Ezel / Ethics Opinions / NYC-BAR
NYC-BAR December 29, 2015

Can a New York lawyer split a legal fee with a law firm in DC or abroad where nonlawyers have an ownership or management interest?

Short answer: Yes. Although Rule 5.4 bars New York lawyers from sharing fees with nonlawyers or practicing in nonlawyer-owned firms, the opinion concludes a New York lawyer may divide a fee under Rule 1.5(g) with a lawyer at a firm in DC or a foreign jurisdiction that permits nonlawyer ownership, so long as the lawyer's independent judgment stays free of nonlawyer interference under Rule 5.4(d).

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This page answers the general question as of 2015. Ezel answers yours: whether it's allowed on your facts, under the current New York Rules of Professional Conduct, with citations.

Currency note: this opinion is from 2015
Subsequent statutory amendments, court decisions, or later opinions or rule amendments may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
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 Not binding precedent.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 on this page) is the authoritative source for any reliance.

Plain-English summary

The opinion addresses whether a New York lawyer may share a legal fee with a lawyer at a firm where nonlawyers hold a financial interest or managerial authority, where that firm is located in a jurisdiction that permits such arrangements. The committee starts from New York's restrictions: Rule 1.5(g) permits dividing legal fees between lawyers at different firms, but Rule 5.4(a) prohibits sharing legal fees with nonlawyers, and Rules 5.4(b) and (c) prohibit forming a partnership with a nonlawyer to provide legal services or practicing for profit in an entity where a nonlawyer has an ownership interest or authority to control a lawyer's professional judgment.

The committee notes that the District of Columbia and some foreign jurisdictions allow attorneys to practice in firms where nonlawyers have a financial interest or managerial authority. Following ABA Formal Op. 464 and Philadelphia Bar Op. 2010-7, it concludes that a New York lawyer may divide legal fees with lawyers in such firms. The reasoning is that the possibility the other firm may eventually share some fraction of its portion of the fee with a nonlawyer should not expose the New York lawyer to discipline; a contrary rule would place the New York lawyer at the mercy of the other firm's internal compensation practices.

The committee emphasizes a limit: although inter-firm fee sharing is permissible in these circumstances, the New York lawyer must still comply with Rule 5.4(d), which prohibits nonlawyers from interfering with the lawyer's independent professional judgment.

In practice

Under this opinion, conduct in which a New York lawyer divides a fee with a lawyer at a DC or foreign firm that permits nonlawyer ownership or management is permitted, as the rules stood at the time, under Rule 1.5(g). The opinion holds that the New York lawyer is not exposed to discipline merely because the other firm may ultimately share part of its portion with a nonlawyer, but that the New York lawyer must continue to satisfy Rule 5.4(d) by ensuring no nonlawyer interferes with the lawyer's independent professional judgment.

Common questions

Q: Doesn't Rule 5.4 stop me from sharing fees with a nonlawyer-owned firm?

A: The opinion reads Rule 5.4(a)-(c) as restricting a New York lawyer's own fee sharing with nonlawyers, partnership with nonlawyers, and practice in nonlawyer-owned entities. It concludes those restrictions do not bar dividing a fee under Rule 1.5(g) with a lawyer at a firm in a jurisdiction that permits nonlawyer ownership.

Q: Why isn't this treated as indirect fee sharing with a nonlawyer?

A: Following ABA Formal Op. 464, the opinion reasons that the chance the other firm may later share part of its fee with a nonlawyer should not expose the New York lawyer to discipline, because that would put the lawyer at the mercy of the other firm's internal compensation practices.

Q: What must I still watch for?

A: The opinion holds the New York lawyer must comply with Rule 5.4(d), which prohibits nonlawyers from interfering with the lawyer's independent professional judgment.

Background and rules framework

The opinion interprets New York Rule of Professional Conduct 1.5(g) (division of fees between lawyers at different firms; Model Rule 1.5(e)) against Rule 5.4 (professional independence of a lawyer; Model Rule 5.4), including the Rule 5.4(d) bar on nonlawyer interference with professional judgment. It adopts the reasoning of ABA Formal Op. 464 and Philadelphia Bar Op. 2010-7.

Citations and references

Rules of Professional Conduct:

  • Model Rule 1.5(e) / NY RPC 1.5(g) (division of fees between lawyers at different firms)
  • Model Rule 5.4 / NY RPC 5.4(a), (b), (c), (d) (professional independence; nonlawyer interference)

Other opinions cited:

  • ABA Formal Op. 464 (2013): inter-firm fee sharing with a firm in a nonlawyer-ownership jurisdiction
  • Philadelphia Bar Association Op. 2010-7 (2010): fee sharing with a DC firm

See also

Source

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