Can a Florida lawyer split fees with an out-of-state lawyer whose firm has nonlawyer owners?

Plain-English summary

The opinion answers a Board of Governors inquiry about Florida lawyers who co-counsel with out-of-state lawyers whose firms have nonlawyer owners, an arrangement permitted in a small number of jurisdictions such as Washington, D.C. The opinion starts from Rule 4-5.4, which bars a Florida lawyer from sharing fees with nonlawyers, and Rule 4-5.5 on unlicensed practice, and confirms that fee division with out-of-state lawyers is permitted only where those lawyers are authorized to provide the services and the division complies with Florida's Rule 4-1.5(g).

Applying those rules, the opinion concludes that sharing fees with an out-of-state lawyer in accordance with Florida's rules does not violate Rule 4-5.4 merely because a nonlawyer owner of the out-of-state firm may ultimately receive part of that lawyer's fee. The Florida lawyer does not control the organization or ownership of the other firm, which may be structured under its own jurisdiction's rules, and the opinion reasons that a contrary result would needlessly expose Florida lawyers and deprive clients of out-of-state counsel of their choice.

The opinion adopts the reasoning of ABA Formal Opinion 464 and notes its caution: under Model Rule 5.4(c), the Florida lawyer must maintain professional independence and not permit a nonlawyer in the other firm to interfere with the lawyer's independent judgment. The opinion expressly does not address a Florida lawyer becoming a partner, shareholder, or employee of a nonlawyer-owned firm.

In practice

Under the Florida rules as they stood at the time of this 2017 opinion, a fee division with an out-of-state lawyer in a nonlawyer-owned firm is permitted when the out-of-state lawyer is authorized to provide the services, the ownership structure is lawful and complied with in that firm's home jurisdiction, and the division meets Rule 4-1.5(g). The opinion makes the controlling factors the out-of-state lawyer's authority and the Florida lawyer's continued professional independence; the opinion identifies the fact that the Florida lawyer does not control the other firm's ownership as the reason the arrangement is not improper fee sharing. The opinion does not reach a Florida lawyer joining such a firm.

Common questions

Q: Does a Florida lawyer violate the no-fee-sharing rule by splitting a fee with a D.C. firm that has nonlawyer owners?

A: No, under this opinion, as long as the split follows Florida's rules. The opinion concludes a Florida lawyer is not subject to discipline merely because a nonlawyer owner of the out-of-state firm may receive part of that lawyer's fee, because the Florida lawyer does not control the other firm's ownership.

Q: What must the Florida lawyer still guard against?

A: Loss of professional independence. The opinion adopts ABA Formal Opinion 464 and emphasizes Model Rule 5.4(c): the lawyer must not let a nonlawyer in the other firm interfere with the lawyer's independent professional judgment.

Q: Does this opinion let a Florida lawyer join a nonlawyer-owned firm?

A: No. The opinion expressly does not address a Florida lawyer becoming a partner, shareholder, employee, or other formal member of a firm with nonlawyer ownership.

Background and rules framework

The opinion interprets Rule 4-5.4 (professional independence and the bar on fee sharing with nonlawyers, Model Rule 5.4), Rule 4-5.5 (unlicensed practice, Model Rule 5.5), and Rule 4-1.5(g) (division of fees between lawyers, Model Rule 1.5(e)) of the Rules Regulating The Florida Bar. It builds on Florida Opinions 90-8, 88-10, and 62-3 on fee division with out-of-state counsel.

Citations and references

Rules of Professional Conduct:

• Model Rule 5.4 / Fla. Rule 4-5.4(a) (professional independence; fee sharing with nonlawyers)
• Model Rule 5.5 / Fla. Rule 4-5.5 (unlicensed practice of law)
• Model Rule 1.5(e) / Fla. Rule 4-1.5(g) (division of fees between lawyers)

Other opinions cited:

• ABA Formal Op. 464 (2013): division of fees with a firm having nonlawyer owners
• New York City Bar Formal Op. 2015-8; Philadelphia Bar Op. 2010-7
• Fla. Ethics Ops. 90-8, 88-10, 62-3

See also

• TX Ethics Op. 704: Texas Lawyer Joining a D.C. Firm With a Nonlawyer Partner
• Florida Bar Op. 18-1: Payments to For-Profit Qualifying Providers

Source

• Landing page: https://www.floridabar.org/etopinions/opinion-17-1/
• Original PDF: https://www-media.floridabar.org/uploads/2017/12/FL-Bar-Ethics-Op-17-1-1.pdf

