Can a law firm include nonlawyer staff in a profit-sharing plan based on a percentage of firm income?

Short answer The committee was of the opinion that a profit-sharing plan under which nonlawyer staff receive a percentage of income after monthly overhead and guarantees to partners is permitted by RPC 5.4(a)(3).

Bar

WSBA

Issued

1995

Apply this to your situation

This page answers the general question as of 1995. Ask about yours and see what the current Washington Rules of Professional Conduct say for your facts, with citations.

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 Not binding precedent.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) is the authoritative source for any reliance.

Plain-English summary

A law partnership asked about a profit-sharing plan with its nonlawyer staff, under which the nonlawyers would receive a percentage of income after monthly overhead and guarantees to the partners. The committee was of the opinion that the plan as described in the inquiry is permitted by RPC 5.4(a)(3).

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 Treat this page as historical context, not current guidance.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 5.4 corresponds to ABA Model Rule 5.4 (professional independence of a lawyer); subsection (a)(3) is the exception permitting a compensation or retirement plan that includes nonlawyer employees based on a profit-sharing arrangement.

Common questions

Q: Can nonlawyer employees share in a firm's profits?

A: The committee was of the opinion that the described profit-sharing plan, paying nonlawyer staff a percentage of income after monthly overhead and partner guarantees, is permitted by RPC 5.4(a)(3).

Q: How is this different from prohibited fee splitting with a nonlawyer?

A: The committee placed the plan within RPC 5.4(a)(3), the rule's exception for a profit-sharing compensation arrangement that includes nonlawyer employees, rather than the general prohibition on sharing legal fees with nonlawyers.

Background and rules framework

The opinion applied RPC 5.4(a)(3) (professional independence of a lawyer, corresponding to ABA Model Rule 5.4). The committee treated the staff profit-sharing plan as falling within the rule's exception for a compensation or profit-sharing plan that includes nonlawyer employees, with the structure described (a percentage of income after overhead and partner guarantees) as the arrangement it approved.

Citations and references

Rules of Professional Conduct:

ABA Model Rule 5.4 (professional independence of a lawyer); Washington RPC 5.4(a)(3)

Source

Landing page: https://ao.wsba.org/print.aspx?ID=727

Original opinion text

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

Advisory Opinion: 1644
Year Issued: 1995
RPC(s): RPC 5.4(a)(3)
Subject: Division of fees with nonlawyer; profit-sharing plan

The Committee was of the opinion that your profit sharing plan with the law partnership's non-lawyer staff [under which the nonlawyers receive a percentage of income after monthly overhead and guarantees to partners] as set out in your inquiry is permitted by RPC 5.4(a)(3).

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