Q. Does a lawyer violate ethics rules prohibiting the division of fees with a non-lawyer when entering into a relationship with a company that provides online document automation services in order to make web-enabled document automation available to the lawyer’s clients as part of the lawyer’s legal services?
A. Model Rule 5.4 and its state counter-parts prohibit a lawyer from sharing legal fees with a non-lawyer, except under circumstances that do not apply here. The rule has been applied to relationships lawyers may develop with other service providers, such as investigators, and to lawyer referral services. In a few state ethics opinions, the prohibition has been applied when a lawyer participates in an Internet-based service. For example, Arizona Opinion 99-06 concludes that a lawyer may not participate in an Internet service that sends questions to individual lawyers when the lawyers pay a portion of their fee to the service.
However, in all aspects of the practice of law, lawyers incur expenses simply because they have clients. Rent for office space, telephone charges, malpractice insurance premiums and staff salaries are traced back to the fact that clients pay their legal bills and the lawyers apportion some of that money for these expenses.
The distinction is whether the payment is computed as a percentage of the fee charged to the lawyer's client. If so, the arrangement is likely to be an improper division of fees. If not, it is likely to be an acceptable cost of doing business.
As applied to an agreement with a company providing a lawyer with online document automation applications, the question turns on whether the lawyer compensates the company based on the forms provided to specific clients, and therefore is like the referral services that charge based on the service to those individuals, or whether the payment is a fixed fee, such as rent or salaries. If a lawyer pays a company that provides online document automation applications a fixed fee for a certain amount of time, such as on a monthly basis, regardless of the number of forms or number of clients who use the forms, the situation is not like those that are deemed an impermissible division of fees.