Could a contingent-fee lawyer hire an accountant whose pay would come only out of the contingent fee, by assigning the accountant a share of that fee?

Plain-English summary

The Oklahoma State Board of Accountancy asked whether a lawyer working on a contingent fee could employ a certified public accountant on an agreement that the accountant's pay would come only out of the contingent fee, when and if collected, on an agreed participation, with the lawyer assigning the accountant the agreed interest in that fee. The Board of Governors concluded he may not.

It pointed to Advisory Opinion No. 69, where it had held it improper for a contingent-fee lawyer to employ an engineer expert to help prepare a case and testify, paid out of the contingent fee if and when collected, and found no distinction in principle. The Board observed that no such arrangement with a physician in personal-injury suits could be tolerated. It reasoned that the trial of a dispute should be an honest effort by everyone, including witnesses, to develop the whole truth; deliberately turning a person into an interested witness is not to be encouraged, and using an accountant who would testify under such an arrangement would be intolerable, because it places the witness in a position offering a temptation not to tell the truth. Separately, the Board held the arrangement barred by Rule 36, which provides that "no division of fees for legal services is proper, except with another lawyer based upon a division of services or responsibility." If the accountant were used merely as an investigator, the Board still found the arrangement interdicted by Rule 44, under which a lawyer may not agree to bear the expense of litigation but may in good faith advance expenses as a convenience, subject to reimbursement.

Currency note

This opinion was issued in 1936, decades before Oklahoma replaced its original Rules of Professional Conduct (patterned on the ABA Canons of Professional Ethics) with the Oklahoma Rules of Professional Conduct (adopted 1988) and the later Ethics 2000 revisions. The rules cited here, Rules 36 and 44, belong to that superseded canon-era code; the modern rules on fee division with non-lawyers and advancing litigation costs take a different and more detailed form. 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 Treat this page as historical context, not current guidance.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: Could a lawyer give a non-lawyer expert a cut of the contingent fee?

A: No. The opinion held that paying an accountant out of, and by assigning an interest in, the contingent fee was an improper division of fees with a non-lawyer under Rule 36.

Q: What if the accountant was only an investigator, not a witness?

A: The opinion still barred it. It held that even as an investigator, the arrangement was interdicted by Rule 44, because the lawyer may not agree to bear the expense of litigation.

Q: Why did the Board object to a witness paid from the recovery?

A: It reasoned that contingent compensation deliberately makes the witness an interested person, placing him in a position that tempts the average person not to tell the whole truth, which is not conducive to the proper administration of justice.

Background and rules framework

The opinion applied Rules 36 and 44 of the canon-era Oklahoma Rules of Professional Conduct: Rule 36's bar on dividing fees except with another lawyer based on a division of services or responsibility, and Rule 44's bar on a lawyer agreeing to bear the expense of litigation. It also relied on prior Advisory Opinion No. 69. It predates the Model Rules and made no Model Rule citation.

Citations and references

Rules of Professional Conduct:

• Rule 36 (1929 Oklahoma Rules of Professional Conduct): no division of fees for legal services is proper except with another lawyer based on a division of services or responsibility.
• Rule 44 (1929 Oklahoma Rules of Professional Conduct): a lawyer may not agree to bear the expense of litigation but may in good faith advance expenses as a convenience, subject to reimbursement.

Other opinions cited:

• Oklahoma Bar Advisory Op. 69 (1935 Year Book): a contingent-fee lawyer may not pay an engineer expert out of the contingent fee.

See also

No sibling opinions yet indexed.

Source

• Landing page: https://www.okbar.org/ethics/ethics-opinion-no-103/

Original opinion text

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

Adopted January 24, 1936

The Oklahoma State Board of Accountancy inquires:

"May a member of the State Bar who has accepted employment upon a contingent fee basis employ a certified public accountant upon an agreement that the accountant's compensation will come out of the contingent fee only, when and if collected, upon an agreed participation therein, and thereupon give to the accountant an assignment of the agreed interest in the contingent fee?"

In response:

The Board of Governors is of the opinion that he may not.

In Advisory Opinion No. 69, 1935 Year Book, the Board held that, "for obvious reasons," it would not be proper for a member of the bar, who was employed upon a contingent fee, to employ an engineer as an expert to assist him in the preparation of a case and to testify, agreeing to pay him for his services out of the contingent fee received by the member of the bar if and when collected. There is no distinction in principle between that situation and the one here presented. The board sees no reason to change its position upon the subject.

Surely, for instance, no such arrangement with a member of the medical profession in relation to personal injury suits could be tolerated. There is no distinction between that instance and the one under consideration.

The trial of a dispute in a court or before an administrative body ought to be an honest and earnest effort by members of the bar and all persons concerned, be they investigators or witnesses, to develop the whole truth and all the facts. It is unfortunate enough when, ex necessitate, a witness is an interested person; and certainly the practice by members of the bar as a course of conduct of premeditatingly creating persons into interested witnesses by an arrangement such as suggested is not to be encouraged.

If the accountant sought to be employed is to be used in the capacity of a witness, the situation presented would be intolerable. There may be accountants who are of such strong moral stamina, high honor and self sacrificing spirit as to enable them to withstand even a subconscious temptation to flavor their testimony in their self interest, but the proper conception of a witness does not tolerate the voluntary placing of him in a position which would offer a possible temptation to the average man, in his self interest, not to tell the truth, the whole truth and nothing but the truth. To acquiesce in the arrangement suggested, even though it were not interdicted by the rules of professional conduct, would not be conducive to the proper administration of justice.

Independent of the foregoing, it is to be noted that such a course of conduct is prohibited by Rule 36 of the Rules of Professional Conduct of the State Bar of Oklahoma, which provides:

"No division of fees for legal services is proper, except with another lawyer based upon a division of services or responsibility."

If the accountant is sought to act merely as an investigator, a narrower question is presented. The member of the bar premeditatively has placed the accountant in a position where his compensation is predicted solely upon the success of the client. He is not an officer of the court; he is not restrained by an oath not to urge a false cause; and he is under no compulsion of an ethical nature so far as the administration of justice is concerned. However that may be, an arrangement such as suggested is interdicted by Rule 44, which provides:

"A lawyer may not properly agree with a client that the lawyer shall pay or bear the expense of litigation; he may, in good faith, advance expenses as a matter of convenience, but subject to reimbursement."