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self-study / Legal Ethics

Catch the client’s eye: The evolution of trade names in the law

Heather L. Rosing

Chief Financial Officer, Shareholder, Klinedinst PC

legal malpractice (specialist), business law

501 W Broadway Ste 600
San Diego , CA 92101

Phone: (619) 239-8131

Fax: (619) 238-8707

Email: hrosing@klinedinstlaw.com

Northwestern Univ School of Law

Heather serves as the chairperson of the Legal Ethics and Law Firm Risk Management Practice Group, as well as the Lawyers and Accountants Practice Group. She is an appointed advisor to the State Bar of California's Rules Revision Commission.

David M. Majchrzak

Shareholder, Klinedinst PC

Litigation, legal ethics

501 W Broadway Ste 600
San Diego , CA 92101-3584

Phone: (619) 239-8131

Fax: (619) 238-8707

Email: dmajchrzak@klinedinstlaw.com

Thomas Jefferson School of Law

David practices in the areas of legal ethics and litigation of professional liability claims.

So you are forming your new firm and it is time to give it a name. Alpha Legal, Justice Lawyers, Wisdom Attorneys at Law, Bravo Corporate Law, Shark Bite Legal, Defense on Demand, Equilibrium Partners, Applied Justice, Better Legal Services, Gavel Makers, The Legal Source, Pit Bull Advocates, White Horse Lawyers. The permutations are endless! Can a firm really use such a trade name? What are the rules? When does the name go too far?

A century ago, lawyer advertising was widely considered to be unprofessional and uncouth. In keeping with this, most law practices used the names of their principals, rather than the catchy names we see in the marketplace today. But much has changed in the last 100 years, with advertising and marketing becoming an integral component of the business model of many law firms. The profession stills operates, however, under strict professional rules and guidelines governing content, to ensure that potential clients are not tricked, confused, or misled. One still-debated issue is whether and what types of trade names attorneys and law firms may use to present their services to the public.

The issue recently came to a head in the state of New York. LawHQ LLC, a consumer law firm based in Utah, wanted to expand its services to New York, but was effectively barred from doing so by New York Rule of Professional Conduct 7.5(b), which prohibited it from operating under its Utah trade name in that state.

In January 2019, LawHQ filed a lawsuit in the United States District Court for the Southern District of New York, alleging that New York's ban on the use of trade names in law firm names violated the First Amendment. The complaint read as follows: "New York's trade-name ban serves no valid purpose. Nobody could claim that consumers would be better protected if trade names were prohibited in other industries -- if the law required Facebook, for example, to be called Mark Zuckerberg & Associates or Apple to be called Jobs & Wozniak. Law firms are no different. On the contrary, prohibiting firms from using trade names, if anything, makes their names more misleading by replacing memorable and easily distinguishable firm names with the names of partners who are often retired, deceased, or unlicensed in the state."

The plaintiff law firm sought a declaration that New York's rule violated the First Amendment, and sought to enjoin the disciplinary authorities in New York from enforcing it. The complaint stated that New York did not cite any evidence in support of its conclusion that the prohibition was necessary to prevent the public from being deceived about the identity, responsibility and status of those who use the name. LawHQ argued that there were no consumer complaints, disciplinary records, studies or empirical research showing "that even a single consumer has ever been misled by a law firm tradename," leading to its argument that the prohibition is unconstitutional.

Just recently, in the midst of this litigation, New York changed its rule. In June 2020, the court system's administrative board approved a revised rule allowing trade names, but prohibiting them from being false, deceptive or misleading, putting New York in the same category as many other states, including California, that have long allowed trade names under certain circumstances.

Many consider this to be a positive trend, giving lawyers more flexibility in naming their law firms. But others believe that it will have little effect, since a law firm's reputation is tied into that of its principals, leading many firms continuing to use the last names of the attorneys as the official appellation. And New York's new rule does have its limitations, including a specific prohibition on using the name of a nonlawyer in the firm name.

California has largely followed the path of the American Bar Association regarding its approach on trade names. In the late 1930s, the American Bar Association banned trade names in its Canons of Professional Ethics. Years later, in 1983, the ABA adopted the Model Rules of Professional Conduct, including Model Rule 7.5, which allowed trade names. This was the ABA standard until 2019, when Rule 7.5 was deleted, based on the general concept that Rule 7.1's prohibition on false and misleading advertising already addressed the issue of trade names.

