Opinion #79. Propriety of Business Venture in Which Lawyers and Accountants Are Principals

Issued by the Professional Ethics Commission

Date Issued: May 6, 1987


The Commission has received a brochure describing a corporation that proposes to furnish the services of two attorneys and an accountant to individual clients. The brochure announces that the corporation will manage the careers and personal affairs of its clients, that it will “provide total legal and financial services” including advice, negotiations, and “handling legal . . . matters,” and that it has a “team of experts” in “legal and financial matters.” Neither the brochure nor any other materials supplied to the Commission state exactly the relationship between the corporation and each member of the team of experts. The brochure describes the corporation in places as “we” and sets forth at length a biography of each of the three experts placing all on an apparently equal footing. It thus suggests that the three are all participants in the venture having apparently the same relationship to the corporation. An accompanying letter to the Commission states that the accountant is not part of the corporation “as far as being an officer is concerned,” but does not state that the accountant will not be a shareholder or otherwise share in profits of the venture. The Commission has been asked whether this proposal would violate any of the Maine Bar Rules.


Rule 3.2(a)(2) prohibits the formation of a partnership or a professional service corporation with a non‑lawyer, if any of the activities of the partnership or corporation consist of the practice of law. Our rule is derived from DR 3‑103 of the ABA Code of Professional Responsibility. The Reporter’s Notes to the Maine Bar Rules indicate that consideration was given to modifying this traditional prohibition, but no change was undertaken:

The Commission was aware of the growing interest in interdisciplinary service organizations but believed the public interest would not be best served by their encouragement on a proprietary level, in the legal profession. Among the goals supported by this decision are: (1) minimal public confusion as to the nature and legitimacy of proffered services; (2) maintenance of clear and unrestricted authority in the Supreme Judicial Court over the practice of law; and (3) avoidance of the difficult problems that would be posed by the substantive law of partnerships under a contrary rule. Lawyers and law firms are, of course, free to employ or otherwise retain in a non‑proprietary capacity economists, physicians, psychologists or others so long as there is neither a delegation nor a representation of authority to practice law. Reporter’s Notes to Rule 3.2.

Related Rule 3.3(e) prohibits a lawyer from dividing a legal fee with a non‑lawyer. This rule is almost identical with its ABA Code counterpart, DR 3‑102.

Rule 3.2(a)(2) turns on whether activities of the corporation consist of the practice of law. The materials furnished to the Commission do not identify as services offered by the corporation any specific service that may only be performed by a person with a license to practice law, such as representing the corporation’s clientele in judicial proceedings. The description of services to be provided includes, on the contrary, many services commonly offered by lay persons, such as business advice and negotiation. It does, however, contain a general representation that “total legal . . . services” will be provided, and it represents that a named lawyer will be a member of the “team of experts.” The corporation is thereby entering into the “practice of law” for the purpose of applying Rule 3.2(a)(2), even if it has no intention of providing any service that requires membership in the Bar.

The “practice of law” as used in rules like 3.2(a)(2) has typically been interpreted as including services in fact performed by lawyers, whenever the business entity in question represents that a lawyer will be performing the service, even though non‑lawyers may and do perform the same service. The ABA in informal Opinions 1482 (lay inventor‑assistants and patent lawyers) and 1241 (licensed treasury agent and lawyer practicing before the Internal Revenue Service) and Formal Opinion 297 (attorney as salaried employee of C.P.A. firm) explained that when a person becomes a lawyer he takes on a mantle that he cannot thereafter take on or off as he pleases. Conduct in which he engages which involves the practice of law when engaged in by lawyers must be in accordance with the ethical standards of the profession if he is to retain his professional status. Even though a particular activity may be open to a layman, if such activity is the practice of law when engaged in by a lawyer, one who is a lawyer cannot free himself of the ethical restraints of the profession in carrying on such activity merely by announcing he is to be regarded as a layman for this particular purpose. Formal Opinion 297.

