Can a North Dakota lawyer keep a fee-splitting agreement with another lawyer who has since been suspended, and pay that lawyer a share of the fee?

Plain-English summary

A lawyer (Girot) had two fee-splitting agreements with lawyers who were later suspended: a written agreement with Millar on a medical-malpractice/products case (15% of the fee or 6% of the settlement to Millar), and an oral agreement with Hamilton on a motor-vehicle case (one-third to Hamilton). Girot asked whether he could maintain those arrangements and pay the suspended lawyers. The committee analyzed Rule 1.5(e), which governs fee division between lawyers who are not in the same firm.

The committee drew a line at the date of suspension. Citing its earlier Opinion 93-01 (and the ABA/BNA Lawyers' Manual and a Michigan opinion), it held that paying a suspended lawyer under a pre-existing fee-splitting arrangement for services performed before the suspension is not a violation, but paying for services rendered after the suspension would be. A suspended lawyer may not work a case as a lawyer; the committee noted such a lawyer could function as a paralegal under a good-standing lawyer's direct supervision, but no such arrangement was present.

Applying the rule to the two agreements, the committee explained that Millar's written agreement could support payment of the agreed percentages if those percentages were proportionate to the services Millar provided; if they were set merely for ease of negotiation or as referral consideration, Girot and Millar would first have to fix a figure proportionate to Millar's actual pre-suspension services. For Hamilton's oral agreement, the committee said that under the version of Rule 1.5(e) then in force, an oral split may divide only in proportion to work actually done, so Girot could pay on the one-third basis only if it matched Hamilton's pre-suspension work; otherwise they had to agree on the proportionate share.

In practice

Under this opinion, a North Dakota lawyer whose fee-splitting partner is later suspended may pay that lawyer only for legal services actually performed before the suspension, in an amount proportionate to that work; payment for post-suspension services would be a violation. The opinion applies Rule 1.5(e) as it stood at the time: an oral fee split may divide only in proportion to the services each lawyer performed, while a written agreement in which each lawyer assumes joint responsibility may support a disproportionate division.

Common questions

Q: Can you pay a lawyer who has been suspended their share of a fee?

A: Only for services actually performed before the suspension. Citing Opinion 93-01 and the ABA/BNA Lawyers' Manual, the committee said a suspended or disbarred lawyer may collect, under a pre-existing fee-splitting arrangement, for work performed before the suspension; paying for post-suspension services would violate the rules.

Q: Does an oral fee-splitting agreement let you divide the fee however you agreed?

A: No. Under the version of Rule 1.5(e) the committee applied, an oral fee split may divide only in proportion to the work each lawyer actually performed. A disproportionate split requires a written agreement in which the lawyers assume joint responsibility.

Q: Can a suspended lawyer keep working on the case?

A: Not as a lawyer. The opinion notes a suspended lawyer could function as a paralegal under a good-standing lawyer's direct supervision and be paid at a paralegal rate, but there was no such arrangement in these matters.

Q: What if the agreed percentages were not tied to the work performed?

A: The lawyers must arrive at a figure proportionate to the services the suspended lawyer actually provided before the suspension, and only that amount may be paid.

Background and rules framework

The opinion interprets North Dakota Rule of Professional Conduct 1.5(e) (Model Rule 1.5(e)) as it stood in 2004. That rule allows a division of a fee between lawyers who are not in the same firm only if the division is in proportion to the services performed by each lawyer (or, by written agreement, each lawyer assumes joint responsibility), the client does not object after consultation, and the total fee is reasonable. North Dakota later revised its Rules of Professional Conduct, so the rule text quoted in the opinion reflects the pre-revision version.

The opinion is issued under North Dakota Rule for Lawyer Discipline 1.2(B), the safe-harbor provision protecting good-faith reliance on a written ethics-committee opinion.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.5(e) / N.D.R. Prof. Conduct 1.5(e) (division of fees between lawyers not in the same firm)
• N.D.R. Lawyer Discipline 1.2(B) (safe harbor for reliance on a committee opinion)

Other opinions cited:

• SBAND Ethics Op. 93-01: fee splitting with a suspended or disbarred lawyer
• State Bar of Michigan Ethics Op. RI-030: a referring lawyer later suspended may be paid for services rendered before the suspension
• ABA/BNA Lawyers' Manual on Professional Conduct at 41:713

See also

• ABA Formal Op. 487: Fee Split With Prior Counsel
• ABA Formal Op. 464: Fee Division With Nonlawyers
• ABA Formal Op. 474: Referral Fees and Conflicts

Source

• Landing page: https://www.sband.org/page/ethics_opinions
• Original PDF: https://cdn.ymaws.com/www.sband.org/resource/resmgr/docs/for_lawyers/extended/opinion_04-02.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

STATE BAR ASSOCIATION OF NORTH DAKOTA
ETHICS COMMITTEE

OPINION NO. 04-02
November 29, 2004

Issues

The Ethics Committee was asked whether the requesting lawyer's fee splitting
arrangements may be ethically maintained now that the referring lawyers are suspended and
whether the requesting lawyer may pay fees earned to a suspended lawyer.

