Can a South Carolina law firm hire a nonlawyer lobbyist as an employee, list the lobbyist on its letterhead, and pay the lobbyist a share of the lobbying profits?

Plain-English summary

A law firm proposed to hire a nonlawyer "lobbyist" to help current and future clients with lobbying before state governmental entities. The lobbyist would handle no legal files, give no legal advice, and do no paralegal work; would have no ownership in or control over the firm; and the firm would decide which clients the lobbyist could assist. The lobbyist's business cards and the firm's letterhead would state plainly that he was neither a lawyer nor a partner or shareholder, but employed solely to provide "governmental assistance." Lobbying fees would be collected by the firm into a separate bank account (apart from the general and trust accounts), used to pay lobbying expenses, then paid out to the lobbyist; legal fees would never go into that account or compensate the lobbyist.

The committee answered that the arrangement was permissible under each rule it examined. On Rule 5.5(b), whether particular conduct is the unauthorized practice of law is a legal question the committee does not decide, but it concluded that so long as the lobbyist's activities stay confined to lobbying and he does no legal work, he is not likely engaged in unauthorized practice, so the firm would not violate Rule 5.5(b). On Rule 5.4(d), because the lobbyist would own no interest in the firm and have no control over lawyers' professional judgment (and assuming he is not a corporate director or officer), the arrangement does not impair the lawyers' independence.

On advertising, the committee concluded that because the letterhead and business cards clearly designate the lobbyist as a nonlawyer providing governmental assistance, listing him does not make the firm's communications misleading under Rules 7.1(a) or 7.5(a). On fee sharing, Rule 5.4(a)(3) bars sharing legal fees with a nonlawyer but allows nonlawyer employees to participate in a compensation or profit-sharing plan; because the lobbyist would be paid only from segregated lobbying profits and never from legal fees, the committee concluded the arrangement does not violate Rule 5.4(a)(3), citing authority that compensation plans based on a percentage of profits and untied to any particular legal fee may be permissible.

In practice

Under the South Carolina rules as they stood at the time of the opinion, the committee held that a firm may employ a nonlawyer lobbyist where the lobbyist is confined to lobbying and does no legal work (Rule 5.5(b)), holds no ownership and no control over lawyers' judgment (Rule 5.4(d)), is identified as a nonlawyer on non-misleading letterhead and cards (Rules 7.1(a), 7.5(a)), and is compensated only from a segregated lobbying-fee account rather than from shared legal fees (Rule 5.4(a)(3)). The committee did not decide whether the lobbying itself constitutes the unauthorized practice of law, which is a legal question. South Carolina revised its Rules of Professional Conduct effective 2005; verify the current text of Rules 5.4, 5.5, 7.1, and 7.5 before relying on the specific subsections cited.

Common questions

Q: Can a law firm employ a nonlawyer lobbyist?

A: The committee concluded yes on the facts presented, so long as the lobbyist's work is confined to lobbying, he does no legal work, and the compensation and letterhead conditions below are met.

Q: Can the lobbyist be listed on the firm's letterhead and business cards?

A: The committee concluded yes under Rules 7.1(a) and 7.5(a), provided the materials clearly state the lobbyist is neither a lawyer nor a partner or shareholder and is employed solely to provide governmental assistance, so the communication is not misleading.

Q: How can the firm pay the lobbyist without illegally sharing legal fees?

A: The committee concluded the firm may pay the lobbyist from a separate account holding only lobbying fees, never from legal fees; Rule 5.4(a)(3) permits nonlawyer employees to share in a profit-based compensation plan untied to any particular legal fee.

Q: Does hiring the lobbyist threaten the lawyers' professional independence?

A: The committee concluded no under Rule 5.4(d), because the lobbyist would own no interest in the firm, would not be a director or officer, and would have no right to direct or control any lawyer's professional judgment.

