Can California lawyers agree, when their partnership dissolves, that a former partner who later probates a named client's will must split the fee with the other former partners or their heirs?

Currency note

This opinion was issued in 1975, before the State Bar of California's adoption of the November 1, 2018 revisions to the Rules of Professional Conduct. The opinion interprets former California Rules 2-108 (division of fees with another lawyer) and 3-102 (sharing fees with nonlawyers), the predecessors to current Rules 1.5(e) and 5.4 (Model Rules 1.5(e) and 5.4). 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 Treat this page as historical context, not current guidance.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 or requirement mentioned here.

Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the State Bar of California's 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. The opinion text is reproduced at the bottom; the official source (linked) controls.

View original opinion

Plain-English summary

The committee was asked about a proposed clause in a partnership agreement: after the partnership dissolved, if a former partner later probated the will of any of certain named individuals, he would forward a fixed percentage of that fee to the other former partner when and if it was received. All of the probate work would be done by the forwarding attorney, and the arrangement would benefit each former partner's beneficiary or heir after death. The committee found the arrangement posed two ethical questions.

On the first question, division during the recipient's lifetime, the committee applied former Rule 2-108, which barred dividing a fee with another lawyer unless the division was made in proportion to services performed or responsibility assumed. Because the retired or separated lawyer would perform no services and assume no responsibility on the particular estate, the arrangement failed that requirement. The committee stressed that former Rule 2-108 had dropped the saving clause of its predecessor (former Rule 22(b)), which had permitted payments to a former partner under a separation or retirement agreement; given that deletion, the proposed division could not be treated as permissible.

On the second question, continued payments after a partner's death to his estate or beneficiary, the committee applied former Rule 3-102, which barred sharing legal fees with nonlawyers except in limited cases. It concluded that if the division was impermissible during the recipient's lifetime it was equally so after death, and that the open-ended payments did not fit the Rule 3-102(A)(1) exception for payment "over a reasonable period of time," because payments could continue until the last named client died and the estate was probated and the fee amount was unknowable until then.

Common questions

Q: Can a dissolving California firm agree that whoever later probates a named client's will splits the fee with the old partners?

A: No, under this opinion. The committee concluded the arrangement was improper because the former partner receiving the share would perform no services and assume no responsibility on the probate matter, which former Rule 2-108 required for any fee division between lawyers.

Q: Does it matter that the former partner did real work back when the relationship existed?

A: The committee focused on the specific fee being divided. Because the retired or separated lawyer would do none of the work on the estate that generated the fee, the division failed former Rule 2-108(A)(2)'s proportionality requirement, and the prior rule's separation-and-retirement saving clause had been deleted.

Q: Can the payments continue to a deceased partner's estate or heirs?

A: No. The committee concluded former Rule 3-102 did not permit it, because the payments were open-ended rather than made over a reasonable period of time and could not be characterized as the decedent's interest in matters pending when the partnership dissolved.

Background and rules framework

The opinion interprets former California Rule 2-108 (a lawyer may divide a fee with another lawyer outside the firm only with client consent, in proportion to services or responsibility, and without increasing the total fee) and former Rule 3-102 (a lawyer may not share legal fees with a nonlawyer except in limited death, retirement-plan, and unfinished-business situations). These are the predecessors to current California Rules 1.5(e) and 5.4 and Model Rules 1.5(e) and 5.4. The committee read former Rule 2-108 against the deletion of the saving clause in former Rule 22(b), and former Rule 3-102 against ABA Code Ethical Consideration 3-8 and ABA Formal Opinion No. 308 (1963).

Citations and references

Rules of Professional Conduct:

• Former California Rules 2-108 and 3-102; former Rules 22(b) and 3 (predecessors)
• Current analogs: Model Rules 1.5(e) and 5.4 / California Rules 1.5(e) and 5.4

Statutes:

• California Probate Code (provisions governing probate fees, referenced generally)

Other opinions cited:

• ABA Committee on Professional Ethics and Grievances Opinion No. 266 (1945)
• ABA Committee on Professional Ethics Opinion No. 308 (1963)
• ABA Code of Professional Responsibility, DR 2-107 and EC 3-8
• L.A. County Bar Assn. Committee on Legal Responsibility and Conduct Opinion No. 162 (1963)
• Association of the Bar of the City of New York Ethics Committee Opinion No. 706 (1947)

See also

• CA Ethics Op. 1975-35: Defense Fee Paid by a Superior on Condition of Silence

Source

• Landing page: https://www.calbar.ca.gov/legal-professionals/ethics-compliance-practice-resources/ethics/ethics-opinions
• Original opinion: https://www.calbar.org/ethics/Opinions/1975-34.htm

Original opinion text

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

THE STATE BAR OF CALIFORNIA
STANDING COMMITTEE ON PROFESSIONAL RESPONSIBILITY AND CONDUCT
FORMAL OPINION NO. 1975-34

ISSUE:

Ethical considerations involved in the division of fees pursuant to separation and retirement agreements.

