Legal Ethics Opinion #1572

Referral Fees--In-Person Solicitation--Splitting Legal Fees With
a Nonlawyer: Lawyer Participation in For-Profit Referral Service 

You have presented a hypothetical situation in which Nonlawyer
operates a "multiservices" business for his particular ethnic
group.  Nonlawyer advertises his services and has his own
separate office "across town" from Lawyer.  Nonlawyer, who has no
affiliation with Lawyer, refers his clients to particular
professionals who provide various services (i.e., accounting,
real estate, computers and insurance). 

You further indicate that Nonlawyer proposes to put Lawyer on his
referral list; in return, Lawyer charges the client 25% of any
recovery on a personal injury matter, a reduced hourly fee for
any civil litigation, and a reduced set fee for traffic and
criminal cases.  Nonlawyer assists in each case referred (i.e.,
obtaining witness statements, translating, photographing the
accident scene, and driving the client to and from health care

You indicate that Nonlawyer charges a set fee for services in
civil and criminal cases.  For personal injury cases, however,
Nonlawyer charges client a fee which consists of a percentage of
the client's recovery, usually 5% to 8%.  The client agrees to
this arrangement in writing.  At the time of disbursement of
settlement proceeds, Nonlawyer's fee is shown on the disbursement
sheet as coming from the client's settlement proceeds.

You have asked the committee to opine under the facts of the
inquiry, (1) whether it is improper and violative of the Code of
Professional Responsibility for Lawyer to participate in the
proposed percentage fee payment to Nonlawyer; and (2) whether, in
the alternative, a set fee payment to Nonlawyer would be
violative of the Code of Professional Responsibility.

The appropriate and controlling Disciplinary Rules related to
your inquiry are DR 2-103(A) which proscribes in-person
solicitation under certain circumstances; DR 2-l03(D) which
states, in pertinent part, that a lawyer shall not compensate or
give anything of value to a person or organization to recommend
or secure his employment by a client, or as a reward for having
made a recommendation resulting in his employment by a client; DR
2-l03(F) which prohibits in-person solicitation in personal
injury and wrongful death cases, and 3-102(A); and DR Rule 3-
102(A) which prohibits the sharing of legal fees with a
nonlawyer, with very limited exceptions. 

The committee opines relative to your inquiries as follows:

1.   The committee is of the opinion that the proposed fee
     arrangement violates the Code of Professional

     First, the committee believes that the arrangement is 
     generally violative of DRs 2-103(A) and (D) in that Lawyer pays
     Nonlawyer a referral fee for the performance of a nondelegable
     function, i.e., solicitation of clients.  See LEO #1290.  In
     solicitation of personal injury clients, the arrangement would
     also be specifically violative of DR 2-103(F). 

     The committee further opines that the percentage fee payment
     to Nonlawyer violates DR 3-102(A) since it is improper for
     the attorney to share his legal fees from the client with a
     nonlawyer intermediary.  See LEO #609. All that is collected
     is properly the property of the attorney and may not be paid
     to the intermediary.  Here, the percentage fee payment is
     neither a reimbursement to the client, nor a permissible
     payment to a bona fide employee, but rather improper fee-
     splitting of a contingent fee with a nonlawyer.  See LEOs
     #835, #1438.

2.   The committee feels that although the payment of a set fee
     would not be improper provided that the fee represents
     reimbursement for nonlegal services furnished by Nonlawyer,
     does not exceed the fair market value for such services, and
     is not otherwise an attempt to circumvent the prohibitions
     contained in DR 3-102(A), it would not be permissible under
     the facts presented because it could not be achieved without
     the violation of DR 2-l03(A) and (D).

Committee Opinion
February 8, 1994