Management Assistance Program
Office Sharing Tips for Lawyers. It Seems Simple Until It’s Not.
By Jim Calloway
It is certainly not rare to see lawyers practicing in an office sharing arrangement. Sometimes a law firm that is downsizing finds itself with more office space than it needs, and subletting makes sense. Two or three lawyers might rent an office suite for their individual solo practices. Office sharers can benefit from sharing overhead expenses, such as utility bills and equipment. And there can be many benefits, such as lawyers nearby to discuss issues with or someone filing a pleading for you when they do their own filings, saving you a courthouse trip.
Office sharing is also positive when a lawyer wants to slow down and practice less than full time but still needs a place to interview clients and someone to sign for deliveries and certified mail when the lawyer is out. Sometimes your officemates may be a good source of referrals.
Office sharing may appear to be simple on its face. But for the lawyers who want to comply with all ethical rules, protect themselves and have appropriate and effective business operations, there is a lot to consider.
Foremost among lawyers’ minds will be complying with the Oklahoma Rules of Professional Conduct regarding client confidences, conflicts of interest and the like. Good lawyers will also be concerned about whether they may be opening themselves up to potential liability. So even though office sharing has the potential for positive benefits, some thought and advance preparation is advised.
One must then invest the energy and time-building processes that address each significant area of concern.
BEGIN AT THE BEGINNING
Let’s begin with the formation of the attorney-client relationship. The solo practitioner will be the one representing their client, just like the other officemates are. But while you may share overhead expenses, you don’t want to share any potential liability should a case go poorly. So, let’s reverse engineer this. If you were trying to sue three office-sharing lawyers on a theory of implied partnership or partnership by estoppel, what evidence could you muster?
- The sign on the front of the building says “Smith, Jones and Wilson, Attorneys at Law.”
This is not to say the sign is determinative in a court proceeding, but three separate signs with individual lawyers’ names are better.
- Clients waiting for their appointment repeatedly hear the receptionist answer the phone “Smith, Jones and Wilson, Attorneys.”
While I have noted before that “Hello, law office” is not an inspiring way to answer incoming calls, it is common, and I suspect the practice is often inspired by office-sharing arrangements. (Very cautious lawyers might even consider signage in the waiting room: “This is not a law firm partnership. The attorneys who work here each have individual law practices.”)
- “Their website said ‘Smith, Jones and Wilson.’ It seemed like a partnership to me.”
Normally each solo practitioner should have a separate website. Not only does that possibly relate to liability, but it makes things simpler when someone wants to move to another location. There could be a situation where an office complex might have a website listing the various lawyers who office there. But examine these exceptions to the “rule” with your plaintiff’s lawyer eyes, and you should be able to minimize any risk.
Client billing should come only from the engaged attorney and not from a firm name.
Your office-sharing arrangement, in most circumstances, requires a written agreement. This is because there are items you need the other officemates to include in their attorney-client agreements to protect you.
Primarily, every client for every lawyer should be required to sign an attorney-client agreement that states something to the effect that the client is only contracting with attorney Smith for this legal matter, and other lawyers at this address are not responsible for it. If you wish to make this even more prominent, make that provision a single-sentence paragraph with a place for the client to initial. Review the contract’s other provisions about utilizing other attorneys to ensure consistency. After all, if you wake up too sick to appear at that arraignment, your officemates are likely among the first you would call. All participants should also agree never to refer to the practice being a partnership or firm.
There are many other aspects of business that need to be considered.
The lawyers need a detailed outline of everyone’s financial responsibilities and a “prenuptial agreement” providing for how someone withdraws, including security deposits, if any, how much written notice is required to leave and how jointly acquired equipment will be divided. Consider what happens if the copier dies. The lawyer who owned the “paid for” copier may have been happy to accept a dime a page for compensation but may not want to buy a new copier or sign a lengthy copier lease. The simple solution may be for each lawyer to buy their own copier, particularly since there is often less need for huge copy jobs in many law offices today. You may even want to include provisions on sharing common facilities, including day-to-day maintenance and cleanup of those areas.
