Can a lawyer agree to a client's contingent-fee contract with a medical consulting service that supplies experts and bars reuse of them?

Plain-English summary

The committee reviewed a contract under which a client would retain a medical consulting service for a 20 percent contingent fee. The service supplied expert witnesses from its own "consulting staff," provided a representative to sit with the lawyer at depositions and trial, helped with medical issues, and formulated questions, all "free" to the lawyer. In return, the lawyer agreed to disburse the contingency funds to the service and not to contact or use any expert the service provided in any future case without the service's written permission.

The opinion concluded it would be unethical for a lawyer to accept or continue representation under the contract's limitations. On ER 3.4(b), which bars offering a witness an inducement prohibited by law, the opinion declined to find a per se violation; although the service's repeat-use experts might hypothetically have a stake in outcomes, the committee would not presuppose facts outside those submitted.

The opinion found the contract unethical under several other rules. ER 5.3 requires a lawyer to make reasonable efforts to ensure that a nonlawyer's conduct is compatible with the lawyer's professional obligations; because the service was completely independent of the lawyer's control, the lawyer had no means to do so and would violate ER 5.3 by acquiescing. Under ER 1.7(b), the lawyer's loyalty and independent judgment were materially limited by the agreement not to use the service's experts on future matters, and that same restriction violated ER 5.6's bar on agreements restricting the right to practice.

Finally, the opinion concluded ER 2.1 was implicated because the client owed the 20 percent contingency to the service regardless of whether the lawyer found its experts acceptable or chose his own, pressuring the lawyer to accept the service's experts against his independent evaluation. Unless the lawyer was certain the contract would in no way interfere with that independent judgment, participating in it would be unethical.

Currency note

This opinion was issued in 1986, before the State Bar of Arizona's adoption of the 2003 revisions to the Rules of Professional Conduct. 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 Treat this page as historical context, not current guidance.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 lawyer go along with a client's contingent-fee contract with an expert service?

A: The opinion concluded the lawyer may not acquiesce in or recommend the contract presented, because it violated ER 5.3, ER 1.7(b), ER 5.6, and ER 2.1.

Q: Why did the supervision rule matter?

A: ER 5.3 requires the lawyer to make reasonable efforts to ensure a nonlawyer's conduct is compatible with the lawyer's obligations; the service was independent of the lawyer's control, so the lawyer could not satisfy that duty.

Q: What was wrong with the promise not to reuse the service's experts?

A: The opinion concluded that promise impaired the lawyer's independent judgment under ER 1.7(b) and restricted the lawyer's right to practice after the relationship ended, violating ER 5.6.

Q: Did paying the experts a contingent fee violate the witness rules?

A: The opinion declined to find a per se violation of ER 3.4(b); while repeat-use experts might hypothetically have a stake in outcomes, the committee would not presume facts beyond those submitted.

Background and rules framework

The opinion applied the Arizona Rules of Professional Conduct adopted effective February 1, 1985, revisiting a similar question it had considered under the prior Code in Opinion 84-9. ER 1.7 (Model Rule 1.7) governs conflicts that materially limit a representation; ER 2.1 (Model Rule 2.1) requires independent professional judgment; ER 3.4(b) (Model Rule 3.4(b)) bars unlawful inducements to witnesses; ER 5.3 (Model Rule 5.3) governs responsibilities for nonlawyer assistants; and ER 5.6 (Model Rule 5.6) bars agreements restricting a lawyer's right to practice.

Citations and references

Rules of Professional Conduct:

• ER 1.7 / Model Rule 1.7 (conflict of interest; material limitation)
• ER 2.1 / Model Rule 2.1 (advisor; independent judgment)
• ER 3.4(b) / Model Rule 3.4(b) (inducements to witnesses)
• ER 5.3 / Model Rule 5.3 (responsibilities regarding nonlawyer assistants)
• ER 5.6 / Model Rule 5.6 (restrictions on right to practice)

Other opinions cited:

• Ariz. Op. 84-9: a similar question considered under the prior Code

See also

• AZ Ethics Op. 85-07: Nonlawyer Agents and Professional Independence
• AZ Ethics Op. 04-02: Referral Fees and Division of Fees
• AZ Ethics Op. 05-01: Referral Fees and Outside Business Activities

Source

• Landing page: https://tools.dev.azbar.org/RulesofProfessionalConduct/ViewEthicsOpinion.aspx?id=542

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

6/1986

Lawyer acquiescing in or recommending to a client a contingent fee contract with medical consulting service for expert testimony is improper.

FACTS

The State Bar of Arizona seeks the opinion of the committee as to the ethical propriety of entering into a contingency fee contract under which a lawyer could arrange for medical expert testimony on behalf of his client through a medical consulting service that charges the client a 20 per cent contingent fee for its services. A copy of the contract has been submitted to the committee.

The contract is primarily between the client and the consulting service. The contract provides that expert witnesses obtained by the service are part of the service's "consulting staff" and are to be paid at an hourly rate in advance, with payment being sent to the consulting service rather than the expert. The contract states that "the experts have no knowledge of this contract, do not benefit by this contract, are not our employees, and are fully paid prior to their professional service.' The contract further provides that the service will provide a representative to sit with the lawyer at depositions and trial, will assist with medical issues and will formulate questions for the lawyer. These services are “free" to the lawyer.

