Can a lawyer split a fee with a firm in a jurisdiction that allows fee sharing with nonlawyers?
ABA Formal Opinion 464: Fee Division With Lawyers Who May Share Fees With Nonlawyers
Short answer: The opinion concludes that a lawyer subject to the Model Rules may, through a single client billing, divide a legal fee with a lawyer or firm in a jurisdiction that permits sharing fees with nonlawyers, even though some portion of the fee may eventually be distributed to a nonlawyer, provided there is no interference with the lawyer's independent professional judgment.
Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the American Bar Association's Model Rules of Professional Conduct and are persuasive authority. This summary is for research purposes only and is not legal advice. Verify current rules before acting on any specific guidance.
About this page: The plain-English summary and Q&A below were written by Ezel based on the official opinion. We do not reproduce the opinion text on this page; follow the linked source for the official text, which controls.
Plain-English summary
The opinion addresses whether a Model Rules lawyer may divide a fee with a firm in a jurisdiction (such as the District of Columbia or the United Kingdom) that lawfully permits sharing fees with nonlawyers. It starts from Model Rule 1.5(e), observing that "inter-firm division of legal fees is clearly contemplated by the Model Rules" when the proportional-services-or-joint-responsibility, written-client-agreement, and reasonable-total-fee conditions are met. It then reasons that the Model Rules lawyer "divided a legal fee only with 'another lawyer,' and a lawyer may divide legal fees with a lawyer admitted in another jurisdiction."
Whether the other firm later shares its portion with a nonlawyer under that jurisdiction's law is conduct occurring entirely in the other jurisdiction and does not implicate Model Rule 5.4(a). The opinion grounds this in Formal Opinion 91-360's principle that a lawyer adheres to the rules of the jurisdiction where the lawyer actually practices, concluding that "in the situation assumed above, however, the lawyer from the Model Rules jurisdiction does not violate Model Rule 5.4(a)." It explains that the purposes of Rule 5.4, protecting the lawyer's independence of professional judgment from nonlawyer influence, are not threatened, because a distant nonlawyer in another firm and jurisdiction is unlikely to influence the Model Rules lawyer.
The opinion adds practical reasoning: a contrary rule would leave the Model Rules lawyer at the mercy of the other firm's bookkeeping and compensation decisions and would needlessly deprive clients of well-suited counsel. It closes with one limitation: the lawyer must still comply with Rule 5.4(c), because "the prohibition against improper nonlawyer influence continues regardless of the fee arrangement," and quotes Comment [1] that the Rule 5.4 limitations "are to protect the lawyer's independence of professional judgment."
In practice
Under this opinion, a lawyer in a Model Rules jurisdiction can divide a fee with a lawyer or firm elsewhere even if that firm may lawfully pass part of its share to a nonlawyer, because the division itself is with another lawyer. The opinion holds the later nonlawyer distribution is the other jurisdiction's conduct and does not expose the Model Rules lawyer to a Rule 5.4(a) violation, subject to the continuing duty under Rule 5.4(c) not to let any nonlawyer interfere with the lawyer's independent professional judgment.
Common questions
Q: Can I split a fee with a firm whose share might later reach a nonlawyer?
A: Per the opinion, yes; doing so does not violate Rule 5.4(a) merely because a nonlawyer could ultimately receive part of the fee under the other jurisdiction's law.
Q: Who am I actually dividing the fee with?
A: The opinion says only with "another lawyer," and a lawyer may divide fees with a lawyer admitted in another jurisdiction.
Q: Does the other firm's distribution to a nonlawyer expose me to discipline?
A: No. The opinion concludes the other firm's compensation system operates in its own jurisdiction and does not threaten the application of Rule 5.4(a) where you practice.
Q: Is there any remaining limit?
A: Yes. The opinion holds the lawyer must still satisfy Rule 5.4(c) and must not allow a nonlawyer in the other firm to interfere with the lawyer's independent professional judgment.
Background and rules framework
The opinion interprets Model Rule 1.5(e) (division of fees between lawyers not in the same firm) and Model Rule 5.4 (professional independence), including 5.4(a) (no fee sharing with nonlawyers) and 5.4(c) (no nonlawyer interference with professional judgment). It reads these against the choice-of-law principle that a lawyer follows the rules of the jurisdiction where the lawyer practices.
Citations and references
Rules of Professional Conduct:
- ABA Model Rule 1.5(e) (division of fees)
- ABA Model Rule 5.4, including 5.4(a) and 5.4(c)
Other opinions cited:
- ABA Formal Op. 91-360 (1991): a lawyer follows the rules where the lawyer practices
- ABA Formal Op. 316 (1967); Op. 423 (2001): who counts as a "lawyer" for fee division
- Philadelphia Bar Op. 2010-7 (2010); NY State Bar Op. 917 (2012)
Cases:
- O'Brien, P.C. v. Snyder, 601 A.2d 1056 (Del. 1990)
- Hoffmann-La Roche Ltd. v. Empagran S.A., 542 U.S. 155 (2004)
See also
- ABA Formal Op. 465: Deal-of-the-Day Marketing Programs
- ABA Formal Op. 474: Referral Fees and Conflict of Interest
- ABA Formal Op. 499: Passive Investment in Alternative Business Structures
Source
- Landing page: ABA Formal Ethics Opinions index
- Original PDF: formal_opinion_464.pdf