Year 1989 Ethics Opinions
THE ASSOCIATION OF
THE BAR OF THE CITY OF NEW YORK
FORMAL OPINION 1989-2
COMMITTEE ON
PROFESSIONAL AND JUDICIAL ETHICS
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May 10, 1989
ACTION: Formal
Opinion
OPINION:
In March and May 1988, the
Committee addressed in Formal Opinions 1988-3 and 1988-3-A a
number of issues under the Lawyer's Code of Professional
Responsibility (the "Code") relating to temporary
lawyering and the agencies which recruit temporary lawyers and
place them with law firms and other providers of legal services,
usually to fill in gaps in the skills and experience, or to
supplement the resources, of those providers. Recognizing the
desirability of improving the delivery of legal services by
augmenting opportunities for lawyers who seek part-time
employment, the Committee established in Formal Opinion 1988-3 a
set of guidelines that would permit temporary lawyer placement
agencies "to be operated in a manner consistent with the
precepts of the Code." In Formal Opinion 1988-3-A, the
Committee clarified paragraph 1 of those guidelines, which
discussed the compensation paid to the temporary lawyer placement
agency.
Since the issuance of Formal
Opinions 1988-3 and 1988-3-A, the ethical implications of
temporary lawyering and of the arrangements between and among
temporary lawyers, law firms n1 and placement agencies have been
addressed by other bar association ethics committees. n2 These
and other developments have prompted the Committee to reconsider
its two opinions on the subject. As a result of that
reconsideration, the Committee has decided to modify the first of
its previously issued guidelines and to affirm its adherence to
the remaining guidelines. n3
n1 For purposes of this opinion,
"law firm" is intended to include not only
partnerships, but also corporate law departments, solo
practitioners and others rendering legal services who engage
temporary lawyers to assist in the rendering of those services.
n2 See ABA Formal Opinion 88-356
(December 1988); Connecticut Informal Opinion 88-15 (August
1988); Florida Opinion 88-12 (August 1988). Two other opinions on
the subject, Kentucky Opinion E-328 (April 1988) and North
Carolina Opinion 38 (January 1988), were not known to and thus
were not considered by this Committee in connection with Formal
Opinions 1988-3 and 1988-3-A.
n3 Three members of the Committee
dissent from both the decision to reconsider the earlier opinions
and the modification of paragraph 1 of the previously issued
guidelines.
A. Our earlier opinions stated
that an arrangement between a law firm and agency under which the
fee paid to the agency was related to the time worked by or
compensation paid to the temporary lawyer (such as a fixed hourly
sum or a percentage of the temporary lawyer's compensation)
entailed a division of a legal fee with a non-lawyer in violation
of DR 3-102(A). On reconsideration, the Committee has concluded
that since the agency unquestionably provides services in
locating, recruiting, screening and placing temporary lawyers and
those services are not legal services, the compensation paid by
the law firm to the agency for those services is not a legal fee
within the meaning of DR 3-102(A), whether the law firm and
agency (i) set the agency's fee as a fixed amount independent of
the time worked by or compensation paid to the temporary lawyer,
or (ii) agree upon a basis of calculating the agency's fee which
varies, proportionately or otherwise, with the time worked by or
compensation paid to the temporary lawyer.
However, to assure that the
arrangement between the agency and the law firm does not directly
or indirectly entail an impermissible division with the agency of
the legal fee received by the law firm or the legal fee received
by the agency of the legal fee received by the law firm or the
legal fee received by the temporary lawyer, the following two
safeguards are, in the Committee's opinion, necessary:
- The agreement between the agency
and the law firm should separately state the fee paid to the
agency and identify that fee as compensation for the agency's
services in locating, recruiting, screening and placing the
temporary lawyer.
- The agency fee, however
calculated, may not be included in the legal fee charged by the
law firm to its client. If the law firm wishes to pass the agency
fee on to the client (rather than absorb that fee in firm
overhead), the agency fee should be separately billed to the
client as a disbursement like other disbursements for non-legal
services.
B. The Committee continues to
believe that the law firm has an ethical obligation in all cases
(i) to make full disclosure in advance to the client of the
temporary lawyer's participation in the law firm's rendering of
services to the client, and (ii) to obtain the client's consent
to that participation. See Formal Opinion 1988-3 (Guideline 7);
N.Y. City 82-14; DR 2-107(A)(1); DR 5-107(A)(1); see also EC 2-22
("Without the consent of the client, a lawyer should not
associate in a particular matter another lawyer outside the
lawyer's firm"); EC 4-2 ("[I]n the absence of consent
of his client after full disclosure, a lawyer should not
associate another lawyer in the handling of a matter . .
.").
C. The Committee also continues to
hold the view that the remaining guidelines set forth in Formal
Opinion 1988-3 (PP2-6, 8-9) should be adhered to by the law firm
and temporary lawyer, and should be memorialized to the extent
appropriate in written agreements among the law firm, temporary
lawyer and agency, to assure that the law firm and temporary
lawyer discharge their respective obligations under the Code to
their client.
