"Esq." vs. "P.C."
William December Starr
Recently someone sent me email asking me:
> Actually, what I'd really like to know is what the distinctions are
> between the various titles attorneys use (e.g., "Esq.," "P.C.," and
> anything else there may be...).
My answer to that person follows; I'm posting it here (a) in case
anybody else's interested and (b) so that I can get flamed at if I got
it wrong...
"Esq." is "Esquire," which is a pretentious title that some lawyers like
to use when referring to themselves and that most lawyers use when
referring formally to other lawyers, just in case the other lawyer in
question is one of the ones who'd get upset if you didn't stick an
"Esq." after his name.
"P.C." is another thing entirely; it stands for (I think) "Professional
Corporation" and is pretty much the legal equivalent of "Inc." -- it
indicates that the thing that precedes it is a corporation rather than a
person. The distinction between a "P.C." and an "Inc." is that under
the laws of some (most?) states, if a corporation is formed for the
purpose of providing services in certain professions that are strictly
regulated/licensed by the state (e.g., law, medicine), only licensed
practitioners of that profession may serve as officers or directors of
the corporation, thus a "Professional Corporation." (In a normal
corporation, of course, just about anybody may so serve.)
Thus, "Perry Mason, Esq." is a person who's a lawyer, while "The Law
Offices of Perry Mason, P.C." is a corporate business formed for the
purpose of providing Mr. Mason's legal services.
-- William December Starr <wds...@world.std.com>
Larry Kolodney
>"P.C." is another thing entirely; it stands for (I think) "Professional
>Corporation" and is pretty much the legal equivalent of "Inc." -- it
>indicates that the thing that precedes it is a corporation rather than a
>person. The distinction between a "P.C." and an "Inc." is that under
>the laws of some (most?) states, if a corporation is formed for the
>purpose of providing services in certain professions that are strictly
>regulated/licensed by the state (e.g., law, medicine), only licensed
>practitioners of that profession may serve as officers or directors of
>the corporation, thus a "Professional Corporation." (In a normal
>corporation, of course, just about anybody may so serve.)
The other very important difference between an "Inc." and a "P.C." is
that in an "Inc." the shareholders are, for virtually all purposes,
shielded against liability for the debts of the corporation. By
contrast, the shareholders of a "P.C.", 1) must be of the profession
in question (i.e. non lawyers cannot be shareholders in a legal P.C.)
and 2) are personally liable for malpractice committed by the P.C.
(and possibly for other types of corporate liabilities, I'm not sure).
I think the main advantage of a P.C. is for tax purposes, but I'm not
sure either.
--
larry kolodney:(l...@panix.com):
&#+!*&$+!?&%+!*&^_)*&#%)*&^%#+&&^_)*&#%)*&^%#+&&#+!*&$+!?&%+!*&^_)*&#%)
Coming to you from Brooklyn, NY, where the weak are killed and eaten.
Bruce Hayden
>Recently someone sent me email asking me:
>> Actually, what I'd really like to know is what the distinctions are
>> between the various titles attorneys use (e.g., "Esq.," "P.C.," and
>> anything else there may be...).
>My answer to that person follows; I'm posting it here (a) in case
>anybody else's interested and (b) so that I can get flamed at if I got
>it wrong...
>"Esq." is "Esquire," which is a pretentious title that some lawyers like
>to use when referring to themselves and that most lawyers use when
>referring formally to other lawyers, just in case the other lawyer in
>question is one of the ones who'd get upset if you didn't stick an
>"Esq." after his name.
It may be pretentious - but it is probably better than "Dr."
which is the alternative - and which is used in a number of
other countries.
>"P.C." is another thing entirely; it stands for (I think) "Professional
>Corporation" and is pretty much the legal equivalent of "Inc." -- it
>indicates that the thing that precedes it is a corporation rather than a
>person. The distinction between a "P.C." and an "Inc." is that under
>the laws of some (most?) states, if a corporation is formed for the
>purpose of providing services in certain professions that are strictly
>regulated/licensed by the state (e.g., law, medicine), only licensed
>practitioners of that profession may serve as officers or directors of
>the corporation, thus a "Professional Corporation." (In a normal
>corporation, of course, just about anybody may so serve.)
