Today’s virtual society has changed how attorneys operate. The law firm’s files can be somewhere in the clouds. This allows easy access just about anywhere and eliminates law libraries, file cabinets and large amounts of physical storage. Attorneys may need a physical presence just not a large office space or staff. This leads to attorneys sharing office space with other unrelated law firms. This saves money for all parties by sharing receptionists, office supplies and operational expenses.
With many law practices occupying one space, law firms need to be careful as to not give the impression that all the attorneys in the space are one law firm. In many states all that is needed is the appearance to the general public that it is one law firm and you have created a partnership. A few years back the Ohio Supreme Court stated that if it walks like a duck, looks like a duck, it’s a duck. If your office gives the impression to a client that it is one law firm, you are opening yourself up to malpractice claims for work that you did not do, nor did you have any control over.
Client confidentiality is another problem. It is very important to make sure that all staff and attorneys know to keep client information separate and confidential. Also take great pains not to discuss client matters over the office water cooler.
Many attorney malpractice insurance policies limit exposure to these claims by having an office sharing exclusion endorsement attached to your law firm’s policy when the insurer is aware of office sharing. Even without an office sharing exclusion, many attorney malpractice policies have other provisions that effectively eliminate coverage. This can lead to having an attorney malpractice claim filed against your firm and having no coverage.
Lastly, protect your physical assets and general liability exposures. Make sure that your Business Owners Insurance and Workers Compensation Insurance properly protect your business personal property and your staff. Having one of the law firms with a Business Owners Policy to protect many unrelated law firms can lead to coverage gaps.
Steps that need to be taken:
1. Makes sure that your phones are answered in a manner that does not give the impression that all attorneys are part of one firm. Ideally, separate phone numbers for each law firm should be maintained. Even if you have just one receptionist, give the receptionist the ability to know which firm that the call is coming in for and to answer it specifically for that law firm.
2. All billing systems, trust accounts, and accounting systems need to be segregated and independently secured for each law firm. Do not send out joint billing statements.
3. It goes without saying that you should maintain separate letterhead, business cards and advertising.
4. Do not share websites with other law firms.
5. Building and office signage should make it clear that there are multiple law firms in the same space.
6. Engagement letters for all law firms in the space need to make it clear that separate law firms are occupying the same space.
7. If the office is going to share one computer system, make sure that there are security measures in place that keeps all client information separate and secure.
8. Physical client files need to be kept segregated and secure.
9. All staff and attorneys need to make sure that all clients know that there are separate law offices being maintained in the office space. Make sure attorney/client confidentiality is maintained.
10. One attorney malpractice policy for each law firm. Attorney Malpractice Insurance Policies are designed to be written on a per firm basis. Most insurers will not knowingly write or cover unrelated attorneys from unrelated firms under the same policy.
11. Business Owners Coverage needs to be endorsed to make sure that a law firm’s business personal property and general liability exposures are specifically insured. Likely each law firm will need its own policy.
12. Workers Compensation insurance, where needed, needs to be properly maintained for the entities that are employing the staff.
13. If possible, agreement needs to be reached by all firms that maintain shared office space that each firm carries the proper Attorney Malpractice Coverage, Business Owners Coverage, and Workers Compensation coverage.
Sharing office space can be a cost effective approach to keeping a lid on legal office expenses. Just make sure that your office sharing arrangement does not give the appearance of one large law firm. Remember if it walks like a duck, looks like a duck, it’s a duck. Don’t feed the duck.
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Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080