Can a lawyer admitted in New York and based in DC share New York litigation fees with a non-lawyer partner in a DC firm?
NY State Bar Ethics Opinion 889: Non-Lawyer Partner and New York Fees
Short answer: A lawyer admitted in New York but who principally practices in a jurisdiction that permits partnership with a non-lawyer (here the District of Columbia) may ordinarily conduct occasional New York litigation even though a non-lawyer partner or employee benefits from the resulting fees, because the Rule 8.5 choice-of-law analysis applies the other jurisdiction's ethics rules rather than New York Rule 5.4.
Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the New York State Bar Association's rules of professional conduct and are persuasive authority. This summary is for research purposes only and is not legal advice. Verify current rules before acting on any specific guidance.
About this page: The plain-English summary and Q&A below were written by Ezel based on the official opinion. We do not reproduce the opinion text on this page; follow the linked source for the official text, which controls.
Plain-English summary
The inquirer is admitted in both New York and the District of Columbia, with a DC-based practice that generates the majority of his revenue. He wished to form a DC partnership with a non-lawyer technical expert to prosecute class-action claims, at least one of which would be brought in New York, and asked whether he could share the resulting New York fees with the partnership, or alternatively compensate the non-lawyer as an employee through profit sharing (paragraphs 1 through 3).
New York Rule 5.4(a) bars sharing legal fees with a non-lawyer and Rule 5.4(b) bars forming a law-practice partnership with a non-lawyer, so the arrangement is prohibited if New York's rules apply. The committee framed the real question as choice of law under Rule 8.5. Although Rule 8.5(a) subjects a New York-admitted lawyer to New York discipline wherever the conduct occurs, Rule 8.5(b) selects which rules apply. For conduct in connection with a court proceeding, the rules of the jurisdiction where the court sits apply (Rule 8.5(b)(1)). But the committee concluded that forming the DC partnership, and distributing profits including occasional New York fees under the partnership agreement, is not "conduct in connection with" the New York litigation, on the assumption that the firm remains centered on DC cases and revenue (paragraphs 4 through 7).
For conduct not connected to a court proceeding, Rule 8.5(b)(2)(ii) applies the rules of the jurisdiction where the lawyer principally practices, unless the conduct clearly has its predominant effect elsewhere. Because the inquirer principally practices in DC and the partnership formation and fee distribution do not clearly have their predominant effect in New York, those matters are subject only to DC's rules, not New York Rule 5.4. The committee found the Philadelphia Opinion 2010-7 approach more instructive than ABA 91-360 and Virginia Opinion 1584, which predated choice-of-law provisions like Rule 8.5(b) (paragraphs 8 through 12).
The committee stressed the result is premised on the particular facts: a DC principal place of business and the bulk of revenue unrelated to New York. Different facts could change the answer; if a major portion of revenue came from New York practice, Rule 8.5 could make New York Rule 5.4 apply, and a partnership created for the very purpose of New York litigation could not use DC formation to circumvent New York's rules. On the alternative profit-sharing-employee model, the committee applied the same choice-of-law analysis and held DC's rules govern, without reaching whether the model would satisfy New York standards (citing N.Y. State 733, which allows profit sharing with non-lawyer employees but not pay tied to soliciting specific business) (paragraphs 11 through 16).
In practice
The opinion holds that, under New York Rules 5.4 and 8.5 as they stood at the time, a non-lawyer partnership that New York would forbid can still lawfully take occasional New York litigation when the lawyer principally practices in a jurisdiction (DC) that permits the arrangement, because Rule 8.5(b)'s choice-of-law rules apply that jurisdiction's ethics rules to partnership formation and fee distribution. The committee tied the result to two findings: partnership formation and profit distribution are not "conduct in connection with" the New York proceeding, and they do not clearly have their predominant effect in New York. It marked the limits clearly: a New York-revenue-heavy practice, or a partnership formed for the purpose of New York litigation, would not escape New York Rule 5.4. The same analysis governed the alternative non-lawyer profit-sharing-employee model.
Common questions
Q: I'm admitted in NY but practice mainly in DC with a non-lawyer partner. Can I take a NY case?
A: Ordinarily yes. The committee applied Rule 8.5 choice of law and concluded DC's rules, not New York Rule 5.4, govern the partnership and fee distribution where you principally practice in DC and the bulk of revenue is unrelated to New York (paragraphs 7 through 10).
Q: Doesn't New York Rule 5.4 flatly ban non-lawyer partnerships and fee sharing?
A: It does for conduct New York governs. The committee's point is that Rule 8.5 determines whether New York's rules or DC's apply, and on these facts DC's apply (paragraphs 4 through 5, 10).
Q: When would New York's rules still apply?
A: If a major portion of the firm's revenue came from New York practice, or if the partnership were created for the very purpose of New York litigation; DC formation cannot be used to circumvent New York's fee-sharing rules (paragraph 11).
Q: Could I instead pay the non-lawyer as a profit-sharing employee?
A: On these facts, DC's rules would govern that too. The committee did not decide whether the model meets New York standards, noting N.Y. State 733 permits profit sharing with non-lawyer employees but not pay tied to soliciting specific business (paragraphs 13 through 15).
Background and rules framework
The opinion interprets New York Rule 5.4(a) and (b) (sharing fees with and partnering with non-lawyers) and Rule 8.5(a) and (b) (disciplinary authority and choice of law), corresponding to ABA Model Rules 5.4 and 8.5. The analysis turns on Rule 8.5(b)(1) (proceeding-related conduct governed by the forum court's jurisdiction) and Rule 8.5(b)(2)(ii) (other conduct governed by the principal-practice jurisdiction unless the predominant effect is elsewhere).
Citations and references
Rules of Professional Conduct:
- MR 5.4 / NY Rule 5.4(a), (b): sharing fees and partnering with non-lawyers
- MR 8.5 / NY Rule 8.5(a), (b)(1), (b)(2)(ii): disciplinary authority and choice of law
Other opinions cited:
- D.C. Opinion 322 (2004) and D.C. Rule 5.4: DC permits non-lawyer partnerships under conditions
- Philadelphia Opinion 2010-7: choice of law permits fee sharing through a DC firm with a non-lawyer partner
- ABA 91-360 and Virginia Opinion 1584 (1994): contrary results, predating Rule 8.5-style choice-of-law provisions
- N.Y. State 733 (2000): profit sharing with non-lawyer employees permitted; not pay tied to soliciting specific business
See also
- NY State Bar Ethics Op. 911: Sharing Fees and Employment With an Out-of-State Firm
- NY State Bar Ethics Op. 906: Sharing Legal Fees With a Non-Profit Organization
- NY State Bar Ethics Op. 917: Non-Lawyer Marketers and Bonus Compensation
Source
- Landing page: https://nysba.org/ethics-opinion-889/