May an Arizona lawyer draft or enforce a nonlawyer's fee contract for unauthorized legal services or pay its claim from client funds?
Apply this to your situation
This page answers the general question as of 2003. Ask about yours and see what the current Arizona Rules of Professional Conduct say for your facts, with citations.
Plain-English summary
An independent paralegal, working without lawyer supervision, obtained contingent interests secured by liens against clients' possible recoveries. The inquiry concerns a lawyer's assistance in drafting or enforcing the paralegal's fee agreement and a lawyer's response to the paralegal's claim against funds held for a client.
The committee expressly assumes that the nonlawyer's services constitute unauthorized practice and that the lawyer has reached that conclusion. On that premise, ER 5.5(b) bars drafting a fee contract for those services or representing the nonlawyer to collect the debt. The opinion cites a decision treating contracts for legal services by a person not admitted in Arizona as void.
If the lawyer knows of the nonlawyer's alleged interest in funds the lawyer holds, ER 1.15 and Arizona Opinion 98-06 govern the response. The lawyer cannot simply ignore the claim, but simply paying it would also assist unauthorized practice. The committee says the proper response depends on the facts and circumstances. Its footnote leaves open representation of a nonlawyer when counsel in good faith believes the activities are authorized or reasonably arguable as such.
In practice
The opinion's prohibition depends on its stated unauthorized-practice assumption. For a known claim against held client funds, it separates the duty to address the claim from permission to pay it.
Common questions
Q: May a lawyer prepare the nonlawyer's contingent-fee agreement?
A: Not on the opinion's assumption that the agreement pays for unauthorized legal services. The committee treats drafting it as assistance barred by ER 5.5(b).
Q: May a lawyer simply disburse client funds to satisfy the nonlawyer's lien?
A: No. The opinion says simple payment would improperly assist unauthorized practice, although ER 1.15 and Opinion 98-06 govern the response to a known claim.
Q: Does the opinion decide every claim by an independent paralegal?
A: No. It assumes the work is unauthorized practice and expressly does not address good-faith beliefs or arguments that the work is permitted.
Background and rules framework
The opinion applies Arizona ER 5.5(b)'s ban on helping a nonlawyer perform unauthorized legal work. It quotes ER 1.16(a)(1) and ER 8.4(d), and invokes ER 1.15 for a known claim against funds in the lawyer's possession. It refers to Arizona Supreme Court Rule 31 for the definition of unauthorized practice.
Citations and references
Rules of Professional Conduct:
- AZ ER 1.15: interests in funds held by a lawyer
- AZ ER 1.16(a)(1): representation violating the rules or other law
- AZ ER 5.5(b): assistance in unauthorized practice
- AZ ER 8.4(d): conduct prejudicial to the administration of justice
Cases:
- Peterson v. Anderson, 155 Ariz. 108, 745 P.2d 166 (App. 1987): fee contract for unlicensed legal services
Other opinions cited:
- Arizona Opinion 99-07: public adjuster engaged in unauthorized practice
- Arizona Opinion 98-06: handling a claim against held client funds
See also
Source
- Landing page: https://www.azbar.org/for-legal-professionals/ethics/ethics-opinions/?V=Opinions&OpinionId=296
- Official opinion API: https://api.azbar.org/EthicsRules/Opinion/?Id=296
Original opinion text
Reproduced from the official source for research purposes. The linked source is authoritative.
FACTS [1]
This Opinion concerns an independent paralegal working in Arizona, although not under the supervision of an attorney. The paralegal was hired by several individuals on their behalf, or on behalf of an estate. The individuals and decedents have developed life threatening, and/or life terminating diseases in the course of their occupation. The paralegal conducted a lengthy investigation, piecing together facts and evidence. The paralegal has gathered the opinions of leading expert witnesses in support of the proposition that certain manufacturers and distributors of a particular product are legally responsible for the life-threatening and life-terminating diseases experienced by the individuals and/or their decedents.
The paralegal has entered into a contingent percentage fee agreement with each of the individuals. Each individual assigned to the paralegal a contingent percentage interest in any future recovery that they may obtain from the manufacturers, distributors, or other liable parties. This contingent interest is secured by a lien in the future recovery.
