independence)

Statutes:

• G.S. Section 84-16 (inactive status of attorneys, as cited in the opinion)

See also

• NC Ethics Op. RPC 38: temporary placement of attorneys
• NC Ethics Op. RPC 34: use of the designation 'of counsel'

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/rpc-13/

Original opinion text

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

Inquiry #1:

Attorneys A, B, and C are partners in Law Firm ABC. Partner A desires to retire early at age 60. Partners B and C are willing for A to retire early and to pay A for his interest in the partnership. However, B and C desire to be assured that A will not continue to represent some of the firm's better clients, who are close friends of A. B and C have agreed to pay A for his interest in the partnership if he will voluntarily surrender his license to practice law in North Carolina, thereby preventing him from continuing to represent his friends who are also firm clients.

If A voluntarily surrenders his license, may the remaining partners continue to use the name Law Firm ABC?

Opinion #1:

Yes. A law firm may continue to include in the firm name that of a retired attorney who practiced with the firm up to the time of his retirement. Nothing about the continued use of the name Law Firm ABC, after A's retirement, violates Rule 2.3(a), Rule 2.1, or Rule 2.2.

Inquiry #2:

If Law Firm ABC continues to use the same firm name after A's retirement, and if Law Firm ABC lists A's name individually on their letterhead where individual firm members and associates are listed, is the Firm required to indicate by A's name that he is retired?

Opinion #2:

Yes. To list A's name individually, where individual firm partners and associates are listed, without some indication that he is retired, could be misleading in violation of Rule 2.3(a) and Rule 2.1.

Inquiry #3:

After A's retirement, may the remaining partners pay to A over a period of years an amount of money, or percentage, based either on the gross fees received by the firm from A's former clients or from all firm clients?

Opinion #3:

Yes. Rule 2.7(a) forbids a lawyer to be a party to or participate in an agreement with another lawyer restricting the right of a lawyer to practice law after termination of the relationship "except as a condition to payment of retirement benefits." Once Attorney A retires, a reasonable agreement, assuming there are no legal or constitutional questions about the validity of the agreement, may provide for restriction of Attorney A's right to practice as a condition to payment of retirement benefits. A percentage of fees paid to a retired attorney, either based on specific clients or on all clients, in view of his contribution to the development of the firm as an ongoing practice, is thus implicitly authorized by Rule 2.7(a). Attorney A, in giving up his right to practice law, would in fact be placed upon inactive status under G.S. §84-16, and Rule 3.2 is not in any way applicable since inactive attorneys are not considered nonlawyers.