DIGEST:

It is improper for attorneys to divide probate fees pursuant to a partnership agreement which provides that, following dissolution, if a former partner should probate the will of any of certain named persons, he will divide the fee with the other former partner(s) or their heirs.

AUTHORITIES INTERPRETED:

Rules 2-108 and 3-102 of the Rules of Professional Conduct.

American Bar Association Code of Professional Responsibility, Disciplinary Rule 2-107.

DISCUSSION

The Committee has been requested to render an opinion with respect to a proposed provision in a partnership agreement between lawyers whereby the partners agree that, following dissolution, if a former partner should at any subsequent time probate the will of any of certain named individuals, he will forward to the other former partner a fixed percentage of the fee when, as, and if it is received. Under such an arrangement it is contemplated that all of the work in probating a particular estate would be done by the forwarding attorney, and that the arrangement would inure to the benefit of each former partner's beneficiary or heir following his death.

The Committee is of the opinion that the foregoing arrangement poses two ethical questions.

The first question concerns the propriety of the above described division of fees during the lifetime of the recipient. The applicable provision of the Rules of Professional Conduct, as adopted by the Board of Governors and approved by the California Supreme Court effective January 1, 1975, is rule 2-108, which provides as follows:

"A member of the State Bar shall not divide a fee for legal services with another person licensed to practice law who is not a partner in or associate of his law firm or law office, unless:

"(1) The client consents to employment of the other person licensed to practice law after a full disclosure that a division of fees will be made; and

"(2) The division is made in proportion to the services performed or responsibility assumed by each; and

"(3) The total fee charged by all persons licensed to practice law is not increased solely by reason of the provision for division of fees."

Rule 2-108 of the Rules of Professional Conduct embodies the long-standing principle that a division of fees can only be made in proportion to the services performed and the responsibility assumed by each lawyer involved. See American Bar Association Code of Professional Responsibility, Disciplinary Rule 2-107 and former canon 34 of the American Bar Association.

The Committee believes that, because of pertinent provisions of the Probate Code relating to fees, the arrangement in question does not violate what is perceived to be the basic policy behind rule 2-108 of the Rules of Professional Conduct; namely, to ensure that the fees charged by more than one lawyer or law firm in respect to a particular matter or case are reasonable. It does not necessarily follow, however, that the arrangement in question is therefore permissible under rule 2-108 of the Rules of Professional Conduct. The rule unequivocally states that a member of the State Bar "shall not" divide a fee with another person licensed to practice law unless, inter alia, "the division is made in proportion to the services performed or responsibility assumed" by each such person. (Rule 2-108(A)(2), Rules Prof. Conduct.) As the arrangement was described to the Committee, the retired or separated lawyer to whom the payments under consideration would be remitted would not perform any services or assume any responsibility in respect to the particular fee-generated estate.

On the other hand, it could be argued that subdivision (A)(2) of rule 2-108 of the Rules of Professional Conduct should not apply to payments pursuant to a separation agreement. However, rule 2-108 does not contain the exception to the general rule pertaining to division of legal fees with another attorney set forth in its predecessor, former rule 22, subdivision (b):

"This rule does not prohibit payment to a former partner or associate pursuant to a separation or retirement agreement."

To characterize this proposed division of probate fees as permissible in the face of such deletion and the unambiguous language of rule 2-108(A)(2) of the Rules of Professional Conduct would, in the opinion of the Committee, be unwarranted. Accordingly, the Committee is of the opinion that the proposed arrangement in question is impermissible under rule 2-108, whether or not a disclosure is made to the executor/client and to the court before which the probate proceeding is pending (cf. rule 2-108(A)(1), Rules Prof. Conduct), and even if the division of fees will not cause an increase in the total fee charged. (Cf. rule 2-108(A)(3), Rules Prof. Conduct.) Had the saving clause previously embodied in former rule 22, subdivision (b), been retained in the new rule, the Committee might have come to a different conclusion.

