Can a lawyer be employed to run a legal clinic organized by a nonprofit corporation that has no lawyers on its board, and run a private practice on the same premises in exchange for the use of those premises?

Plain-English summary

The lawyer asked whether he could accept employment running a legal clinic organized by a nonprofit corporation that had no attorneys on its board, where he would control staff, budget, clients, and files, and where the corporation would let him use the clinic premises to conduct a part-time private practice. The opinion concluded that such employment by a nonlawyer-run nonprofit was authorized by Rule 2-103(D) if the employer was a type the rule lists and the rule's conditions were met. Because the clinic charged clients, it was not a legal aid office under Rule 2-103(D)(1)(b); the only fit was Rule 2-103(D)(4), covering an organization that recommends, furnishes, or pays for legal services to its members or beneficiaries. The opinion reasoned that, where the nonprofit's purpose was to make low-cost legal services available to a lower-income community, the clinic's users could be considered beneficiaries in the broader sense of recipients of a benefit, and the lawyer should satisfy himself that the conditions of Rule 2-103(D)(4)(a) through (h) were met.

The opinion stressed that Rule 2-103(D) and Rule 5-107(B) allowed the employment only if there was no interference with the lawyer's independent professional judgment. Because the clinic was meant to handle areas of law that did not require much attorney time, the opinion directed the lawyer to confirm that any limits on the cases he could take or the time he could spend were intended only to make his services widely available, and did not become impermissible restraints or cause him to violate Rule 6-101(A)(2) and (3) on adequate preparation and neglect.

On the dual arrangement, the opinion concluded that compensating the lawyer for his availability by letting him use the clinic premises (and possibly its personnel or equipment) for a private practice was not objectionable if he delineated the scope of his employment and compensation with the employer, preferably in a written agreement, and disclosed fully to both his clinic clients and his private clients in which capacity and on what terms he represented them. It noted EC 5-21 through 5-24 on the risk of a third party influencing a lawyer through compensation, and the desirability of a written agreement. On the final question about malpractice insurance, the opinion treated who should pay as chiefly practical and outside the Committee's scope, but observed that the lawyer was responsible for insuring his own private practice and could share a single policy only if he paid at least the portion of the premium attributable to that private practice.

Currency note

This opinion was issued in 1984, when New Mexico lawyers were governed by the former New Mexico Code of Professional Responsibility, which the State Bar later replaced with the Rules of Professional Conduct; it also predates the State Bar of New Mexico's November 3, 2008 revisions to those Rules (the New Mexico adoption of the ABA Ethics 2000 changes). The Canons, Disciplinary Rules, and Ethical Considerations it cites are no longer in force. 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 take a job running a legal clinic for a nonprofit with no lawyers on its board?

A: Yes, under the conditions of Rule 2-103(D). The opinion concluded the employment was authorized if the clinic's users qualified as beneficiaries of the nonprofit under Rule 2-103(D)(4) and the rule's listed conditions in subsections (a) through (h) were satisfied.

Q: Did it matter that the clinic charged its clients a fee?

A: Yes. Because there was a charge for the legal services, the opinion concluded the nonprofit was not operating a legal aid office under Rule 2-103(D)(1)(b), so the analysis turned on whether it fit the beneficiary category in Rule 2-103(D)(4).

Q: Could the lawyer run a private practice on the clinic's premises as part of his compensation?

A: The opinion concluded the arrangement was not objectionable if the lawyer delineated the scope of his clinic employment and compensation, preferably in a written agreement, and disclosed fully to both clinic and private clients in which capacity and on what terms he represented them.

Q: What protected the lawyer's independent judgment in this setup?

A: The opinion relied on Rule 2-103(D) and Rule 5-107(B), which permitted the employment only if there was no interference with independent professional judgment, and on Rule 6-101(A)(2) and (3), so that any limits on his caseload had to be aimed at availability, not at restraining his judgment.

Background and rules framework

The opinion interpreted the former New Mexico Code of Professional Responsibility: Rule 2-103(D) (employment by and cooperation with qualifying organizations, including subsection (D)(4) on beneficiaries), Rule 5-107(A) and (B) (avoiding influence from a third party who compensates the lawyer), and Rule 6-101(A)(2) and (3) (adequate preparation and not neglecting a legal matter), together with Ethical Considerations 5-21 through 5-24. It also referenced the then newly adopted Model Rules of Professional Conduct, Rule 5.4.

Citations and references

Rules of Professional Conduct (former Code):

• Model Code DR 2-103 / NM Code Rule 2-103(D), including (D)(1)(b) and (D)(4)(a)–(h) (organizations a lawyer may accept employment from or be recommended by)
• Model Code DR 5-107 / NM Code Rule 5-107(A) and (B) (avoiding third-party influence on professional judgment), and EC 5-21 through 5-24
• Model Code DR 6-101 / NM Code Rule 6-101(A)(2) and (3) (preparation; neglect)
• Model Rules of Professional Conduct Rule 5.4 (professional independence of a lawyer)

Cases:

• Bauer v. Myers, 224 F. 902, 908 (8th Cir. 1917), cited for the meaning of "beneficiary" as a recipient of a benefit or advantage

Other opinions cited:

• ABA Formal Opinion 334 (Aug. 10, 1984) and ABA Informal Opinion 1359 (June 4, 1976): limits on a lawyer's caseload and independence in a legal clinic setting

See also

• NM Ethics Op. 1984-12: Prepaid Legal Service Materials in a Lawyer's Office

Source

• Landing page: https://www.sbnm.org/Leadership/Committees/Ethics-Advisory-Committee/Ethics-Advisory-Opinions
• Original PDF: https://www.sbnm.org/Portals/NMBAR/AboutUs/committees/Ethics/1984/1984-11.pdf

