(1) An agreement by a lawyer with the lawyer’s firm, partner, or associate may provide for the payment of money, over a reasonable period of time after the lawyer’s death, to the lawyer’s estate or to one or more specified persons;
(2) A lawyer who undertakes to complete unfinished legal business of a deceased lawyer may pay to the estate of the deceased lawyer that proportion of the total compensation which fairly represents the services rendered by the deceased lawyer;
(3) A lawyer or law firm may include nonlawyer employees in a compensation or retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement; and
(4) Sharing of fees is permitted in a partnership or other form of organization which meets the requirements of paragraph (b).
(b) A lawyer may practice law in a partnership or other form of organization in which a financial interest is held or managerial authority is exercised by an individual nonlawyer who performs professional services which assist the organization in providing legal services to clients, but only if:
(1) The partnership or organization has as its sole purpose providing legal services to clients;
(2) All persons having such managerial authority or holding a financial interest undertake to abide by these Rules of Professional Conduct;
(3) The lawyers who have a financial interest or managerial authority in the partnership or organization undertake to be responsible for the nonlawyer participants to the same extent as if nonlawyer participants were lawyers under Rule 5.1;
(4) The foregoing conditions are set forth in writing.
(c) A lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer’s professional judgment in rendering such legal services.
Comment
[1] The provisions of this Rule express traditional
limitations on sharing fees with nonlawyers. (On sharing fees among
lawyers not in the same firm, see Rule 1.5(e).) These limitations are
to protect the lawyer’s professional independence of judgment. Where
someone other than the client pays the lawyer’s fee or salary, or recommends
employment of the lawyer, that arrangement does not modify the lawyer’s
obligation to the client. As stated in paragraph (c), such arrangements
should not interfere with the lawyer’s professional judgment.
[2] Traditionally, the canons of legal ethics and
disciplinary rules prohibited lawyers from practicing law in a partnership
that includes nonlawyers or in any other organization where a nonlawyer
is a shareholder, director, or officer. Notwithstanding these strictures,
the profession implicitly recognized exceptions for lawyers who work
for corporate law departments, insurance companies, and legal service
organizations.
[3] As the demand increased for a broad range of professional
services from a single source, lawyers employed professionals from other
disciplines to work for them. So long as the nonlawyers remained employees
of the lawyers, these relationships did not violate the disciplinary
rules. However, when lawyers and nonlawyers considered forming partnerships
and professional corporations to provide a combination of legal and
other services to the public, they faced serious obstacles under the
former rules.
[4] This Rule rejects an absolute prohibition against
lawyers and nonlawyers joining together to provide collaborative services,
but continues to impose traditional ethical requirements with respect
to the organization thus created. Thus, a lawyer may practice law in
an organization where nonlawyers hold a financial interest or exercise
managerial authority, but only if the conditions set forth in subparagraphs
(b)(1), (b)(2), and (b)(3) are satisfied, and pursuant to subparagraph
(b)(4), satisfaction of these conditions is set forth in a written instrument.
The requirement of a writing helps ensure that these important conditions
are not overlooked in establishing the organizational structure of entities
in which nonlawyers enjoy an ownership or managerial role equivalent
to that of a partner in a traditional law firm.
[5] Nonlawyer participants under Rule 5.4 ought not
be confused with nonlawyer assistants under Rule 5.3. Nonlawyer participants
are persons having managerial authority or financial interests in organizations
that provide legal services. Within such organizations, lawyers with
financial interests or managerial authority are held responsible for
ethical misconduct by nonlawyer participants about which the lawyers
know or reasonably should know. This is the same standard of liability
contemplated by Rule 5.1, regarding the responsibilities of lawyers
with direct supervisory authority over other lawyers.
[6] Nonlawyer assistants under Rule 5.3 do not have
managerial authority or financial interests in the organization. Lawyers
having direct supervisory authority over nonlawyer assistants are held
responsible only for ethical misconduct by assistants about which the
lawyers actually know.
[7] As the introductory portion of paragraph (b) makes
clear, the purpose of liberalizing the rules regarding the possession
of a financial interest or the exercise of management authority by a
nonlawyer is to permit nonlawyer professionals to work with lawyers
in the delivery of legal services without being relegated to the role
of an employee. For example, the Rule permits economists to work in
a firm with antitrust or public utility practitioners, psychologists
or psychiatric social workers to work with family law practitioners
to assist in counseling clients, nonlawyer lobbyists to work with lawyers
who perform legislative services, certified public accountants to work
in conjunction with tax lawyers or others who use accountants’ services
in performing legal services, and professional managers to serve as
office managers, executive directors, or in similar positions. In all
of these situations, the professionals may be given financial interests
or managerial responsibility, so long as all of the requirements of
paragraph (c) are met.
[8] Paragraph (b) does not permit an individual or
entity to acquire all or any part of the ownership of a law partnership
or other form of law practice organization for investment or other purposes.
It thus does not permit a corporation, an investment banking firm, an
investor, or any other person or entity to entitle itself to all or
any portion of the income or profits of a law firm or other similar
organization. Since such an investor would not be an individual performing
professional services within the law firm or other organization, the
requirements of paragraph (b) would not be met.
[9] The term "individual" in subparagraph
(b) is not intended to preclude the participation in a law firm or other
organization by an individual professional corporation in the same manner
as lawyers who have incorporated as a professional corporation currently
participate in partnerships that include professional corporations.
[10] Some sharing of fees is likely to occur in the
kinds of organizations permitted by paragraph (b). Subparagraph (a)(4)
makes it clear that such fee sharing is not prohibited.
