Can a lawyer work as a salaried employee of a nonprofit run entirely by nonlawyers and represent the people the nonprofit serves?

Plain-English summary

A private nonprofit serving crime victims, run by nonlawyers, proposed to hire a lawyer as its employee to represent the victims it assists in civil actions and to assist in criminal prosecutions in magistrates' court, with general supervision of the lawyer by nonlawyers (though steps would be taken to prevent them from influencing the lawyer's legal judgment). The committee was asked whether this employment violated Rule 5.4 (professional independence) or Rule 5.5 (unauthorized practice).

The committee concluded the arrangement is ethically proper. Salaried employment by a nonlawyer-run nonprofit is not inherently improper, as shown by long-standing legal-services programs and union staff counsel; the absence of any lawyers on the board gave the committee some concern, and it suggested adding lawyer members would be prudent, but it found no violation so long as the organization does not direct, regulate, or interfere with the lawyer-client relationship. It drew a key distinction (following ABA Formal Opinion 334) between general organizational policies defining the kinds of cases the organization will take, which the board may set, and the objectives, strategy, and tactics of a particular case, which are for the client and lawyer alone under Rules 1.2 and 2.1.

On nonlawyer supervision, the committee found two concerns under Rules 5.4 and 1.8(f): interference with professional judgment and confidentiality. A nonlawyer may supervise only nonlegal matters (expense accounting, employment-policy compliance) and may not interfere with the lawyer's professional judgment; had the organization employed a supervising lawyer, that lawyer would have broad responsibility under Rule 5.1. Revealing client confidences to a nonlawyer supervisor would violate Rule 1.6 unless the client consented or disclosure was impliedly authorized; disclosing the information necessary for the supervisor to check compliance with general policies is impliedly authorized to carry out the representation, but other information requires the client's consent after consultation. The committee noted its analysis assumed no client fees were paid to the organization (so no Rule 5.4(a) fee-splitting issue arose) and that unauthorized practice is outside its jurisdiction, observing that all legal services here are rendered by the lawyer, not the organization.

In practice

Under the South Carolina rules as they stood at the time of the opinion, the committee held that a lawyer may be a salaried employee of a nonlawyer-run nonprofit representing its beneficiaries, with the organization setting only general case-selection policies and never controlling case strategy or the lawyer's judgment (Rules 5.4(c), 1.8(f), 1.2, 2.1); that a nonlawyer supervisor is limited to nonlegal matters; and that client information may be shared with such a supervisor only as needed to verify compliance with general policies, with anything more requiring client consent under Rule 1.6. The opinion assumed no client fees flowed to the organization, leaving the Rule 5.4(a) fee-splitting question open if they did. South Carolina revised its Rules of Professional Conduct effective 2005; verify the current text of Rules 5.4, 5.5, 1.8(f), and 1.6 before relying on the specific subsections cited.

Common questions

Q: Can a nonlawyer-run nonprofit employ a lawyer to represent the people it serves?

A: The committee concluded yes, so long as the organization does not direct, regulate, or interfere with the lawyer-client relationship; it suggested adding lawyer members to the board would be prudent but did not require it.

Q: How much control can the organization have over the cases?

A: The committee concluded the board may set general policies on the types of cases the organization will take, but once a case is assigned the objectives, strategy, and tactics are for the client and lawyer alone under Rules 1.2 and 2.1.

Q: What can a nonlawyer supervisor be told about a client's case?

A: The committee concluded a nonlawyer supervisor may oversee only nonlegal matters and may receive client information only as needed to verify compliance with the organization's general policies; other information requires the client's consent after consultation under Rule 1.6.

Q: Is this fee splitting with a nonlawyer?

A: The committee concluded no fee-splitting issue arose because no client fees were paid to the organization; if the client paid the organization fees from a civil recovery, a Rule 5.4(a) issue would arise.

Background and rules framework

The opinion interprets South Carolina RPC 5.4 (professional independence; 5.4(a) fee sharing and 5.4(c) third-party direction), 1.8(f) (compensation from a third party), 1.6 (confidentiality), 5.5(b) (assisting unauthorized practice), and 5.1 (responsibilities of supervising lawyers), with Rules 1.2 and 2.1 on client authority, corresponding to the like-numbered Model Rules. The committee relied on ABA Formal Opinion 334 and In re Anonymous Member, 346 S.C. 177, 552 S.E.2d 10 (2001).

Citations and references

Rules of Professional Conduct:

• South Carolina RPC 5.4(a), (c) / Model Rule 5.4: fee sharing and third-party direction of a lawyer's judgment.
• South Carolina RPC 1.8(f) / Model Rule 1.8(f): accepting compensation from someone other than the client.
• South Carolina RPC 1.6 / Model Rule 1.6: confidentiality of client information.
• South Carolina RPC 5.5(b), 5.1 / Model Rules 5.5, 5.1: assisting unauthorized practice; supervisory responsibility.

Other opinions cited:

• ABA Formal Op. 334 (legal-aid boards and case-by-case interference); ABA Formal Op. 93-374 (sharing court-awarded fees with a nonprofit).

See also

• SC Bar Ethics Op. 02-17: A lawyer employed by a nonlawyer nonprofit corporation
• SC Bar Ethics Op. 02-18: A law firm hiring a nonlawyer lobbyist
• ABA Formal Op. 08-453: In-house ethics consulting and reporting

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-02-04/

Original opinion text

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

UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.

Ethics Advisory Opinion 02-04

A private non-profit organization that provides assistance to victims of crime proposes to hire an attorney to represent the victims they assist in civil actions and also to assist in criminal prosecution of their cases in magistrates' court. The attorney would actually be an employee of the non-profit organization, which is run by non-lawyers. Although steps would be taken to prevent the non-lawyers from influencing the legal judgment of the lawyer regarding a case, the general supervision of the lawyer would be by nonlawyers.