California's approach to trade names was long embodied in Rule 1-400, before the California Supreme Court adopted a new set of rules consistent with the ABA model and numbering system on Nov. 1, 2018. The new Rule 7.5 provides that a lawyer shall not use a firm name, trade name or other professional designation that violates Rule 7.1, which in turn prohibits false and misleading communications. It also prohibits a lawyer in private practice from using trade names that implied a relationship with a government agency or with a public or charitable legal services organization. Finally, practitioners are not allowed to state or imply that the lawyer practices in or has a professional relationship with a law firm or other organization unless that is the fact.

In recommending Rule 7.5, the State Bar's Rules Revision Commission looked at a variety of factors. It examined such cases as Central Hudson Gas & Elec. v. Pub. Serv. Comm'n, 447 U.S. 557 (1980) and Alexander v. Cahill, 598 F.3d 79 (2d Cir. 2010), which recognize that the regulation of advertisements is constitutionally permitted only if such regulations are narrowly drawn to advance a substantial governmental interest. On the flipside, the commission considered the fact that the California Legislature, as a public protection measure, regulates attorney advertising, through the "Legal Advertising" section of the State Bar Act (Business and Professions Code Sections 6157 through 6159.2).

California does not have a manual on what names are acceptable under Rule 7.5, but there are several ethics opinions that give guidance. An older opinion, designated as Formal Opinion No. 1986-90, tackled the issue of whether a law office comprised of separate sole practitioners who share office space and overhead expenses may hold themselves out as a single entity. Under an analysis of former Rule 2-101, the answer is that attorneys who are neither partners nor principals in the same law corporation cannot advertise as a single entity without identifying themselves as individual practitioners.

Formal Opinion No. 2004-167 analyzed three interesting hypothetical situations: a private law firm called "Workers' Compensation Relief Center"; a lawyer with a private firm identifying herself on communications as "Joan Smith, Member of the City Council of the City of Oz"; and a former senator operating a law firm called "Senator Richard Jones and Associates." The opinion reiterated that an attorney may not use a firm trade name or other professional designation that implies, or has a tendency to confuse or mislead the public into believing, that the firm is connected to a governmental agency. An attorney may accurately describe a current governmental office held by the attorney in a firm resume or brochure, but may not use a current title in the firm name, letterhead or business card. The same analysis applies to a former governmental title that is not qualified with the use of the word "former" or "retired" or similar indication that the office is no longer held.

There are also bar association opinions that provide guidance. The Los Angeles County Bar Association issued Opinion 530 in 2018, addressing whether a law firm (professional corporation or limited liability partnership) misleads the public and violates the trade name rule if the firm's name includes the name of a former shareholder or partner who remains employed by the firm. LACBA concluded that the answer was no, noting that "there is little chance that members of the public could be misled by including a former shareholder's or partner's name in the name of a law corporation or an LLP." The opinion also discussed the widespread and accepted custom of retaining the name of partners and shareholders who retire or pass away, with a reference to the practice in the California Supreme Court opinion of Jacoby v. State Bar, 19 Cal. 3d 180 359 (1977). But such a practice is impermissible when an attorney has been disbarred or resigns with charges pending. Business and Professions Code Section 6132 makes it clear that a law firm must remove the name of such an attorney from the business name.

There are also important nuances for naming law corporations and limited liability partnerships. Law Corporation Rules of the State Bar of California, Rule 3.154 provides that a "law corporation may practice law only under the name registered with the secretary of state and approved by the State Bar. Use of the name must comply with requirements of the Rules of Professional Conduct." The Limited Liability Partnership Rules of the State Bar provide for the same in Rule 3.174(B). Moreover, the name under which the law corporation intends to practice law must include a designation of corporate existence such as "Professional Corporation," "Prof. Corp.," "Corporation," "Corp," "Incorporated," or "Inc." (Rule 3.152(B)). The name proposed for the limited liability partnership must include "Registered Limited Liability Partnership," "Limited Liability Partnership," "L.L.P.," "LLP," "R.L.L.P." or "RLLP" (Rule 3.171(C)). So, while these entities may arguably initially form using a trade name, they cannot operate under a trade name alias.

The clear trend across the country has been to allow lawyers to use trade names. Only a few states continue to prohibit it outright. Simple searches on the Internet reveal lawyers who have adopted creative and catchy names designed to attract clientele. Nevertheless, practitioners must be careful in their advertising and marketing ventures, including the adoption of trade names, given the strictures found in the Rules of Professional Conduct and State Bar Act. 

#816

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