Can a staff lawyer or volunteer lawyer turn over court-awarded attorney's fees to the nonprofit public-interest organization that sponsored the case?

Plain-English summary

A nonprofit corporation brought legal actions for clients. Lawyer A was a staff employee; Lawyer B was a private practitioner who sometimes handled the nonprofit's cases pro bono, alone or as co-counsel with Lawyer A. No fee was charged to the clients, but some cases produced court-awarded attorney's fees. The committee was asked whether Lawyer A (as a condition of employment) and Lawyer B (as a private practitioner) could give those court-awarded fees to the nonprofit.

The controlling rule is Rule 5.4(a), which bars a lawyer from sharing legal fees with a nonlawyer except in three enumerated situations. The committee first notes, citing LEO 1691, that a lawyer who accepts a pro bono referral from a nonprofit may not charge or collect a contingent fee, so neither lawyer could simply claim the court-awarded fees for himself. The remaining question is whether the lawyer may agree to turn the fees over to the nonprofit. Rule 5.4(a) is implicated because nonprofit and public-interest groups are governed by boards that include nonlawyers.

The committee concludes there is no ethical impropriety. It reads Rule 5.4 against Rule 5.4(d), which addresses for-profit associations of lawyers and nonlawyers, and reasons that Rule 5.4(a) does not bar turning court-awarded fees over to a nonprofit public-interest group that sponsored the litigation. The purpose of Rule 5.4 is to prevent nonlawyer interference with a lawyer's professional judgment; here the recipient is a nonprofit, and the fees are court-awarded rather than paid by the client, so there is no risk the client is charged an excessive fee through nonlawyer influence (citing LEO 1598 and ABA Formal Op. 93-374). Accordingly, Lawyer A as a condition of employment, and Lawyer B as a private practitioner, may give court-awarded fees to the nonprofit without violating Rule 5.4(a).

Currency note

This opinion was issued in 2000. Virginia's Rule 5.4 may have changed since. Verify against current rules before relying on any specific requirement mentioned here.

In practice

The opinion holds that, under the rules as they stood at the time, a staff or volunteer lawyer may turn over court-awarded attorney's fees to the nonprofit public-interest organization that sponsored the litigation without violating Rule 5.4(a). It rests that conclusion on Rule 5.4's focus on nonlawyer interference in for-profit practice, the nonprofit status of the recipient, and the fact that the fees are court-set rather than charged to the client. It also holds that a lawyer accepting a pro bono referral may not charge or collect a contingent fee for the representation.

Common questions

Q: Can a public-interest lawyer hand court-awarded fees to the nonprofit that sponsored the case?

A: Yes. The committee holds this does not violate Rule 5.4(a), because the recipient is a nonprofit, the fees are court-awarded rather than charged to the client, and Rule 5.4 is aimed at nonlawyer interference with a lawyer's judgment in for-profit practice.

Q: Why doesn't this count as barred fee-sharing with a nonlawyer?

A: The committee reasons the purpose of Rule 5.4 is to protect a lawyer's professional independence, and that with court-set fees paid to a nonprofit there is no risk that a nonlawyer's influence causes the client to be charged an excessive fee (citing LEO 1598 and ABA Formal Op. 93-374).

Q: Can a lawyer who takes a pro bono referral charge a contingent fee?

A: No. The committee notes, citing LEO 1691, that a lawyer who accepts a pro bono referral from a nonprofit may not charge or collect a contingent fee for the representation.

Background and rules framework

The opinion interprets Rule 5.4(a) (a lawyer or law firm shall not share legal fees with a nonlawyer; successor to former DR 3-102(A)) in light of Rule 5.4(d) (the bar on practicing in a for-profit entity where nonlawyers could control a lawyer's judgment) and the rule's purpose of preserving lawyer independence. It draws on ABA Formal Op. 93-374's reading of Rule 5.4(a).

Citations and references

Rules of Professional Conduct:

• Virginia Rule 5.4(a) and 5.4(d) (professional independence of a lawyer; sharing fees with a nonlawyer; former DR 3-102(A))

Other opinions cited:

• Virginia LEO 1691: a lawyer accepting a pro bono referral may not charge or collect a contingent fee.
• Virginia LEO 1598: the thrust of DR 3-102(A) is an agreement to share client-paid fees with a nonlawyer.
• ABA Formal Op. 93-374 (1993): Rule 5.4(a) addresses fee-sharing that threatens a lawyer's independence; Cleveland Bar Op. 141 (1979).

See also

• VA LEO 1751: Percentage Fee for a Bar Referral Service
• VA LEO 1764: Fee Sharing With a Finance Company
• VA LEO 1843: Patent Lawyer With a Non-Lawyer Agent

Source

• Landing page: https://vsb.org/Site/about/rules-regulations/leo-opinions.aspx
• Original PDF: https://www.vsb.org/common/Uploaded%20files/LEOs/1744.pdf

Original opinion text

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

Committee Opinion
June 27, 2000
LEGAL ETHICS OPINION 1744

ATTORNEY, IN PRO BONO
REPRESENTATION, RETURNING COURTAWARDED FEES TO CLIENT.