In Colorado there are two levels of regulation of P.C.'s -
first by the Secretary of State which requires that certain
things be in the Articles (see above), and then by the Supreme
Court, which oversees P.C.'s as it does any other attorney / endeaver.
Professional Corporations are (obviously) formed primarily for their
limited liability. Unfortunately, the limit is not absolute as far
as the practice of law. First, one is still personally liable for
one's own practice. Secondly, (under Colo. law) one's liability for
the other attys in one's firm is limited to the difference between
the statutory limits (100k per atty, cumulative) and the amount of
malpractice insurance carried.
The other reason for using a P.C. is for tax reasons. Sub-C corps
are becoming less and less attractive as Slick and his cronies
try to punish the "rich" (corporate tax rates keep going up).
The alternative are Sub-S corps, which essentially pass income
through to the taxpayer, being taxed essentially as a partnership.
This has a couple of advantages. First, you can possibly deduct
more things (more easily) as a corp than as an individual, and
secondly, any income received as a dividend (instead of as
salary) is not subject to FICA, medicare, etc. - just federal
and state income taxes).
Finally, the rage this year in Colorado, and I presume in a couple
of other states is what is called a Limited Liability Corporation
(LLC). I do not know the difference between LLC's and PC's yet,
(and should) but believe that they are taxed as partnerships,
but don't have the Sub-S restrictions (such as 35 stockholders, etc)
>Thus, "Perry Mason, Esq." is a person who's a lawyer, while "The Law
>Offices of Perry Mason, P.C." is a corporate business formed for the
>purpose of providing Mr. Mason's legal services.
But as pointed out above, the advantages of a PC are greater the
larger the firm. I believe that the only real advantages to one
for a sole practioner are essentially tax related (and not that
great). So, unless Perry Mason has some associates (what about
respondeat superior? even with the PC) or partners, he may be
less likley to use this form than Dewey Cheatem and Howe, P.C.
Obviously this is not legal advice, and at least the attorneys
reading and thinking of incorporating are smart enough to either
consult an expert or do their own research. Anyone else should
get their own legal advice before depending on any of the above.
Bruce E. Hayden 1720 South Bellaire Street
bha...@csn.org 1100 Colorado Tower Bldg.
(303) 758-8400 Denver, Colorado 80222
Bruce Hayden
>In <CG69y...@world.std.com> wds...@world.std.com (William December Starr) writes:
>>"P.C." is another thing entirely; it stands for (I think) "Professional
>>Corporation" and is pretty much the legal equivalent of "Inc." -- it
>>indicates that the thing that precedes it is a corporation rather than a
>>person. The distinction between a "P.C." and an "Inc." is that under
>>the laws of some (most?) states, if a corporation is formed for the
>>purpose of providing services in certain professions that are strictly
>>regulated/licensed by the state (e.g., law, medicine), only licensed
>>practitioners of that profession may serve as officers or directors of
>>the corporation, thus a "Professional Corporation." (In a normal
>>corporation, of course, just about anybody may so serve.)
>The other very important difference between an "Inc." and a "P.C." is
>that in an "Inc." the shareholders are, for virtually all purposes,
>shielded against liability for the debts of the corporation. By
>contrast, the shareholders of a "P.C.", 1) must be of the profession
>in question (i.e. non lawyers cannot be shareholders in a legal P.C.)
>and 2) are personally liable for malpractice committed by the P.C.
>(and possibly for other types of corporate liabilities, I'm not sure).
At least here in Colorado there is an unstated distinction between
one's own malpractice and that of the other attys in one's firm.
One cannot shield one's self from a malpractice claim for one's
own malpractice, just from the malpractice of the other (unsupervised
by you?) attorneys in your firm.
>I think the main advantage of a P.C. is for tax purposes, but I'm not
>sure either.
See my previous post. The tax advantages depend on one's individual
circumstances.
Joe Corcoran
In article 752854491@teal, bha...@teal.csn.org (Bruce Hayden) writes:
>wds...@world.std.com (William December Starr) writes:
>
>>"P.C." is another thing entirely; it stands for (I think) "Professional
>>Corporation" and is pretty much the legal equivalent of "Inc." -- it
>>indicates that the thing that precedes it is a corporation rather than a
>>person. The distinction between a "P.C." and an "Inc." is that under
>>the laws of some (most?) states, if a corporation is formed for the
>>purpose of providing services in certain professions that are strictly
>>regulated/licensed by the state (e.g., law, medicine), only licensed
>>practitioners of that profession may serve as officers or directors of
>>the corporation, thus a "Professional Corporation." (In a normal
>>corporation, of course, just about anybody may so serve.)
