Source: Florida Contemplates Fee Sharing with Out of State NonLawyers | Legal Ethics in Motion
Florida Contemplates Fee Sharing with Out of State NonLawyers
A proposed advisory opinion by The Florida Bar’s Professional Ethics Committee addresses fee-splitting with out-of-state lawyers when the out-of-state lawyer practices in a law firm with nonlawyer ownership. In the opinion, the committee states that a Florida Bar member should not be subject to discipline simply because a nonlawyer owner of an out-of-state law firm could receive a portion of the legal fees.
Partnerships with out-of-state lawyers are hardly new, but tensions between Florida’s Rules of Professional Conduct, and the organization and ownership of out-of-state-firms led the Florida Bar to clarify the matter.
Under Florida Rule of Professional Conduct 4-5.4, lawyers are prohibited from partnering or sharing legal fees with a nonlawyer. However, some U.S. jurisdictions—Washington, D.C. and Washington state—permit nonlawyer ownership of law firms.
The Florida Bar proposed advisory opinion follows in the footsteps of ABA Formal Opinion 464, and several other jurisdictions, in deciding that nonlawyer ownership of law firms in jurisdictions where permissible should not cause collaborating Florida lawyers to violate the prohibition against fee sharing set forth in Rule 4-5.4.
The underlying policy of Rule 4-5.4 concerns the improper influence of a nonlawyer may on a lawyer’s professional judgment. However in the scenario analyzed in the proposed opinion, Florida Bar committee believes that a lawyer’s professional independence is not at risk simply because a nonlawyer owner receives a portion of an out-of-state lawyer’s fees.
Ultimately, the proposed opinion encourages attorneys to work with out-of-state lawyers despite differences in ownership structure, and allows clients to maintain flexibility in choosing counsel from other jurisdictions.
To read the proposed opinion please click here.
Source: OTHERWISE: Avvo, Rocket Lawyer, Legal Zoom Blocked by New Jersey Supreme Court Ethics Committees
Opinion 732 – AVVO, Legal Zoom, Rocket Lawyer
NJ Supreme Court Committees: Advisory Committee on Professional Ethics, Attorney Advertising, Unauthorized Practice of Law
Responding to an inquiry by the New Jersey State Bar Association, the New Jersey Law Journal reports today that a binding joint Opinion of three New Jersey Supreme Court Committees has found that AVVO Legal Services fee plan violates the Court’s Rules of Professional Conduct. The business model runs afoul of RPC 5.4 (a) bar on division of fees with non-lawyers and constitutes an impermissible referral fee in violation of RPC 7.2 (c).
New Jersey lawyers are barred from participating in AVVO Legal Services.
The Opinion is binding subject to discretionary review by the Supreme Court itself.
Legal Zoom and Rocket Lawyer were found to be permissible legal services plans, but lawyers may not participate until the plan is properly registered with the Supreme Court.
AVVO asserted a First Amendment defense but the Committees responded:
AVVO asserted that its marketing scheme is commercial speech that must be tested against the intermediate scrutiny standard applied to First Amendment commercial speech. The Committees are not restricting Avvo’s marketing; the focus of this Joint Opinion is on the for-profit lawyer referral program and sharing of a legal fee with a nonlawyer. The First Amendment does not protect lawyers who seek to participate in prohibited attorney referral programs or engage in impermissible fee sharing.
NOTICE TO THE BARLAWYER PARTICIPATION IN THE AVVO LEGAL SERVICE PROGRAM AND IN LEGAL ZOOM AND ROCKET LAWYER LEGAL SERVICE PLANS
On June 21, 2017, the Advisory Committee on Professional Ethics, Committee on Attorney Advertising, and Committee on the Unauthorized Practice of Law issued a Joint Opinion (ACPE Opinion 732, CAA Opinion 44, UPL Opinion 54) stating that the legal service program operated by Avvo through its website is an impermissible lawyer referral service, in violation of Rules of Professional Conduct 7.2(c) and 7.3(d), and comprises improper fee sharing with a nonlawyer in violation of Rule of Professional Conduct 5.4(a). New Jersey lawyers may not participate in the Avvo legal service program. The Joint Opinion further states that LegalZoom and Rocket Lawyer appear to be offering legal service plans that have not been registered pursuant to Rule of Professional Conduct 7.3(e)(4)(vii). New Jersey lawyers may not participate in the LegalZoom or Rocket Lawyer legal service plans because they are not registered with the New Jersey Supreme Court (Administrative Office of the Courts).
Glenn A. Grant, J.A.D.,
Acting Administrative Director of the Courts
Source: OTHERWISE: SCOTUS Should Adopt a Code of Judicial Conduct// Lubet// Legal Ethics forum
by Steve Lubet (Northwestern Law School)
I have an oped on CNN.com explaining why SCOTUS should adopt a Code of Judicial Conduct. Here is the gist:
While Supreme Court justices obviously face the same quandaries and dilemmas as all other judges, they alone have no set rules for resolving, or even addressing, ethics issues.
