Legal Ethics and Professional Responsibility Committee
Topic: attorneys participating in fixed fee limited scope legal services referral programs
The fixed-fee legal referral service works as follows:
- A for-profit business (the “Business”), which is not a law firm or lawyer-owned, assists in pairing up potential clients seeking certain legal services with lawyers who are willing to provide such services for a flat fee, with the amount of the fee established by the Business. The client remits the full fee, in advance, to the Business. The Business then forwards the fee to the lawyer after confirming that the requested services were performed.
- The lawyer then separately pays the Business what is described as a “marketing fee” for each assignment completed. The amount of the “marketing fee” varies directly with the amount of the flat fee for the legal services. The greater the amount of the flat fee, the greater the amount of the marketing fee, with the marketing fee typically ranging between 20% to 30% of the legal fee.
A lawyer who participates in a Flat Fee Limited Scope Legal Services (FFLS) referral program such as that described in this Opinion, in which the program operator collects “marketing fees” from that lawyer that vary based upon the legal fees collected by the lawyer, violates RPC 5.4(a)’s prohibition against sharing legal fees with a non-lawyer.
In addition, under the procedures of the FFLS program described in this Opinion, the advance fees paid by the client remain in the possession of the non-lawyer program operator until the operator concludes that the requested legal services have been performed, at which time the operator deposits the funds into the lawyer’s operating account. Consequently, a lawyer who participates in such a program violates RPC 1.15(i), which requires advance fees to be deposited in the lawyer’s Trust Account.
Participation in a Flat Fee Limited Scope Legal Services program also raises potential concerns regarding assisting in the unauthorized practice of law, in violation of RPC 5.5(a).
Pennsylvania Rule of Professional Conduct:
- 2.1, which requires a lawyer to exercise independent professional judgment;
- 5.4(c), which, in pertinent part, prohibits a lawyer from allowing a person who recommends a lawyer to direct or regulate the lawyer’s professional judgment;
- 5.3(c)(1), which holds a lawyer responsible for conduct of a non-lawyer that would violate the RPCs if engaged in by the lawyer, if the lawyer has ordered or ratified such conduct;
- 8.4(a), which prohibits a lawyer from violating the RPCs through the acts of another;
- 1.16(d), which, in pertinent part, requires a lawyer to refund to a client any advance payment of fees that has not been earned upon termination of the representation;
- 1.2(c), which permits a lawyer to limit the scope of a representation, but only if the limitation is reasonable under the circumstances and the client has given informed consent;
- 1.6(a), which generally prohibits a lawyer from revealing information relating to the representation of a client; and
- 7.7(a), which, in pertinent part, prohibits a lawyer from accepting referrals from a lawyer referral service if the service engaged in communications with the public in a manner that would violate the RPCs if the communication were made by the lawyer.
Pennsylvania Bar Association, Legal Ethics and Professional Responsibility Committee Formal Opinion 2016-200 is available at https://www.pabar.org…