Can an Ohio lawyer pay a staff member a bonus for being named in a positive online review?

Plain-English summary

A lawyer asked whether the firm may reward exceptional service by paying a bonus to any nonlawyer staff member who is named in a positive online review. The Board concludes the firm may not.

On fee-sharing, the opinion explains that Prof.Cond.R. 5.4 bars sharing legal fees with a nonlawyer, but Rule 5.4(a)(3) allows nonlawyer employees to be included in compensation or profit-sharing plans. The rule has been read to prohibit nonlawyer plans that tie shared profits to particular clients or matters. The opinion lists bonus structures firms should avoid (reliant on case outcome, number of clients, commissions or referral payments, hours billed by staff, or a percentage of fees on a particular case) and structures that are acceptable (revenue, expenses, profit, or a staff member's exceptional efforts), citing Tex. Ethics Op. 642 and Fla. Ethics Op. 02-1. The Board concludes that a bonus keyed to obtaining a positive online review impermissibly ties the bonus to a particular client or matter. It adds that a lawyer with managerial authority must, under Prof.Cond.R. 5.3(a), reasonably supervise staff and so should already know when a staff member provides exceptional service; a positive review is not needed to identify that.

On recommending employment, the opinion observes that even if a strict reading of Prof.Cond.R. 7.2(b) would not treat the bonus as giving something of value for recommending the lawyer's services, the structure carries a risk of undue influence, intimidation, or overreaching: a staff member who tells a client about the bonus may make the client feel pressured to leave a positive review, and the purpose of the plan is to advance the lawyer's own business interests. Citing the Preamble's reminder that the rules do not exhaust a lawyer's ethical considerations, the Board concludes the lawyer should refrain from such a structure. The Board recommends the holding apply prospectively.

In practice

Under this opinion, an Ohio firm may reward nonlawyer staff for good work, but not by paying a bonus that is triggered solely by a positive online review. The opinion treats that trigger as tying compensation to a particular client or matter, which falls outside the profit-sharing latitude of Prof.Cond.R. 5.4(a)(3).

The opinion identifies acceptable bases for staff bonuses (revenue, expenses, profit, or exceptional efforts) and the supervisory duty under Prof.Cond.R. 5.3(a) as the means by which a properly run firm already recognizes exceptional service without conditioning pay on client reviews.

Common questions

Q: Can an Ohio law firm pay staff a bonus for getting a good online review?

A: No. The opinion concludes a lawyer may not pay a nonlawyer staff member a bonus based solely on the staff member being named in a positive online review.

Q: Are staff bonuses banned generally?

A: No. Per the opinion, Prof.Cond.R. 5.4(a)(3) permits nonlawyer employees to share in compensation or profit-sharing plans; the problem is tying the bonus to a particular client or matter.

Q: What bonus structures does the opinion treat as acceptable?

A: The opinion lists revenue, expenses, profit, or the exceptional efforts of a staff member as permissible factors, citing Texas and Florida ethics opinions.

Q: Why is the review-based bonus a problem beyond fee-sharing?

A: The opinion explains it carries a risk of undue influence, intimidation, or overreaching, because a staff member could pressure a client to post a positive review, and the structure exists to further the lawyer's business interests.

Background and rules framework

The opinion interprets Ohio Prof.Cond.R. 5.4 (Model Rule 5.4; sharing fees with nonlawyers, including the 5.4(a)(3) compensation-plan exception), Prof.Cond.R. 5.3(a) (Model Rule 5.3; supervision of nonlawyer assistants), and Prof.Cond.R. 7.2(b) (Model Rule 7.2; giving something of value for recommending the lawyer's services). It also draws on Preamble cmt. [16].

Citations and references

Rules of Professional Conduct:

• Model Rule 5.4 / Ohio Prof.Cond.R. 5.4(a), 5.4(a)(3) (sharing fees with nonlawyers; compensation-plan exception)
• Model Rule 5.3 / Ohio Prof.Cond.R. 5.3(a) (supervision of nonlawyer assistants)
• Model Rule 7.2 / Ohio Prof.Cond.R. 7.2(b) (something of value for recommending services)

Cases:

• Columbus Bar Assn. v. Plymale, 91 Ohio St.3d 367 (2001), no violation where a year-end bonus was a small percentage of gross fees earned by a lawyer

Other opinions cited:

• Tex. Ethics Op. 642 (rev. 2015) and Fla. Ethics Op. 02-1 (2002): acceptable bases for nonlawyer staff bonuses

See also

• ABA Formal Op. 506: Responsibilities Regarding Nonlawyer Assistants
• ABA Formal Op. 464: Fee Division With Lawyers Who Share With Nonlawyers
• ABA Formal Op. 465: Deal-of-the-Day Marketing Programs

Source

• Landing page: https://ohioadvop.org/advisory-opinion-index/
• Original PDF: https://www.ohioadvop.org/wp-content/uploads/2023/10/Adv.-Op.-2023-11-Final.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

OPINION 2023-11
Issued October 6, 2023

Nonlawyer Employee Bonus Plan

SYLLABUS: A lawyer may not pay a bonus to a nonlawyer staff member based solely on the staff member receiving a positive online review.