>Professional Corporations are (obviously) formed primarily for their
>limited liability. Unfortunately, the limit is not absolute as far
>as the practice of law. First, one is still personally liable for
>one's own practice. Secondly, (under Colo. law) one's liability for
>the other attys in one's firm is limited to the difference between
>the statutory limits (100k per atty, cumulative) and the amount of
>malpractice insurance carried.
>
>The other reason for using a P.C. is for tax reasons. Sub-C corps
>are becoming less and less attractive as Slick and his cronies
>try to punish the "rich" (corporate tax rates keep going up).
>The alternative are Sub-S corps, which essentially pass income
>through to the taxpayer, being taxed essentially as a partnership.
>This has a couple of advantages. First, you can possibly deduct
>more things (more easily) as a corp than as an individual, and
>secondly, any income received as a dividend (instead of as
>salary) is not subject to FICA, medicare, etc. - just federal
>and state income taxes).
Something that has been missing from this line of posts is that in many
states, a law firm cannot be incorporated (under general business corporate statutes)
for _any reason_ due to ethical and professional constraints. There are many reasons
for this restriction, the strongest being that the professional rules of conduct
value the professional independence of lawyers and do not want law firms to
possess the qualities of standard business corporations (i.e. making legal
decisions with an eye to shareholders rather than to the best interests of the
client. Of course many lawfirms are in fact run like corporations anyway.)
Thus it is not a decision of "Incorporation" versus "Professional corporation"
because law firms simply cannot incorporate. The decision to be made is
between traditional partnership versus professional corporation (and now there
are L.L.P.s). I should emphasize that a professional corporation is not a
scaled down corporation, rather it is an upscaled partnership (offering some
of the limited protections described above). Professional Corporations are not at
all like standard corporations.
Before changes in the tax code, an attorney could form a P.C. and put half of
her salary into a retirement fund and deduct every cent from her tax liability.
But the code has since changed, and now there are only very limited tax advantages.
Texas, like Colorado, is experiencing the LLC craze. However, in Texas, LLCs cannot
be formed by law firms (for the reasons alluded to above). There is, however, a
Limited Liability Partnership (LLP) which law firms can utilize. This LLP
is the form of choice for many Texas law firms.
Joe Corcoran
University of Texas Law School
Robert J. Keller
>The other very important difference between an "Inc." and a "P.C." is
>that in an "Inc." the shareholders are, for virtually all purposes,
>shielded against liability for the debts of the corporation. By
>contrast, the shareholders of a "P.C.", 1) must be of the profession
>in question (i.e. non lawyers cannot be shareholders in a legal P.C.)
>and 2) are personally liable for malpractice committed by the P.C.
>(and possibly for other types of corporate liabilities, I'm not sure).
I'm not sure how it works in other states, but my understanding of the
situation in Washington, D.C. (where I am admitted) is that the PC status
can shield me personally from liability for the actions of other members
of the firm (subject to adquate disclosure/understanding of this fact by
the clients) but does not shield me from personal libility for my _own_
actions. Thus, you get _some_ limited personal liability by PCing, but
not to the same extent that INCs enjoy.
>I think the main advantage of a P.C. is for tax purposes, but
I'm not >sure either.
That is correct, except the advantages depend on the situation. Again
using D.C. as an example, a single flat tax rate applies to PCs at all
income levels, while there are phased in brackets that increase with
corporate income for normal INCs. Thus, being a PC has a tax
DISadvantage until you reach a certain income level.
--
Bob Keller <r...@telcomlaw.win.net> or <r...@access.digex.net>
Arthur Rubin
>"P.C." is another thing entirely; it stands for (I think) "Professional
>Corporation" and is pretty much the legal equivalent of "Inc." -- it
>indicates that the thing that precedes it is a corporation rather than a
>person. The distinction between a "P.C." and an "Inc." is that under
>the laws of some (most?) states, if a corporation is formed for the
>purpose of providing services in certain professions that are strictly
>regulated/licensed by the state (e.g., law, medicine), only licensed
>practitioners of that profession may serve as officers or directors of
>the corporation, thus a "Professional Corporation." (In a normal
>corporation, of course, just about anybody may so serve.)