Original opinion text

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

FLORIDA BAR ETHICS OPINION
OPINION 17-1
June 23, 2017
Advisory ethics opinions are not binding.
Florida Bar members may divide legal fees with an out-of-state lawyer whose firm
includes non-lawyer ownership where: the out-of-state lawyer is providing only services that the
out-of-state lawyer is authorized by law to provide; nonlawyer ownership of the out-of-state firm
is permitted in the jurisdiction where that law firm is located; the out-of-state firm is in
compliance with that jurisdiction’s requirements; and the division of fees complies with Florida
Bar rules on fee division. The opinion does not address a Florida Bar member becoming a
partner, shareholder, employee, or other formal arrangement with a law firm with nonlawyer
ownership.
RPC: Rules 4-1.5(g), 4-5.4(a), 4-5.5
Opinions: 90-8; 88-10; 62-3; ABA Formal Opinion 464 (2013); New York City Bar Formal
Ethics Opinion 2015-8 (2015); and Philadelphia Bar Association Ethics Opinion
2010-7 (2010)
The Professional Ethics Committee has been asked by the Board of Governors of The
Florida Bar to give an opinion on the issue of whether Florida Bar members may divide fees with
out-of-state lawyers where those out-of-state lawyers are members of law firms in which there is
nonlawyer ownership because nonlawyer ownership is allowed in the jurisdiction where the
other law firm is located.
Florida Bar members frequently work with lawyers outside their firms in representing
clients. Florida Bar members also co-counsel cases with lawyers who are admitted solely in
jurisdictions outside of Florida. Lawyers admitted solely in jurisdictions outside Florida are
authorized to provide legal services in Florida under limited circumstances. Co-counselling with
out-of-state lawyers thus raises potential concerns regarding assisting in the unlicensed practice
of law and improper division of legal fees. Florida Bar members may divide fees with lawyers
from other jurisdictions only where the out-of-state lawyers are providing legal services to the
same client that the out-of-state lawyers are authorized by other law to provide and only in
compliance with Florida Bar rules. See, Rules 4-1.5(g), 4-5.4(a), 4-5.5, and Florida Ethics
Opinions 90-8, 88-10, and 62-3.
Florida Bar members are prohibited from partnering or sharing legal fees with
nonlawyers. See, Rule 4-5.4. Most U.S. jurisdictions share a similar prohibition. The only
United States jurisdictions that currently permit nonlawyer ownership of law firms are
Washington, D.C. and Washington state. Nonlawyer ownership of law firms is permitted in
Canadian provinces Ontario, British Columbia and Quebec, England, Wales, Scotland, Germany,

the Netherlands, Brussels, and New Zealand.1 Requirements and limitations on nonlawyer
ownership vary in jurisdictions that allow it.
This opinion addresses Florida Bar members in co-counseling and dividing fees with out-
of-state lawyers with whom the Florida Bar members are permitted to divide fees as noted above,
and in which the out-of-state lawyers practice in law firms with nonlawyer ownership as
permitted by the other jurisdiction.
The committee is of the opinion that sharing fees with an out-of-state lawyer in
accordance with Florida rules, law, and ethics opinions does not violate the prohibition against
fee sharing set forth in Rule 4-5.4. A Florida Bar member should not be subject to discipline
merely because a nonlawyer ultimately may receive some part of the out-of-state lawyer’s fee
solely by virtue of being an owner of the out-of-state law firm. The Florida Bar member has no
control over the organization and ownership of the out-of-state firm. The out-of-state law firm
may be organized in accordance with the rules of its own jurisdiction. The fact that the
nonlawyer ownership would not be permitted in Florida should not impact what the out-of-state
lawyer is permitted to do under the rules of that jurisdiction. To opine otherwise unnecessarily
places Florida Bar members at risk and deprives clients of counsel of their own choosing from
other jurisdictions.
Other jurisdictions that have addressed the issue have reached similar conclusions. See,
ABA Formal Opinion 464 (2013); New York City Bar Formal Ethics Opinion 2015-8 (2015);
and Philadelphia Bar Association Ethics Opinion 2010-7 (2010).
ABA Formal Opinion 464 also cautions lawyers that they:
. . .must continue to comply with the requirement of Model Rule 5.4(c) to
maintain professional independence. Even if the other law firm may be governed
by different rules regarding relationships with nonlawyers, a lawyer must not
permit a nonlawyer in the other firm to interfere with the lawyer’s own
independent professional judgment. As noted above, the actual risk of improper
influence is minimal. But the prohibition against improper nonlawyer influence
continues regardless of the fee arrangement.
The committee agrees with and adopts the reasoning of the ABA Standing Committee on
Ethics and Professional Responsibility in formal opinion 464 above.
Finally, the committee notes that this opinion does not address a Florida Bar member
becoming a partner, shareholder, associate, or other formal arrangement in a law firm that is
permitted to have nonlawyer ownership in its home jurisdiction and does so in compliance with
the rules of its home jurisdiction. Neither does this opinion address the issue of a Florida Bar
member who also is admitted to practice in another jurisdiction where nonlawyer ownership is
permitted joining a law firm with nonlawyer owners under the rules of the other jurisdiction.
1 Alternative Law Business Structures ABA Issue Paper (April 5, 2011) available at:
http://www.americanbar.org/content/dam/aba/administrative/ethics_2020/abs_issues_paper.authc
heckdam.pdf.