What is the term of the agreement or is it indefinite? How are changes to the agreement handled? What if there is a tie vote? Each different arrangement may have different concerns. If someone is dead set against doing this in contract form, at least they should agree to the preparation of an unsigned memo as to agreed terms.
Then there’s the matter of liability insurance. The lowest-risk scenario would include an executed agreement between all the officemates, where each agrees to carry a minimum amount of professional liability insurance with the notice given to the other officemates if the policy is ever canceled, just like a lienholder would receive on collateral. If all officemates agree to carry professional liability insurance with the same policy limits from the same provider, this can be an important safeguard. While the prior discussion about avoiding implied partnership is very important, if an individual lawyer’s professional liability insurance policy limits are sufficient to cover a client’s claim, there is reduced motivation to try to bring in another lawyer defendant – particularly one who didn’t work on the matter.
Once you have a good working agreement between all insured officemates and everyone has included the proper provisions in their engagement letters, what’s next?
For some types of law practices, the phone number may be one of the lawyer’s most valuable assets. This varies based on how long a phone number has been used for a legal business and the amount of advertising that has been invested in publicizing the phone number.
But, whatever the circumstances, it is usually best for each lawyer to have their own phone number, not shared with other lawyers in the building. The primary reason for this, in my opinion, is if the relationship with the other lawyer or lawyers doesn’t work out and one decides to move, there will be no need to obtain a new number and risk losing contact with clients calling the old number.
But having the individual office phone number has other benefits as well. If you pay a person or service to answer your phone, they can answer it with your law firm’s name. If you utilize voicemail, you can have a customized message, including your name. If you invest in marketing efforts that feature your phone number as a part of the information, this makes it less likely you will pay for advertising that could benefit your officemates instead of you.
Once I was in an office-sharing relationship with an attorney who died. His brother, also an attorney, had a different type of law practice and was happy to let the remaining lawyers keep his brother’s phone number. We assigned that number to the last rollover line so we would know when calls coming in were directly coming into it. He must have been very good about giving out his business card because that phone rang with potential client inquiries for years.
So most experienced lawyers will want to keep their own phone numbers. A jointly owned phone number may be quite a bone of contention when an office sharing arrangement terminates. Include how that will be decided in your operating agreement.
SHARING OF STAFF AND CONTRACTORS
Is it appropriate for officemates in an office-sharing relationship to share staff? As we lawyers often have to say, it depends.
If you have a cleaning service for the office, most likely that should be a shared expense. Someone should be responsible for making sure the cleaning crew understands they are not to read any documents they may come across or discuss anything they have seen in the law firm with outsiders. But there’s no apparent business or ethical reason not to split the cost of law office cleaning. But once you get past the shared cleaning services, things are more complicated.
What about the office receptionist? The traditional role of the in-office receptionist is not usually problematic. Welcoming individuals, offering them a seat or perhaps refreshments and letting the lawyer know their appointment has arrived is routine. Any question the client might ask about the legal matter can be answered with, “Ask your lawyer about that in the meeting.”
But the policies regarding the person who answers the phones can be more challenging. Clients or potential clients calling a law firm’s phone number may blurt out confidential information to the person who answers the phone. So that must be addressed with a policy and training about the nature of the office sharing arrangement. If three or four lawyers all want a shared receptionist to answer individual phone lines with different greetings, this could be too challenging for many.
A shared phone line will present the additional challenge of who gets the call from a potential new client wanting to talk with a lawyer, any lawyer. Some sort of shared rotation should be established. To me, the first rule should be if only one lawyer is available to take a call immediately, they get the potential client inquiry simply because if the caller leaves a message and their call is not returned for a few hours, they may already have secured a lawyer. Sometimes there are other considerations. For example, if only one lawyer in the office-sharing arrangement practices criminal law, those inquiries should go to that lawyer.
As we examine the possibilities, the idea of each lawyer having a separate phone number (with a virtual reception service as a backup when they cannot answer the phone) becomes more appealing.
Sharing staff, such as legal assistants and secretaries, increases the complexity. It can be challenging for two partners in a law firm to share a secretary or paralegal, and many a law firm associate has felt that they were second-class citizens compared to the partners as to how staff handled their assignments.
