NEW YORK COUNTY LAWYERS’ ASSOCIATION
Committee on Professional Ethics
QUESTION NO. 692
TOPIC: OFFICE SHARING; PROFESSIONAL NOTICES, LETTERHEADS, AND SIGNS; PRESERVATION OF CONFIDENCES AND SECRETS OF A CLIENT; REFERRALS.
DIGEST: LAW FIRM MAY LEASE SPACE IN ITS OFFICE SUITE TO, AND SHARE OFFICE SERVICES WITH, AN INSURANCE SALESMAN OR OTHER NON-LAWYER PROVIDED (1) IT DOES NOT DECEIVE PUBLIC AS TO RELATIONSHIP WITH INSURANCE SALESMAN OR OTHER NON-LAWYER, (2) ADEQUATE MEASURES ARE UNDERTAKEN TO PROTECT CLIENT CONFIDENCES AND SECRETS AND . (3) LAW FIRM DOES NOT PAY FOR OR REQUEST REFERRALS FROM INSURANCE SALESMAN OR OTHER NON-LAWYER.
CODE: DR 1-102(A)(4), 2-101(A), 2- 103(A), 2-103(B), 4-101(A), (B) & (D); EC 4-2, 4-4.
Law firm ABC, which has four (4) members, is moving to a new office suite where it will have extra space. ABC would like to rent one of its offices to an insurance salesman, who is not a lawyer. The law firm and insurance practice will share common reception and conference room space, hallways, and various office services. There will be no solicitation of business between ABC and the insurance salesman. Is this office-sharing arrangement permissible?
It is not uncommon for law firms with extra office space to sublease to other businesses. Questions of professional responsibility are raised because a non-lawyer will be conducting business within the physical environs of ABC.
Although this arrangement is not prohibited per se on grounds of professional responsibility, it raises concerns with respect to (i) potential confusion of the public regarding the operation of the two businesses, (ii) the preservation of client confidences, and (iii) prohibited referrals of business. Thus, the proposed arrangement would be permissible only if ABC adhered to certain procedures to ensure compliance with applicable ethical rules.
Prohibitions against deceptive conduct require that ABC be scrupulous in setting up the office-sharing arrangement and conducting business to ensure that the two businesses operate separately and that the public is not confused regarding any affiliation. N.Y. Lawyer’s Code of Professional Responsibility (1990) (the “Code”) DR 1- 102(A)(4) and DR 2-101(A).
Therefore, building and door signs, letterhead, business cards, professional announcements, telephone listings and similar items for both businesses must be designed to avoid any implication that they are affiliated and must enable clients and the public generally to identify ABC and the insurance business as separate enterprises.
As well, the Code prohibits lawyers from revealing the confidences or secrets of a client. DR 4-101(A) & (B). Lawyers should use discretion when discussing client matters to avoid inadvertent disclosure to third parties. EC 4-2 & 4-4. Furthermore, a lawyer’s obligation to protect such information requires the exercise of “reasonable care” to prevent disclosure by employees, associates and others working at the firm with whom such information has been shared. DR 4-101(D).
The proposed arrangement heightens the risk of improper disclosure of confidential information because of the regular contact which would occur between ABC and the insurance business. This is similar to the concern raised when unaffiliated lawyers share office space. See N.Y. County 680 (1990) (group of lawyers who share office space may be treated as partners for conflict of interest purposes if they have access to each others’ client files).
Even inadvertent disclosures to the insurance salesman would be improper, and potentially damaging to ABC clients, and it would be ABC’s responsibility to ensure that this does not occur. Therefore, ABC members and employees would have to implement appropriate safeguards to prevent the salesman from overhearing or viewing confidential communications. Such precautions in any case should include restricting access to client files and ensuring that documents are not left in shared areas such as conference rooms and hallways, as well as using discretion when discussing client matters in open areas within the office.
The arrangement will involve the sharing of various office services in addition to space, and the concerns discussed would not necessarily preclude the sharing of any particular service so long as adequate safeguards are implemented by ABC to prevent improper disclosures of client confidences or secrets. Shared support staff such as secretaries and receptionists should be educated regarding the need to restrict the salesman’s access to firm work product and client papers. Both businesses could conceivably use the same word processing, photocopying, facsmile and similar services so long as appropriate procedures were in place to ensure that the confidentiality of client matters is preserved. Similarly, shared computer systems with adequate security restrictions could protect confidential information.
Lastly, lawyers are prohibited from compensating others, except for certain approved organizations, for referrals of business, DR 2-103(B), and from seeking professional employment, either directly or indirectly, in violation of any statute or court rule. DR 2-103(A). See N.Y. Judiciary Law § 479; Matter of Alessi, 60 N.Y.2d 229, 457 N.E.2d 682, 469 N.Y.S.2d 577 (1983), (requesting real estate brokers to refer clients for legal work violates § 479 where inherent conflict of interest might affect broker’s recommendation), cert. denied, 465 U.S. 1102 (1984) ; Matter of Greene, 54 N.Y.2d 118, 429 N.E.2d 390, 444 N.Y.S.2d 883 (1981), cert. denied, 445 U.S. 1035 (1982) (same).
ABC may lease space in its office suite to, and share office services with, a non-lawyer insurance salesman provided that (1) ABC sets up the office-sharing arrangement and conducts business so as to ensure that the two businesses operate separately and there is no implication that they are in any way affiliated, (2) adequate measures are undertaken to protect client confidences and secrets and (3) ABC does not pay for or request referrals from the insurance salesman.
March 2, 1993