Office Sharing and Avoiding the Risk of a Malpractice Claim
With the combined expense of actual office space, staff and equipment, many lawyers choose to enter into an office sharing arrangement as an economical way to hang out their shingle. Although there may be initial cost-saving benefits, there are disadvantages to sharing offices with other professionals, such as increased exposure to bar grievances or malpractice claims, disqualification motions, and imputed knowledge of confidential communications.
The primary issues are avoiding misleading the public into thinking the shared office is a partnership and maintaining client confidentiality. Conflicts, billing issues and staff management are also significant concerns.
Avoiding the Appearance of a Partnership and Vicarious Liability
Specific major benefits of office sharing are consulting with other lawyers, arranging for reliable backup for extended absences, making and receiving referrals, and occasionally associating with an office-share lawyer on a matter. Regrettably, these benefits tempt lawyers to enhance their status by implying the association among the lawyers in the shared office is like that of a partnership, with all its resources available to the client. This inappropriate impression is conveyed by signs, letterhead and business cards depicting the shared office as “A & B,” “Associates” or “Law Offices of A, B & C.” Additional ways in which misleading impressions are given are misuse of the term “of counsel” among office-share lawyers, the manner in which the telephone is answered, the use of the same telephone line for outgoing calls and the office layout.
Office Sharing Agreement
The first item of business in shared offices is to enter into an office sharing agreement. The agreement itself can be evidence the lawyers are not partners and assist in defending a vicarious liability claim. Following procedures spelled out by the agreement can prevent clients from getting the impression lawyers are practicing as a firm or partnership. Exactly what should be included in this agreement depends, but here are some items that should be considered:
- Assigning office space between private and shared areas and on what terms;
- Identifying what expenses are to be shared and in what percentage (e.g., conference rooms, computer systems, shared area furniture, office equipment, telephone systems, staff and supplies);
- Decide whether you have a common office budget account for office expenses, but always remember there needs to be strict separation of each lawyer’s client trust account and general account;
- Language that prohibits representation of the shared office as a partnership;
- Language that requires all lawyers to use a contract or letter of representation that includes a clarification that the shared office is not a partnership and to what extent, if any, the client will receive services from other lawyers in the shared office (e.g., client must provide permission and understand there will be separate billing);
- Language that requires all lawyers have professional liability insurance, workers compensation insurance and office package insurance;
- A conflicts system requirement to avoid the appearance of a conflict, and a system to allow written exceptions made with consent of clients involved.
Restrictions of access to communications, documents and evidence within a shared office is crucial to confidentiality. Strict processes are required for separate maintenance of files and accounts. Computer systems, copiers and telephones must be secure. Be careful with the use of a shared copier, as it can result in copies of confidential material being left out for others to see. Files in unlocked areas and mail arriving at the office can make it possible for persons other than the lawyer working on the matter to see confidential information. Computer systems in which lawyers have access to each other’s data over a network can also result in breaches of confidential information.
Shared staff is an especially difficult confidentiality issue. It is an accepted practice for lawyers in shared offices to hire a shared receptionist. Sharing paralegals, assistants and additional staff regularly dealing with confidential material is much more difficult and should be avoided. Having separate staff and measures in place to handle external deliveries, mail, protected sites (only accessible to the lawyers who should have access), separating computer systems, and mindfulness of lawyers and personnel about the need to return materials to secured areas.
Signage, Phones and Other Considerations
Signs on the exterior of the building and the lawyers’ offices should indicate separate law offices exist in the office space. Similarly, every lawyer should have their own letterhead, website, etc.
If there is a receptionist, he or she should be instructed to answer any common phone line in a way that does not suggest a single law office, such as “law offices.” Each lawyer should have their own outgoing line for telephone calls, so another lawyer’s name does not appear on caller ID.
Potential clients should be told the lawyer is in an office sharing arrangement and other lawyers in the office are not the client’s lawyer. As listed above, contracts or engagement letters should repeat this message. Clients should also be told to discuss legal matters only with their lawyer and his or her employees.
Take Measures to Protect Yourself
Although the cost-savings and other perceived benefits can be enticing, do not let them overshadow your duty to protect yourself and your practice. As with any endeavor, be cautious and take appropriate measures to ensure you do not leave yourself exposed.