May a lawyer serve on the board of directors of a nonprofit corporation that, among other things, provides legal services to indigents?

Plain-English summary

A lawyer wished to help form a nonprofit corporation that, among other services, would provide legal representation to indigents, and asked whether she could also serve on its board of directors. The Commission concluded that no Bar Rules are violated if the lawyer merely serves on the board.

Bar Rule 3.2(a)(2) provides that a lawyer "shall not form a partnership or a professional corporation with a person not licensed to practice law if any of the activities of the partnership or corporation consist of the practice of law," and the Reporter's Notes explain the concern that the public interest is not best served by interdisciplinary service organizations on a proprietary level. The inquiry assumed the entity is formed under Title 13-B of the Maine Revised Statutes, is neither a partnership nor a business or professional corporation, and qualifies as a tax-exempt organization (presumably under IRC § 501(c)(3), which requires that earnings not inure to the benefit of any private shareholder or individual).

The Commission concluded that, although the rule does not say so specifically, serving on the board of an organization that by definition is not proprietary, and whose property and activities will not inure to the benefit of its directors or members, is not prohibited. It distinguished Opinion 79, which held a lawyer could not form a business relationship with an accountant that provided legal services, reasoning that Rule 3.2(a)(2) prohibits forming a proprietary relationship with non-lawyers regardless of formal structure. Here the lawyer-director would receive no proprietary benefit from the organization's economic success, unlike an owner of a business enterprise. The Commission cautioned that if the lawyer were instead employed by the organization with compensation tied to income received for her services, there might be a question whether that relationship is proprietary like the one barred in Opinion 79, but because the inquiry did not present that situation, the Commission expressed no opinion on it.

Currency note

This opinion was issued in 1992, before Maine's replacement of the former Maine Bar Rules with the Maine Rules of Professional Conduct (effective August 1, 2009). 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.

Common questions

Q: Can a lawyer sit on the board of a nonprofit that provides legal services to indigents?

A: The opinion concluded yes. It held that serving on the board of a nonprofit, nonproprietary corporation whose property does not inure to its directors is not prohibited by Rule 3.2(a)(2).

Q: Why doesn't this violate the rule against lawyer-nonlawyer practice entities?

A: The opinion reasoned that Rule 3.2(a)(2) targets proprietary relationships with non-lawyers, and a director of a tax-exempt, nonproprietary organization receives no proprietary benefit from its economic success.

Q: Would it matter if the lawyer were employed and paid based on the organization's income?

A: The opinion said that might raise a question whether the relationship is proprietary, like the one barred in Opinion 79, but it expressed no opinion because the inquiry did not present an employment arrangement.

Background and rules framework

The opinion interprets Maine Bar Rule 3.2(a)(2), which bars a lawyer from forming a partnership or professional corporation with a non-lawyer if any of the entity's activities consist of the practice of law. The Commission read the rule to reach proprietary relationships with non-lawyers. This corresponds to ABA Model Rule 5.4 (professional independence of a lawyer; restrictions on nonlawyer ownership and partnership).

Citations and references

Rules of Professional Conduct:

• Model Rule 5.4 (professional independence; nonlawyer ownership and partnership)
• Maine Bar Rule 3.2(a)(2)

Statutes:

• 13-B M.R.S.A. (Maine Nonprofit Corporation Act); IRC § 501(c)(3) (tax-exempt organizations)

Other opinions cited:

• Maine Professional Ethics Commission Op. 79: lawyer-accountant business venture providing legal services

See also

• Maine Ethics Op. 158: Lawyer-Nonlawyer Lobbying Firm
• Maine Ethics Op. 149: Lawyer and Nonlawyer in a Mediation Partnership
• ABA Formal Op. 464: Fee Division With Nonlawyers

Source

• Landing page: https://mebaroverseers.org/attorney_services/opinion.html?id=89839

Original opinion text

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

Issued by the Professional Ethics Commission

Date Issued: December 30, 1992

Question

A Lawyer wishes to participate in the formation of a non-profit corporation which, among other services, will provide legal representation to indigents. The question is whether she can also serve on its Board of Directors.

Opinion

The commission concludes that no Bar Rules are violated if the lawyer merely serves on the Board of Directors. Bar Rule 3.2(a)(2) states that "A lawyer shall not form a partnership or a professional corporation with a person not licensed to practice law if any of the activities of the partnership or corporation consist of the practice of law." The Reporter's Notes to the Rule state:

The commission was aware of the growing interest in interdisciplinary service organizations but believed the public interest would not be best served by their encouragement on a proprietary level, in the legal profession.

The question presented assumes that the entity the lawyer contemplates serving is formed under Title 13-B of the Maine Revised Statutes and is neither a partnership, joint venture, business or professional corporation. It also asks the Commission to assume that the entity qualifies as a tax exempt organization, presumably under Section 501(c)(3) of the Internal Revenue Code (which explicitly requires that the organization's earnings not "inure to the benefit of any private shareholder or individual").

Although the Rule does not specifically so state, we believe that participating on the Board of Directors of an organization that by definition will not be proprietary and whose property and activities will not inure to the benefit of its directors or its members, is not prohibited by the Rule. In Opinion 79 this Commission concluded that a lawyer could not form a business relationship with an accountant that provided legal services to clients. We reasoned that regardless of the formal structure selected for the organization, Rule 3.2(a)(2) prohibited the formation of a proprietary relationship with non lawyers. The question presented here is different because the lawyer as a director will not be permitted to receive any proprietary benefit from the economic success of the organization as she most certainly would if it were a business enterprise in which she were an owner or co-owner. If the lawyer were to be employed by the organization and her compensation related to the income received by the organization for her services, there may be a question as to whether such relationship would be a proprietary one similar to the type prohibited in Opinion 79. Since the Request does not address such a situation, we express no opinion about the permissibility of such an employment relationship.