Ezel / Ethics Opinions / VTBAR

May a Vermont lawyer share mortgage-relief fees with a broker or form an LLC with the broker?

Short answer Opinion 2008-3 rejected both the proposed fee split and the LLC with a nonlawyer minority owner. The lawyer could engage the broker as an employee or contractor only with close supervision and no improper fee sharing.
Bar
VTBAR
Issued
2008
Source
View Original PDF

Apply this to your situation

This page answers the general question as of 2008. Ask about yours and see what the current Vermont Rules of Professional Conduct say for your facts, with citations.

Currency note: this opinion is from 2008
Subsequent statutory amendments, court decisions, or later opinions or rule amendments may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Disclaimer: Advisory only. Not binding precedent.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked on this page as a PDF) is the authoritative source for any reliance.
View original ethics opinion (PDF)

Plain-English summary

A lawyer proposed a flat-fee service for clients seeking lower mortgage payments. A mortgage broker would advertise, collect financial information, and help prepare hardship letters. The lawyer would negotiate with lenders, and each would receive a set portion of the fee.

The committee found the proposed division of legal fees barred by Vermont Rule 5.4(a). It also rejected an LLC in which the broker would hold a minority interest and work as an employee, citing Rule 5.4's protection of independent professional judgment.

The opinion permitted associating with the nonlawyer as an employee or contractor only with close and adequate lawyer supervision of the work product. The lawyer would remain responsible for work given to clients and must avoid improper fee sharing. The committee expressly left the proposed broker advertising without detailed analysis.

In practice

For the proposed mortgage-relief service, the distinction was between paying the broker a portion of legal fees or giving the broker an ownership stake, which the committee rejected, and using the broker's services under close lawyer supervision without improper fee sharing.

Common questions

Q: Could the broker receive a set part of each client's flat fee?

A: No. The committee treated the proposed payment as prohibited sharing of legal fees with a nonlawyer under Rule 5.4(a).

Q: Would a minority LLC interest solve the fee-sharing problem?

A: No. The committee found the proposed LLC inconsistent with Rule 5.4's protection of lawyer independence.

Q: Could the broker work as an independent contractor?

A: Yes, under close and adequate lawyer supervision of the work product, with precautions against improper fee sharing. The opinion said that degree of supervision would make the supposed independent relationship essentially a nullity.

Background and rules framework

The committee applied Vermont Rules 5.5(b), 5.3, and 5.4. It discussed Rules 1.2(a), 1.7(b), and 1.8(f) as reinforcing the lawyer's duty to serve the client rather than a third party.

Citations and references

Vermont Rules of Professional Conduct:

  • Rules 5.5(b), 5.3, 5.4, 1.2(a), 1.7(b), and 1.8(f).

Model Rules:

  • Model Rule 5.4.

Cases cited:

  • Cincinnati Bar Assn. v. Mullaney, 2008 WL 427445 (Ohio 2008).

Other opinions cited:

  • ABA Formal Opinions 87-355, 95-392, and 91-360; Vermont Opinions 2003-08, 1999-03, and 1995-10.

See also

Source

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