Can a lawyer pay a paralegal out of court-awarded attorney's fees without violating the rule against fee splitting with a nonlawyer?

Plain-English summary

A lawyer asked whether it violates the rule against fee splitting with a nonlawyer to compensate a paralegal where that compensation is contingent on an award of reasonable attorney's fees under a fee-shifting statute, with the nonlawyer's compensation to be separately petitioned for. The committee was of the opinion that the proposed arrangement does not violate RPC 5.4(a), provided that the nonlawyer is compensated on an hourly rate basis and not based on a fractional or percentage share of the attorney's fees. The committee expressed no opinion on whether the arrangement complies with wage and hour claims laws.

The committee reminded the lawyer of the strictures of RPC 5.3 and 5.5(b). In its view, the employment arrangement creates a significant risk that the lawyer may run afoul of one or both of these rules if the lawyer is not vigilant in supervising the paralegal. The committee stated that, to comply with RPC 5.3 and 5.5, paragraph four of the contract, which provided that the paralegal is an independent contractor not subject to the lawyer's direction as to means or schedule, must be changed; the lawyer still needs to comply with Title 5 of the RPCs even if the paralegal is treated as an independent contractor.

Currency note

This opinion was issued in 1995, before the Washington State Bar Association's adoption of the 2006 revisions to the 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 Treat this page as historical context, not current guidance.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. Washington's RPC 5.3, 5.4, and 5.5 correspond to ABA Model Rules 5.3 (responsibilities regarding nonlawyer assistants), 5.4 (professional independence of a lawyer), and 5.5 (unauthorized practice of law).

Common questions

Q: Does paying a paralegal from court-awarded fees count as illegal fee splitting?

A: The committee said the arrangement does not violate RPC 5.4(a) provided the nonlawyer is compensated on an hourly rate basis and not as a fractional or percentage share of the attorney's fees.

Q: Can the paralegal be paid a percentage of the attorney's fees?

A: No. The committee conditioned its conclusion on the nonlawyer being paid hourly, not on a fractional or percentage share of the fees.

Q: Does treating the paralegal as an independent contractor remove the lawyer's duties?

A: No. The committee said the lawyer still needs to comply with Title 5 of the RPCs even if the paralegal is treated as an independent contractor, and that paragraph four of the contract had to be changed to comply with RPC 5.3 and 5.5.

Background and rules framework

The opinion applied RPC 5.4(a) (professional independence, corresponding to ABA Model Rule 5.4), RPC 5.3 (responsibilities regarding nonlawyer assistants, ABA Model Rule 5.3), and RPC 5.5 (unauthorized practice of law, ABA Model Rule 5.5). The committee treated the form of compensation (hourly versus a percentage share) as the factor that kept the arrangement clear of the fee-splitting prohibition, and the lawyer's supervision of the paralegal as the factor governing the RPC 5.3 and 5.5 questions.

Citations and references

Rules of Professional Conduct:

• ABA Model Rule 5.4 (professional independence of a lawyer); Washington RPC 5.4(a)
• ABA Model Rule 5.3 (responsibilities regarding nonlawyer assistants); Washington RPC 5.3
• ABA Model Rule 5.5 (unauthorized practice of law); Washington RPC 5.5(b)

See also

• WA Ethics Op. 1628: Sharing a Consultation Fee With Translator Referral Sources

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=707

Original opinion text

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

Advisory Opinion: 1624
Year Issued: 1995
RPC(s): RPC 5.3; 5.4(a); 5.5
Subject: Division of fees with nonlawyer; nonlawyer's compensation contingent on court awarded fees

The Committee discussed your inquiry regarding whether it is a violation of the rule prohibiting fee splitting with a non-lawyer paralegal wherein compensation of the non-lawyer is contingent on an award of reasonable attorney's fees under a fee shifting statute and the non-lawyer's compensation will be separately petitioned for. The Committee was of the opinion that this proposed arrangement does not violate RPC 5.4(a), provided that the non-lawyer is compensated on an hourly rate basis and not based on a fractional or percentage share of the attorney's fees. The Committee expresses no opinion on whether this arrangement complies with wage and hourly claims laws.

The Committee reminds the lawyer of the strictures of RPC 5.3 and 5.5(b): it is the Committee's view that this employment arrangement creates a significant risk that the lawyer may run afoul of one or both of these rules if he is not vigilant in his supervision of the paralegal. In order to comply with RPC 5.3 and 5.5, paragraph four of the contract [providing that the paralegal is an independent contractor, not subject to the direction of the lawyer as to means or schedule] must be changed. The lawyer still needs to comply with Title 5 [of the RPCs] even if the paralegal is treated as an independent contractor.