Members of Congress have repeatedly called on the justices to adopt an ethics code. Most recently, Sen. Chris Murphy, D-Connecticut, and Rep. Louise Slaughter, D-New York, introduced the Supreme Court Ethics Act of 2017, which would give the court six months to “promulgate a code of ethics” based on the Code of Conduct for US Judges already in effect for the lower federal courts, along with any modifications that “the Supreme Court deems appropriate.”
[T]he objective of a code would be to set discernible standards for the justices’ conduct so that the public could know the norms to which the justices are holding themselves.
You can read the whole thing here.
Source: OTHERWISE: Required to Report a Client’s Drug Addiction? Illinois Says Not Necessarily… | Legal Ethics in Motion
This fascinating Illinois State Bar Ethics Opinion 17-01 (click through for link) presents this question under the state’s RPC 1.6(c)which mandates disclosure “to the extent the lawyer reasonably believes necessary to prevent death or substantial bodily harm”. :
The inquiring attorney has a client who is addicted to heroin and opioids, and also takes cocaine, marijuana and methadone. The client is arrested for possession of a controlled substance, and appears severely impaired during court hearings, but remains silent before the Judge, allowing the attorney to do the speaking. The client is unable to stop consuming heroin and continues to be in violation of bond conditions.
In essence the bar committee finds insufficient immediacy of harm but suggests that in appropriate circumstances RPC 1.14 Diminished Capacity may allow the lawyer the ability to take protective steps.
Source: OTHERWISE: 2d Circuit rejects claim that lawyers have First Amendment right to non-lawyer equity partners //Alberto Bernabe //John Marshall law School
Jacoby & Myers, LLP was one of the first law firms to employ large scale consumer-oriented advertising. Their slogan “It’s about time” promised efficiencies and effectiveness. However the firm’s growth stagnated as the P.C. transformed the practice of law, making it much less labor-intensive.
In hope of raising capital the firm, according to the Second Circuit’s precis, “challenge(d) the constitutionality of a collection of New York regulations and laws that together prevent for‐profit law firms from accepting capital investment from non‐lawyers. The J&M Firms allege that, if they were allowed to accept outside investment, they would be able to—and would—improve their infrastructure and efficiency and as a result reduce their fees and serve more clients, including clients who might otherwise be unable to afford their services. By impeding them from reaching this goal, the J&M Firms contend, the state has unconstitutionally infringed their rights as lawyers to associate with clients and to access 18 the courts—rights that are grounded, they argue, in the First Amendment.
The Southern District of New York’s Judge Lewis A. Kaplan dismissed the complaint, concluding that the plaintiffs failed to state a claim for violation of any constitutional right. The Second Circuit panel agreed in Jacoby& Myers v. The Presiding Justices. It is a decision that is a major blow to those who hoped to put a chink in the wall that bars U.S. firms from – like British and Australian firms – bringing on non-lawyer equity shareholders.
The panel (Lynch, Carney and Hellerstein) declared that “even if such rights as they claim were to be recognized, the challenged regulations withstand scrutiny because they are rationally related to a legitimate state interest. We agree that under prevailing law the J&M Firms do not enjoy a First Amendment right to association or petition as representatives of their clients’ interests; and that, even if they do allege some plausible entitlement, the challenged regulations do not impermissibly infringe upon any such rights.“
The issues are thoughtfully explored by Prof. Alberto Bernabe on his Professional Responsibility Blog – below. – gwc
Professional Responsibility Blog: Court of Appeals for the Second Circuit rejects argument that rules that ban lawyers from raising capital from non lawyers are unconstitutional
Source: OTHERWISE: DC Bar: Lawyers Must Consider Ethics When Dissolving Law Firms | Legal Ethics in Motion
by VINCENT CALARCO
Closing the doors on a law firm includes much more than just locking the door behind you. “Dissolution” means the process of terminating the law firm’s existence as a legal entity. The District of Columbia Bar recently issued an opinion that discusses the multiple rules of professional conduct come into play when considering the ethics involved in dissolving a law firm.
After the members of the firm decide to dissolve the firm, the next step is to promptly notify the firm’s clients. Timing is important because, after dissolution, the law firm no longer represents its clients. Notice of the dissolution should also be sent to opposing counsel and the tribunal.
During the dissolution period, lawyers must continue to diligently represent and communicate with clients while facilitating the client’s choice of counsel going forward and where appropriate, properly disposing of client files, funds, and any property.
Under Rule 1.16(d), if a particular lawyer and his client will be terminating their relationship then the lawyer is required to “take timely steps to the extent reasonably practicable to protect the client’s interests” which include surrendering property and papers to the client, allowing time for the client to find other counsel and other considerations.
To read the full opinion, click here.