Background Provided by Requestor

Pseudonyms are used for all parties. Requestor, Girot, entered fee splitting agreements
with two lawyers in good standing: Millar and Hamilton.

Prior to his suspension, Millar contacted Girot about joining forces and splitting fees on
medical malpractice / products liability type of case. Millar and Girot agreed in writing that
Millar would be reimbursed for his costs, and, upon resolution, either 15% of the total attorney
fees or 6% of the entire settlement. After the agreement was struck, Millar was suspended.
Girot indicates that to date there has been no settlement in the medical malpractice products
liability case and that there are, as of this time, no proceeds to distribute. Millar is still
suspended and it is unknown whether Millar will ever resume licensed practice in North Dakota.

Prior to his suspension, Hamilton contacted Girot about joining forces and splitting fees on
a motor vehicle accident case. Hamilton and Girot agreed (orally only) to split the attorneys’
fees 33% to Hamilton and 66% to Girot. Girot indicates that of the three claims in the motor
vehicle case, two are settled and the third with an insurer is pending. Proceeds from the two
settled claims were distributed to the client and the remainder is being held in Girot’s trust
account. Hamilton did some work on the case prior to being suspended. Hamilton is still
suspended and it is unknown whether Hamilton will ever resume the practice of law in North

Dakota.

Discussion
This situation is governed primarily by Rule 1.5 of the North Dakota Rules of Professional
Conduct. In particular, 1.5(e) of the Rules specifies that lawyers may divide fees if the fee is
reasonable, the client consents, and the fee is proportionate to the work done or, if each lawyer
involved accepts joint responsibility for the case, it may be on a basis disproportionate to the

work.

(e) A division of fee between lawyers who are not in the same firm may be made
only if
(1) The division of fee is in proportion to the services performed by
each lawyer or each lawyer, by written agreement, assumes joint
responsibility for the representation;
(2) After consultation, the client does not object to the participation
of all the lawyers involved; and

(3) The total fee is reasonable.

Comment to 1.5(e)

Division of Fee

A division of fee is a single billing to a client covering the fee of two or more
lawyers who are not in the same firm. A division of fee facilitates association of
more than one lawyer in a matter in which neither alone could serve the client as
well, and most often is used when the fee is contingent and the division is
between a referring lawyer and a trial specialist. Paragraph (e) permits the lawyers
to divide a fee on either the basis of the proportion of services they render or by
agreement between the participating lawyers if all assume responsibility for the
representation as a whole and the client is consulted and does not object. It does
not require disclosure to the client of the share that each lawyer is to receive.

Fee splitting with a suspended attorney was addressed by this Committee in Opinion 93-
01 when the Committee cited with approval language from the ABA/BNA Lawyer’s Manual on
Professional Conduct that noted a suspended or disbarred lawyer may, under a fee-splitting
arrangement in effect prior to the suspension or disbarment, collect for services actually
performed prior to the suspension or disbarment. SBAND Opinion 93-01 (citing ABA/BNA
Lawyers Manual on Professional Conduct at 41:713); see also, State Bar of Michigan Ethics
Opinion RI-030 [referring lawyer subsequently suspended can be paid for the service rendered

prior to the suspension].

Ww

A suspended lawyer may not work on a case as a lawyer and a lawyer in good standing
may not maintain an active fee-splitting arrangement with a non-lawyer. It was suggested in
Opinion 93-01 that a suspended lawyer could function as a paralegal under the direct supervision
of a lawyer in good standing and then be paid at a rate suited for a paralegal. There has been no
indication of any intent to build such a relationship in these cases nor any inquiry regarding that
sort of structure.

Conclusion

Paying a suspended lawyer, under a Rule 1.5(e) fee-splitting arrangement, for services
rendered after the lawyer was suspended would be an ethical violation. Paying a suspended
lawyer for services rendered prior to the suspension would not be an ethical violation.

The first situation described above involves Girot and Millar’s written agreement to split
either the attorney fees 15% to Millar / 85% to Girot or the final settlement 6% to Millar
remainder to client and Girot. If, in this instance, the percentages were deemed by Millar and
Girot to be proportionate to the legal services that Millar had/would provide, then it is ethical for
Girot to pay Millar either of the two figures for services Millar provided prior to suspension. If
those percentages were not based on the idea that they were proportionate to the services Millar
had or would provide, but were percentages employed for ease of negotiation or as consideration
for the commodity of a referral regardless of whether or if any legal services were, had, or would
be provided by Millar, then the two attorneys would need to arrive at a figure proportionate to
the services Millar actually provided before the suspension. Once done, Girot may ethically
disburse that amount Millar.

The second situation above involves Girot and Hamilton’s oral agreement to split the fees
1/3 - 2/3. Under the current version of 1.5(e), oral fee splitting agreements can only split in
proportion to work actually done. If the 1/3 - 2/3 arrangement is proportionate to the work
actually done, then Girot may disburse on that scheme; if not, Girot and Hamilton need to agree
what portion of the overall work Hamilton actually performed on the case (only Hamilton’s pre-

suspension work may be considered) and distribute accordingly.

This opinion was drafted by Fritz Fremgen and unanimously approved by the Ethics

Committee on the 29" of November 2004.

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