MARYLAND STATE BAR ASSOCIATION, INC.
COMMITTEE ON ETHICS
ETHICS DOCKET NO. 1990-30
Division of fees with attorney who has resigned from the bar.
Your letter of inquiry provides the following facts. You currently employ a young man, A, who was originally hired as a lawyer. Because of a problem which came to light concerning his prior employment, A determined to resign from the bar under pressure. In addition to resigning from the bar in Maryland, A has submitted his resignations to two other state bars of which he is a member. Those resignations have not yet been accepted. Since you consider A's services valuable to your operation, you have retained him in the capacity of legal assistant.
When A was initially hired his remuneration package consisted of salary plus a bonus based on a percentage of the business he brought to the firm. Since you are aware of the prohibition against dividing legal fees with persons not authorized to practice law, you have the following questions concerning your agreement for remunerating A:
1. Is it improper to divide fees with A in accordance with the firm's original agreement, if services were performed while A was a member of the bar, but fees were received subsequent to his resignation?
2. To what extent may fees be divided in accordance with the original agreement in situations in which A was retained on a contingent fee basis prior to his resignation, but the case is not completed until subsequent to his resignation?
4. In cases where the firm was retained prior to A's resignation, but the cases are not concluded until subsequent to his resignation and fees are paid on an ongoing basis, to what extent may fees be divided as received?
5. Are the answers to the foregoing questions affected by the fact that A is still a member in good standing of two state bars?
Rule 5.4 of the Maryland Rules of Professional Conduct is applicable to your questions. Rule 5.4 provides in pertinent part:
(a) A lawyer or law firm shall not share legal fees with a non-lawyer, except that:
(1) an agreement by a lawyer with the lawyer's firm, partner, or associate may provide for the payment of money, 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 who undertakes to complete unfinished legal business of a deceased lawyer may pay to the estate of the deceased lawyer that proportion of the total compensation which fairly represents the services rendered by the deceased lawyer; and
(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.
Rule 5.4 makes no provision for sharing a legal fee with a lawyer who has resigned from the bar.
In Ethics Dockets 84-101 and 88-81, the Committee dealt with the question of sharing fees with a disbarred or suspended lawyer. (Copies of those opinions are enclosed.) The Committee opined that a lawyer may share legal fees with a disbarred or suspended lawyer pursuant to a fee-sharing agreement made prior to the disbarment or suspension, but a lawyer may not make an agreement to share legal fees with a lawyer who had been suspended or disbarred. The Committee believes that the same principle should be applied to the sharing of fees with a lawyer who has resigned from the bar.
Therefore, you may share fees with A, in accordance with your agreement, only for work A performed prior to his resignation from the bar. The time of receipt of the fee is not relevant. The Committee does not believe that the fact that A is currently a member in good standing of two other state bars is relevant to the questions posed.
This opinion, 90-30 makes references to opinions 84-101, 88-81.
Other References: Maryland Rule 5.4