Can a lawyer join an arrangement where a paralegal company and financial planner refer clients, prepare documents, and split the fee under the lawyer's 'supervision'?

Plain-English summary

The inquiry concerned a proposed arrangement with a paralegal company under which a financial planner, who received clients from the paralegal company, would refer them to the lawyer. The financial planner would collect the entire fee by a client check payable to the lawyer's trust account; the lawyer would review worksheets filled out with the financial planner, return them to the paralegal company to prepare the documents, and, on approving the completed forms, disburse the fees to the financial planner, the paralegal company, and the lawyer. The lawyer described the role as "supervising" the process.

The committee was of the opinion that the arrangement would violate several provisions. As proposed, it would constitute sharing legal fees with a nonlawyer in violation of RPC 5.4, and if the lawyer operated as a partner with the paralegal company it would also violate RPC 5.4(b). The committee was of the opinion that the proposal might violate RPC 7.2(c) because the payment to the paralegal or financial planner might be value given for recommending the lawyer's services. Because many decisions about the services were made by persons other than the lawyer, the proposal would violate RPC 5.4(c) as a limitation on the lawyer's professional judgment. Finally, the committee expressed concern that the fee schedule might not meet the reasonable-fee requirements of RPC 1.5.

Currency note

This opinion was issued in 1990, before the Washington State Bar Association's adoption of the 2006 revisions to the Washington Rules of Professional Conduct. 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 Treat this page as historical context, not current guidance.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 split fees with a paralegal company and a financial planner who refer the clients?

A: Under this 1990 opinion, no. The committee was of the opinion that the arrangement would constitute sharing legal fees with a nonlawyer in violation of RPC 5.4.

Q: Does paying the referrers for sending clients create a separate problem?

A: Yes. The committee was of the opinion that the payment to the paralegal or financial planner might constitute value given for recommending the lawyer's services in violation of RPC 7.2(c).

Q: What about nonlawyers making the substantive decisions?

A: The committee was of the opinion that because many decisions about the services were made by persons other than the lawyer, the proposal would violate RPC 5.4(c) as a limitation on the lawyer's professional judgment.

Q: Was the fee itself a concern?

A: The committee expressed concern that the fee schedule in the proposal might not meet the reasonable-fee requirements of RPC 1.5.

Background and rules framework

The opinion applies several rules. RPC 5.4, Washington's version of ABA Model Rule 5.4, protects the lawyer's professional independence: subsection (b) bars partnership with a nonlawyer where the activities include the practice of law, and subsection (c) bars letting a payer or other nonlawyer direct the lawyer's professional judgment. RPC 7.2(c) restricts giving value for recommending the lawyer's services. RPC 1.5 requires fees to be reasonable. The committee found the paralegal-company arrangement to run afoul of each.

Citations and references

Rules of Professional Conduct:

• ABA Model Rule 1.5 (fees; reasonableness)
• ABA Model Rule 5.4 (professional independence; sharing fees, partnership, and direction by nonlawyers)
• ABA Model Rule 7.2 (advertising; payment for recommendations)
• Washington RPC 1.5, RPC 5.4(b), RPC 5.4(c), RPC 7.2(c)

See also

• WA Ethics Op. 1332: Splitting Court-Awarded Fees With a Collection Agency
• WA Ethics Op. 1297: Lawyer in a Paid Referral Package

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=415

Original opinion text

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

The Committee again reviewed your inquiry concerning a proposed arrangement with a paralegal company whereby you could be referred clients by a financial planner to whom they had been referred by the paralegal company. Under the proposal, the financial planner would collect the entire fee in the form of a check from the client payable to your trust account, and you would deposit that check into your trust account until the work was completed. You would also be provided with worksheets which had been filled out with the financial planner for your review. After your review, you would return them to the paralegal company which would prepare the necessary documents to be returned to you. You described your participation in this arrangement as "supervising" the process. Upon your apparent approval of the completed forms, you would disperse the fees to the financial planner, the paralegal company and yourself. The Committee was of the opinion that such an arrangement would violate several provisions of the Rules of Professional Conduct. First, the Committee thought that, as proposed it would constitute sharing legal fees with a non-lawyer in violation of RPC 5.4. Further, although the facts were not clear on this, if you operated as a partner with the paralegal company, the proposal would also violate RPC 5.4(b). The Committee was also of the opinion that this proposal might violate RPC 7.2(c) in that the payment from you to the paralegal and/or financial planner might constitute a payment on value to someone for recommending your services. The Committee was also of the opinion that the fact that many of the decisions regarding the services to be provided to the client were made by persons other than the lawyer, such a proposal would violate RPC 5.4(c) as a limitation on the lawyer's professional judgment. Finally, the Committee expressed some concern that the fee schedule as set out in the proposal might not meet the reasonable fee requirements of RPC 1.5.