Can a for-profit agency place temporary lawyers with law firms, and how must the agency, the firm, and the temporary lawyer structure the arrangement to satisfy the ethics rules?

Plain-English summary

A firm proposed to operate an agency that would recruit temporary lawyers and place them with law firms and other providers on a per-diem or per-hour basis. The agency would never be the same as the placing firm, and the temporary lawyer would be neither co-counsel nor of-counsel. The agency would bill the firm at a rate higher than the lawyer's compensation and keep the balance. The inquirer asked whether the agency could represent that it operated in conformity with the Code, and whether the arrangement would violate DR 3-101(A) (unauthorized practice) and DR 3-102(A) (dividing fees with a non-lawyer).

In Part I, the committee concluded that, in the manner proposed, the arrangement would assist the agency in the unauthorized practice of law in violation of DR 3-101(A). Citing N.Y. County 587 (1971) and early ABA opinions, it reasoned that a lawyer should not aid a lay agency that intervenes between lawyer and client or that profits from legal services. The committee also found the proposed fee structure, tied to the lawyer's time, raised the fee-splitting concern of DR 3-102(A) and the solicitation concern of DR 2-103.

In Part II, the committee explained that a proper fee structure can be developed to minimize improper agency influence, and that the controlling concern is the temporary lawyer's own compliance with the Code, not the agency's status. Whether working part-time or temporarily, the lawyer must preserve client confidences (Canon 4), avoid conflicts (Canon 5), and act competently (Canons 5 and 6), and must obtain the client's consent after disclosure where a consultant is involved (DR 5-107(A)(1)). The committee drew on the ABA's analysis of for-profit legal-service delivery plans (ABA Op. 87-355 (1987)), noting that participation in a for-profit legal-service plan is prohibited under the Code's DR 2-103(D)(4)(a) even though no such bar exists under the Model Rules.

The committee then set out nine guidelines for a temporary-lawyer placement agency to operate consistently with the Code, to be memorialized in writing: (1) the fee structure should avoid fee-splitting barred by DR 3-102(A), with even a time-based agency fee raising concern; (2) the agency must respect that the temporary lawyer's relationship with the client is a traditional lawyer-client relationship; (3) the agency must not limit or control the time the lawyer spends on a matter; (4) the agency must not control the kinds of matters or how they are handled, or require the lawyer to take a case; (5) the agency must not cause the lawyer to breach confidentiality, and the lawyer must not reveal confidences or secrets to the agency; (6) the agency and firm must not require the lawyer to take a matter posing a potential conflict; (7) the temporary lawyer and firm must disclose the temporary nature of the relationship to the client; (8) the agency must not require the lawyer to handle a matter beyond the lawyer's competence; and (9) the firm must investigate and be satisfied of the temporary lawyer's competence. The committee concluded that although such an agency can be properly established under these guidelines, the agency as proposed was improper, and it flagged that Article 15 of the New York Judiciary Law and other authorities may also govern.

Currency note

This opinion was issued in 1988, before New York replaced the Code of Professional Responsibility (the Disciplinary Rules cited here) with the New York Rules of Professional Conduct, effective April 1, 2009. Professional independence and fee-sharing with non-lawyers are now governed by Rule 5.4, the unauthorized practice by Rule 5.5, competence by Rule 1.1, and confidentiality by Rule 1.6; the committee later modified the first of these guidelines in Formal Opinion 1989-2. 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 for-profit agency place temporary lawyers with law firms at all?

A: The committee concluded that such an agency can be properly established if it follows the nine guidelines, but that the agency as proposed was improper because of how it would operate and its fee structure.

Q: What was wrong with the proposed arrangement?

A: The committee concluded the proposed manner would assist the unauthorized practice of law under DR 3-101(A) and that the time-based fee raised the fee-splitting concern of DR 3-102(A) and the solicitation concern of DR 2-103.

Q: Can the agency tell the temporary lawyer how to handle a matter or how long to spend?

A: The committee concluded no; the guidelines require that the agency not control the kinds of matters, the manner of handling them, or the time the lawyer spends, and not require the lawyer to take any particular case.

Q: Does the client have to be told a temporary lawyer is involved?

A: The committee concluded yes; the temporary lawyer and the firm have a duty to disclose the temporary nature of the relationship to the client under DR 5-107(A)(1).

Q: Who is responsible for the temporary lawyer's competence?

A: The committee concluded the firm must investigate and be satisfied of the temporary lawyer's competence to handle the assigned matter, as in any hiring decision, under DR 6-101.

Background and rules framework

The opinion applied New York Code DR 3-101(A) (aiding the unauthorized practice), DR 3-102(A) (dividing fees with a non-lawyer), DR 2-103 (solicitation and recommendation of employment), DR 5-107 and DR 5-107(A)(1) and (B) (compensation and direction from one other than the client; client consent), DR 4-101 (confidences and secrets), DR 5-105 (conflicts), and DR 6-101 (competence). These correspond to ABA Model Rule 5.4 (professional independence and fee-sharing), Model Rule 5.5 (unauthorized practice), Model Rule 1.1 (competence), and Model Rule 1.6 (confidentiality).

Citations and references

Rules of Professional Conduct:

• New York Code DR 3-101(A), DR 3-102(A), DR 2-103, DR 5-107(A)(1), DR 5-107(B), DR 4-101, DR 5-105, DR 6-101 (applied in the opinion)
• MR 5.4 (professional independence; fee-sharing); MR 5.5 (unauthorized practice); MR 1.1 (competence); MR 1.6 (confidentiality)

Statutes:

• New York Judiciary Law Article 15, sections 476(a), 479, 482, 491, 495 (noted as potentially governing)

Other opinions cited:

• N.Y. County 587 (1971): aiding a lay intermediary in legal services
• ABA Formal Op. 87-355 (1987): for-profit legal-service delivery plans
• ABA Op. 8 (1925); ABA Op. 10 (1926): lay intermediaries and the practice of law

See also

• NYC Bar Formal Op. 1989-2: Temporary Lawyers and Placement Agency Fees
• NYC Bar Formal Op. 1994-3: For-Profit Lawyer Referral Services

Source

• Landing page: https://www.nycbar.org/reports/formal-opinion-1988-3/
• Original PDF: https://www.nycbar.org/wp-content/uploads/2023/05/bf223f7976bcff3590c37d242ef605ed.pdf