Can a lawyer take a cut of a non-legal company's fees for reviewing forms the company prepares for its customers?

Plain-English summary

The committee responds to a New York lawyer who proposed to review citizenship-application forms prepared by an out-of-state non-legal organization (NLO) for the NLO's customers, with the NLO paying the lawyer a percentage of the fees it collected from those customers under a fee schedule the NLO set. Rather than issue a single yes or no, the opinion identifies as many as 21 rules that may bear on the arrangement and works through the principal ones, noting that several determinative questions (such as whether particular conduct is the unauthorized practice of law) turn on substantive law outside the committee's jurisdiction.

The threshold issue is which jurisdiction's rules apply under Rule 8.5; the opinion assumes the lawyer is admitted only in New York. It then flags that the arrangement may violate Rule 5.5(a) if the legal review constitutes unauthorized practice elsewhere, and Rule 5.5(b) if the lawyer thereby aids the NLO's unauthorized practice. It also notes that if the venture offers both legal and non-legal services to the public, Rule 5.8 generally prohibits such a multidisciplinary practice unless the non-legal firm is on the Appellate Divisions' approved list (architecture, CPA, engineering, land surveying, certified social work), which does not include immigration-services businesses.

On the payment structure, the opinion concludes the arrangement has the indicia of fee splitting with a nonlawyer under Rule 5.4(a) (especially if the NLO charges customers more than it pays the lawyer) and could operate as an indirect referral fee under Rule 7.2(a). It then explains that if the lawyer's clients are the individual customers, the lack of direct contact undermines the duties of competence (Rule 1.1), consultation and communication (Rules 1.2(a), 1.4), reasonable and disclosed fees (Rule 1.5, with control over fees ceded to the NLO), confidentiality and informed consent to disclose information to the NLO (Rule 1.6), a personal-interest conflict from dependence on the NLO for referrals and fees (Rule 1.7(a)(2), citing In re Lefkowitz), and the conditions for accepting payment from a non-client (Rule 1.8(f)). The committee concludes the lawyer must analyze the arrangement under all of these rules before proceeding.

Common questions

Q: Can I take a percentage of a non-legal company's fees for doing legal review of its customers' forms?

A: The opinion does not categorically forbid it, but concludes the structure has the indicia of fee splitting with a nonlawyer under Rule 5.4(a) and could be an indirect referral fee under Rule 7.2; a disciplinary authority would likely scrutinize it closely.

Q: Does it matter that I never talk to the company's customers?

A: Yes. Per the opinion, if those customers are your clients, the lack of direct contact makes it difficult to satisfy competence (Rule 1.1), communication (Rules 1.2(a), 1.4), fee-disclosure (Rule 1.5), and informed-consent-to-disclose (Rule 1.6) duties.

Q: Could reviewing the company's forms make me complicit in unauthorized practice?

A: The opinion concludes that if the NLO is engaged in the unauthorized practice of law, the lawyer's involvement would likely violate Rule 5.5(b); whether the NLO is doing so is a question of substantive law the committee cannot decide.

Q: Is this a prohibited multidisciplinary practice?

A: Possibly. The opinion explains that Rule 5.8 generally bars ventures offering both legal and non-legal services unless the non-legal firm is on the Appellate Divisions' approved list, which does not include immigration-services businesses.

Background and rules framework

The opinion canvasses a wide range of New York Rules, anchored by Rule 5.4 (fee sharing and independence; Model Rule 5.4), Rule 5.5 (unauthorized practice; Model Rule 5.5), Rule 7.2 (payment for recommendations; Model Rule 7.2), Rule 5.8 (cooperative business arrangements with non-legal professionals), and the client-duty rules 1.1, 1.2, 1.4, 1.5, 1.6, 1.7, and 1.8(f), with Rule 8.5 governing choice of law. Many sub-questions, including unauthorized practice and the reach of Judiciary Law § 491, are noted as substantive-law matters beyond the committee's jurisdiction.

Citations and references

Rules of Professional Conduct:

• Model Rule 5.4 / NY RPC 5.4(a), (c) (fee sharing with nonlawyers; independence)
• Model Rule 5.5 / NY RPC 5.5(a), (b) (unauthorized practice; aiding nonlawyers)
• Model Rule 7.2 / NY RPC 7.2(a), (b) (payment for recommendations; permitted organizations)
• Model Rule 1.7 / NY RPC 1.7(a)(2) (personal-interest conflict)
• Model Rule 1.8(f) / NY RPC 1.8(f) (compensation from one other than the client)

Statutes:

• N.Y. Judiciary Law § 491 (prohibition on nonlawyer fee division), referenced as outside jurisdiction

Cases:

• In re Lefkowitz, 47 A.D.3d 326 (1st Dep't 2007), divided loyalties and aiding unauthorized practice

See also

• NYC Bar Ethics Op. 2006-3: Outsourcing legal support services overseas
• NYC Bar Ethics Op. 2017-1: Payment of fees to a legal referral service
• ABA Formal Op. 464: Fee division with a firm that shares fees with nonlawyers

Source

• Landing page: https://www.nycbar.org/reports/formal-opinion-2014-1-ethical-considerations-for-lawyers-contemplating-business-arrangements-with-non-legal-organizations/
• Original PDF: https://www.nycbar.org/wp-content/uploads/2023/05/20072636-FormalOpinion2014-1RelationshipwithNonlawyerOrganizations.pdf