Following is the 56th post in a series from Parker Taylor Law Group about recent changes to the California Bar Association (CBA)’s Rules of Professional Conduct (RPC). This rule is found in Chapter 5 – “Law Firms and Associations,” focusing on financial and similar arrangements made with non-lawyers. (The summary of this rule, which follows the actual rule in this post, explains how this revision overlaps with the rule as described in post #54.)
This Rule of Professional Conduct, as revised, is as follows:
Rule 5.4 Financial and Similar Arrangements with Non-Lawyers
(a) A lawyer or law firm shall not share legal fees directly or indirectly with a non-lawyer or with an organization that is not authorized to practice law, except that:
(1) an agreement by a lawyer with the lawyer’s firm, partner, or associate may provide for the payment of money or other consideration over a reasonable period of time after the lawyer’s death, to the lawyer’s estate or to one or more specified persons;
(2) a lawyer purchasing the practice of a deceased, disabled or disappeared lawyer may pay the agreed-upon purchase price, pursuant to rule 1.17, to the lawyer’s estate or other representative;
(3) a lawyer or law firm may include non-lawyer employees in a compensation or retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement, provided the plan does not otherwise violate these rules or the State Bar Act;
(4) a lawyer or law firm may pay a prescribed registration, referral, or other fee to a lawyer referral service established, sponsored and operated in accordance with the State Bar of California’s Minimum Standards for Lawyer Referral Services; or
(5) a lawyer or law firm may share with or pay a court-awarded legal fee to a nonprofit organization that employed, retained or recommended employment of the lawyer or law firm in the matter.
(b) A lawyer shall not form a partnership or other organization with a non-lawyer if any of the activities of the partnership or other organization consist of the practice of law.
(c) A lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer’s independent professional judgment or interfere with the lawyer-client relationship in rendering legal services.
(d) A lawyer shall not practice with or in the form of a professional corporation or other organization authorized to practice law for a profit if:
(1) a non-lawyer owns any interest in it, except that a fiduciary representative of a lawyer’s estate may hold the lawyer’s stock or other interest for a reasonable time during administration;
(2) a non-lawyer is a director or officer of the corporation or occupies a position of similar responsibility in any other form of organization; or
(3) a non-lawyer has the right or authority to direct or control the lawyer’s independent professional judgment.
(e) The Board of Trustees of the State Bar shall formulate and adopt Minimum Standards for Lawyer Referral Services, which, as from time to time amended, shall be binding on lawyers. A lawyer shall not accept a referral from, or otherwise participate in, a lawyer referral service unless it complies with such Minimum Standards for Lawyer Referral Services.
(f) A lawyer shall not practice with or in the form of a nonprofit legal aid, mutual benefit or advocacy group if the nonprofit organization allows any third person to interfere with the lawyer’s independent professional judgment, or with the lawyer-client relationship, or allows or aids any person to practice law in violation of these rules or the State Bar Act.
Rule 1-320(A) (“Financial Arrangements with Non-Lawyers”) in the CBA’s previous version of the RPC are now in CBA Rule 5.4(a)(1)-(4). (Subd. (a)(2) of the new rule has added “disabled” and “disappeared” to “deceased” for the types of status required for a lawyer whose practice is being purchased by a different lawyer.) Subd. (a)(5) of the new rule – stating that a lawyer or law firm may share with or pay a court-awarded legal fee to a nonprofit organization – was NOT in the previous CBA RPC’s Rule 1-320(A).
Rule 5.4(a)(1)-(4) of the American Bar Association (ABA)’s Model RPC contains the same information as the information in the CBA’s revised RPC Rule 5.4(a)(1)-(3), (5). Subd. (a)(4) of the CBA rule – explaining that a lawyer or law firm may pay a prescribed registration, referral, or other fee to a lawyer referral service – does not appear in the ABA’s rule.
Benefit: Generally speaking, placing information about lawyer referral services and nonprofit organizations in the same rule that discusses other types of arrangements with non-lawyers should make it easier for attorneys to reference the information as needed.
The information provided herein is informational only and should not be construed as legal advice or as an agreement for representation. This is not an advertisement. If you have an issue or dispute with your attorney, or are seeking advice with respect to your obligations, you should consult with an experienced attorney. Parker Taylor Law Group is a full-service litigation and transactional law firm. Mr. Parker has represented clients in professional malfeasance disputes for over 23 years. If you would like to schedule an initial consultation with Mr. Parker or his team, you can reach them at (916) 996-0400 or at email@example.com. (An email to the law firm requesting a consultation does not create an attorney-client relationship or any agreement for representation by the firm.)
Rules of Professional Conduct, California Bar Association, American Bar Association, Legal Malpractice, Legal Representation, Breach of Fiduciary, Parker Taylor Law Group, Port Parker