The Board recommends that the holding in this opinion be applied prospectively.

APPLICABLE RULES: Prof.Cond.R. 5.3, 5.4, and 7.2

QUESTIONS PRESENTED:

1. May a lawyer pay a bonus to nonlawyer staff members of a law firm when the staff members are mentioned by name in a positive online review?

2. Is compensating a staff member pursuant to a bonus structure described above giving something of value to a person for recommending the lawyer's services under Prof.Cond.R. 7.2?

ANALYSIS: The requesting lawyer would like to compensate staff for providing exceptional service to the law firm's clients. The lawyer has proposed incentivizing the provision of exceptional service by paying a bonus to any staff member who is named in a positive online review. The Board assumes that the nonlawyer staff members are aware of and informed of the law firm's bonus pay structure.

Sharing Legal Fees

Prof.Cond.R. 5.4 prohibits a lawyer from sharing legal fees with a nonlawyer. The traditional limitations on sharing legal fees are designed to protect the lawyer's independence of judgement. Id. at cmt. [1]. The rule does not specifically prohibit a lawyer from providing bonuses to nonlegal employees in that it allows law firms to include nonlawyer employees in compensation or retirement plans, even if the plan is based in whole or in part on a profit-sharing agreement. Prof.Cond.R. 5.4(a)(3). See also Columbus Bar Assn. v. Plymale, 91 Ohio St.3d 367, 745 N.E.2d 413 (2001)(no rule violation found when a year-end bonus policy provided that nonlegal assistants assigned to a particular lawyer would be paid .004 [.4%] of the gross fees earned by the lawyer during the fiscal year). The rule has often been interpreted to prohibit nonlawyer participation in plans that tie the shared profits to particular clients or particular matters. Bennett & Gunnarsson, Annotated Model Rules of Professional Conduct 527 (9th ed. 2019).

Law firms should avoid structuring bonuses for nonlawyer employees in any of the following ways: (1) reliant on the outcome of a case, (2) based on the number of clients worked with, (3) as a "commission" or "referral" payment for bringing clients to the firm, (4) solely based on number of hours billed by the nonlegal staff member, or (5) based on the percentage of fees earned on any particular case. See id. The Board believes law firms can consider the following as factors in determining whether to pay a bonus to nonlegal staff members: (1) revenue, (2) expenses, (3) profit, or (4) the exceptional efforts of a nonlegal staff member. See Tex. Ethics Op. 642 (rev. 2015) and Fla. Ethics Op. 02-1 (2002).

When a lawyer possesses managerial authority in a law firm, he or she must make reasonable efforts to ensure that there are measures in effect giving reasonable assurance that nonlawyer staff members' conduct is compatible with the professional obligations of the lawyer. Prof.Cond.R. 5.3(a). To do so, lawyers must give nonlawyer assistants appropriate instruction and supervision concerning all aspects of their employment. Id. at cmt. [2]. In the Board's view, if a lawyer is fulfilling his or her obligation to properly supervise nonlawyer staff members, then he or she should be aware when a staff member is providing exceptional service to a client. A positive online review is not necessary to determine whether exceptional service is provided. The Board concludes that a bonus structure reliant on a staff member obtaining a positive online review impermissibly ties the bonus to a particular client or matter.

Recommendation of Professional Employment

While a strict interpretation of Prof.Cond.R. 7.2(b) may not result in a conclusion that the lawyer has given something of value to a person for recommending the lawyer's services, the Board believes that the potential for undue influence, intimidation, or overreaching is present in the proposed bonus structure. If the nonlegal staff member informs the client of the fact that he or she will receive a bonus if the client posts a positive review online, this may place the client in a position of feeling uncomfortable or possibly harassed, especially if it occurs in the course of the representation or if the request is made more than once. It may also cause a client to feel compelled to leave a positive review out of fear that the staff member may not continue to work as diligently on the client's behalf or that the lawyer may not be willing to continue the representation unless the client complies with the request. Additionally, the underlying purpose of the bonus structure is to further the lawyer's own business interests by accumulating as many positive reviews as possible. Because the rules do not exhaust the moral and ethical considerations that should inform a lawyer, the Board believes the lawyer should refrain from using a bonus structure that might call into question whether the lawyer or his or her staff has exercised undue influence, intimidation, or overreaching to further his or her own financial or business interests. See Prof.Cond.R., Preamble [16].