Could a South Carolina nonprofit pay lawyers to represent domestic and sexual assault survivors without unlawfully practicing law?

Plain-English summary

A state representative asked whether the Pee Dee Coalition Against Domestic and Sexual Assault could pay lawyers to represent clients through a federal legal-assistance grant. The nonprofit offered the services free of charge. In an informal 2002 opinion, the Attorney General said the described arrangement did not violate South Carolina's ban on corporations practicing law or the cited professional-conduct rule, so long as the lawyers kept autonomy and maintained appropriate attorney-client relationships.

The AG distinguished a nonprofit that funded independent legal representation from an organization that itself practiced law or controlled lawyers' work for clients. He cited an earlier South Carolina AG opinion on a legal-assistance program and a New Jersey Supreme Court decision on preserving lawyers' loyalty and independence. He also repeated the bar ethics committee's warning that the lawyers had to comply with consultation, client-consent and other professional-conduct requirements. The opinion's answer was conditional on how the coalition and its lawyers actually operated.

Currency note

This opinion was issued in 2002. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Historical summary

Victim-services nonprofits

The AG said the coalition could pay attorneys for client representation without itself practicing law if the attorneys were free to maintain the lawyer-client relationship. His assessment relied on a description from the coalition's victim-services director and on standards separating funding from control of legal work.

Attorneys representing clients through the program

The letter emphasized lawyers' autonomy and obligations to their clients. It said the arrangement would not violate the cited professional-conduct rule if the standards described were maintained, and noted the bar committee's separate requirements on consultation and client consent.

Common questions

Did paying the lawyers make the nonprofit a law firm under the opinion? A: No, if it funded representation while the attorneys maintained independent client relationships rather than letting the organization control the legal work.

Could nonprofit staff direct how a lawyer handled an individual case? A: The AG's answer depended on attorney autonomy. The standards he quoted did not allow organizational interference once the lawyer was retained by a client.

Did the AG waive lawyers' professional-conduct obligations? A: No. He said the attorneys still had to meet the consultation, consent and other conditions identified by the bar ethics committee.

Background and statutory framework

The question arose under S.C. Code Ann. §40-5-320, which restricted corporate practice of law, and Rule 5.4 of the Rules of Professional Conduct. The AG compared a 1978 South Carolina opinion about a funding organization with In Re Education Law Center. Inc., a New Jersey Supreme Court decision quoted for standards protecting attorney-client relationships. His conclusion for the coalition was expressly conditional.

Citations and references

• S.C. Code Ann. §40-5-320: corporate-practice restriction quoted in the letter.
• The opinion also discusses professional-conduct rules on fee sharing and payment by a party other than the client.
• In Re Education Law Center. Inc., 429 A.2d 1051 (NJ 1981): nonprofit legal-services standards cited in the letter.

Official title

Nonprofit funding of legal representation for domestic and sexual assault survivors.

Requester

The Honorable J.G. McGee, III, Member, House of Representatives

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/may-2-2002/
• Original PDF: https://www.scag.gov/wp-content/uploads/2013/04/02may2mcgee.pdf

Original opinion text

The State of South Carolina

OFFICE OF THE ATTORNEY GENERAL
CHARLES M. CONDON
ATTORNEY GENERAL

May 2, 2002

The Honorable J. G. McGee, III
Member, House of Representatives
420-A Blatt Building
Columbia, South Carolina 29211

Re:

Your Letter of April 2, 2002
Pee Dee Coalition Against Domestic and Sexual Assault

/ .-

Dear Representative McGee:

In your above-referenced letter, you ask this Office the following question: "can attorneys be paid through a nonprofit organization to provide legal services to clients the organization serves?" By way of background, you indicate that "[i]n September of 2001, the Pee Dee Coalition Against Domestic and Sexual Assault (PDC) was privileged to receive a Legal Assistance for Victims Grant through the U.S. Department of Justice Programs' Violence Against Women Office. The purpose of the grant is to provide legal services to victims who would not otherwise receive representation. The PDC offers these services free of Charge." You further indicate that it has been brought to your attention that S.C. Code Ann. §40-5-320, which prohibits a corporation from practicing law, may be applicable to the PDC in this situation. You further question whether Rule 5 .4 of the Rules of Professional Conduct, which generally prohibits a lawyer from sharing legal fees with a nonlawyer, might also prohibit the PDC from providing the legal services mentioned above. You also state that " [t ]his complication was taken to the Ethics Committee of the Bar Association which instructed the PDC to abide by rules 5.4c and l.Sf so there would be no breach of ethics." S.C. Code Ann. §40-5-320 provides, in pertinent part, as follows: (A) It is unlawful for a corporation or voluntary association to: ( 1) practice or appear as an attorney at law for a person other than itself in a court in this State or before a judicial body; (2) make it a business to practice as an attorney at law for a person other than itself in a court or judicial body; (3) hold itself out to the public as being entitled to practice law, render or furnish