I don't recall "P.C." "P.S.C" (personal/professional services corporation)
means, to the best of my recollection, a corporation whose revenue is
almost entirely (95%?) derived from services of the member/officers. The
advantage is, as noted above, that some state licensing organizations will
license the corporation if all member/officers are licensed. The
disadvantage (whether you ask for it or not) is the corporate income is
taxed (federally) at a straight 35% (under current law --I'd have to
research what it will be next year), as opposed to the normal corporate
progressive tax rates ending at 34%.
--
Arthur L. Rubin: a_r...@dsg4.dse.beckman.com (work) Beckman Instruments/Brea
216-...@mcimail.com 7070...@compuserve.com art...@pnet01.cts.com (personal)
My opinions are my own, and do not represent those of my employer.
Bruce Hayden
>states, a law firm cannot be incorporated (under general business corporate statutes)
>for _any reason_ due to ethical and professional constraints. There are many reasons
>for this restriction, the strongest being that the professional rules of conduct
>value the professional independence of lawyers and do not want law firms to
>possess the qualities of standard business corporations (i.e. making legal
>decisions with an eye to shareholders rather than to the best interests of the
>client. Of course many lawfirms are in fact run like corporations anyway.)
What I think you are saying here is that PC's are special statutory animals
due to those professional and ethical constraints. As I stated before,
in Colorado here there are specific statutory requirements for a PC,
including what you must have in the bylaws, who can be a stockholder,
or officer, etc. These are checked by both the Secretary of STate's
office and the Supreme Court (office) when you are incorporating.
The reason for all of this is as you say - in order to maintain
independance, and to make sure that attys do not shield themselves
from their own negligence (or any other torts).
>Thus it is not a decision of "Incorporation" versus "Professional corporation"
>because law firms simply cannot incorporate. The decision to be made is
>between traditional partnership versus professional corporation (and now there
>are L.L.P.s). I should emphasize that a professional corporation is not a
>scaled down corporation, rather it is an upscaled partnership (offering some
Except of course for such inconveniences as articles, bylawys,
director and stockholder meetings, etc. In other words, at
least here, a P.C. is a corporation, just a special type
of corporation, with very specific requirements, in
particular in the articles of incorporation (for example,
only attys can be stockholders, that liability isn't
that limited, etc.). And of course if you don't follow
the formalities, if you are ever sued for malpractice,
the plaintiff will of course try to pierce the corporate
veil by showing that the PC is you alter-ego.
Bruce Hayden
>l...@panix.com (Larry Kolodney) writes:
>>The other very important difference between an "Inc." and a "P.C." is
>>that in an "Inc." the shareholders are, for virtually all purposes,
>>shielded against liability for the debts of the corporation. By
>>contrast, the shareholders of a "P.C.", 1) must be of the profession
>>in question (i.e. non lawyers cannot be shareholders in a legal P.C.)
>>and 2) are personally liable for malpractice committed by the P.C.
>>(and possibly for other types of corporate liabilities, I'm not sure).
>I'm not sure how it works in other states, but my understanding of the
>situation in Washington, D.C. (where I am admitted) is that the PC status
>can shield me personally from liability for the actions of other members
>of the firm (subject to adquate disclosure/understanding of this fact by
>the clients) but does not shield me from personal libility for my _own_
>actions. Thus, you get _some_ limited personal liability by PCing, but
>not to the same extent that INCs enjoy.
That is the case in Colorado, with the exception that you only
get the limited liability if you carry the statutory minimum
amount of M.P> insurance.
>>I think the main advantage of a P.C. is for tax purposes, but
>I'm not >sure either.
>That is correct, except the advantages depend on the situation. Again
>using D.C. as an example, a single flat tax rate applies to PCs at all
>income levels, while there are phased in brackets that increase with
>corporate income for normal INCs. Thus, being a PC has a tax
>DISadvantage until you reach a certain income level.
That is one reason to use a Sub-S corp. Also, the new craze -
LLC's (which are now legal I believe for Attys in Colo.) are
taxed as partnerships, but have some of the limited liablility
advantages of a corp.