"If I am not mistaken, the typical model would have the non-licensed employees just be paid employees and not fee sharing partners in the firm, company, entity."
And that is the next question. If this model was adopted, can the non-lawyers participate in a profit-sharing model? I know they can't share in the fees, but can they share in the firms profits?
Do not assume the answer is "Yes". Even if the state bar is liberal, as Nevada appears to be, it will likely still depend on the form the profit-sharing takes.
Re the prohibition generally: my personal take is that the driving force behind it is the desire to ensure the profit motive won't override legal ethics (and/or other professional judgment) in firm decision making. By ensuring all decision-making stakeholders in law firms are attorneys, you ensure that those directing the firm are 1) trained in the law of and governed by their state's legal code of ethics, and 2) subject to suspension or disbarment for straying from that ethical code. Other concerns are that clients might mistake non-attorney members of a firm for attorneys, or the activities of non-attorneys could cause client confidences to lose attorney-client privilege.
Here's an excerpt from a DC Bar Ethics Opinion which provides a bit of background re the traditional concerns behind the prohibition and the modern trend with regards to fee-sharing. (The full opinion can be found at
http://www.dcbar.org/for_lawyers/ethics/legal_ethics/opinions/opinion233.cfm.) It discusses the issue in the context of deciding whether or not a "success" fee could be shared with non-lawyers.
Opinion 233 [DC BAR]
Payment of “Success Fees” to Nonlawyer Consultants
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[....] "The bans on fee-sharing and partnerships with nonlawyers have long been a feature of codes of legal ethics. They were motivated by a number of concerns, chiefly that nonlawyers might through such arrangements engage in the unauthorized practice of law, that client confidences might be compromised, and that nonlawyers might control the activities of lawyers and interfere with the lawyers’ independent professional judgment. Opinion No. 146.
"The Kutak Commission of the American Bar Association, which drafted the ABA Model Rules of Professional Conduct, proposed a dramatically different approach that would have allowed a wide range of business associations between lawyers and nonlawyers. The Kutak Commission thus recognized the important and integral role that a variety of types of nonlawyers—from paralegals to economists, social workers and accountants—have come to play in modern law practice. Compare Opinion No. 93, in which this Committee in 1980 similarly recognized the increasing role of nonlawyers in law practice. The ABA’s House of Delegates, however, rejected the Kutak Commission proposal and adopted, in Rule 5.4 of the Model Rules, general bans on sharing of legal fees with nonlawyers and on partnerships with nonlawyers paralleling those contained in Disciplinary Rules 3-102 and 3-103 of the old ABA Model Code of Professional Responsibility.
"The Rules of Professional Conduct adopted in the District of Columbia, effective January 1, 1991, contain a version of Rule 5.4 that, like the Kutak Commission proposal, reflects a more liberal approach to the subject of fee-sharing and association of nonlawyers in the legal practice. Rule 5.4(a), the general ban on fee-sharing, contains not only the traditional exceptions for payments to a deceased lawyer’s estate and inclusion of nonlawyer employees in a retirement plan based on profit-sharing, but also, in Rule 5.4(a)(4) and 5.4(b), an exception permitting the sharing of fees in partnerships or other organizations in which nonlawyers have an interest, provided that certain safeguards are observed.[footnote omitted]
"We believe that the more liberal approach embodied in the D.C. Rules, together with a recognition of the vital role that nonlawyer experts from many disciplines play today in assisting lawyers in providing legal services to their clients, counsels against a broad reading of the Rule 5.4 proscription of fee-sharing with nonlawyers in this context. We also think that the present inquiry must be viewed in the light of several propositions that, it seems to us, are incontestable. First, nothing in the Rules of Professional Conduct would prohibit a direct arrangement between the law firm’s client and the consulting firm for the payment of a “success fee” to the consulting firm. Second, it is commonplace for lawyers to retain and pay outside consultants directly and to pass on their charges as an expense in billing their clients; no-one suggests that this constitutes the “sharing” by the lawyer of a fee with the nonlawyer consultant. Third, Comment 8 to Rule 3.4, reflecting another liberalization of the traditional approach in the District of Columbia, permits payments of contingent fees to expert witnesses so long as they are not based on a percentage of the recovery." [....]
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Topic: Lawyer + Agent + Engineer = Firm? (Read 2312 times)