The Honorable J. G. McGee, III
Page 2
May 2, 2002
legal services, advise or to furnish attorneys or counsel, or render legal services in actions or proceedings; (4) assume to be entitled to practice law or to assume, use, or advertise the title of lawyer, attorney, attorney at law, or equivalent terms in any language as to convey the impression that it is entitled to practice law or to furnish legal advice, services, or counsel; or (5) advertise that it has, owns, conducts, or maintains a law office or an office for the practice of law or for furnishing legal advice, services, or counsel, either alone or together with, by, or through a person, whether a duly and regularly admitted attorney at law, or not. In a previous opinion request, this Office was asked whether Section 40-5-320 "applies to the Charleston Neighborhood Legal Assistance Program, Inc., created under the auspices of ... " certain federal laws existing at that time. In response to this question, we opined that

I

§ 40-5-320 prohibits the practice oflaw by corporations and voluntary associations. The corporation created under Public Law 93-355 does not practice law but rather disburses funds in a manner which allows private, qualified attorneys to maintain a client/attorney relationship with individuals who might not be able to obtain legal assistance otherwise. The attorneys are not involved in the corporation and the funding corporation does not practice law. It is therefore the opinion of this Office that the Charleston Neighborhood Legal Assistance Program, Inc., is not subject to the prohibitions of§ 40- 5-320. See OP. ATTY. GEN. Dated April 14, 1978. Courts in other states which have similar laws have produced similar opinions. In In Re Education Law Center. Inc., 429 A.2d 1051 (NJ 1981 ), the New Jersey Supreme Court held that nonprofit corporations operating for charitable purposes could be exempted from the ban on the practice of law by corporations if certain standards were met in order to preserve the integrity ofthe lawyer-client relationship. The Education Law Center court noted that the basis for the general prohibition of the practice of law by a corporation is a concern that the relationship of confidentiality, trust and undivided loyalty which must exist between a lawyer and his client could be impaired if the lawyer is employed by a corporation and a concern that such corporation may place its own interests ahead of interests of its clients. Id. The court recognized the public need for organizations such as the PDC and set forth the following standards which must be met in order for the organization to be exempt from the ban on the corporate practice of law: First, the role of the public interest law firm as regards the relationship between individual staff attorneys and clients must be limited to that of "a conduit or intermediary to bring the attorney and client together" which "does not purport to control or exploit the manner in which the attorney represents his ... client." Once a staff attorney is retained by a client, there can be no interference in the attorney-client relationship by the organization. Staff attorneys must remain fully responsible to the client and the corporation must be liable for any damages arising

The Honorable J. G. McGee, III
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May 2, 2002

l

from the attorney's malpractice. In the course of this representation, lawyers are, of course, subject to all Disciplinary Rules and to the discipline of [the] Court. The responsibility of the lawyer to the client naturally includes the pursuit of the client's best interests in all legal matters. As far as legal matters are concerned ... the participation of ... non-lawyers must be limited to the formulation of broad policies
... and the use of "reasonable procedures to review periodically the actions of (the organization's) personnel to determine whether the board's policy directives have been adhered to. Determinations of which cases to accept and all decisions concerning how such cases are to be handled must be made by lawyers, either employed by the organization or members of its board, who are fully cognizant of governing professional standards and who are responsible to [the] Court for maintenance of those standards. Once a staff attorney has begun representation of a client in a case, it would be prudent for the [organization] to "take special precautions not to interfere with its attorney's independent professional judgment in the handling of the matter." (Citations omitted). Id. at 1058, 1059.

I

I have spoken with Wendy M. Bowen, Director of Community & Outreach Victim Services for the PDC, concerning this matter. From her description, it sounds as if the PDC and the attorneys it hires would be operating in accordance with the standards expressed in In Re Education Law Center, Inc. IQ., and our prior opinion. Therefore, as long as the attorneys are given the autonomy to maintain the appropriate attorney-client relationship, it is my opinion that the PDC would not be in violation of S.C. Code Ann. §40-5-320. Further, as long as these standards are maintained, it is also my opinion that neither the PDC nor its attorneys would be in violation of Rule 5.4 of the Rules of Professional Conduct. Of course, as stated by the Bar Association's Ethics Committee, the PDC attorneys must comply with the consultation, client consent and other requirements of Rule l .8(f). This letter is an informal opinion only. It has been written by a designated Assistant Attorney General and represents the position of the undersigned attorney as to the specific question asked. It has not, however, been personally scrutinized by the Attorney General and not officially published in the manner of a formal opinion.

David K. Avant
Assistant Attorney General