ISBA 2014

Can a lawyer employed by a non-lawyer company represent the company's customers in their legal matters?

Short answer: No. A staff attorney for a financial services company may not handle the customers' Social Security appeals: it creates a materially limiting conflict, risks assisting the company's unauthorized practice of law, and amounts to fee sharing with a non-lawyer.

Apply this to your situation

This page answers the general question as of 2014. Ezel answers yours: whether it's allowed on your facts, under the current Illinois Rules of Professional Conduct, with citations.

Disclaimer: Advisory only. Not binding precedent.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked on this page) is the authoritative source for any reliance.

Plain-English summary

A staff attorney is salaried by a financial services company. The company plans to advertise help for individuals denied Social Security disability benefits and then have its salaried staff attorneys handle those individuals' appeals. The committee was asked whether the staff attorney could represent both the company and its customers, and whether the arrangement is fee sharing with a non-lawyer.

On the conflict question, the opinion applies Rule 1.7. Even though the company's and customers' interests appear aligned, the committee finds a concurrent conflict because there is a significant risk the lawyer's employment would materially limit the customer representation: as a salaried employee, the lawyer's customer work is subject to the company's supervision, review, and evaluation, and the company might direct the lawyer to pursue larger-recovery appeals and delay smaller ones. That pressure runs against Rule 5.4(c), which bars a third party who employs or pays the lawyer from directing the lawyer's professional judgment. The committee concludes the lawyer could not reasonably believe the representation would be unaffected, citing ISBA Opinion 90-20.

The opinion also finds a separate unauthorized-practice problem. The company is a non-lawyer entity soliciting customers to provide legal services; under the Illinois Corporation Practice of Law Prohibition Act (705 ILCS 220/1 and 220/4), a corporation may not practice law or do so through a licensed employee. Providing legal services to customers on the company's behalf risks assisting the employer's unauthorized practice in violation of Rule 5.5(a). The committee draws on ISBA Opinion 97-03 and opinions from Maine, New Jersey, and Florida reaching the same result.

On fee sharing, the opinion applies Rule 5.4(a), which prohibits sharing fees with a non-lawyer absent an exception (none of which apply). The committee, following Maine Opinion 180, finds little substantive difference between sharing a fee with a non-lawyer and being paid a salary by a non-lawyer to provide legal services to its fee-paying customers; it is immaterial that the lawyer is not paid directly from the claimants' fees.

In practice

Under this opinion, an Illinois lawyer salaried by a non-lawyer company may not represent the company's customers in their own legal matters. The opinion holds that the arrangement triggers a Rule 1.7 conflict the lawyer cannot reasonably cure, compromises the lawyer's independent judgment under Rule 5.4(c), risks assisting the employer's unauthorized practice of law under Rule 5.5(a), and constitutes fee sharing with a non-lawyer barred by Rule 5.4(a).

Common questions

Q: Can a company's in-house lawyer take on the company's customers as clients?

A: Not in this arrangement. The opinion concludes a salaried lawyer cannot represent the employer's customers in their Social Security appeals, citing conflict, loss of independent judgment, unauthorized practice, and fee sharing.

Q: Why is it a conflict if the company and customer want the same outcome?

A: The opinion finds a significant risk that the company's supervision and economic priorities (favoring larger-recovery claims) would materially limit the customer representation under Rule 1.7 and improperly direct the lawyer's judgment under Rule 5.4(c).

Q: Is paying the lawyer a salary, rather than a cut of the fees, still fee sharing?

A: Yes, in the committee's view. Following Maine Opinion 180, the opinion finds little substantive difference between sharing a fee and being salaried by a non-lawyer to serve its fee-paying customers, so Rule 5.4(a) applies.

Background and rules framework

The opinion interprets Illinois Rules of Professional Conduct 1.7 (concurrent conflicts; Model Rule 1.7), 5.4 (professional independence and fee sharing; Model Rule 5.4), and 5.5 (unauthorized practice; Model Rule 5.5), read against the Illinois Corporation Practice of Law Prohibition Act (705 ILCS 220/1, 220/4).

Citations and references

Rules of Professional Conduct:

Illinois RPC 1.7 (Model Rule 1.7): concurrent conflicts of interest
Illinois RPC 5.4 (Model Rule 5.4): professional independence; fee sharing with non-lawyers
Illinois RPC 5.5 (Model Rule 5.5): unauthorized practice of law

Statutes:

Illinois Corporation Practice of Law Prohibition Act, 705 ILCS 220/1 and 220/4

Cases:

In re Discipio, 163 Ill. 2d 515, 645 N.E.2d 906 (1994), use of legal skills as the practice of law

Other opinions cited:

ISBA Advisory Opinions 90-20 (1991) and 97-03 (1997): salaried lawyer serving an entity's consumer clients
Maine Ethics Opinion 180 (2002); New Jersey Ethics Opinion 716 (2009); Florida Bar Ethics Alert (rev. 2011): sibling-state authorities

Source

Landing page: https://www.isba.org/ethics/opinions/1403

Get today's answer for your situation

You just read a 2014 opinion on this question. Ezel checks the current Illinois Rules of Professional Conduct and answers your specific situation, with citations.

Opens in Ezel Pro. Every answer cites the rules it relies on.