Is it fee splitting for a lawyer to pay an independent paralegal a flat fee that is then billed to the client as a cost?

Plain-English summary

A lawyer wanted to contract with an independent paralegal. As part of the compensation, the paralegal would receive a $250 flat fee for the initial file review and conference with the lawyer, charged only in cases the paralegal subsequently worked on, and would be paid hourly for later work. In every case, both the initial fee and the hourly fee would be billed to the client as costs, even in contingency-fee cases. The committee was asked whether this constitutes fee splitting and what impact the "paralegal retainer" has on the client.

The committee concluded that payment of a flat fee as part of the compensation for an independent paralegal retained for work on a case does not violate the rule against fee splitting with a nonlawyer. It stated that, provided the lawyer makes reasonable efforts to ensure the paralegal's conduct is compatible with the professional obligations of the lawyer and that the paralegal's fees are reasonable in light of the lawyer's own expected fees, the arrangement does not violate the Rules of Professional Conduct.

Currency note

This opinion was issued in 1997, 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 Treat this page as historical context, not current guidance.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 cited rules correspond to ABA Model Rules 1.5 (fees), 5.3 (responsibilities regarding nonlawyer assistants), and 5.4 (professional independence, including the bar on sharing fees with a nonlawyer).

Common questions

Q: Is paying an independent paralegal a flat fee per case considered fee splitting?

A: The committee concluded that paying a flat fee as part of the compensation for an independent paralegal retained for case work does not violate the rule against fee splitting with a nonlawyer.

Q: What conditions did the committee attach?

A: The lawyer must make reasonable efforts to ensure the paralegal's conduct is compatible with the lawyer's professional obligations, and the paralegal's fees must be reasonable in light of the lawyer's own expected fees.

Q: Does it matter that the fee is billed to the client as a cost, including in contingency cases?

A: The committee treated the described arrangement, which billed both the flat fee and hourly fee to the client as costs even in contingency-fee cases, as not violating the Rules of Professional Conduct under the stated conditions.

Background and rules framework

The opinion applied RPC 5.4 (the bar on sharing legal fees with a nonlawyer), RPC 5.3 (a lawyer's responsibilities for nonlawyer assistants), and RPC 1.5 (fees), corresponding to ABA Model Rules 5.4, 5.3, and 1.5. The committee distinguished compensation paid to a retained paralegal for case work from a prohibited division of the lawyer's fee, conditioning its conclusion on the lawyer's supervision of the paralegal and the reasonableness of the paralegal's fees relative to the lawyer's expected fees.

Citations and references

Rules of Professional Conduct:

• ABA Model Rule 1.5 (fees); Washington RPC 1.5
• ABA Model Rule 5.3 (responsibilities regarding nonlawyer assistants); Washington RPC 5.3
• ABA Model Rule 5.4 (professional independence of a lawyer); Washington RPC 5.4

See also

• WA Ethics Op. 1768: Fee Sharing on Social Security Cases
• WA Ethics Op. 1769: Trust Company Referring Clients
• WA Ethics Op. 1730: Preferred-Provider Fee Sharing

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=838

Original opinion text

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

Advisory Opinion: 1774
Year Issued: 1997
RPC(s): RPC 1.5; 5.3; 5.4
Subject: Division of fees with nonlawyer; paralegal paid flat fee which is charged to client

Facts Presented: A lawyer wants to enter into a contract with an independent paralegal. As part of the compensation for services on any case , the paralegal wants to receive a $250 flat fee for the initial file review and conference with the lawyer. This fee would only be charged in cases in which the paralegal would subsequently work. The paralegal would be paid hourly for work done after this initial review. In all cases this initial fee and the hourly fee would be billed to the client as costs even in contingency fee cases.

Questions Presented: (1) Does this arrangement constitute fee splitting; and (2) What impact, if any, does this "paralegal retainer" have on the client?

Applicable Rules: RPC 1.5; 5.3; 5.4

RPC Committee Opinion: Payment of a flat fee as part of the compensation for an independent paralegal who is retained for work on a case does not violate the rule against fee splitting with a nonlawyer. Provided that the lawyer makes reasonable efforts to insure that the paralegal's conduct is compatible with the professional obligations of the lawyer and that the paralegal's fees are reasonable in light of the lawyer's own expected fees, this arrangement with the paralegal does not violate the Rules of Professional Conduct.