Under the contract, the lawyer agrees to disburse the funds per the contract's terms to the consulting service and also agrees not to contact or utilize any expert witness provided by the consulting service in the future without the consulting service's written permission.

QUESTION

May a lawyer ethically acquiesce in or recommend to a client another separate contingent fee contract with a medical consulting service which provides technical research, analysis of records, investigation and expert witnesses?

ETHICAL RULES INVOLVED

ER 1.7. Conflict of Interest: General Rule

(b) A lawyer shall not represent a client if the representation of that'client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless:

(1) the lawyer reasonably believes the representation will not be adversely affected; and

(2) the client consents after consultation ***

ER 2.1. Advisor

In representing a client, a lawyer shall exercise independent professional judgment and render candid advice.

ER 3.4. Fairness to Opposing Party and Counsel

A lawyer shall not:

(b) falsify evidence, counsel or assist a witness to testify falsely, or offer an inducement to a witness that is prohibited by law;

ER 5.3. Responsibilities Regarding Nonlawyer Assistants

With respect to a nonlawyer employed or retained by or associated with a lawyer:

(b) A lawyer having direct supervisory authority over the nonlawyer shall make reasonable efforts to ensure that the person's conduct is compatible with the professional obligations of the lawyer; and

(1) the lawyer orders or, with the knowledge of the specific conduct, ratifies the conduct involved; or

(2) the lawyer is a partner in the law firm in which the person is employed, or has direct supervisory authority over the person, and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.

ER 5.6. Restrictions on Right to Practice

A lawyer shall not participate in offering or making:

(a) a partnership or employment agreement that restricts the right of a lawyer to practice after

termination of the relationship, ***

OPINION

The committee previously considered a similar question in its Opinion No. 84-9 under the prior Code of Professional Responsibility. We now address the question under the current Rules of Professional Conduct, which were adopted by the Supreme Court effective February 1, 1985. It is the opinion of the committee that it would be unethical for a lawyer to accept or continue representation under the limitations imposed by the contingent fee contract under review. A copy of that contract is annexed to this opinion as Exhibit A.

ER 3.4(b) prohibits an attorney from offering an inducement to a witness that is prohibited by law. ER 3.4(b), although more inclusive than its predecessor DR 7-109(C ), encompasses the proscription contained in DR 7-109(C ) that “a lawyer shall not pay, offer to pay, or acquiesce in the payment of compensation to a witness contingent on the content of his testimony or the outcome of the case." From the service contract provided to this committee, it appears that the service maintains a stable of experts on its '”consulting staff" from which it draws and that those experts may in fact have a stake in the outcome of the litigation due to their repeated utilization and compensation by the service. Those whose testimony generally results in favorable judgments or settlements are likely to be utilized more frequently and thus may well have a pecuniary interest in the outcome of the litigation.

That the service's experts may hypothetically have a personal stake in the outcome of the litigation does not make the lawyer's acquiescence in the service contract per se unethical. The committee will not presuppose facts outside of those submitted. Thus, a lawyer would not necessarily violate ER 3.4(b) by acquiescing in the service contract.

However, ER 5.3 imposes upon a lawyer a duty to ensure that the conduct of a non-lawyer associated with the lawyer is compatible with the lawyer's professional obligations. Since the consulting services are actually rendered to the lawyer, the lawyer's obligations regarding the service fall within the provisions of ER 5.3. However, the service is completely independent of the attorney's control. The attorney has no means of making reasonable efforts to ensure that the service's conduct is compatible with the attorney's professional obligations. Therefore, a lawyer who participates or acquiesces in the contract with the service would violate ER 5.3 and such participation would thus be unethical.

ER 1.7(b) provides that a lawyer shall not represent a client if that representation may be materially limited by the lawyer's responsibilities to a third person. The Comment to ER 1.7(b) provides:

*Loyalty to a client is also impaired when a lawyer cannot consider, recommend or carry out an appropriate course of action for the client because of the lawyer's other responsibilities or interests. The conflict in effect forecloses alternatives that would otherwise be available to the client."

Under the service contract, the lawyer agrees not to contact or use any expert provided by the service on any other case without prior written permission of the service. The contract thus materially interferes with the lawyer's independent professional judgment in selecting and retaining experts for future clients. Such an agreement is unethical. The contract would further constitute a restriction on the rights of the lawyer to practice after the termination of the relationship and is thus violative of ER 5.6.

In addition, ER 2.1 requires a lawyer to exercise independent professional judgment. Under the contract, the client would be obligated for the 20% contingency fee to the service regardless of whether the lawyer found the dervice's experts to be acceptable and regardless of whether the lawyer selected an expert from his own sources. Thus, the lawyer is under pressure to accept those experts provided by the service regardless of his independent evaluation of these experts and their testimony. Unless the lawyer is certain that the contract would in no way interfere with his independent professional judgment in selecting an expert witness, it would be unethical to participate or acquiese in such an agreement.

For the foregoing reasons we are unable to approve the contract in question and conclude that it would be unethical for a lawyer to accept or continue representation under its limitations.

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 proceeding. This opinion is based on the Ethical Rules in effect on the date the opinion was published. If the rules change, a different conclusion may be appropriate.

© State Bar of Arizona 1986