Even if you're not practicing, you should remain an active member of your profession.

I am a senior lawyer and wish to stop practicing. Should I elect retired status? What do you advise?

Samuel C. Stretton.

One should never let their law license lapse. Sometimes, as a lawyer gets older, they forget how hard they worked to get a law degree and law license. But in this writer's mind there is no good reason to allow one's law license to lapse even if they choose no longer to practice. Too many times, lawyers have let their license lapse or be placed on inactive status. Then a case comes their way and they want to get involved again. But three years have passed and they have to apply for reinstatement and it takes some time to do that. Other lawyers let their licenses lapse and are put on inactive status, but then get involved in giving advice periodically or become in-house corporate counsel. Suddenly they are faced with an unauthorized practice of law charge since they allowed their law license to be placed on inactive status.

A retired lawyer might have a new client or a former client come in with an excellent personal injury case where there might be a large recovery. If the lawyer is on inactive status when they refer the case to a lawyer to represent the client, the inactive status lawyer or retired status lawyer can't get a referral fee. It's easy to maintain one's law license. There is an annual fee of approximately $225 each year which can go up or down depending on the financial system of the Unified Judicial System. The lawyer is also required to take 12 hours of CLE, two of which must be ethics. The cost is minimal. Anyone who has ever practiced law should want to keep up with the law even if they are not practicing. Their intellectual curiosity and general knowledge base would be enhanced by continuing to take the CLEs even if they no longer wish to practice law. In other words, there is no good reason not to keep one's law license active.

Any lawyer who does retire, should protect themselves by keeping a tail on their legal malpractice policy if they had one. Obviously, it's a good idea always to have professional liability coverage, and if one retires, it's still not a bad idea to maintain it at least for the time period for the last case's statute of limitations.

Pennsylvania Rules of Disciplinary Enforcement, Rule 217 deal with formerly admitted attorneys. Formerly admitted attorneys include not only those who are suspended or disbarred, but also those who place themselves on inactive status or administrative suspension. Any lawyer who places themselves on inactive or retired status must notify all clients. Formerly admitted attorneys can no longer practice law and if they want to work as a paralegal, they are limited under Pennsylvania Rules of Disciplinary Enforcement, Rule 217(j). A formerly admitted attorney cannot do what a normal paralegal can do. A formerly admitted attorney must register if they are acting as a paralegal and cannot work with former clients or in the same office that they practiced nor can they have direct client contact on substantive matters, among other issues. A formerly admitted attorney also going inactive status cannot continue to use checks or anything that have the word “IOLTA” or “attorney” or “lawyer” or “esquire.” It should be noted under Rule 217, titled “Formerly Admitted Attorneys,” there is no sub-status of retired. But under Rule 219, titled “The Annual Registration of Attorneys,” under Rule 219(b), retired attorneys are exempt from paying the annual registration fee. An inactive attorney normally has to continue to pay a reduced fee. Under Rule of Disciplinary Enforcement 219(h)(3), there are requirements for placing one's self on retired status. For a lawyer to go on retired status, they must either deliver or mail to the attorney registration office an application for retirement and payment of any fees. After the application is filed, the Pennsylvania Supreme Court shall enter an order transferring the attorney to retired status and the lawyer is no longer eligible to practice law. The retired lawyer no longer has to pay the annual fee. An attorney on retired status for three years or more may be reinstated to the practice of law in the same way as an inactive attorney, that is by filing an administrative reinstatement petition. But the retired attorney then would have to pay the annual fee for the three most recent years in which they were retired. Under Subsection 219(j), the inactive status is discussed. An inactive lawyer is removed from the active lawyer role. That person has to apply for reinstatement if they are inactive for more than three years. But an inactive lawyer still has to pay an annual fee of $100.

Unfortunately, a lawyer on inactive status is classified as being on administrative suspension. That sounds very negative, which might cause someone to believe the lawyer did something wrong.

There seems to be a lot of paperwork and effort to have one go on inactive or retired status. The only advantage is the inactive or retired lawyer does not have to take their CLEs. A retired lawyer has no annual fee and an inactive lawyer has a $100 annual fee. It seems very unwise to put one's self on inactive status when for $225 a year for an annual fee and 12 CLE hours, a lawyer can maintain active status even if they don't want to practice anymore.

There is some question as to whether or not a retired lawyer could apply for reinstatement to active status at some point. The attorney registration office when called by telephone suggested that they could not. But the Rules of Disciplinary Enforcement do suggest that a lawyer can always reapply from the retired status if they let their license lapse in the retired status for three years, as long as they pay the past three years of annual fees.

But if someone has a modicum of income, it is a very wise decision to maintain their law license in its active status. One's law license is more than just an occupation. It is a way of life and a profession. It would do a lawyer well to remain an active member of their profession even if they are not practicing. To be an active member to the end in the legal profession is a very noble way to complete one's professional career.

Lawyer's names cannot appear on the letterhead as partners if they do not have an equity interest.

I am a practicing lawyer and have several associates who have worked very hard for me. I am a controlling type so I don't want to give them equity, but I want their names to be on the letterhead. Can I do that?

The answer in Pennsylvania appears to be no. Under Pennsylvania Rules of Disciplinary Enforcement, Rule 7.5, one cannot list people as partners or shareholders if they don't have an equity interest. This answer is found in Rule 7.5(d): “A lawyer shall not state or imply that they practice in a partnership or other organization unless that is the fact.”

The comment to that rule notes as follows: “With regard to Paragraph D, lawyers sharing office facilities, but who are not, in fact, associated with each other in a law firm, may not denominate themselves as, for example, Smith & Jones, for that title suggests they are practicing together in a firm.”

For a lawyer to practice in a partnership or in a professional corporation, they have to have equity or shares. Pennsylvania law is fairly clear on that. Therefore, one cannot list their nonequity associates on the letterhead because that would imply, they are partners in the legal sense, which they would not be.

This Rule 7.5 went into effect in 1987, but in the early 1980s the chief disciplinary counsel wrote a letter warning lawyers not to hold themselves out as partners if they were not. There was in those days, and maybe there still is, many law offices where people would share a secretary, be in the same suite, and have a lot of cross-referrals. The lawyers would have the name of the firm as X, Y and Z when, in fact, they were all separate law firms just sharing expenses. That was misleading to many clients. Sometimes clients don't want to go to a solo practitioner but want to go to someone who is in a law firm where there are back-up lawyers. Rule 7.5(b) was the result of concern to correct that confusion. The bottom-line answer is: One has to have equity in the traditional partnership sense by law or the traditional shareholder sense or else they cannot be on the letterhead as partners or shareholders.

Chester County lawyer Samuel C. Stretton has practiced in the area of legal and judicial ethics for more than 35 years. He welcomes questions and comments from readers. If you have a question, call Stretton directly at 610-696-4243 or write to him at 301 S. High St. P.O. Box 3231, West Chester, Pennsylvania, 19381.