Is paying a contract or temporary lawyer only for the hours the hiring lawyer bills to and collects from the client a 'division of fee' governed by RPC 1.5(e)?

Plain-English summary

A temporary lawyer asked whether a proposed contract arrangement violated RPC 1.5(e) on fee-splitting between lawyers. Under the arrangement, she would be directly supervised by the hiring lawyer and would bill the hiring lawyer for hours worked, but would be paid only for hours that the hiring lawyer billed to and collected from the client.

The committee concluded that this situation does not implicate RPC 1.5(e), which by its terms applies to a division of fee between lawyers. It pointed to Comment 7 to ABA Model Rule 1.5 (then proposed for adoption by the WSBA and pending before the Washington Supreme Court), which defines a division of a fee as a single billing to a client covering the fee of two or more lawyers who are not in the same firm. Because the gross fee the client pays the hiring lawyer is not shared with the temporary lawyer, the committee found there is no division of a fee implicating RPC 1.5(e). It cited ABA Formal Ethics Opinion 88-356, which reached the same result where a firm pays a temporary lawyer reasonable compensation for services and does not later charge the payments to the client as a disbursement, because the gross fee the client pays the firm is not shared with the temporary lawyer.

The committee added that other ethics issues could arise in any temporary-lawyer scenario for both the hiring and temporary lawyers, but it was not asked about and did not comment on them in this informal opinion.

In practice

Under this opinion, and under RPC 1.5(e) as it stood in 2006, the test is whether the client's single fee is divided among lawyers outside one firm. The opinion holds that paying a temporary lawyer for services rendered, even when payment is contingent on the hiring lawyer billing and collecting for those hours, is not a division of the client's fee and so does not trigger RPC 1.5(e)'s requirements. The committee tied its conclusion to the definition of fee division in Comment 7 to Model Rule 1.5 and to ABA Formal Opinion 88-356, and expressly declined to address other ethics issues a temporary-lawyer arrangement might raise.

Common questions

Q: Does RPC 1.5(e) apply to paying a contract lawyer out of what the client pays?

A: Not on these facts. The committee concluded that paying the temporary lawyer for hours the hiring lawyer bills and collects is not a division of the client's fee, so RPC 1.5(e) does not apply.

Q: Why isn't this a fee division?

A: Because the gross fee the client pays the hiring lawyer is not shared with the temporary lawyer. Citing Comment 7 to Model Rule 1.5, the committee defined fee division as a single client billing covering the fees of lawyers not in the same firm.

Q: Does the opinion clear the arrangement of all ethics concerns?

A: No. The committee said other ethics issues could arise for both lawyers in a temporary-lawyer scenario, but it was not asked about them and did not comment on them in this informal opinion.

Background and rules framework

The opinion interprets Washington RPC 1.5(e) (division of a fee between lawyers not in the same firm; the counterpart to Model Rule 1.5(e)). It relies on Comment 7 to ABA Model Rule 1.5 (then pending adoption in Washington) for the definition of a fee division, and on ABA Formal Ethics Opinion 88-356 on payments to temporary lawyers.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.5 / Washington RPC 1.5, 1.5(e) (division of a fee between lawyers not in the same firm); Model Rule 1.5 Comment 7 (definition of fee division)

Other opinions cited:

• ABA Formal Ethics Opinion 88-356 (payments to a temporary lawyer are not a fee division when the client's gross fee is not shared)

See also

• WA Ethics Op. 1083: Lawyer Placement Service
• WSBA Ethics Op. 1039: Contract Lawyer Markup
• WSBA Ethics Op. 2126: Paying Staff a Cut of Settlements

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=1566

Original opinion text

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

Advisory Opinion: 2127
Year Issued: 2006
RPC(s): RPC 1.5(e)
Subject: Fee splitting w/contract lawyer based on contingency fee

A temporary lawyer asks whether a proposed contract arrangement in which she will be directly supervised by the hiring lawyer and will bill the hiring lawyer for hours worked, but will be paid only for hours that the hiring lawyer bills to and collects from the client, violates RPC 1.5(e) regarding fee-splitting between lawyers. This situation does not implicate RPC 1.5(e), which by its terms applies to "a division of fee between lawyers." Comment [7] to ABA Model Rule 1.5, which has been proposed for adoption by the WSBA and is now pending before the Washington Supreme Court, defines a division of a fee under the rule as "a single billing to a client covering the fee of two or more lawyers who are not in the same firm." Under the proposed arrangement, the gross fee paid by the client to the hiring lawyer is not shared with the temporary lawyer, so there is no division of a fee implicating RPC 1.5(e). See ABA Formal Ethics Op. 88-356 (where a law firm pays a temporary lawyer reasonable compensation for services performed for the firm and does not charge the payments thereafter to the client as a disbursement, RPC 1.5(e) does not apply “because the gross fee the client pays the firm is not shared with the temporary lawyer”).

Finally, there may be other important ethics issues besides fee-splitting implicated in any temporary lawyer scenario for both the hiring and the temporary lawyers. We have not been asked about those and we are not commenting on them in this informal opinion.