In these uncertain economic times, attorneys are more and more seeking to reduce overhead costs, making office sharing rather appealing due to its cost efficiency.
Office sharing can also be beneficial as it provides close proximity to other attorneys and professionals with whom an attorney may give and receive referral business.
However, if you choose to office share, it is important to be aware of possible risks and take steps to create clear boundaries for your business. The two main dangers associated with sharing office space are vicarious liability and protecting client confidentiality.
Arguably the most concerning risk from office sharing is the potential for vicarious liability. A court could hold one office sharing attorney liable for the act, error, or omission of another office sharing attorney, even though they may have had nothing to do with the attorney’s case.
Constructive relationship theories such as implied partnership and apparent authority can be deemed to exist between office sharing attorneys.
The test most often used is how the relationship appears from the client’s point of view. If the average client would perceive the office as a partnership, then a court in a legal malpractice suit may find an implied partnership exists. This would create joint and several liability among the implied partners.
Common factors which can lead to the appearance of a partnership include:
- Shared receptionist or staff
- Shared telephone lines
- Shared signage and advertising
- Shared letterhead
It is vital in an office sharing situation that a written agreement is entered into including all terms and conditions of the office sharing arrangement. The agreement should include, but is not limited to the following:
- A strict prohibition against any lawyer representing that the shared office is a partnership.
- A requirement that all parties send to all clients engagement letters including clear statements regarding the status of their legal entity and that clients acknowledge their receipt by signing and returning duplicate copies to the responsible lawyer.
- An agreement not to take adversarial positions in case unless in strict compliance with the jurisdiction’s applicable ethical rules and opinions.
- A statement of the necessity to protect client confidentiality at all times, and a requirement that each attorney take measures to ensure the confidential safekeeping of client files and property.
- A clear understanding of what, if any, office equipment is to be shared, who is provide the equipment, who is responsible for repair and maintenance, and how the other lawyers will be charged for its use.
- An agreement to take full responsibility for informing and training all staff members, including temporary help, about how to respond properly to questions from clients and others so they never give the impression that the lawyers are a partnership.
- A plan for sharing traditional and online libraries, conference rooms, etc.
- A clear understanding of responsibilities regarding day-to-day office maintenance and cleanup.
- An acknowledgment that if the participating lawyers make client referrals to one another, there is an inherent risk that the referral will result in some clients liking the other lawyer so well they retain him or her for all future legal work, and if this happens how these matters will be handled.
With respect to client confidentiality, it is necessary to address this issue in all aspects of the practice. This includes physical layout of the office, separate computer systems, separate file storage, access to faxes, and privacy of verbal conversation that occur with the client both on the telephone and in person.
The best way to make office sharing a successful endeavor with limited risks is to engage in preventative planning. Having a written agreement amongst those sharing the office will set proper expectations. It is also imperative that staff is aware of how to prevent any confusion or appearance of a partnership. Finally, look at the practice from the perspective of the client and clear up any situations which could create the appearance of a partnership, remembering that if a legal malpractice arises, it will be the client’s perspective that concerns the court.
Angie Hoppe is a claim attorney at Minnesota Lawyers Mutual Insurance Company.