A Decision to Share Office Space Can Be a Great One, Except When It Isn’t.
Some attorneys prefer working in an office share setting. And look, I get it. The reasons for doing so can be compelling. There’s the savings on overhead, the presence of others who can provide personal and professional support, the opportunity for cross referrals, and the list goes on. While I have no desire to quash anyone’s desire to work in such a setting, I do feel compelled to share a story; because sometimes it’s just too easy to minimize and even ignore the possibility that something could go seriously wrong.
Three solo attorneys, who had practiced together in an office share setting for years, decided to formalize their relationship and form a firm. Unfortunately, the arrangement proved to be short lived due to diligence issues coupled with multiple disciplinary complaints involving one of the partners and financial struggles with a second partner. The firm was dissolved and the three returned to their former office share arrangement. Not long after, one of these attorneys was sued for malpractice. It was then that the following came to light. Two of the three attorneys had decided to practice without malpractice insurance, including the one who had been sued.
Now, because the pockets of the attorney who was sued were basically empty, the judge in this case allowed the plaintiff to amend the complaint to include the other two suitemates, the prior firm, and a fictitious firm. And this is where it gets interesting. The attorney who was originally sued had been using letterhead, writing checks, and filing pleadings all under a fictitious firm name, which just happened to be the last names of the three attorneys sharing the space. Making matters worse, due to the eventual success of the initial malpractice claim additional claims followed.
Again, my purpose in sharing this story is not to try and convince attorneys to never share office space. Office share settings are commonplace and can be quite beneficial for all involved. My intent is simply to encourage any attorney who is already in an office share setting, or might consider doing so at some point in the future, to focus on more than just the benefits of the setting. Sometimes something crazy and unexpected happens and the consequences can be severe.
Entering into or staying in an office share setting shouldn’t be just about the money, the convenience, the space itself, or the presence of others. Know who you are about to enter into a business relationship with. Don’t run with informal verbal agreements. You do need to put everything in writing. Most importantly, make sure everyone in the space maintains malpractice coverage. If there’s any big takeaway from the story above, it’s that.
Authored by: Mark Bassingthwaighte, Risk Manager
Since 1998, Mark Bassingthwaighte, Esq. has been a Risk Manager with ALPS, an attorney’s professional liability insurance carrier. In his tenure with the company, Mr. Bassingthwaighte has conducted over 1200 law firm risk management assessment visits, presented over 550 continuing legal education seminars throughout the United States, and written extensively on risk management, ethics, and technology. Mr. Bassingthwaighte is a member of the State Bar of Montana as well as the American Bar Association where he currently sits on the ABA Center for Professional Responsibility’s Conference Planning Committee. He received his J.D. from Drake University Law School.