Can a law firm pay a consulting firm a capped share of its contingent fees for help on athletes' contracts?

Plain-English summary

The inquiry concerned an arrangement with a consulting firm under which the consulting firm would be paid by the law firm out of the fees the law firm earned. Neither firm would be paid unless a professional athletic contract were executed, and the lawyer had placed a "cap" of 30% of fees received by the law firm on total compensation to the consulting firm.

The committee was of the opinion that, as presently structured, the arrangement would constitute fee splitting with a nonlawyer in violation of RPC 5.4. The committee was of the opinion that there would be nothing improper in restructuring the arrangement so that there was a separate fee contract between the client and the consultant. It was also concerned that the "cap" might not ensure a reasonable fee, and directed attention to the reasonable-fee consideration in RPC 1.5.

Currency note

This opinion was issued in 1991, 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 Treat this page as historical context, not current guidance.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 law firm pay a consultant out of its own contingent fees?

A: Under this 1991 opinion, not as structured; the committee was of the opinion that paying the consultant from the firm's fees is fee splitting with a nonlawyer in violation of RPC 5.4.

Q: How could the arrangement be fixed?

A: The committee was of the opinion that a separate fee contract directly between the client and the consultant would be proper.

Q: What was the concern with the 30% cap?

A: The committee was concerned the cap might not ensure a reasonable fee, and pointed to the reasonable-fee consideration in RPC 1.5.

Background and rules framework

At the time of this opinion, Washington's RPC 5.4 barred sharing legal fees with a nonlawyer and RPC 1.5 required fees to be reasonable, the subjects the Model Rules place in Rules 5.4 and 1.5. The committee distinguished an impermissible split of the firm's fee from a permissible separate client-consultant contract, and flagged the cap as a reasonableness concern.

Citations and references

Rules of Professional Conduct:

• ABA Model Rule 1.5 (reasonable fees)
• ABA Model Rule 5.4 (sharing fees with a nonlawyer)
• Washington RPC 1.5, 5.4

See also

• WA Ethics Op. 1386: Paying a Paraprofessional From Escrow Receipts
• WA Ethics Op. 1348: Sharing a Fee With an SSA Paralegal

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=484

Original opinion text

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

The Committee reviewed your inquiry concerning an arrangement with a consulting firm whereby the consulting firm would be paid by your law firm out of the fees earned by the law firm. Neither your firm nor the consulting firm would be paid unless a professional athletic contract were executed. In addition, you have put a "cap" [of 30% of fees received by law firm] on the total compensation to be paid to the firm. The Committee was of the opinion that as presently structured, this arrangement would constitute fee splitting with a non-lawyer in violation of RPC 5.4. The Committee was of the opinion that there would be nothing improper with restructuring the arrangement so that there was a separate fee contract between the client and the consultant. In addition, the Committee was concerned that the "cap" might not ensure a reasonable fee, and directs your attention to the consideration in RPC 1.5 regarding a reasonable fee.