Can a law firm let a nonlawyer staff leasing company run debt-consolidation services for its clients under the firm's name?

Plain-English summary

A nonlawyer "staff leasing company" (SLC) proposed to provide debt-consolidation and financial-planning services to a law firm's clients. Advertisements would say the firm provided the services; clients would come to the firm's office to meet SLC staff; the SLC would generate all creditor correspondence under the firm's name, handle creditor calls, and prepare bankruptcy papers at the firm's direction, referring only "difficult" legal questions to the firm. The firm would bill clients and be billed in turn by the SLC, which would rent the office and sublet part of it to the firm.

The committee held the arrangement improper. A lawyer may not aid a nonlawyer in the unauthorized practice of law (DR 3-101(A)) or form a partnership with a nonlawyer where any of its activities is the practice of law (DR 3-103(A)). Even services a nonlawyer could perform become improper when the structure lets the nonlawyer hold itself out as offering legal services (citing N.Y. State 557 and In re Schenk). Nonlawyers may serve a firm's clients only where the lawyers supervise the delegated work and maintain a direct relationship with the clients (EC 3-6). Here the firm would not supervise the SLC and would have minimal client contact, so DR 3-101(A) barred the plan. The committee also observed, while noting it does not decide questions of law, that Judiciary Law Sections 495, 478, and 484 forbid a corporation or association from practicing law, and that assisting illegal conduct is unethical (DR 7-102(A)(8); EC 1-5).

The committee identified three further problems. Using the firm's name on creditor letters and advertising the services without disclosing that nonlawyers handle most of the work would be misleading (DR 2-101(A), citing N.Y. City 80-26 and N.Y. State 179). Compensating the SLC by commission or percentage of business volume would be improper fee sharing with a nonlawyer (DR 3-102(A), citing N.Y. State 565). And while there is no per se bar on the landlord-tenant arrangement, the firm must avoid financial interests that could affect its independent judgment (DR 5-101(A)). Finally, having nonlawyer SLC staff interview clients and act as intermediaries endangers confidences and secrets, so the arrangement would be improper unless each client is told, before any contact with SLC staff, that the communications may not be protected as confidences or secrets (DR 4-101(B), (C)).

Currency note

This opinion was issued in 1992, under New York's former Code of Professional Responsibility, which New York replaced with the Rules of Professional Conduct in 2009. The provisions on unauthorized practice, fee sharing, nonlawyer assistants, and advertising have since been renumbered and revised. 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 law firm let a nonlawyer company run a service line under the firm's name?

A: Not the way proposed. The committee held that where the firm does not supervise the nonlawyers' work or keep a direct relationship with clients, the arrangement aids the unauthorized practice of law (DR 3-101(A), 3-103(A)).

Q: What is wrong with advertising the service under the firm's name?

A: It would mislead the public. The committee said both the creditor letters and any advertising would be misleading under DR 2-101(A) unless they disclosed that nonlawyers handle the bulk of the work.

Q: Can the firm pay the nonlawyer company a percentage of the business?

A: No. The committee explained that commission or percentage-of-volume compensation would be improper fee sharing with a nonlawyer under DR 3-102(A).

Background and rules framework

The opinion interpreted New York's former Code: DR 3-101(A) (aiding unauthorized practice), DR 3-103(A) (partnership with a nonlawyer), DR 3-102(A) (sharing fees with a nonlawyer), DR 2-101(A) (false or deceptive communications), DR 4-101(B), (C) (confidences and secrets), DR 5-101(A) (personal-interest conflicts), and DR 7-102(A)(8) (illegal conduct), with EC 1-5, 3-5, and 3-6, against Judiciary Law Sections 495, 478, and 484. The closest Model Rule analogues are Rule 5.3 (nonlawyer assistants), Rule 5.4 (professional independence; fee sharing), Rule 5.5 (unauthorized practice), and Rule 7.1 (communications about a lawyer's services). New York replaced the Code with the Rules of Professional Conduct in 2009; the provisions cited here are historical.

Citations and references

Rules of Professional Conduct:

• MR 5.3 (responsibilities regarding nonlawyer assistance)
• MR 5.4 (professional independence of a lawyer)
• MR 5.5 (unauthorized practice of law)
• MR 7.1 (communications concerning a lawyer's services)
• NY DR 2-101(A), DR 3-101(A), DR 3-102(A), DR 3-103(A), DR 4-101(B), (C), DR 5-101(A), DR 7-102(A)(8)

Statutes:

• N.Y. Judiciary Law Sections 495, 478, 484 (unauthorized practice; corporations practicing law)

Cases:

• In re Schenk, 171 A.D.2d 33, 574 N.Y.S.2d 372 (App. Div. 1991): lawyer may not associate with a collection agency

Other opinions cited:

• N.Y. State 557 (1984): joint lawyer-nonlawyer services that let the nonlawyer offer legal services
• N.Y. State 565 (1984): percentage compensation as improper fee sharing

See also

• NY State Bar Op. 644: A corporation with nonlawyers for tax reductions
• NY State Bar Op. 662: Affiliating with a nonlawyer in tax proceedings
• NY State Bar Op. 636: Selling standard will forms to the public; trade names

Source

• Landing page: https://nysba.org/opinion-633/