The paralegal is assisting the individuals in interviewing attorneys. The individuals are free to select any attorney and to enter into any appropriate agreement with counsel. The paralegal is not interested in splitting, sharing, or otherwise participating in any fees received by any law firm. The paralegal is, however, concerned about protecting the paralegal's contingent interest in the recoveries and the lien securing that interest.
QUESTIONS PRESENTED
- Is it a violation of ER 5.5(b) for an Arizona lawyer to assist the non-lawyer in drafting or seeking to enforce the contingent fee agreement for services that the Arizona lawyer believes constitute the unauthorized practice of law?
- Is it a violation of ER 5.5(b) for an Arizona lawyer confronted with a claim by a non-lawyer for services that the lawyer believes constitute the unauthorized practice of law against funds of a client to honor and direct payment of the non-lawyer's claim?
RELEVANT ETHICAL RULES
ER 1.16. Declining or Terminating Representation
(a) Except as stated in paragraph (c), a lawyer shall not represent a client or, where representation has commenced, shall withdraw from the representation of a client if:
(1) the representation will result in violation of the Rules of Professional Conduct or other law;
* * * *
ER 5.5. Unauthorized Practice of Law
A lawyer shall not:
* * * *
(b) assist a person who is not a member of the bar in the performance of activity that constitutes the unauthorized practice of law.
ER. 8.4. Misconduct
It is professional misconduct for a lawyer to:
* * * *
(d) engage in conduct that is prejudicial to the administration of justice;
* * * *
OPINION
The Arizona Supreme Court has recently amended Supreme Court Rule 31 to define the unauthorized practice of law. A lawyer or person concerned about whether activities constitute UPL should consider this Rule. The balance of this Opinion will assume that the non-lawyer's activities constitute UPL and that the lawyer has so concluded.
1. Assisting the Paralegal Would Constitute Assistance of the Unauthorized Practice of Law
Ethical Rule 5.5 prohibits the lawyer from assisting in the performance of UPL activity. Drafting a contract to obtain a contingent fee for practices that constitute the unauthorized practice of law, or representing the non-lawyer in an action to collect upon the debt, would constitute such assistance.
The Arizona Court of Appeals explained that a contract to pay fees to a person not admitted to practice law in Arizona for legal services is void. Peterson v. Anderson, 155 Ariz. 108, 111, 745 P.2d 166, 169 (App. 1987) (improper fee splitting between Arizona lawyer and lawyer not licensed to practice in Arizona).
In Ariz. Op. 99-07, negotiating with a public adjuster engaged in the unauthorized practice of law constituted facilitating the unauthorized practice of law in violation of ER 5.5(b). So would participation in an arbitration hearing where the other side was represented by a non-lawyer adjuster. Id.
2. Honoring the Contract Would Constitute Assistance of the Unauthorized Practice of Law
To the extent that the non-lawyer has an interest in funds held by the lawyer, and the attorney has actual knowledge of that alleged interest, ER 1.15 and Ariz. Op. 98-06 direct how the lawyer must respond to the claim. The lawyer is not free to simply arbitrate or ignore the claim, and the lawyer's proper action depends upon the facts and circumstances.[2] But simply paying the claim would be improper assistance of UPL under the authority cited above.
CONCLUSION
An Arizona lawyer may not assist the unauthorized practice of law. Drafting or seeking to enforce a contract for UPL services, or directing payment of client funds for UPL services, would constitute such prohibited assistance.
__________________
[1] Formal Opinions of the Committee on the Rules of Professional Conduct are advisory in nature only and are not binding in any disciplinary or other legal proceedings. ? State Bar of Arizona 2003
[2] This Opinion does not address the situation where a non-lawyer seeks representation in a situation where the lawyer has a good faith belief that the non-lawyer's activities either do not constitute UPL or there is a good faith basis for arguing so. This Opinion does not suggest that such a lawyer must decline to represent the non-lawyer as a client under those circumstances.
What do the rules say today, for your facts?
This opinion is from 2003. Ezel checks the current Arizona Rules of Professional Conduct against your situation and cites the rules it relies on.
Opens in Ezel Pro.
- Checks the law as it stands today, not only this page
- Cites every source it relies on, so you can verify it
- Chat, drafting and research in one workspace