Can a lawyer accept an anonymous lump-sum cash payment that is meant to cover legal fees for the lawyer's clients and a co-defendant represented by a different lawyer?
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This page answers the general question as of 2014. Ezel answers yours: whether it's allowed on your facts, under the current rules of professional conduct in your state, with citations.
Plain-English summary
Lawyer A represents two co-defendants in a criminal drug case. A potential third co-defendant is represented by Lawyer B, and the three defendants' shared family is paying the legal fees. An anonymous source dropped off $29,000 in cash at Lawyer A's office for the representation of all three defendants. The Committee analyzed the ethical obligations this triggers; it expressly limited itself to ethics, noting that the income-reporting and currency-transaction questions are legal issues requiring separate analysis.
On accepting the payment, the opinion applies NRPC 1.8(f), which bars a lawyer from accepting compensation from someone other than the client unless the client gives informed consent, there is no interference with the lawyer's independent professional judgment, and confidential information stays protected under Rule 1.6. The Committee concluded the payment is problematic under 1.8(f)(2) because the $29,000 was not delivered for Lawyer A's clients alone; part of it is meant for Lawyer B's client, Defendant 3, who is not Lawyer A's client. The anonymity of the payer compounds the difficulty, and if the arrangement creates a conflict the lawyer must also satisfy Rule 1.7, with informed consent confirmed in writing.
On dividing the money, the opinion concludes NRPC 1.5(e) does not authorize splitting the fee with Lawyer B, because that rule governs fee division between lawyers representing the same client, not lawyers for different clients. Instead, NRPC 1.15(e) controls: when a lawyer holds funds in which two or more persons claim interests, the property must be kept separate until the dispute is resolved. Because it cannot yet be determined how much each lawyer and client is entitled to, the entire sum is disputed, so Lawyer A must safeguard the $29,000 in trust, keep records for seven years, and notify the interested parties, until an agreement on apportionment is reached.
The opinion also flags collateral duties: cash over $10,000 received in a trade or business must be reported to the IRS on Form 8300; Comment 3 to MR 4.1 and NRPC 1.2(d) bear on tainted funds and assisting a crime, subject to Rule 1.6; NRPC 8.4(c) prohibits dishonest or deceitful conduct; and NRPC 4.2 bars Lawyer A from discussing the payment directly with Defendant 3, who is represented by Lawyer B.
In practice
The opinion holds that, under the Nevada rules as they stood at the time, a lawyer who receives an anonymous third-party lump sum covering fees for a co-defendant the lawyer does not represent faces a potential 1.8(f) conflict that may require informed consent (confirmed in writing under Rule 1.7) and, absent an agreed allocation, an obligation to hold the entire amount as disputed property in trust under NRPC 1.15 rather than dividing it under NRPC 1.5(e). The opinion notes that, until the conflict and consent issues are resolved, NRPC 1.8 may prohibit Lawyer A from continuing to represent the two clients.
Common questions
Q: Can a lawyer accept fees paid by an anonymous third party for a client's defense?
A: Per the opinion, third-party payment is governed by NRPC 1.8(f), which requires the client's informed consent, no interference with the lawyer's independent judgment, and protection of confidential information. The Committee found the anonymous, lump-sum payment here problematic because part of it was intended for a co-defendant the lawyer does not represent.
Q: Can the lawyer just give the other co-defendant's lawyer a share of the cash?
A: Not under NRPC 1.5(e). The opinion explains that rule covers fee division between lawyers representing the same client; here the lawyers represent different clients, so the disputed funds must be held in trust under NRPC 1.15 until the parties agree on apportionment.
Q: Does receiving cash trigger any reporting duty?
A: Yes. The opinion states that cash over $10,000 received in a trade or business must be reported to the IRS on Form 8300, and that the lawyer should conduct due diligence to identify the source, since the form asks for it.
Q: Can the lawyer talk to the third co-defendant about the payment?
A: No. The opinion applies NRPC 4.2: because Defendant 3 is represented by Lawyer B, Lawyer A should leave any discussion of the payment to Lawyer B.
Background and rules framework
The opinion interprets Nevada Rule of Professional Conduct 1.8(f) (compensation from a third party), read with NRPC 1.6 (confidentiality), 1.7 (concurrent conflicts), 1.5(e) (division of fees between lawyers in different firms), 1.15 (safekeeping property and disputed funds), 4.2 (communication with represented persons), 1.2(d) (assisting crime or fraud), and 8.4(c) (dishonest conduct). NRPC 1.0A permits consulting the comments to the corresponding ABA Model Rules for guidance, and the opinion relies on the comments to MR 1.8, 1.5, and 1.15.
Citations and references
Rules of Professional Conduct:
- Model Rule 1.8 / Nev. RPC 1.8(f) (compensation from one other than the client)
- Model Rule 1.5 / Nev. RPC 1.5(e) (division of fees between lawyers)
- Model Rule 1.15 / Nev. RPC 1.15 (safekeeping property; disputed funds)
- Model Rule 1.6 / Nev. RPC 1.6 (confidentiality)
- Model Rule 1.7 / Nev. RPC 1.7 (concurrent conflicts of interest)
- Model Rule 4.2 / Nev. RPC 4.2 (communication with represented persons)
- Model Rule 8.4 / Nev. RPC 8.4(c) (dishonesty, fraud, deceit)
Statutes:
- Bank Secrecy Act (Currency and Foreign Transactions Reporting Act), Pub. L. No. 91-508
- IRS Form 8300 / IRS Publication 1544 (reporting cash payments over $10,000)
Cases:
- Caplin & Drysdale, Chartered v. United States, 491 U.S. 617 (1989), forfeiture of legal fees derived from tainted funds
See also
- NV Ethics Op. 9: insurance-defense counsel and a third-party payer's interests
- NY State Bar Op. 1000: fees paid by a third party with adverse interests
Source
- Landing page: https://nvbar.org/for-lawyers/ethics-discipline/ethics-opinions/
- Original PDF: https://nvbar.org/wp-content/uploads/Opinion%2051%20Anonymous%20Payment%20Opinion.pdf
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