Ezel / Ethics Opinions / NYSBA
NYSBA January 29, 2007

Can a New York firm split fees with a foreign law firm that refers it a New York matter and stays involved as a consultant?

Short answer: Yes, with conditions. The committee concludes a New York firm may share a percentage of its fees with a foreign law firm on referred matters where the foreign firm's lawyers are bona fide lawyers with comparable training and standards and the firms comply with the fee-division rule.

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This page answers the general question as of 2007. 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 2007
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.
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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

A New York law firm was "affiliated" with an Italian law firm, meaning only that the two firms refer matters to each other; no Italian-firm attorney resides or is licensed in the United States, and no New York-firm attorney is licensed in Italy. When the Italian firm refers a matter to the New York firm that generates a fee, the Italian firm does not record time but remains available for consultation, advice, and guidance from Italy, adding value to the matter. The committee was asked whether the New York firm may share a percentage of its earned fees with the Italian firm, and in what proportion.

The committee concludes it may, with conditions. The bar on sharing legal fees with non-lawyers (DR 3-102(A)) and on partnering with non-lawyers (DR 3-103(A)) exists to keep non-lawyers from compromising a lawyer's independent judgment; those concerns do not arise where the foreign firm's members are in fact "lawyers" with professional education, training, and ethical standards comparable to those of American lawyers. Treating the foreign firm's members as lawyers, the division of fees is governed by DR 2-107(A), the rule on dividing fees among lawyers not in the same firm, which permits a division (including one not based on services performed) subject to its conditions, such as client awareness and total fees that are reasonable.

The committee concludes that, assuming the foreign firm's members are in fact lawyers and both firms act in full compliance with DR 2-107(A) and are not otherwise disqualified, nothing in the New York Code prohibits the New York firm from sharing a percentage of its reasonably stated fees with the foreign firm for matters the foreign firm refers.

In practice

The opinion holds, under the former Code as it stood at the time, that fee sharing with a foreign law firm on referred matters is permitted where the foreign firm's members are bona fide lawyers with comparable training and ethical standards, so the anti-non-lawyer-sharing rules (DR 3-102(A), DR 3-103(A)) do not bar it, and the division satisfies DR 2-107(A). The committee frames the threshold question as whether the foreign firm's members are in fact "lawyers"; if so, the division is treated like any division among lawyers not in the same firm.

Common questions

Q: Can a New York firm split fees with a foreign law firm that referred a matter?

A: Yes, with conditions. The committee concludes the New York firm may share a percentage of its reasonably stated fees with the foreign firm where the foreign firm's members are bona fide lawyers and both firms comply with DR 2-107(A).

Q: Why is this not prohibited fee sharing with a non-lawyer?

A: Because the foreign firm's members are lawyers. The committee concludes that where the foreign firm's lawyers have professional education, training, and ethical standards comparable to American lawyers, the concerns behind DR 3-102(A) and DR 3-103(A) do not arise, so the division is governed by the rule on dividing fees among lawyers.

Q: Must the foreign firm have done a set share of the work?

A: The committee analyzes the division under DR 2-107(A), which governs fee divisions among lawyers not in the same firm and permits a division subject to its conditions; here the foreign firm remained available for consultation, advice, and guidance and added value to the matter.

Background and rules framework

The opinion interprets DR 2-107(A) (division of fees among lawyers not in the same firm, the analogue of ABA Model Rule 1.5(e)), DR 3-102(A) and DR 3-103(A) (sharing fees with, and partnering with, non-lawyers, the analogue of ABA Model Rule 5.4(a) and (b)), and DR 2-102(D), with EC 3-8, treating bona fide foreign lawyers as "lawyers" for these purposes.

Citations and references

Rules of Professional Conduct:

  • MR 1.5 (fees; division of fees); MR 5.4 (professional independence; sharing fees with non-lawyers)
  • Former Code DR 2-107(A); DR 3-102(A); DR 3-103(A); DR 2-102(D); EC 3-8

See also

Source

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