Can a New York lawyer enter a collaboration agreement with an independent paralegal who refers clients to the lawyer and prepares forms, and how may the lawyer pay the paralegal?
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This page answers the general question as of 2023. Ezel answers yours: whether it's allowed on your facts, under the current New York Rules of Professional Conduct, with citations.
Plain-English summary
The inquirer is an immigration lawyer approached by an individual who runs a document-preparation business and is described as a "paralegal." The paralegal proposed a "collaboration agreement" involving both referring clients to the lawyer's firm and completing forms to be submitted to immigration authorities. The committee notes it does not advise on structuring business arrangements and instead identifies the governing ethical principles. The opinion also declines to opine on whether calling the independently employed person a "paralegal" is appropriate.
The opinion sets out the controlling principles. First, under Rule 5.4(a), the lawyer must not share legal fees with the paralegal, though the paralegal may be compensated for the value of paralegal services on an hourly or per-document basis. Second, under Rule 7.2(a), the lawyer may accept referrals from the paralegal but must not pay the paralegal a fee for referrals. Third, under Rule 5.5(b), the lawyer must not aid the paralegal in the unauthorized practice of law, although whether particular collaborative actions amount to unauthorized practice is a question of law on which the committee does not opine.
Fourth, under Rule 5.3, the lawyer must appropriately supervise the paralegal's work on the lawyer's client matters, a duty that extends to nonlawyers outside the firm working on firm matters and includes instruction on confidentiality. Fifth, the lawyer must not allow, assist, or induce the paralegal to do what the lawyer could not do directly, such as in-person solicitation. Finally, the opinion applies Rule 5.8, concluding that paragraph (c) allows non-exclusive reciprocal referral arrangements with a nonlegal professional, and emphasizing that any such arrangement must be non-exclusive so the lawyer continues to exercise independent professional judgment.
In practice
Under this opinion, a lawyer may collaborate with an independent paralegal who refers clients and prepares forms, provided the lawyer does not split legal fees (Rule 5.4(a)) or pay for referrals (Rule 7.2(a)), pays only for the value of paralegal services, supervises the paralegal's work on client matters under Rule 5.3, does not aid the unauthorized practice of law (Rule 5.5(b)), and keeps any reciprocal referral arrangement non-exclusive under Rule 5.8.
Common questions
Q: Can the lawyer pay the paralegal for sending clients?
A: Per the opinion, no. Under Rule 7.2(a) the lawyer may accept referrals but must not pay the paralegal a fee for them. The paralegal may be paid for the value of paralegal services on an hourly or per-document basis.
Q: Can the lawyer split legal fees with the paralegal?
A: Per the opinion, no. Rule 5.4(a) prohibits sharing legal fees with a nonlawyer.
Q: Does the lawyer have to supervise an outside paralegal's work?
A: Per the opinion, yes. Rule 5.3 requires appropriate supervision, and the duty extends to nonlawyers outside the firm working on firm matters, including instruction on confidentiality.
Q: Can the referral arrangement be exclusive?
A: Per the opinion, no. Under Rule 5.8(c), reciprocal referral arrangements with a nonlegal professional must be non-exclusive so the lawyer continues to exercise independent professional judgment.
Background and rules framework
The opinion interprets New York Rule 5.4(a) (no fee sharing with nonlawyers), Rule 7.2(a) (no payment for referrals), Rule 5.5(b) (no aiding the unauthorized practice of law), Rule 5.3 (supervision of nonlawyers), and Rule 5.8 (relationships with nonlegal professionals). These correspond to ABA Model Rules 5.4, 7.2, 5.5, and 5.3; Rule 5.8 is a New York provision without a direct Model Rule analogue.
Citations and references
Rules of Professional Conduct:
- New York Rules of Professional Conduct 5.3, 5.4(a), 5.5(b), 5.8, 7.2(a)
- ABA Model Rules 5.3, 5.4, 5.5, 7.2 (analogues)
Other opinions cited:
- N.Y. State 1068 (2015): no fee-splitting with a nonlawyer; not inducing solicitation
- N.Y. State 942 (2012): giving value for referrals violates Rule 7.2(a)
- N.Y. State 1132 (2017): paying for marketing is permitted, paying for a recommendation is not
- N.Y. State 255 (1972): describing a "paralegal"
See also
- CA Op. 1995-141: Lawyers Providing Non-Legal Services
- ISBA Op. 25-02: For-Profit Referral Service
- LACBA Ethics Op. 467: Referral Fees & Client Consent
Source
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