LACBA 1995-11-01

When a California landlord-attorney refers prospective clients to subleasing attorneys and is paid a portion of the resulting fees, what must the landlord-attorney do under former Rule 2-200, and what restrictions apply to a letterhead that suggests a firm relationship?

Short answer: The opinion concluded that under former Rule 2-200, a referral fee from a non-firm subleasing attorney to the referring attorney requires written client consent after full written disclosure of the fee division. The committee further concluded that the landlord-attorney's letterhead ('A and Associates') and conduct must not mislead prospective clients about the relationship with subleasing attorneys, per former Rule 1-400(D).

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 Not binding precedent.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 at the bottom of this page, or PDF in the sidebar) is the authoritative source for any reliance.

View original ethics opinion (PDF)

LACBA Ethics Opinion 486: Referrals to Attorneys Subleasing Office Space

Short answer: Under former California Rules 1-100, 1-400, 2-200, 3-310, and 3-500 as analyzed in 1995, the committee concluded that a landlord-attorney's referral of prospective clients to subleasing attorneys, in exchange for a flat percentage of the subleasing attorneys' fees, must comply with Rule 2-200's written-client-consent-after-written-disclosure requirement. The committee identified no attorney-client relationship as arising from the referral itself. The committee concluded that the landlord-attorney's letterhead ("A and Associates") and conduct must not mislead the prospective client about the relationship between the landlord-attorney and the subleasing attorneys under Rule 1-400(D).

Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the Los Angeles County Bar Association's view 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. We do not reproduce the opinion text on this page; follow the linked source for the official text, which controls.

Currency note

This opinion was issued in 1995, before California's November 1, 2018 adoption of the renumbered Rules of Professional Conduct. Former Rule 2-200 corresponds to current Rule 1.5.1 (fee sharing among lawyers not in the same firm); former Rule 1-400 corresponds to current Rules 7.1-7.3; former Rule 3-310 corresponds to current Rule 1.7; former Rule 3-500 corresponds to current Rule 1.4. 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, deadline, or requirement mentioned here.

View original opinion

Plain-English summary

The committee considered Landlord-attorney "A" who proposed to refer matters to attorneys subleasing office space from A in exchange for a flat percentage of the fees earned by the subleasing attorneys. Two tiers were proposed: one rate for subleasing attorneys paying $1,200 monthly rent and a higher rate for those not paying rent. The referral fee was for the referral itself; any additional work A performed would be separately compensated. A did not intend to enter an attorney-client relationship with the referred prospective clients, relying on the subleasing attorneys to inform clients of that fact. A's letterhead described the practice as "A and Associates."

On the first question (ethical duties on referral), the committee identified Rule 2-200 as prohibiting fee division with a lawyer not in the same firm unless (1) the client consents in writing after full written disclosure that a division will be made and of its terms, and (2) the total fee is not increased solely by reason of the division and is not unconscionable under Rule 4-200. The committee identified Rule 2-200's disclosure and consent requirements as applying to all referrals contemplating a fee division to a lawyer outside the firm. Citing LACBA Formal Opinion 467 and Scolinos v. Kolts, the committee identified that disclosure should be obtained as soon as practical, and that referral agreements made without client disclosure and consent are void and unenforceable.

The committee identified that the referral itself does not create an attorney-client relationship between the referring attorney and the prospective client. The client's entry into a relationship with the referred-to attorney for the same matter "should negate a finding" of an attorney-client relationship with the referring attorney. Because no attorney-client relationship exists, the referring lawyer's referral fee does not constitute an "interest in the subject matter of the litigation" requiring disclosure under Rule 3-310(B)(4); Rule 3-310(B) applies only when a lawyer "accepts" or "continues representation."

Citing In re Marriage of Zimmerman, the committee identified that fiduciary duties may still attach to a prospective-client consultation even without formal employment. The committee identified that the referring attorney should clearly communicate in writing that (1) no attorney-client relationship exists and (2) the referring attorney will have no involvement in the representation other than the referral. The committee identified that if the referring attorney does in fact have some involvement (e.g., consultant or associate), the client may form a reasonable expectation of a lawyer-client relationship, triggering Rule 3-310(B) disclosure requirements.

On the second question (letterhead and form of practice), the committee identified letterheads as a form of attorney communication subject to Rule 1-400(A)(2). The committee identified Rule 1-400(D) as prohibiting communications that are untruthful, false, deceptive, or that "tend to confuse, deceive, or mislead the public," and as requiring statements not to omit facts necessary to avoid being misleading. The committee identified the juxtaposition of A's "and Associates" letterhead with referrals to subleasing attorneys as potentially misleading regarding the relationship between A and the subleasing attorneys. Citing ABA Formal Opinion 94-388, the committee identified that attorneys may not mislead prospective clients about the size of a firm, available resources, or affiliations.

The committee identified that the facts were insufficient to address whether a "de facto" law firm or "office-sharing" arrangement existed.

Common questions

Q: Can a California landlord-attorney accept a percentage of a subleasing attorney's fees for referring a client?

A: Per the opinion, yes, only if Rule 2-200's written-client-consent-after-written-disclosure requirement is satisfied and the total fee is not increased solely by the division and is not unconscionable.

Q: Does the referral itself create an attorney-client relationship with the referred client?

A: Per the opinion, no, where the referring attorney does not "accept" or "continue representation." Fiduciary duties may still arise from the prospective-client consultation under In re Marriage of Zimmerman.

Q: When must client consent under Rule 2-200 be obtained?

A: Per the opinion (citing LACBA Opinion 467), as soon as practical. The committee identified Scolinos v. Kolts as holding that referral agreements made without client disclosure and consent are void and unenforceable.

Q: What if the referring attorney does perform some additional work on the matter?

A: Per the opinion, that involvement may create a reasonable expectation in the client of an attorney-client relationship, triggering Rule 3-310(B) disclosure obligations that do not exist for a pure referral.

Q: Can the referring attorney use letterhead that says "A and Associates" when "Associates" may include subleasing attorneys?

A: Per the opinion, the letterhead must not mislead the public about the size of the firm, available resources, or the relationship between A and the subleasing attorneys (Rule 1-400(D)(2)-(3); citing ABA Formal Opinion 94-388).

Background and rules framework

The opinion interprets former California Rule of Professional Conduct 1-100 (definition of "law firm"), Rule 1-400 (advertising and communications), Rule 2-200 (fee division with non-firm lawyers), Rule 3-310 (conflicts disclosure when lawyer has interest in subject matter), and Rule 3-500 (duty to keep client informed). The committee distinguished referral fees from fee divisions within a single firm (which Rule 2-200 does not reach).

Citations and references

Rules of Professional Conduct (former):

California Rule 1-100 (definitions including "law firm")
California Rule 1-400 (advertising and communications)
California Rule 2-200 (fee division with non-firm lawyers)
California Rule 3-310 (conflicts disclosure)
California Rule 3-500 (duty to inform client)

Cases:

In re Marriage of Zimmerman, 16 Cal.App.4th 556 (1993), fiduciary duties extend to prospective clients
Scolinos v. Kolts, 37 Cal.App.4th 635 (1995), referral agreement without client consent void

Other opinions cited:

LACBA Formal Opinion 467 (timing of Rule 2-200 disclosure)
ABA Formal Opinion 94-388 (firm-size representations on letterhead)

Source

Landing page: https://lacba.org/?pg=ethics-opinions
Original PDF: https://lacba.org/docDownload/2010926