NYSBA 1998-05-26

Can a lawyer take property-tax cases referred by a non-attorney tax reduction company, and be paid a percentage of the company's contingent fee?

Short answer: The opinion concluded a lawyer may accept such cases where the property owner authorized the company to engage counsel, but not where doing so aids the company's unauthorized practice of law; the lawyer may be paid a percentage of the company's reduction-based fee.

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 Not binding precedent.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 705: Taking cases referred by a non-attorney tax reduction company

Short answer: The opinion concluded a lawyer may accept property-tax cases from a non-attorney tax reduction company where the property owner authorized the company to engage counsel, but not where accepting ongoing referrals would aid the company's unauthorized practice of law; the lawyer may be paid a percentage of the company's reduction-based fee.

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 lawyer who handled tax certiorari proceedings was asked by a non-attorney tax reduction company to represent a property owner in Supreme Court under RPTL Article 7, after the company's administrative grievance was denied. The owner's agreement authorized the company to "engage counsel" to file Article 7 petitions and represent the owner in court, and the company's fee was one-third of any tax reduction. The lawyer would contract with the company (not the owner), for either an hourly fee or a percentage of the company's fee.

On accepting the engagement, the committee began with N.Y. State 371 (1975), which it read to establish that a non-lawyer acting as the client's agent may engage a lawyer to represent the client. So a lawyer may generally take the representation when a company authorized by the owner selects counsel, with limits: the client is the property owner, not the company, so under DR 5-107(B) the lawyer may not accept conditions that compromise professional judgment (for example, a requirement to use the company's recommended experts), and decisions on the merits such as settlement remain the owner's under EC 7-7 while legal-handling decisions remain the lawyer's under EC 7-9. The arrangement would also be improper if it involved improper solicitation or fee-splitting (DR 2-103, DR 3-102(A)), which the committee said was not present here because the company did substantive work in the administrative phase rather than merely signing up clients and skimming a fee.

The committee then addressed DR 3-101(A) (aiding unauthorized practice of law). Whether the company itself engages in unauthorized practice is a question of law outside the committee's jurisdiction. But even assuming the company's prior administrative activities were unauthorized practice, the committee concluded that representing an owner who authorized the company to engage counsel would not in every case be "aiding" it, because serving as an agent to engage counsel is not itself the practice of law. The committee rejected any implication in Suffolk Op. 96-2 that a lawyer may never be engaged by a non-lawyer company. It cautioned, however, that a law firm's agreement to accept ongoing, regular referrals could "aid" the company by assuring it that counsel will be available, which may be integral to the company's business; entering into such an understanding would violate DR 3-101(A) if it assisted activities comprising unauthorized practice.

On the fee, the committee held the lawyer may work for an hourly fee, a flat fee, or a contingent fee (a percentage of the tax reduction), and may receive a fee that is a percentage of the company's fee where that fee is itself a percentage of the reduction, so long as the payment is allocable to the lawyer's services and the company's compensation is separate and distinguishable. To the extent N.Y. State 371 implied otherwise, the committee rejected the implication.

Currency note

This opinion was issued in 1998, under New York's former Code of Professional Responsibility, which New York replaced with the Rules of Professional Conduct in 2009. It clarifies N.Y. State 371 (1975). 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 lawyer accept a case referred by a non-attorney tax reduction company?

A: The opinion concluded yes, where the property owner authorized the company, acting as the owner's agent, to engage counsel; the client is the owner, and the lawyer's loyalty and judgment are owed to the owner, not the company.

Q: When would taking such referrals be improper?

A: The opinion said it would be improper if the company imposed conditions compromising the lawyer's judgment, if the arrangement involved improper solicitation or fee-splitting, or if an agreement for ongoing referrals would aid the company's unauthorized practice of law.

Q: Can the lawyer be paid a percentage of the company's fee?

A: The opinion concluded yes. The lawyer may take an hourly, flat, or contingent fee, including a percentage of the company's fee where that fee is itself a percentage of the tax reduction, provided the lawyer's portion is allocable to the lawyer's own services.

Background and rules framework

The opinion interpreted New York's former Code of Professional Responsibility: DR 3-101(A) (aiding the unauthorized practice of law), DR 3-102(A) (sharing legal fees with a non-lawyer), DR 2-103 (solicitation and referrals), and DR 5-107(B) (third-party interference with professional judgment), together with EC 7-7 and EC 7-9 on allocating decisions between lawyer and client. The Model Rule analogues are Rule 5.4 (professional independence; fee-sharing with non-lawyers) and Rule 5.5 (unauthorized practice of law). New York replaced the Code with the Rules of Professional Conduct in 2009; the DR numbers cited here are historical.

Citations and references

Rules of Professional Conduct:

MR 5.4 (professional independence; sharing fees with non-lawyers)
MR 5.5 (unauthorized practice of law)
NY DR 3-101(A); DR 3-102(A); DR 2-103; DR 5-107(B); EC 7-7; EC 7-9

Statutes:

N.Y. Real Property Tax Law 706 and Article 7 (tax certiorari proceedings); RPTL 524 (assessment review)

Cases:

Matter of Property Valuation Analysts, Inc. v. Williams, 164 A.D.2d 131, 563 N.Y.S.2d 545 (3d Dep't 1990), non-attorney may not promise to pursue judicial relief
Matter of Cipollone v. City of White Plains, 181 A.D.2d 887, 581 N.Y.S.2d 421 (2d Dep't 1992), non-attorneys in small-claims assessment review

Other opinions cited:

N.Y. State 371 (1975): a non-lawyer agent may engage counsel for the client (clarified by this opinion)
N.Y. State 698 (1998): conditions on a lawyer's professional judgment
Nassau Op. 92-26 (1992); Suffolk Op. 96-2 (1996): accepting tax-reduction referrals

Source

Landing page: https://nysba.org/opinion-705/