Legal Ethics Opinion No. 1380

 Fees--Law Firms--Aiding Unauthorized Practice of Law--Splitting
Fees With Nonlawyer: Arrangement Between Multi-Jurisdictional
Offices of Law Firm

You have advised that a Virginia based law firm, ABC, P.C.
("ABC") and a District of Columbia practitioner, X, P.C. ("X")
entered into an agreement for their mutual benefit.  Some of the
members of ABC were not admitted in the District of Columbia and
X was not admitted in Virginia.  An office was operated in
Virginia and another in Washington, D.C. and the firm was known
as "XABC, P.C." ("XABC") in Virginia.  Subsequent to the forming
of XABC, the decision was made to close the District of Columbia
office; thus, X, who was nearing retirement, would be spending
more time in the Virginia location and the District of Columbia
practice would be limited to X's residence and privileges at a
separate firm's office in the District of Columbia.  You indicate
that X, P.C. was the head of XABC, P.C.'s labor section and, as
such, his name would remain in the firm even after he retired. 
The firm stationery indicated that X, A, B and C were all
affiliated, that X was not admitted to practice law in Virginia,
and that XABC, P.C. had an address in the District of Columbia in
addition to its Virginia location.

You further indicated that a legal problem arose in Virginia with
one of X's clients, the basis of which precipitated this inquiry. 
You have stated that, pursuant to the Agreement between the two
firms, X arranged for one of the other principals of XABC to
actually represent the client in the matter in question, and that
the client was aware of both this arrangement and the fact that
part of the fees paid for services would be received by X, P.C..  

You wish to know whether the payments made by XABC, P.C. to X,
P.C. in accordance with the agreement are violative of the Code
of Professional Responsibility.   

The appropriate and controlling Disciplinary Rules relevant to
your inquiry are DR 2-l05(A) which requires a lawyer's fees to be
reasonable and adequately explained to the client; DR 2-103(D)
which mandates that, with certain limited exceptions, a lawyer
shall not compensate or give anything of value to a person or
organization to recommend or secure his employment by a client;
and DR 2-105(D) which permits a division of fees between lawyers
who are not in the same firm only if (1) the client consents to
the employment of additional counsel; (2) both attorneys
expressly assume responsibility to the client; and (3) the terms
of the division of the fee are disclosed to the client and the
client consents thereto. 

The committee is of the view that the specific applicability of
the pertinent rules to the facts you have presented requires a
preliminary determination of whether the new P.C. is in fact a
single entity or two entities which have entered into a contract
for referral services and office sharing but which remain
separate for all purposes except fee-sharing.  Such a
determination raises a legal question of fact which is beyond the
purview of the committee's authority.

It is the committee's opinion that if XABC, P.C. is determined to
be a single entity where the relationship is truly an "organic"
one as you posit and where every attorney associated with the
entity is jointly responsible for the work done for each client,
regardless of who performs the actual services, and where only
one charge is made to the client, which charge is reasonable,
fully explained and acceptable to the client, then no impropriety
exists in the sharing of those fees among the attorneys
associated with XABC, P.C.  See LEO #945.  The methods and
proportions in which those fees are shared are business decisions
outside the realm of the Code of Professional Responsibility.

Conversely, if XABC, P.C. is determined to be comprised of two
separate entities which are not in fact merged into the new P.C.,
the committee is of the view that the fee-splitting arrangement
described in Paragraph 4 of the agreement would be violative of
DR 2-105(D) absent the client's consent and the assumption of
responsibility by both attorneys.  In addition, in such
circumstances, the percentage paid to the firm which initiated
the matter by the firm which actually performed the work would be
violative of DR 2-103(D).  With regard to the hypothetical case
described in your inquiry, X, P.C.'s client was referred to an
attorney/principal of XABC, P.C. who actually represented the
client whereas X, P.C. did not provide any legal services in
connection with that matter.  Under the terms of the agreement,
however, it appears that X, P.C. is automatically entitled to
receive a percentage of the fees collected by XABC, P.C.  Such
compensation by one attorney to another for the recommendation or
securing of employment  would be improper and violative of DR
2-103(D).  

The committee cautions that other ethical issues are raised by
provisions in the agreement dealing with matters other than
sharing of fees.  With regard to the continued use of the firm
name following the departure of X, P.C. under certain
circumstances, the committee directs your attention to LEO #277
in which the committee previously opined that it is improper for
the remaining attorneys of a firm to retain in the firm name or
on the letterhead the name of an attorney/partner who ceases to
practice law, no longer shares space in the law office, but is
otherwise engaged full-time in the operation of a business
venture.  See also DR 2-101(A), DR 2-102(A), DR 2-l06(A), ECs
2-l3 and 2-l5, and LEO #1347. 

Furthermore, the committee cautions that, since X has not been
admitted to the Virginia State Bar, he is therefore a nonlawyer
subject to the constraints of the Unauthorized Practice Rules and
Considerations contained in Part Six: Section I of the Rules of
the Supreme Court of Virginia.  Under those circumstances, the
Virginia lawyers affiliated with XABC must be cognizant of the
mandates of DR 3-l0l proscribing a [Virginia] lawyer from aiding
a nonlawyer in the unauthorized practice of law.

Committee Opinion
November 30, 1990