Can a lawyer who has since been suspended or disbarred still collect fees earned for work done while he was still licensed?

Plain-English summary

A lawyer serving as bankruptcy trustee for a professional corporation (and as attorney for himself as trustee) explained that, before the bankruptcy filing, the P.C. had taken a personal-injury case on contingency and then referred it to another lawyer under a fee-sharing agreement. After the referral, the P.C.'s sole stockholder was temporarily suspended from practice, with disbarment proceedings pending. When the case settled, the lawyer who received the referral refused to pay any share of the fee, arguing that because the stockholder was now suspended, paying him would amount to sharing a fee with a non-lawyer, prohibited by the Code. The trustee, obligated to recover assets for creditors (including malpractice claimants) yet also bound not to aid the unauthorized practice of law, asked whether pursuing the fee would violate his Canon 3 obligations.

The Disciplinary Commission concluded that a suspended or disbarred lawyer may receive, after the date of his suspension or disbarment, legal fees to which he was entitled for work performed before that date. While the Commission could not speculate on how such a fee would be computed or the amount due, it concluded the lawyer is entitled to seek recovery, directly or through the bankruptcy trustee, of any fees to which he was entitled for services rendered before his suspension or disbarment.

Currency note

This opinion was issued in 1990, under the former Alabama Code of Professional Responsibility (Canon 3, EC 3-8) and before the Alabama State Bar's January 1, 1991 adoption of the Rules of Professional Conduct and the 2002 Ethics 2000 revisions to the ABA Model Rules. The prohibition on sharing legal fees with a non-lawyer is now in Rule 5.4, and the rule against assisting the unauthorized practice of law in Rule 5.5. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a disbarred or suspended lawyer collect fees for work done before the discipline?

A: Per the opinion, yes. The lawyer may receive, after the date of suspension or disbarment, fees to which he was entitled for work performed before that date.

Q: Doesn't paying a now-suspended lawyer count as sharing a fee with a non-lawyer?

A: The opinion concluded the lawyer is entitled to seek recovery of fees earned for services rendered while he was authorized, and that a trustee may pursue those earned fees; it treated the fee as earned for pre-discipline work rather than as an impermissible fee split with a non-lawyer.

Q: Can a bankruptcy trustee pursue the fee on the lawyer's behalf?

A: The opinion concluded the lawyer may seek recovery directly or through the bankruptcy trustee of any fees to which he was entitled for pre-suspension services.

Background and rules framework

The opinion interpreted the former Alabama Code of Professional Responsibility, Canon 3 (assisting in preventing the unauthorized practice of law) and EC 3-8 (no sharing of fees with non-lawyers). Those concerns are now addressed by Rule 5.4 (professional independence; fee-sharing with non-lawyers) and Rule 5.5 (unauthorized practice of law).

Citations and references

Rules of Professional Conduct:

• Former Ala. Code of Prof. Resp. EC 3-8 (no fee-sharing with non-lawyers); now Model Rule 5.4
• Former Ala. Code of Prof. Resp. Canon 3 (preventing unauthorized practice); now Model Rule 5.5

See also

• AL Ethics Op. 1992-13: an employer billing clients for in-house counsel's work and fee-splitting
• AL Ethics Op. 1990-85: a lawyer selling his collections practice files to a collection agency

Source

• Landing page: https://www.alabar.org/office-of-general-counsel/formal-opinions/1990-02/
• Original PDF: https://www.alabar.org/assets/2019/02/RO-90-02.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative. Party names have been redacted in the source.

ETHICS OPINION

RO-90-02

QUESTION:

"I am a lawyer licensed to practice in Alabama. I have been appointed as Trustee in Bankruptcy for [redacted], P.C., and under the authority of the Bankruptcy Code, I have been authorized to serve as attorney for myself as Trustee.

Prior to the filing of the Bankruptcy petition, [redacted], P.C. was employed to pursue a personal injury case on a contingency fee basis. The case was pursued and a settlement offer was obtained. Thereafter, [redacted], P.C. referred that case to another lawyer under an agreement that the other lawyer would pursue the case and that the attorney's fee earned in the case under the contingency fee arrangement would be shared.

After the case was referred to the other lawyer, [redacted], the sole stockholder of [redacted], P.C., was temporarily suspended from the practice of law in Alabama and disbarment proceedings are now pending against him.

The personal injury claim has now been settled, but the lawyer to whom the case was referred by [redacted], P.C. has refused to pay any part of the attorney's fee in the case to [redacted], P.C. because its sole stockholder has been temporarily suspended from the practice of law and because he is, therefore, prohibited by Ethical Consideration 3-8 of the Code of Professional Responsibility of the Alabama State Bar from sharing the fee with a non-lawyer.

As Trustee in this case, I have a responsibility to pursue all funds to which [redacted], P.C. is entitled, and as attorney for the Trustee, I have an obligation under Canon 7 to zealously represent the Trustee and the Bankruptcy estate within the bounds of the law. Since [redacted], P.C. did perform legal services in the personal injury case and since to allow the lawyer to whom the case was referred to receive a windfall by not having to share the fee, at the expense of the creditors of [redacted], P.C., I feel that I have an obligation to pursue recovery of the attorney's fee due to [redacted], P.C. The creditors of [redacted], P.C. include people with malpractice claims, so the obligation to recover these funds for them is especially strong.

On the other hand, as a lawyer, I have an obligation under Canon 3 to assist in preventing the unauthorized practice of law, which includes preventing the sharing of fees with non-lawyers. Since the lawyer to whom the personal injury claim was referred contends that he is prohibited by Canon 3 from paying an attorney's fee to [redacted], P.C., I am troubled that by pursuing the recovery of those funds, I may be violating my obligations under Canon 3.

Therefore, I request an opinion on the following question:

Under the circumstances outlined above, will I violate my obligations under Canon 3 of the Code of Professional Responsibility of the Alabama State Bar by pursuing recovery of the attorney's fee due to [redacted], P.C.?"

ANSWER:

We are of the opinion that a suspended or disbarred lawyer may receive, subsequent to the date of his suspension or disbarment, legal fees to which he was entitled for work performed prior to his suspension or disbarment. While we cannot speculate as to how such a fee might be computed, or to the amount of money to which [redacted] might be entitled, we do feel that [redacted] is entitled to seek recovery, directly or through the Bankruptcy Trustee, of any fees to which he was entitled for services rendered prior to his suspension or disbarment.

AWJ/vf

1/17/90