Original opinion text

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

Advisory Opinion 1984-11
An attorney has requested an opinion concerning the propriety of his being employed in a legal clinic organized by a nonprofit organization which has no attorneys on its board of directors. The attorney will be in charge of the operation of the clinic, including staff, budget, clients, and files. In order to encourage the attorney to be available to clinic clients, the nonprofit corporation will allow him to use the premises to conduct his part-time private law practice. The attorney also inquires whether malpractice insurance should be on the attorney or the clinic and who should pay for it.
The letter raises the question whether the attorney may accept employment in his capacity as an attorney with a nonprofit organization run by nonlawyers. Such employment is authorized by Rule 2-103(D) of the New Mexico Code of Professional Responsibility if the employer is of a type listed in Rule 2-103(D) and the conditions stated in the Rule are met. See also model Rules of Professional Conduct, Rule 5.4. It appears that the nonprofit corporation will not be operating a legal aid office (Rule 2-103(D)(1)(b)), since the letter implies that there will be a charge to clients for the legal services provided. The only other category in which the nonprofit corporation could fit would be that of Rule 2-103(D)(4), a "bonafide organization that recommends, furnishes or pays for legal services to its members or beneficiaries...." The nonprofit corporation will be recommending the services of the legal clinic attorney and perhaps paying for them in part by some form of direct or indirect subsidy to the clinic. As there is no indication that the recipients of the services would be "members" of the nonprofit corporation, the recipients must be "beneficiaries" of the nonprofit corporation if the corporation is to come within the definition of Rule 2-103(D)(4). The term "beneficiaries" was no doubt employed by the drafters of the Rule principally to apply to beneficiaries of prepaid legal insurance plans. To the extent that the purpose of the nonprofit corporation is to provide or make available low-cost legal services to members of "a lower income community," the users of the clinic may be considered beneficiaries of the nonprofit corporation in the broader sense that they are recipients of a "benefit or advantage." See, Bauer v. Myers, 224 F. 902, 908 (8th Cir., 1917). The attorney should determine for himself that the applicable conditions of Rule 2-103(D)(4)(a) through (h) are satisfied. If they are, the Committee considers the attorney's proposed employment to come within the scope of Rule 2-103(D).
Rule 2-103(D) also requires that the attorney may accept employment from or recommendation by the nonprofit corporation only "if there is no interference with the exercise of independent professional judgment in behalf of his client." Rule 5-107(B) is to the same effect. The attorney's letter states that there will be no restraint by his employer on his exercise of independent professional judgment. He indicates, however, that the clinic is intended to provide legal services at a minimum cost "in areas of the law which do not require much attorney time." Counsel should satisfy himself that limitations imposed by his employer on the types of cases he can handle for the legal clinic or the time he can spend on them are intended solely to make his services as widely available and effective as possible, and that they do not constitute impermissible restraints on the exercise of his professional judgment or cause him to violate Rule 6-101(A)(2) and (3), which requires that he prepare adequately for legal matters entrusted to him and that he not neglect such legal matters. See, Formal Opinion 334 (August 10, 1984), and Informal opinion 1359 (June 4, 1976), ABA Committee on Ethics and Professional Responsibility.
The attorney proposes to dovetail his activities as the employee of a nonprofit legal clinic with the conduct by him of a private legal practice for profit on the same premises. The employer apparently wishes him to be available at the clinic even when he is not working on clinic matters, and has offered to compensate him for his time by allowing him to use the clinic premises (and possibly personnel, equipment, or other resources of the employer) to conduct his private practice. The Committee does not find this arrangement objectionable if counsel delineates clearly with his employer (preferably in a written agreement) the scope of his employment by and compensation from the nonprofit corporation and discloses fully to his clinic clients and private clients in which capacity and on what terms he is representing them. See Rule 5-107(A) and EC 5-21 through 5-24 concerning the possibility of influence being exerted over a lawyer through compensation from one other than his or her client. EC 5-24 points out the desirability of a written agreement.
Counsel should have an agreement as to what portion of his compensation consists of use of an office and any equipment, personnel, and the like of the nonprofit corporation. Standards for the scope of his duties as a part-time employee of the nonprofit corporation should be established, although counsel should always be mindful that his highest responsibility is to his clients (whether in the clinic or private practice), and that no agreement with an employer can lessen his obligation to his clients under Rule 6-101(A)(2) and (3).
Disclosures to clients should be sufficient to make clinic clients aware of the limitations on services offered through the clinic and the amount of the fee. Clients in counsel's private practice should be informed of the nature of the services counsel is to provide, any limitations on their scope, and the basis for the fee (hourly, contingent, or other). In view of the possibility for confusion as to the two types of practice to be conducted by counsel, written agreements concerning services and fees would be highly desirable.
Counsel's final question, concerning malpractice insurance, appears to be chiefly a practical question rather than an ethical one, and to that extent, outside the scope of this Committee. The query about who should pay for malpractice insurance does have ethical implications. As an independent sole practitioner, counsel is responsible for payment for insurance covering the private practice, in which the nonprofit corporation has no interest. Counsel's responsibility to pay for insurance for his private practice is not necessarily a bar to obtaining a single policy which covers risks to the attorney (in both his private practice and his legal clinic practice) and to the nonprofit corporation that employs him, so long as the attorney pays at least the portion of the insurance premiums that is attributable to coverage of his private practice. Counsel is advised to consult the Risk Manager of the State Bar of New Mexico about what kind of coverage is needed by him and his employer in the legal clinic area of his practice.