The second question posed concerns the propriety of the continuation of the arrangement following the death of a party to the agreement under which the surviving partner who acted as attorney in respect to any of the estates designated therein would be obliged to forward a percentage of his fee to the personal representative or designated beneficiary of a deceased former partner. The applicable rule is rule 3-102 of the Rules of Professional Conduct, relating to division of legal fees with persons who are not licensed to practice law. Rule 3-102 provides that:

"A member of the State Bar or a firm of which he is a member shall not directly or indirectly share legal fees except with a person licensed to practice law except that:

"(1) An agreement by a member of the State Bar with his firm, partner, or associate may provide for the payment of money, over a reasonable period of time after his death, to his estate or to one or more specified persons.

"(2) A member of the State Bar who undertakes to complete unfinished legal business of a deceased member of the State Bar may pay to the estate of the deceased member of the State Bar or other person legally entitled thereto that proportion of the total compensation which fairly represents the services rendered by the deceased member of the State Bar.

"(3) A member of the State Bar or firm of which he is a member may include employees not members of the State Bar in a retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement."

The predecessor of this rule, former rule 3 of the Rules of Professional Conduct, had been interpreted to bar payments by ex-partners to a deceased lawyer's surviving spouse or heirs, to the extent that such payments represented a percentage of fees received for legal services rendered after the lawyer's death. (L. A. Co. Bar Assn. Committee on Legal Responsibility and Conduct, opn. No. 162 (1963).) This is the prevailing view across the country. (See, e.g., ABA Committee on Prof. Ethics and Grievances, opn. No. 266 (1945); Assn. of the Bar of New York Ethics Committee, opn. No. 706 (1947).)

The purpose of rule 3-102 of the Rules of Professional Conduct is to discourage or prevent the unauthorized practice of law by lay persons. In this regard, Ethical Consideration 3-8 of the American Bar Association Code of Professional Responsibility is apposite:

"Since a lawyer should not aid or encourage a layman to practice law, he should not practice law in association with a layman or otherwise share legal fees with a layman. This does not mean, however, that the pecuniary value of the interest of a deceased lawyer in his former practice may not be paid to his estate or specified persons such as his widow and heirs. In like manner, profit sharing retirement plans of a lawyer or law firm which include nonlawyer office employees are not improper. These limited exceptions to the rule against sharing legal fees with laymen are permissible since they do not aid or encourage laymen to practice law."

The Committee does not believe that the proposed division of probate fees, with the estate or beneficiary of a former partner of the lawyer forwarding the same, serves either to encourage or perpetuate the unauthorized practice of law by the estate or the beneficiary. Nevertheless, we believe the arrangement is not permissible.

First, if the division is impermissible under rule 2-108(A)(2) of the Rules of Professional Conduct during the recipient's lifetime, then surely it is equally so after his death.

Second, the Committee does not believe that the payments in question fall within the intent of rule 3-102(A)(1) of the Rules of Professional Conduct. Unlike the agreement approved in American Bar Association Committee on Professional Ethics, opinion No. 308 (1963), the instant arrangement is open ended. It does not meet the requirement of rule 3-102(A)(1) that the agreement "... may provide for the payment of money, over a reasonable period of time..." (Emphasis added.) The recipient's estate or beneficiary would apparently be eligible to receive payments until the last client listed in the agreement had died and the estate had been probated by the surviving partner. Moreover, the Committee does not believe these payments could properly be characterized as an approximation of the decedent's interest in matters pending at the time the partnership was dissolved, since there is no way of telling what the amount of the fee to be divided will be until the client dies, and since it is entirely possible that the client's executor will choose another lawyer to represent the estate.

Accordingly, it is the Committee's opinion that the proposed agreement is also impermissible under rule 3-102 of the Rules of Professional Conduct insofar as it provides for a continued division of probate fees, after the death of a partner, with his estate or beneficiary.

This opinion is issued by the Standing Committee on Professional Responsibility and Conduct of The State Bar of California. It is advisory only. It is not binding upon the courts, The State Bar of California, its Board of Governors, any persons or tribunals charged with regulatory responsibilities, or any member of the State Bar.