Question:
Does the lawyer's employment by the organization violate S.C. Rule of Professional Conduct 5.4 (Professional Independence of Lawyer) or 5.5 (Unauthorized Practice of Law)?

Summary of Opinion:
A lawyer may be employed by a nonprofit organization run by nonlawyers that offers to provide legal services to beneficiaries of the organization. The organization may establish general standards for selection of cases but may not interfere with the lawyer's representation of individual clients. SCRPC 5.4(c), 1.8(f). If the lawyer is supervised by a nonlawyer, the supervisor cannot control the lawyer's decision-making in individual cases, but is limited to determining compliance with general policies of the organization. The lawyer may not disclose information about the client's case to a nonlawyer supervisor except to the extent necessary for supervisor to determine compliance with general organizational policies. SCRPC 1.8(f) and 1.6. Disclosure of such information is impliedly authorized to carry out the representation under Rule 1.6(a). This opinion is based on the assumption that no fees are being paid to the organization, so no issue of fee splitting is presented. See SCRPC 5.4(a). The Committee does not have jurisdiction over issues involving the unauthorized practice of law, but it notes that the legal services being offered are provided by the lawyer, not by the organization.

Opinion:
SCRPC 5.4, dealing with the professional independence of a lawyer, states: "(c) A lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer's professional judgment in rendering such legal services." In addition, Rule 1.8(f) states:

A lawyer shall not accept compensation for representing a client from one other than the client unless:
(1) the client consents after consultation;
(2) there is no interference with the lawyer's independence of professional judgment or with the client-lawyer relationship; and
(3) information relating to representation of a client is protected as required by Rule 1.6.

The fact that the lawyer is employed on a salaried basis by a nonprofit organization run by nonlawyers is not necessarily improper. Legal services programs throughout the country have long employed salaried lawyers to provide representation to indigent clients. Similarly, labor unions and other organizations hire staff counsel to provide legal services to organization members. The boards of such programs include nonlawyer representatives. The question posed does not state, but it implies, that the non-profit organization is controlled totally by nonlawyers. The absence of any lawyers on the board of the organization gives the Committee some concern, but the Committee has concluded that such an arrangement is ethically proper so long as there is no attempt by the organization to direct, regulate, or interfere with the lawyer-client relationship. It may be prudent, however, for the board of the organization to consider having at least some lawyer members so that the board has the benefit of their professional perspective.

In determining whether the organization is attempting to direct, regulate, or interfere with the lawyer-client relationship, a distinction should be drawn between general organizational policies that identify the types of cases for which the organization is willing to provide representation and the strategy for handling particular cases. The board may properly establish policies that define the types of cases for which the organization will provide legal services, but once a case is selected and assigned to the lawyer, the organization may not interfere with the objectives, strategy, or tactics for handling the cases. These matters are determined exclusively by the client and lawyer pursuant to the Rules of Professional Conduct. See SCRPC 1.2 and 2.1. In Formal Opinion 334 the ABA Committee on Ethics and Professional Responsibility discussed this issue as follows:

[T]here should be no interference with the lawyer-client relationship by the directors of a legal aid society after a case has been assigned to a staff lawyer and the board should set broad guidelines respecting the categories or kinds of cases that may be undertaken rather than act on a case-by-case, client-by-client basis. Id. at 5.

The letter of inquiry indicates that nonlawyers will supervise the activities of the attorney. This arrangement poses two problems under Rules 5.4 and 1.8(f): interference with professional judgment and violation of the duty of confidentiality. A nonlawyer may supervise the activities of a lawyer only to the extent involving nonlegal matters, such as proper accounting for expenses or compliance with employment policies. Like the board of the organization, a nonlawyer may not interfere with the lawyer's professional judgment on behalf of the client. If the organization employed a supervising lawyer, that lawyer would have broad responsibility over the legal work of the subordinate lawyer. See SCRPC 5.1 and In re Anonymous Member of the South Carolina Bar, 346 S.C. 177, 552 S.E.2d 10 (2001).

Revelation of client confidences to a nonlawyer supervisor would violate Rule 1.6 unless the client consented to such disclosure or the disclosure was " implied authorized in order to carry out the representation." Disclosure to a nonlawyer supervisor of information necessary for the supervisor to determine compliance with the organization's general policies would, in the Committee's opinion, be impliedly authorized in order to carry out the representation. Disclosure of other information would be proper only with the consent of the client after consultation under Rule 1.6(a).

Your letter does not mention but raises the possibility of another ethical issue: fee splitting between a lawyer and a nonlawyer. See SCRPC 5.4(a). If the client is not paying the organization any fees for the services provided by the attorney, then no fee splitting issue exists. If it is contemplated that the client will make payments to the organization of fees received in any civil cases, a fee splitting issue arises. See ABA Formal Op. #93-374 (lawyer who undertakes pro bono representation at request of nonprofit organization may agree to share court-awarded fees). But see In re Rule Amendments to Rules 5.4(a) and 7.2(c) of the Rules of Professional Conduct of R.I., 18 Laws. Man. Prof. Cond. (ABA/BNA) 157 (2002) (rejecting proposal to amend rules to allow lawyers to share court-awarded fees with nonprofit organizations).

Rule 5.5(b) states that a lawyer shall not "assist a person who is not a member of the bar in the performance of activity that constitutes the unauthorized practice of law." Determination of what constitutes the unauthorized practice of law is a legal issue, not within the Committee's jurisdiction. See S.C. Code Ann. '40-5-320. The Committee notes, however, that under the proposed employment arrangement all legal services will be rendered by the lawyer, not the organization. In addition, as noted above, it is well established that legal services programs and labor unions may properly offer legal services to their members.