MARYLAND STATE BAR ASSOCIATION, INC.
COMMITTEE ON ETHICS
ETHICS DOCKET NO. 1993-38
Division of Legal Fees With Out-of-State Lawyer
Your May 24, 1993 inquiry has been considered by the Committee on Ethics of the Maryland State Bar Association. I have been designated to respond to you on behalf of the Committee.
Your letter presents a statement of facts and four questions. In essence, you inquire whether you can split legal fees with a Pennsylvania attorney not licensed to practice in Maryland who seeks to refer Russian speaking clients to you in Maryland. You state that you will perform all of the legal work for these clients but that referring counsel will agree in writing that he will assume joint responsibility for each case. You indicate that the client will agree in writing to your proposed fee division. You also inquire as to whether you can pay a monthly' service fee to referring counsel in exchange for his providing you with office space, equipment and a Russian speaking legal secretary.
Your questions will be addressed in turn.
1. May a Maryland Attorney divide fees with an attorney from another state? Does the proposed fee arrangement violate Rule 1.5(e) of the Maryland Rules of Professional Conduct?
In response to the first part of your question, the Maryland Rules of Professional Conduct do not prohibit p~ ~g the sharing of fees with attorneys from other jurisdictions. As to the second part, Rule 1.5(e) provides:
(e) A division of fee between lawyers who are not in the same firm may be made only if:
(1) the division is in proportion to the services performed by each lawyer or, by written agreement with the client, each lawyer assumes joint responsibility for the representation;
(2) the client is advised of and does not object to the participation of all the lawyers involved; and
(3) the total fee is reasonable.
Technically, your proposal does not comply with Rule 1.5(e) because you do not state that the clients will agree in writing that both attorneys will assume joint responsibility for the representation. Instead, you indicate that your clients will agree in writing to the fee split proportion, which the Rule does not require. Nevertheless, if the clients agree in writing to the assumption of joint responsibility as required by the Rule, the agreement does not violate the Rules, even where referring counsel performs no legal work, here or in his home state, assuming the total fee for services is reasonable.
Although the term "joint responsibility" is not defined by the Rule, by the use of the disjunctive, the Rule distinguishes between services performed and the assumption of responsibility. DR 2-107(A), the predecessor the Rule 1.5(e), prohibited a fee split among members of different firms unless "... the division is made in proportion to the services performed and responsibility by each." Our current Rule changes the "and" to "or". Thus, the fee division need not be related to the amount of services performed. Therefore, your proposed fee division, assuming the client agrees in writing to the assumption of joint responsibility and the total fee is reasonable, does not violate the Rules.
The Comment to Rule 1.5(e) is consistent with this result wherein it states that the permitted fee division "most often is used when the fee is contingent and the division is between a referring lawyer and a trial specialist." Similarly, ABA Informal Opinion 85-1514 (1985), which addressed DR 2-107(A), defined "joint responsibility" as differing from the performance of legal services for the client. Rather, the Opinion includes in the definition of "joint responsibility:
"assumption of responsibility comparable to that of a partner in a law firm under similar circumstances, including financial responsibility, ethical responsibility to the extent a partner would have ethical responsibility for actions of other partners in a law firm in accordance with Rule 5.]., and the same responsibility to assure adequacy of representation and adequate client communication that a partner would have for a matter handled by another partner in the firm under similar circumstances."
2. Does the relationship with Pennsylvania counsel violate Rule 5.5(b) of the Rules?
Rule 5.5(b) prohibits an attorney from assisting a person who is not a member of the bar in the performance of activity that constitutes the unauthorized practice of law. We understand from your inquiry that Pennsylvania counsel will not perform any legal activities in Maryland with respect to the referred clients other than the acceptance of joint responsibility with regard to these clients.
The answer to this question turns on whether the Pennsylvania attorney is practicing law by accepting joint responsibility for these cases under Rule 1.5(e). The question of whether a party is practicing law is a legal issue to be decided by the courts. This committee does not opine on issues of law. We can only answer your question in the context of the Rules, i.e., whether your activities violate Rule 5.5(b).
Again, Rule 1.5(e) does not define "joint responsibility". The Comment to Rule 1.5(e) and an analysis of Rules 5.1 and 8.5, however, provide the answer to your inquiry. The Comment to Rule 1.5(e) states that "[j]oint responsibility for the representation entails the obligations stated in Rule 5.1 for purposes of the matter involved." Rule 5.1 details the obligations and potential responsibility of a supervisory lawyer or partner in a firm who directs a subordinate's activities. The question then becomes whether assumption of this additional ethical burden constitutes the practice of law by the supervisory attorney under the Rules. According to Rule 8.5(b), it does not.
Rule 8.5(b) provides:
(b) A lawyer not admitted by the Court of Appeals to practice in this State is subject to the disciplinary authority of this State for conduct that constitutes a violation of these Rules and that:
(1) involves the practice of law in this State by that lawyer, or
(2) involves that lawyer holding himself or herself out as practicing law in this State, or
(3) involves the practice of law in this State by another lawyer over whom that lawyer has the obligation of supervision or control.
Thus, Rule 8.5(b) distinguishes between the practice of law in this state in (b)(3.) and the supervision or control of a lawyer by an out of state lawyer in (b)(3). As a result, the Rules do not equate the supervision/control of a Maryland lawyer by an out-of-state attorney under Rule 5.1 with the practice of law in Maryland. Therefore, if the Pennsylvania lawyer does not perform any other act than accepting joint responsibility under Rule 1.5(e), and, in doing so adopting the concomitant obligations under 5.1, Rule 1.5(e) does not define this activity as the practice of law in Maryland. As a result, your participation in the arrangement does not violate Rule 5.5(b) under these circumstances.
This conclusion differs from the result reached in our prior opinion 88-58. In that Opinion, the inquirer was a Maryland resident not licensed to practice here. Re sought to split fees with a Maryland attorney based upon the work he performed. The Committee stated that the fee could be split based on the services performed, but not by each assuming joint responsibility. The Committee states "In this case, since you are not authorized to practice law in the State of Maryland, you cannot assume joint responsibility for the representation." To the extent that the current Opinion differs from 88-58, the prior Opinion is overruled.
3. Given the Facts, is Pennsylvania Counsel subject to Maryland Jurisdiction under Rule 8.5(b)(3)?
The foregoing analysis answers question 3. Under Rules 5.1 and 8.5(b)(3), depending on the actual violation, referring counsel may be subject to discipline by the Maryland Court of Appeals if you violate the Rules.
4. Is the payment of the monthly service fee to Pennsylvania Counsel, for office space, use of office equipment, and services permissible?
As the Committee reads your factual statement, the monthly service fee is not tied to a percentage of the fees your receive. Under these circumstances, your proposal does not violate the Rules.
This opinion, 93-38 makes references to opinion 88-58.