Background and rules framework

The opinion interprets South Carolina RPC 5.5(b) (assisting the unauthorized practice of law), 5.4(d) (professional independence; nonlawyer ownership and control), 7.1(a) and 7.5(a) (misleading communications; letterhead), and 5.4(a)(3) (sharing legal fees with nonlawyers, with the profit-sharing-plan exception), corresponding to the like-numbered Model Rules. The committee cited South Carolina case law (Linder v. Insurance Claims Consultants, In re Deddish, Doe v. Condon, In re Anonymous Member) and its own Opinions 02-04, 99-07, 98-31, 96-01, 92-03, and 91-04.

Citations and references

Rules of Professional Conduct:

• South Carolina RPC 5.5(b) / Model Rule 5.5: assisting the unauthorized practice of law.
• South Carolina RPC 5.4(d) / Model Rule 5.4(d): professional independence; nonlawyer ownership and control.
• South Carolina RPC 5.4(a)(3) / Model Rule 5.4(a)(3): sharing legal fees with nonlawyers; profit-sharing-plan exception.
• South Carolina RPC 7.1(a), 7.5(a) / Model Rules 7.1, 7.5: misleading communications and letterhead.

Cases:

• Linder v. Insurance Claims Consultants, Inc., 348 S.C. 477, 560 S.E.2d 612 (S.C. 2002), unauthorized practice as a legal question.
• Doe v. Condon, 341 S.C. 22, 532 S.E.2d 879 (S.C. 2000), paralegal compensation and Rule 5.4.
• In re Anonymous Member of S.C. Bar, 295 S.C. 25, 367 S.E.2d 17 (S.C. 1988), profit-based nonlawyer compensation.

Other opinions cited:

• S.C. Bar Ethics Advisory Ops. 02-04, 99-07, 98-31, 96-01, 92-03, 91-04 (nonlawyer employees; letterhead; fee sharing).

See also

• SC Bar Ethics Op. 02-17: A lawyer employed by a nonlawyer nonprofit corporation
• ABA Formal Op. 08-451: Outsourcing legal and nonlegal services
• ABA Formal Op. 465: Deal-of-the-day marketing programs

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-02-18/

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 02-18

A law firm wants to hire a non-lawyer employee (“lobbyist”) to assist current and future clients in their lobbying efforts with state governmental entities. The lobbyist would not handle any legal files or give legal advice and would provide no services that could be construed as those of a paralegal. Furthermore, the lobbyist would be solely limited to assisting the firm’s clients when interacting with state governmental entities.

The lobbyist would have no ownership interest in the firm and no control over any aspect of the firm’s functions. Moreover, the firm itself would determine which clients the lobbyist could assist.

The lobbyist’s business cards and the firm’s letterhead would clearly designate the lobbyist was neither a lawyer nor partner/shareholder of the firm, but was employed solely to provide “governmental assistance.”

For work performed by the lobbyist, the firm would collect payment and place this payment into a bank account, separate from the firm’s general and trust accounts. Only funds from the lobbyist’s lobbying activities would be deposited in this account. The firm would pay any lobbying-related expenses and then pay the lobbyist out of the remaining funds. Legal fees collected from any client who utilized both the firm’s legal and lobbying services would be deposited in either the firm’s general or trust accounts and would not be used to compensate the lobbyist.

Question
Given the hiring scheme described in the inquiry, under the South Carolina Rules of Professional Conduct is a law firm permitted to hire a non-lawyer lobbyist as an employee of the firm?

Summary
Pursuant to the South Carolina Rules of Professional Conduct a firm is permitted to hire a non-lawyer lobbyist as an employee. Under the facts presented in this inquiry, the inclusion of the lobbyist in the firm would not cause the firm to violate:

1) Rule 5.5(b), SCRPC, because the lobbyist, a non-member of the bar, would not be engaged in the unauthorized practice of law;

2) Rule 5.4(d), SCRPC, because the lobbyist would not have control over the independent judgment of lawyers within the firm;

3) Rules 7.1(a) or 7.5(a), SCRPC, because the firm’s advertisements, with respect to the lobbyist’s presence within the firm, would not be misleading; or

4) Rule 5.4(a)(3), SCRPC, because the firm would not be improperly splitting legal fees with the lobbyist.

