Can a Florida lawyer pay a paralegal or legal assistant a bonus based on the number of hours they billed?

Plain-English summary

A family law attorney asked whether a legal assistant could be paid a bonus based on the number of hours the assistant worked on a particular client's case, where the attorney bills the assistant's time at an itemized hourly rate and would fund the bonus separately from the fees received. The opinion answers that this specific method is not permitted.

The committee applies Rule 4-5.4(a), which bars a lawyer or law firm from sharing legal fees with a nonlawyer, and its exception in Rule 4-5.4(a)(4), which allows bonuses to nonlawyer employees "based on their extraordinary efforts on a particular case or over a specified time period," provided the payment is not based on generating clients or business and is not calculated as a percentage of the firm's legal fees. The opinion concludes that a bonus calculated solely on the hours the assistant incurred is "tantamount to a finding that every single hour incurred was an extraordinary effort," which is very unlikely to be true; unless every hour was a truly extraordinary effort, a bonus computed that way is impermissible. The number of hours may, however, be considered as one of several factors in setting the bonus. The opinion also notes Rule 4-7.2(c)(8) (now Rule 4-7.17(b)) prohibits giving anything of value for recommending the lawyer's services, and cites Florida Opinion 89-4 (no bonus to a marketing manager based on a percentage of business generated).

In practice

Under the Florida rules as they stood at the time of this 2002 opinion, the controlling line the opinion draws is between rewarding extraordinary effort and converting a bonus into a disguised share of fees. The opinion holds that a bonus keyed only to hours worked fails Rule 4-5.4(a)(4) because it equates routine billed time with extraordinary effort, and it also forbids bonuses calculated as a percentage of the firm's fees or of a gross recovery, or based on client generation. Per the opinion, hours worked remain a permissible factor among others in a discretionary bonus.

Common questions

Q: Can I pay my paralegal a bonus at all?

A: Yes. The opinion confirms Rule 4-5.4(a)(4) permits bonuses to nonlawyer employees based on their extraordinary efforts on a particular case or over a specified time period.

Q: Why can't the bonus just be a rate times the hours the paralegal billed?

A: The opinion concludes that paying a bonus solely on hours incurred treats every hour as an extraordinary effort, which is very unlikely to be true, so unless every hour truly was extraordinary the method is impermissible.

Q: Can hours worked be considered at all in the bonus?

A: Yes. The opinion states the number of hours worked on a matter or over a period may be considered as one of several factors in determining the bonus; it just cannot be the sole basis.

Q: What kinds of bonuses are flatly prohibited?

A: Per the opinion, a bonus cannot be calculated as a percentage of the firm's legal fees or of the gross recovery, and cannot be based on generating clients or business for the firm.

Background and rules framework

The opinion interprets Rule 4-5.4 (professional independence of a lawyer, Model Rule 5.4) of the Rules Regulating The Florida Bar, specifically the fee-sharing prohibition in Rule 4-5.4(a) and the bonus exception in Rule 4-5.4(a)(4). It also references Rule 4-7.2(c)(8) (since renumbered Rule 4-7.17(b)) on giving value for recommendations.

Citations and references

Rules of Professional Conduct:

• Model Rule 5.4 / Fla. Rule 4-5.4(a), (a)(4) (sharing fees with nonlawyers; bonus exception)
• Fla. Rule 4-7.2(c)(8) (now Rule 4-7.17(b)) (giving value for recommending the lawyer's services)

Other opinions cited:

• Fla. Ethics Op. 89-4 (no bonus to a firm marketing manager based on a percentage of business generated)

See also

• Florida Bar Op. 17-1: Fee Division With a Nonlawyer-Owned Out-of-State Firm
• Florida Bar Op. 18-1: Payments to For-Profit Qualifying Providers
• Florida Bar Op. 12-2: Nonlawyer Use of a Lawyer's E-Portal Credentials

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-02-1/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-02-1-1.pdf

Original opinion text

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

FLORIDA BAR ETHICS OPINION
OPINION 02-1
January 11, 2002
Advisory ethics opinions are not binding.
An attorney may not give a bonus to a nonlawyer employee solely based on the number
of hours worked by the employee.
RPC: 4-5.4
A member of The Florida Bar has requested an advisory ethics opinion. The operative
facts as presented in the inquiring attorney’s letter and telephone call are as follows.
Specifically, the attorney inquires:
May I bonus a non-lawyer employee based on the number of hours the non-
lawyer employee has worked on a case for a particular client?
As a family law attorney I do virtually nothing at a flat rate and certainly no work
is done by percentage. I bill my time and the time of my legal assistant at
separate hourly rates which are itemized on the client’s bill and described in the
written fee agreement with the client. I would like to bonus my employees based
on their own productivity. I would not be utilizing any portion of the fees
received by me for that purpose.
Although the attorney did not specifically state it in the written request, during the hotline
call the attorney proposed the following: If the legal assistant works ten hours on a case and the
attorney bills the client ten hours of legal assistant time, may the attorney pay a bonus to the
legal assistant based on a certain rate times ten hours?
Rule 4-5.4(a), Florida Rules of Professional Conduct, provides that a lawyer or law firm
“shall not share legal fees with a nonlawyer.” Rule 4-5.4(a)(4), specifically deals with the issue
of “bonus” payments to nonlawyer personnel in a law firm. The rule provides as follows:
(a) Sharing Fees with Nonlawyers. A lawyer or law firm shall not share legal
fees with a nonlawyer, except that:

(4) bonuses may be paid to nonlawyer employees based on their extraordinary
efforts on a particular case or over a specified time period, provided that the
payment is not based on the generation of clients or business and is not calculated
as a percentage of legal fees received by the lawyer or law firm.
Pursuant to Rule 4-5.4(a)(4), the inquirer may pay the firm’s legal assistant a bonus, but
that bonus cannot be based in any way upon a percentage of fees generated by the legal assistant
or the firm and cannot be based upon generating clients for the firm. Bonuses to non-lawyer

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employees cannot be calculated as a percentage of the firm’s fees or of the gross recovery in
cases on which the non-lawyer worked. See Florida Ethics Opinion 89-4 (law firm cannot pay to
firm marketing manager a bonus based upon percentage of business she generates for the firm).
Rule 4-7.2(c)(8) [See current Rule 4-7.17(b)], Florida Rules of Professional Conduct, further
prohibits attorneys from giving “anything of value to a person for recommending the lawyer’s
services. . . . ”
Based on the rules and opinion, the inquiring attorney may pay the legal assistant a bonus
based on the legal assistant’s extraordinary efforts on a particular case or over a specific period
of time. While the number of hours the legal assistant works on a particular case or over a
specific period of time is one of several factors that can be considered in determining a bonus for
the legal assistant, it is not the sole factor to be considered. It must be remembered that the rule
allows a bonus to be paid to a nonlawyer based on “extraordinary efforts” either in a particular
case or over a specific time period. A bonus which is solely calculated on the number of hours
incurred by the legal assistant on the matter is tantamount to a finding that every single hour
incurred was an “extraordinary effort”, and such a finding is very unlikely to be true. Therefore,
unless every single hour incurred by the legal assistant was a truly extraordinary effort, it would
be impermissible for the inquiring attorney to pay a bonus to his legal assistant calculated in the
manner the inquiring attorney has proposed. However, the number of hours incurred by the legal
assistant on the particular matter or over a specified time period may be considered by the lawyer
as one of the factors in determining the legal assistant’s bonus.