Ezel / Ethics Opinions / NYSBA
NYSBA 2013

Can a lawyer employed by a nonprofit credit-counseling agency provide legal services to the agency's clients and help the agency seek grants to fund those services?

Short answer: Yes, if the agency lawfully offers legal services under Judiciary Law 495 and the lawyer gets each client's informed consent to third-party payment, keeps the agency from controlling his professional judgment, and protects client confidences; on those conditions he may also help the agency pursue grants.
Currency note: this opinion is from 2013
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 Not binding precedent.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 at the bottom of this page) is the authoritative source for any reliance.

NY State Bar Ethics Opinion 957: Lawyer providing legal services through a nonprofit agency

Short answer: A lawyer employed by a bona fide nonprofit agency may provide legal services to the agency's clients, and help the agency seek grants to fund those programs, as long as the agency lawfully offers legal services under Judiciary Law 495, each client gives informed consent to the agency paying the lawyer, the agency does not direct or interfere with the lawyer's independent professional judgment, and client confidences are protected.

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.

View original opinion

Plain-English summary

A salaried lawyer at a nonprofit credit-counseling agency (not a law firm) asked whether he could run two legal-services programs for the agency's clients, filing for bankruptcy protection and advising seniors on joinder agreements for pooled income trusts, and whether he could help the agency seek grant funding to subsidize those programs. Each client would sign an engagement letter making clear the agency gives no legal advice and that the attorney-client relationship runs only between client and lawyer, and the agency's board would adopt a policy barring it from controlling the representation.

The committee first addresses the entity question. Rule 5.4(d) bars a lawyer from practicing in a for-profit entity owned or controlled by nonlawyers, but it does not extend to nonprofit organizations. Judiciary Law 495 bars corporations from practicing law, but section 495(7) exempts, among others, nonprofits that furnish legal services as an incidental activity in furtherance of another primary purpose, subject to the reporting duties in section 496. The committee will not opine on the legal question whether the agency satisfies 495, but assumes it does; if it does not, the lawyer would be aiding the unauthorized practice of law in violation of Rule 5.5(b).

Assuming the agency complies, three conduct rules still govern. Rule 1.8(f) bars accepting compensation from a third party to represent a client unless the client gives informed consent, there is no interference with the lawyer's independent professional judgment or the client relationship, and confidences are protected under Rule 1.6. Rule 5.4(c) bars letting a person who pays the lawyer direct his judgment. And Rule 7.2(b)(4) permits a bona fide organization to employ or pay a lawyer to furnish legal services to others, again only without interference with independent judgment.

On grant funding, the committee concludes Rule 1.8(f) does not bar the agency from seeking grants, provided the grants are not tied to any particular client's legal services, the grantors do not interfere with the lawyer's professional judgment, and neither the lawyer nor the agency reveals client confidential information in the applications or in reporting on the use of grant money.

In practice

The opinion holds that a lawyer may deliver legal services through a bona fide nonprofit, and help it raise grant funds, on four conditions the committee identifies: the agency lawfully offers legal services under Judiciary Law 495; each client gives informed consent to the agency's third-party payment under Rule 1.8(f); the agency does not direct or regulate the lawyer's professional judgment under Rule 5.4(c); and client confidences stay protected, including in grant applications and reporting. The committee expressly does not decide the underlying legal question of whether the agency qualifies under section 495.

Common questions

Q: Does Rule 5.4(d)'s bar on nonlawyer-owned firms stop a lawyer from working for a nonprofit?

A: No. Per paragraphs 6 to 8, Rule 5.4(d) applies only to for-profit entities and does not reach nonprofit organizations authorized to practice under Judiciary Law 495(7) and 496.

Q: What does the lawyer need from the client when the nonprofit pays the lawyer?

A: Informed consent. Per paragraph 11, Rule 1.8(f) requires the client's informed consent to third-party payment, no interference with the lawyer's independent judgment, and protection of confidences under Rule 1.6.

Q: Can the lawyer help the agency apply for grants to fund the legal programs?

A: Yes, with limits. Paragraph 13 permits it if the grants are not tied to a particular client's services, grantors do not interfere with the lawyer's judgment, and no client confidential information appears in the applications or use reports.

Q: What happens if the agency is not actually allowed to offer legal services?

A: Then the lawyer must not assist. Paragraph 10 explains that if the agency violates Judiciary Law 495, helping it provide legal services would aid the unauthorized practice of law under Rule 5.5(b).

Background and rules framework

The opinion interprets Rule 5.4(c) and (d) (Model Rule 5.4, professional independence and nonlawyer involvement), Rule 1.8(f) (Model Rule 1.8(f), third-party compensation), Rule 5.5(b) (Model Rule 5.5, assisting unauthorized practice), and Rule 7.2(b) (organizations that may employ or pay lawyers). It situates them against New York Judiciary Law 495 and 496, which it treats as a legal-question backdrop it does not resolve.

Citations and references

Rules of Professional Conduct:

  • MR 1.8 / NY Rule 1.8(f) (compensation from a third party; informed consent; independence; confidentiality)
  • MR 5.4 / NY Rule 5.4(c), (d) (professional independence; nonprofit exception)
  • MR 5.5 / NY Rule 5.5(b) (assisting the unauthorized practice of law)
  • MR 7.2 / NY Rule 7.2(b)(4) (organization employing or paying a lawyer to serve others)

Statutes:

  • N.Y. Judiciary Law 495, 496 (corporate practice of law; nonprofit exemptions and reporting)

Cases:

  • Paskowski v. DiBenedetto, 184 Misc.2d 34, 705 N.Y.S.2d 521 (Fam. Ct. Rockland Co. 2000), on the 495(7) exemption for a nonprofit's incidental legal counseling.

Other opinions cited:

  • N.Y. City 1997-2: a lawyer employed by a social services agency must keep independent judgment and protect confidences.

See also

Source