Opinion
Unauthorized Practice of Law [Rule 5.5(b)]
Rule 5.5(b), SCRPC, provides “[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.” The question of whether a particular activity constitutes the unauthorized practice of law is a legal question about which this Committee offers no opinion. See L.W. Linder v. Ins. Claims Consultants, Inc., 348 S.C. 477, 560 S.E.2d 612 (2002); S.C. Code Ann. § 40-5-320 (2001); S.C. Bar Ethics Adv. Op. # 02-04. However, the facts provided in this inquiry leads this Committee to conclude that so long as the lobbyist’s activities are strictly confined to assisting clients with their lobbying efforts, and the lobbyist would not handle any legal files, give legal advice, or have duties that might be associated with the work of a legal professional, the lobbyist is not likely to have engaged in the unauthorized practice of law. And, therefore, the firm will not have violated Rule 5.5(b), SCRPC. See, e.g., In re Deddish, 347 S.C. 614, 557 S.E.2d 655 (2001); Doe v. Condon, 341 S.C. 22, 532 S.E.2d 879 (2000); S.C. Bar Ethics Adv. Op. # 91-04; 90-03.

Lawyer’s Professional Independence [Rule 5.4(d)]
Rule 5.4(d), SCRPC, states a lawyer is not permitted to form or practice with a professional corporation for profit if: “(1) a nonlawyer owns any interest therein . . . ; (2) a nonlawyer is a corporate director or officer thereof; or (3) a nonlawyer has the right to direct or control the professional judgment of a lawyer.” According to the facts provided in this inquiry, the lobbyist will neither own any interest in the firm, nor have control over any aspect of the firm’s functions. Furthermore, assuming the lobbyist would not serve as a “corporate director or officer” within the firm, hiring the lobbyist to work for the firm should in no way violate Rule 5.4(d), SCRPC. See, e.g., S.C. Bar Ethics Adv. Op. # 02-04; 99-07; 91-04.

Lawyer Advertising [Rules 7.1(a) & 7.5(a)]
Rule 7.1(a), SCRPC, provides a communication by a lawyer violates Rule 7.1 if the communication “contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading.” Rule 7.5(a), SCRPC, provides “[a] lawyer shall not use a . . . letterhead or other professional designation that violates Rule 7.1.” The facts in this inquiry indicate the firm’s letterhead and the lobbyist’s business cards would clearly designate the lobbyist was neither a lawyer nor partner/shareholder within the firm, but rather was employed solely to provide the firm’s clients with “governmental assistance.” Assuming the firm’s other communications were handled similarly, the inclusion of the lobbyist’s name on the firm’s letterhead, and the lobbyist’s use of firm business cards would not violate either Rule 7.1(a) or 7.5(a), SCRPC. See, e.g., S.C. Bar Ethics Adv. Op. # 98-31; 96-01.

Fee Splitting with Non-Lawyers [Rule 5.4(a)(3)]
Rule 5.4(a)(3), SCRPC, provides “[a] . . . law firm shall not share legal fees with a nonlawyer, except that: . . . nonlawyer employees [may be included] in a compensation or retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement.” The facts in this inquiry indicate the firm would collect lobbying fees and place these payments into a bank account separate from the firm’s general and trust accounts. Only lobbying fees would be deposited in this account. The firm would pay any firm-related expenses and then pay the lobbyist a percentage of the remaining funds (profit). Legal fees collected from a client would neither be deposited in this separate lobbying account, nor used to compensate the lobbyist. Pursuant to this detailed arrangement, the firm would not violate Rule 5.4(a)(3), SCRPC. See, e.g., Deddish, 347 S.C. 614, 557 S.E.2d 655 (2001); S.C. Bar Ethics Adv. Op. # 92-03; 91-32; cf. Doe, 341 S.C. at 28-29, 532 S.E.2d at 883 (holding law firm compensating a paralegal based on the “volume and types of cases [the paralegal] ‘handles’” violates Rule 5.4, SCRPC); In re Anonymous Member of South Carolina Bar, 295 S.C. 25, 28, 367 S.E.2d 17, 18 (1988) (indicating “compensation plans [for nonlawyer employees] based upon a percentage of the profits or untied to a percentage of a particular legal fee may be permissible” (emphasis added)).