On Risk Management: Avoiding the Pitfalls of Office Sharing
By Kay G. Kenny
The Daily Record, December 4, 2000

Office sharing can be the best of both worlds for a solo practitioner or two-attorney firm. The arrangement maintains the simplicity inherent in a small practice while allowing for reduced overhead, less isolation, and an environment where others are available to discuss strategy and issues in new cases. Office sharing also allows networking opportunities that often lead to referrals.

However, it is important to avoid the pitfalls that can arise when you share office space with someone other than a partner or employee — and to know which risks your Lawyers Professional Liability Insurance policy will cover.

Professional liability policy

A natural starting place for this discussion should be the liability policy’s definitions, endorsements and/or exclusions. Your policy may contain an exclusion in words substantially as follows:

This insurance does not apply to any claim made against an insured if such a claim arises solely out of an act, error or omission...of a lawyer with whom the insured shares office space or common facilities, if that lawyer is not also an insured under the policy.

A policy with such an exclusion would not provide coverage or a defense to claims brought against you solely on a vicarious liability basis for the alleged negligence of attorneys with whom you share office space. If the lawyer whose negligence gives rise to the claim happens to be insured with the same company as yours, the exclusion is inapplicable.

Even if your insurance does not have an exclusion for office-sharing arrangements, all new business applications ask about shared office space with attorneys not listed on the application. Or, a renewal application will ask a whether there are any office-sharing arrangements that were not previously disclosed, and if so, require completion of an Office Sharing Associates Supplemental Application.

The supplement normally asks whether you share “(1) letterhead; (2) professional employees such as paralegals or law clerks; (3) office signs or advertising materials that combine your names; (4) telephone lines and how are they answered?”

Most insurers require a copy of the applicant’s letterhead along with new business and renewal applications, so they know exactly whom they are insuring under an individual professional liability policy.

Claims frequency

According to the Malpractice Data Center of the American Bar Association, statistics show that the majority of malpractice claims are made against solo practitioners and firms of less than five lawyers. This higher claims frequency raises the risk of exposure from vicarious liability in office-sharing arrangements. If you share offices with others in the high-claims demographic, it’s important to take reasonable steps to avoid looking like you’re part of the same law firm.

Ask yourself these questions about your practice as a sole practitioner in an office-sharing arrangement:

  • Is it clear to clients and prospective clients who enter the suite that the lawyers have separate practices, or does the entrance suggest a firm?

  • When the telephone is answered, how are the lawyers identified? Are you made to sound like a member of a firm?

  • Are your files stored in a common area and in plain view of clients when they visit the office?

  • Is the secretarial staff grouped in a common area and is the arrangement obvious to clients when they visit?

  • Do your stationary and business cards identify you as a sole practitioner or a member of a group?

  • Does your advertising suggest you are practicing as a solo or in a group?

  • Do you refer clients to other lawyers with whom you share space?

  • Do you accept a referral fee when you refer clients to others in the office?

    • Reducing the risk

    If you want to share space with another lawyer but do not want to be considered a firm for vicarious liability purposes, following these guidelines may help:

    Agreement. Use a written office-sharing agreement. This will help ensure that everyone in the space is cognizant of the pitfalls and will take steps to avoid them.

    Stationery. Make sure your business cards, letterhead and pleading paper are separate from others who share the office. List only your name or your firm’s name. The name of your office-sharing mate should not be on your business card, letterhead or pleading paper.

    Signage. Make sure that all signs — such as those posted on the office door, building directory and building exterior — clearly represent the relationship between you and the other lawyers. For example, if you are a sole practitioner sharing office space with a law firm, list your name separately. You can signify this separation by placing a line between the firm’s name and your name. Include the phrase “sole practitioner” after your name, if possible.

    Telephones. Have the receptionist answer the phone in a manner that conveys separation from the other law firm. For example, answering the phone “Law Offices of Jane Doe...” is an effective way of reminding the clients that you are separate from “Smith and Jones,” the firm with whom you share space. Using separate phone numbers makes this easy to do and is less confusing than having one phone numbered that is answered, “Law Offices...”

    Associating. If you are going to have your office-sharing mate help you on a case, get your client’s written consent first, just as you would if you were to associate an attorney who did not work at the end of the hallway. If you are going to split fees, be sure to follow the appropriate rules.

    Fire-wall. Review office procedures for files, mail handling, telephone messages and faxes, to make sure client confidentiality is maintained.

    These simple steps will greatly reduce the risk that a claim from someone else’s client will succeed against you.

    Conclusion

    Position yourself so you are not surprised by a non-client who asserts a claim against you for services you did not provide and for which you did not envision potential liability. If you choose to practice solo, be sure that fact is conveyed clearly to the world by the way in which you hold yourself out to the public. Or, consider the simple option whereby all who share space insure with the same carrier so that, at least you all have matching coverage when the unexpected occurs.

    Resources

    "Want to Share Space Without Liability?" - Malpractice Alert!, OBLIC, October 1999.
    Legal Mutual Liability Insurance Society of Maryland - Application for Lawyers Professional Liability New Business - MLPL-159, January 2000; Renewal Application MLPL-183, January 2000; Office Sharing Associates Supplemental Application, MLPL-185, October 1989.
    "Loss Prevention Self Audit" - AIM, revised 1992.
    "Office Sharing: Minimizing Vicarious Liability" - by Dennis K. Larry, Esq., The Risk Manager, Florida Lawyers Mutual Insurance Company, Spring 1999.
    "Want to Share Space Without Liability Guidelines" - In Brief, Oregon State Bar Professional Liability, December 1999.

    Kay G. Kenny is Assistant General Manager of the Legal Mutual Liability Insurance Society of Maryland. This is the fifth in a series of articles designed to minimize the likelihood of being sued for legal malpractice. The material presented does not establish, report or create the standard of care for attorneys, is not legal advice and does not represent a complete analysis of the topics. Readers should conduct their own appropriate research.

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