Legal Ethics Opinion #1573

Confidences and Secrets: Corporation Acting as Billing Agent for
Court-Appointed Attorney and Charging Percentage of Fee

You have presented a hypothetical situation in which Attorney has
been court-appointed to represent Client (who is either a
criminal defendant, a minor, or an incompetent).  You state that
in jurisdictions which rely upon the court-appointed system for
representation of indigent individuals, the delay in conclusion
of the case and payment of fees is approximately two to six
months.  Upon conclusion of the case and entry of a final Order,
Attorney submits his time sheets to XYZ Company, acting as
billing agent for Attorney, which then completes the necessary
paperwork and files with the appropriate court.  XYZ Company
exercises no control over the case and has only nonattorney

As an example, you indicate that where Attorney earns a $100.00
fee, XYZ Company issues a check to Attorney for $93.00 (the fee
minus a 7% discount).  Thus, Attorney would receive immediate
payment, and XYZ Company would receive a 7% fee as billing agent. 

You have asked the committee to opine whether, under the facts of
the inquiry,the proposed arrangement violates the Code of
Professional Responsibility.  

The appropriate and controlling Disciplinary Rules related to
your inquiry are DR 3-102(A) which prohibits the sharing of legal
fees with a nonlawyer; and DR 4-101 which provides for the
preservation of client confidences and secrets.  Further guidance
is available through Ethical Consideration 4-3 which states:
"Unless the client otherwise directs, it is not improper for a
lawyer to give limited information from its files to an outside
agency necessary for statistical, bookkeeping, accounting, data
processing, handling, printing, or other legitimate purposes
provided he exercises due care in the selection  of the agency
and warns the agency that the information must be kept

The committee is of the opinion that the use of a lay corporation
as billing agent is not per se unethical.

Although the preservation of client confidences and secrets is
mandated by DR 4-101, the committee is of the view that, in
accordance with EC 4-3, the attorney or law firm may use the lay
corporation's billing services so long as the attorney or law
firm provides only "limited" information necessary for the
service, selects the billing agency with due care, and warns the
billing agency that the information must be kept confidential. 
Details regarding the type of services rendered by the attorney
to the client could exceed the limitations contemplated by EC 4-
3.  See LEO #1016.

Committee Opinion
December 18, 1993