Can a lawyer join a trade-and-barter association that takes a 10 percent cut of every trade, lists the lawyer as a member, and refers business to the lawyer?

Plain-English summary

A lawyer was asked to join a trade-and-barter association. The association charges every member a 10 percent fee for acting as a clearinghouse for trades, with members earning "trading dollars" usable to buy other members' goods or services. The association also wished to list the lawyer as an attorney and possibly refer business to the lawyer. The lawyer asked three questions, and the committee answered each in turn.

On the first question, whether the 10 percent clearinghouse charge would be splitting a fee with a nonlawyer, the committee applied DR 3-102, which bars a lawyer or law firm from sharing legal fees with a nonlawyer. Assuming the 10 percent charge equals the cash value of the services rendered, the committee opined that the arrangement would violate DR 3-102. On the second question, whether the association could list the lawyer as an attorney, the committee said DR 2-102(A) permits such a listing so long as it makes no false, fraudulent, misleading, or deceptive claim. It also pointed to DR 2-101(B), under which a public communication for which a lawyer has given value must be identified as such unless that is apparent from the context.

On the third question, whether the association could refer business to the lawyer, the committee opined that if the association did so, the 10 percent fee would appear to be compensation for the referral, which would violate DR 2-103(D). The opinion's committee note observes that current Rule 1.5(e) permits fee sharing between lawyers in different firms, including a referral fee, where the client consents after full disclosure and the fee is reasonable; that note addresses lawyer-to-lawyer fee division and is distinct from the nonlawyer arrangement the opinion analyzed.

Currency note

This opinion was issued in 1988, under Virginia's former Code of Professional Responsibility (the disciplinary rules it cites), before the Virginia State Bar's adoption of the Rules of Professional Conduct effective January 1, 2000. The committee note records that current Rule 1.5(e) governs fee sharing among lawyers in different firms. 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 Treat this page as historical context, not current guidance.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: Can a lawyer pay a nonlawyer organization a percentage of fees for running a clearinghouse?

A: Under this 1988 opinion, no. The committee opined that a 10 percent charge equal to the value of services would share legal fees with a nonlawyer in violation of DR 3-102.

Q: Can a trade or barter association list a lawyer member as an attorney?

A: Yes, if the listing makes no false, fraudulent, misleading, or deceptive claim. The committee added that under DR 2-101(B) a paid communication must be identified as such unless that is apparent from the context.

Q: Can such an association refer clients to the lawyer member?

A: Not under this fee structure. The committee opined that if the association referred business while taking its 10 percent, the fee would appear to be referral compensation prohibited by DR 2-103(D).

Background and rules framework

The opinion interpreted several provisions of the former Virginia Code: DR 3-102 (sharing legal fees with a nonlawyer), DR 2-102(A) (professional listings and notices that are not false or misleading), DR 2-101(B) (paid public communications must be identified as such), and DR 2-103(D) (compensation for recommending or securing employment). The committee note ties the fee-division question to current Virginia Rule 1.5(e), the counterpart of ABA Model Rule 1.5, which governs division of a fee between lawyers who are not in the same firm.

Citations and references

Rules of Professional Conduct:

• Former Virginia DR 3-102 (sharing legal fees with a nonlawyer)
• Former Virginia DR 2-102(A) (professional listings and notices)
• Former Virginia DR 2-101(B) (identification of paid communications)
• Former Virginia DR 2-103(D) (compensation for recommending employment)
• Virginia Rule 1.5(e) / ABA Model Rule 1.5 (division of fees between lawyers in different firms)

See also

• VA LEO 1083: Law Firm Ownership of a Nonlegal-Services Subsidiary
• VA LEO 1130: Dividing a Referral Fee With a Foreign Attorney
• VA LEO 1254: Criminal Lawyers Owning a Bail-Bond Business and Referring Clients

Source

• Landing page: https://vsb.org/Site/about/rules-regulations/leo-opinions.aspx
• Original PDF: https://www.vsb.org/common/Uploaded%20files/LEOs/1035.pdf

Original opinion text

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

Committee Opinion
February 19, 1988
LEGAL ETHICS OPINION 1035

ATTORNEY – TRADE ASSOCIATION.

You advise that you have been asked to join a Trade and Barter Association. As part of its operation, the trade association charges all members a ten percent charge for acting as a clearinghouse in the various trades. When one participates in a trade, one obtains "trading dollars" which are used to purchase other goods or services which other members of the association have to offer. You also advise that the trade association wishes to list you as an attorney and perhaps refer business to you. You ask three questions relative to the above. The Committee will answer these questions in the order presented in your letter. Your first question is whether the ten percent charge by the clearing association would be considered splitting a fee with a nonlawyer. Disciplinary Rule 3-102 states that "A lawyer or law firm shall not share legal fees with a nonlawyer. ..." Assuming that the ten percent charge is equivalent to the cash value of the services rendered, the Committee believes this violates DR:3-102. Your second question is whether it is improper for the trade association to list you as an attorney. Disciplinary Rule 2-102(A) [ DR:2-102] provides that "A lawyer or law firm may use or participate in the use of a professional card, professional announcement card, office sign, letterheads, telephone directory listing, law list, legal directory listing or a similar professional notice or device, unless it includes a statement or claim that is false, fraudulent, misleading or deceptive." As long as the trade association makes no false, fraudulent, misleading or deceptive claim, it would not be improper for the association to list you as an attorney. The Committee, however, also directs you to DR:2-101(B), which states that "a public communication for which a lawyer has given value must be identified as such unless it is apparent from the context that it is such a communication." Your third question is whether the Trade and Barter Association may refer business to you. Disciplinary Rule 2-103(D) [ DR:2-103] states that "A lawyer shall not compensate or give anything of value to a person or organization to recommend or secure his employment by a client, or as a reward for having made a recommendation resulting in his employment by a client, except that he may pay for public communications permitted by DR:2-101 and the usual and reasonable fees or dues charged by a lawyer referral service and any qualified legal services plan or contract of legal services insurance as authorized by law, provided that such communication of the service or plan is in accordance with the standards of DR:2-101 or DR:2-104, as appropriate." Should the Trade and Barter Association refer business to you, it would appear that the ten percent fee was compensation for the referral. To do so would violate the provisions of DR:2103(D). Committee Opinion February 19, 1988 Legal Ethics Committee Notes. – Rule 1.5(e) permits fee sharing between lawyers in different firms provided the client consents and the fee is reasonable. The referring

Committee Opinion
February 19, 1988
attorney may charge a fee for referring a case to another lawyer without further participation in the client’s matter. Rule 1.5(e) does not require that a lawyer sharing in fees also share responsibility, thus allowing “referral fees” if the client consents after full disclosure.