Legal Ethics Opinion No. 1438

Splitting Fees With a Nonlawyer: Attorney Compensating An
Advertising Agency Based on a Profit-Sharing Plan

You have presented a hypothetical situation in which an attorney
hires an advertising agency to place advertisements for him.  The
attorney wishes to compensate the advertising agency, in part,
based on a profit-sharing plan.

You have asked the committee to opine whether, under the facts of
the inquiry, the attorney's planned compensation of the
advertising agency violates the provision of DR 3-102(A)(3).

Disciplinary Rule DR 3-102(A)(3) provides that a lawyer or law
firm shall not share legal fees with a nonlawyer, except that a
lawyer or law firm may include nonlawyer employees in a
compensation or retirement plan, even though the plan is based in
whole or in part on a profit-sharing arrangement, provided such
plan does not circumvent another Disciplinary Rule.

The committee has previously opined that it is not improper to
compensate nonlawyer personnel on a profit-sharing basis, either
in lieu of salary or in addition to salary. See LEOs #LEO #767,
806, and 885.  

Notwithstanding the cited Disciplinary Rule and prior Legal
Ethics Opinions, however, under the facts you have presented, the
committee is of the opinion that unless the advertising agency
occupies a position with the attorney's firm such that it is a
bona fide and regular employee of the lawyer or law firm, the
general rule of DR 3-l02, which prohibits a lawyer from sharing
legal fees with a nonlawyer is the operative requirement.  The
committee is of the opinion that the exception articulated in DR
3-102(A)(3), permitting a lawyer to share legal fees with
nonlawyer employees [emphasis added], is inapplicable to the
question you pose since the advertising agency is independent of
the lawyer or law firm and does not operate as a bona fideregular employee of the lawyer or law firm.  The committee
opines, thus, that the proposed profit-sharing compensation plan
involves sharing legal fees with a nonlawyer, in violation of DR

Committee Opinion
October 21, 1991