Lawyers are not necessarily barred from co‑proprietorship with lay persons in non‑legal enterprises, or even in law‑related enterprises for that matter. Informal Opinion 1241 emphasized, however, that if the services of the enterprise would be included in the practice of law when engaged in by a practicing lawyer, and if the lawyer proprietor holds himself out as a lawyer, those services will constitute the practice of law for the purpose of determining whether co‑proprietorship with a lay person is forbidden. Inevitably there will be such a holding out if the enterprise represents that its services will be performed by a lawyer.

It is not clear from the materials supplied to the Commission whether it is proposed to organize the corporation as a P.A., or as a business corporation. If organized in Maine as a P.A., the corporation could not have a mixture of professionals as its shareholders and could not mix the professional services it proposes to offer. (13 M.R.S.A. Sections 705, 710) Nor could the corporation use the “Inc.” tag in its name, as does the brochure furnished to the Commission. (13 M.R.S.A. Sec. 713) If organized as a business corporation, the corporation could not practice law or accountancy.[1] The Commission expresses no opinion on whether the services described in the brochure would constitute the practice of law or accountancy for this purpose.

The Commission has concluded that as the venture was described to it, Rule 3.2(a)(2) would be violated whether the corporation is a P.A. or a business corporation. If it is proposed to organize a P.A. with only one profession among the shareholders, then the brochure seems to describe a joint venture between the P.A. and the non‑shareholder professional or professionals. The Commission concludes that such a joint venture is within the rule’s prohibition on forming a partnership with a non‑lawyer. Otherwise the rule would be violated when an arrangement achieves the permanency of a formal partnership agreement but not when it is transitory, as are many joint ventures. Moreover, in the present case, the arrangement has been described as if it were to have an indefinite duration and thus for purposes of the rule could fairly be treated as a de facto partnership.

If the facts should be interpreted as describing a P.A. with both attorneys and accountants as shareholders, notwithstanding 13 M.R.S.A. Sec. 705, the result would be a violation of an express prohibition in Rule 3.2(a)(2).

The same conclusion follows if a business corporation is proposed. Although Rule 3.2(a)(2) expressly lists only partnerships and professional corporations as forbidden, both the text of the rule and the Reporter’s Notes make clear that Rule 3.2(a)(2) was intended to prohibit all business arrangements for providing legal services in which lawyers and non‑lawyers share proprietorship, thereby supporting the ban on dividing fees for legal services with a non‑lawyer [Rule 3.3(3)] and avoiding confusion of regulatory authority between the judicial and executive branches. The enumeration in the Rule of particular arrangements should not be construed as a limitation having the capacity to frustrate those objectives. Of course, the Bar Rules do not prohibit shared proprietorship in such entities as banks and insurance companies. Although those businesses may offer some of the same services as lawyers, typically they do not represent that the services are “legal” or that they are performed by lawyers, let alone lawyers having a proprietary interest in the corporation.

The Commission therefore concludes that when a business corporation represents that it will offer services traditionally performed by lawyers and that those services will be performed by lawyers who are held out as having a proprietary relationship to the business, Rule 3.2(a)(2) will prohibit any sharing of proprietorship with non‑lawyers, regardless how that shared proprietorship is accomplished. The materials furnished to the Commission clearly imply just such a relationship among the lawyers, the accountant and the corporation in the present case. Accordingly, the arrangement described to the Commission would violate Rule 3.2(a)(2). As the Reporter’s Notes to that Rule indicate, it does not prohibit lawyers from employing other professionals, such as accountants, or non‑professionals. We do not mean this interpretation of Rule 3.2(a)(2) to be exhaustive; other cases will be resolved as they are presented.


[1] Title 13A does not permit formation of a corporation under its umbrella for purposes expressly covered by some other incorporation statute. (13A M.R.S.A. Sec. 401.2.) Maine’s Professional Services Corporation Act authorizes formation of corporations to furnish services requiring licensure by the State, such as those of an attorney or accountant. (13 M.R.S.A. Sec. 703.2.) It follows that business corporations may not be organized to practice law or accountancy.

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