You have presented a hypothetical situation in which Lawyer A is an employee of a non-profit
corporation which brings legal actions on behalf of clients. Lawyer B, a private practitioner,
sometimes handles these cases at the request of the non-profit corporation on a pro bono basis,
alone or as co-counsel with Lawyer A. Although no fee is charged, in some instances the legal
actions result in court-awarded attorney’s fees.
Under the facts you have presented, you have asked the committee to opine as to whether
Attorney A, as a condition of employment, and Attorney B, as private practitioner, may give
court-awarded attorney’s fees to the non-profit corporation.
The appropriate and controlling disciplinary rule relative to your inquiry is Rule 5.4(a) of the
Virginia Rules of Professional Conduct 1 providing that:
A lawyer or law firm shall not share legal fees with a nonlawyer, except that:
(1) an agreement by a lawyer with the lawyer’s firm, partner, or associate may provide for
the payment of money, over a reasonable period of time after the lawyer's death, to the
lawyer’s estate or to one or more specified persons;
(2) a lawyer who undertakes to complete unfinished legal business of a deceased,
disabled, or disappeared lawyer may pay to the estate or other representative of
that lawyer that portion of the total compensation that fairly represents the services
rendered by the deceased, disabled or disappeared lawyer; and
(3) a lawyer or law firm may include nonlawyer employees in a compensation or
retirement plan, even though the plan is based in whole or in part on a profit-sharing
arrangement.
The committee has previously opined that it is unethical for a lawyer who accepts a pro bono
referral from a non-profit organization to charge or collect a contingent fee for the representation.
Legal Ethics Op. 1691 (1996). Thus, in the facts you present, it would be improper for the staff
attorney (Lawyer A) or the pro bono lawyer (Lawyer B) to claim the court-awarded fees. In some
situations, however, a cooperating attorney may contract for a reduced fee with the nonprofit
organization and therefore be entitled to a part of the court-awarded legal fees. The issue remains,
then, whether the lawyer may ethically agree to turn over all or part of the fees awarded by the
court to the non-profit organization that has sponsored the litigation. Rule 5.4(a) is implicated
because non-profit organizations or public interest groups are controlled, in whole or in part, by
1 The prohibition in Rule 5.4 (a) on sharing fees with a nonlawyer is substantially identical to its
predecessor, DR 3-102 (A) of the Code of Professional Responsibility.

Committee Opinion
June 27, 2000
boards or governing bodies composed of nonlawyers.
Attorney’s fees awarded to successful plaintiffs pursuant to statute are a significant source of
funding for non-profit public interest organizations. Typically, all such organizations require
staff or cooperating attorneys to turn over all or a part of any court-awarded legal fees arising out
of successful litigation sponsored by the organization. Roy Simon, Fee Sharing Between
Lawyers and Public Interest Groups, 98 YALE L. J. 1069, 1070-71 (1989)(hereinafter “Simon”).
A legal ethics rule prohibiting lawyers from sharing court awarded fees with public interest
groups would jeopardize this important source of funding. 2
The committee opines that there is no ethical impropriety in a lawyer’s sharing court-awarded
fees with the sponsoring pro bono organization. Rule 5.4 (d) states that a lawyer shall not
practice with or in the form of a professional corporation or association authorized to practice law
for a profit if nonlawyers are in a position to exercise control over the professional judgment of a
lawyer. Given the rule’s history, development and reference to for profit associations of lawyers
and non-lawyers, the committee believes that Rule 5.4(a) does not prohibit an attorney sharing or
turning over court-awarded attorneys fees to a non-profit public interest group which sponsored
the litigation. 3
The primary purpose of Rule 5.4 is to prohibit nonlawyer interference with a lawyer’s
professional judgment and ensure lawyer independence. The fact that the entity with which legal
fees are shared is a non-profit organization is significant given Rule 5.4 (d)’s language. In
addition, the legal fees in question are court-awarded rather than paid by the client. In Legal
Ethics Op. 1598 (1994), the committee concluded that the thrust of DR 3-102 (A) is that a lawyer
and a nonlawyer enter into an agreement where fees received from one or more clients are shared
with the nonlawyer. In the facts you present, there is no issue that the client will be charged an
excessive fee, due to the nonlawyer’s influence or involvement, since the client does not pay the
fee and the court hears evidence and determines the amount of the fee to be awarded.
This Committee is of the opinion that it is not unethical for an attorney to participate with a
nonprofit organization that requires participating attorneys to turn over court-awarded fees to the
organization, notwithstanding Rule 5.4 (a) or DR 3-102 (A). 4
2

Professor Simon cited a study of non-profit public interest groups revealing that at least nine percent (9%)
of their budgets were funded by court-awarded attorneys fees. Simon, supra at 1074.
3

In Formal Opinion 93-374 issued by the ABA’s Standing Committee on Legal Ethics, the committee
analyzed Rule 5.4, reasoning that:
Paragraph (a), with its more general prohibition on a lawyer sharing legal fees with a lay person,
must address some residual range of circumstances, not caught by the other, more specific
paragraphs of the rule, where the sharing of fees alone, absent a partnership agreement or its
equivalent, presents a significant threat to the lawyer’s independence of judgment. That threat,
presumably, must arise from the fact that the fee-sharing arrangement gives the lay participant both
the incentive and the power to interfere in the lawyer’s conduct of a matter.
4

See, ABA Formal Op. 93-374 (1993); Cleveland Bar Ass’n Op. 141 (1979)(staff attorney for organization
dedicated to legal rights for women could agree to remit court-awarded fees as condition of employment); But see,

Committee Opinion
June 27, 2000
Therefore, under the facts you have presented, Attorney A, as a condition of employment, and
Attorney B, as private practitioner, may give court-awarded attorney’s fees to the non-profit
corporation. Such conduct does not violate Rule 5.4 (a) of the Virginia Rules of Professional
Conduct.

ACLU v. Miller, 803 S.W.2d 592 (Mo. 1991) (organization had no enforceable right to court-awarded attorneys fees
because this would constitute fee-splitting between participating lawyer and a non-lawyer); Maine Comm’n on Legal
Ethics, Op. 69 (1986).