But in those large-firm situations, everyone is still theoretically focused on generating revenue for the firm, while the lawyers in an office sharing arrangement are all focused on their individual bottom lines. While I appreciate that many lawyers have made these situations work well for years, there will be growing pains initially setting this up, particularly if the staff person has a primary role in document creation.
When a client retains a law firm, all those working in the firm are understood to have access to the client’s confidential information. (A law firm may limit access for administrative reasons.) With an office-sharing situation, as suggested above, the clients sign a contract with only one individual lawyer instead of a firm. So shared resources and staff are not assumed but must be examined with an eye toward guarding client confidentiality. Before we cover some of these concerns, let’s discuss a broad office confidentiality policy.
To oversimplify, there are two broad approaches. You can build walls between the practices, so nothing is shared between them and then determine exceptions as needed (e.g., letting the in-office receptionist know whom to expect that day.) Or you can decide that even though the arrangement is not a partnership, it is a better arrangement not to take cases in opposition or conflict with each other. This would require a conflict-checking protocol like that used by any law firm.
To me, there are many reasons not to take matters in direct opposition to your officemates. Lawyers can sometimes get emotionally involved in litigation, and it’s best to avoid that with officemates. As one long-term office sharer remarked to the OBA Office of Ethics Counsel, “We don’t take cases against each other. Too much potential for things to get messy.” But the main reason to me is the Murphy’s Law hypothetical situation, where lawyers do not share schedules. Just imagine two lawyers scheduling pretrial conference preparation with opposing parties in a marital dissolution case at the same time. What if both lawyers are then delayed, and the two clients spend a lot of time in your waiting room glowering at each other? It is quite possible that someone’s trust in their lawyer could be damaged, and/or a client could decide to fire their lawyer just over the waiting room situation.
The lawyers’ agreement will also need to address walk-in clients and how they are assigned a lawyer. Any method of operation has the potential for challenges. The walk-in client who just showed up needing a lawyer – any lawyer – may turn out to have been referred to Lawyer A by a long-time client. But that is far better than dealing with an enraged client who didn’t notice both their attorney and opposing counsel shared the same address.
Most solo and small firm practices with employees are well served to use a payroll service. But if you are sharing an employee and paying a portion of the employee’s salary, you can be personally responsible should someone else fail to make the employee tax deposits with the authorities. The reports from the payroll service can make that simple.
Trust account management under office sharing scenarios is simple. Each individual lawyer should have their own trust account. There is no good argument to handle it any other way.
First of all, it is simpler to manage a single-lawyer trust account. Even assuming it would ethically be permissible to have a multi-lawyer trust account, it would take someone with very strong accounting skills to properly manage it. That person would have to be compensated. And, of course, the worst-case scenario would be checking on the trust account to find that it was substantially overdrawn, and an overdraft notice had been sent to the OBA Office of General Counsel even though you hadn’t used the trust account for months.
One may need to hire a computer expert to set up your network properly, so each lawyer only has access to their own files. This is not a particularly difficult task for a trained individual to set up.
But the cloud is likely the best option for client file information in any event. Either your practice management software or a service like Microsoft OneDrive can organize and store all your client information, including scanned copies of all documents filed with the court. And just like owning your own phone number, your cloud-based information storage is yours exclusively, as long as you keep paying the subscription fees.
I hope this rather detailed piece will not deter you from sharing offices with another lawyer or firm if that is in your best interest. Working through all of this in advance with your officemates may take some time, but planning can avoid potential problems and potential liability.
Many years ago, Oklahoma City attorney Jim Slayton and I taught a CLE on office sharing and published an article as well. Jim noted that some of the most important attributes for making this arrangement work are common courtesy and cleaning up after yourself when you use common areas. Some things do not change.
Mr. Calloway is OBA Management Assistance Program director. Need a quick answer to a tech problem or help solving a management dilemma? Contact them at 405-416-7008, 800-522-8060 or firstname.lastname@example.org. It’s a free member benefit.
Originally published in the Oklahoma Bar Journal — September, 2022 — Vol. 93, No. 7