MARYLAND STATE BAR ASSOCIATION, INC.
COMMITTEE ON ETHICS
ETHICS DOCKET NO. 1990-31
Division of fees with disbarred attorney
You provide the following facts in your letter. Attorney A approached you several weeks ago to handle some overflow work for him. You completed one matter to his and the client s satisfaction. While working on the matter you learned from a third party that Attorney A had been indefinitely suspended from practicing law in Maryland since October 1989. When you mentioned this fact to him, he stated that he did not know that you were unaware of this fact when he first spoke to you.
Attorney A has recently requested that you handle a number of matters in which he is still listed as counsel of record. These matters are in various states of completion ranging from almost ready for trial to files which contain only notes from an initial interview. Attorney A has proposed compensation for you for your work on these matters ranging from an hourly rate for those matters which were reasonably complete to a fee sharing arrangement for those which needed more work. You would receive all the compensation for new matters and those which might come into Attorney A's office in the future. Your acceptance of any case from Attorney A would be contingent on the client's acceptance of you as substitute attorney.
Based on these facts, you seek the Committee's views on the following questions. With regard to fees owed to Attorney A for work he completed prior to his suspension, can you act as his representative in collecting those fees owed and be paid on an hourly basis for time expended, or are you able to collect those fees on your own behalf as the replacement attorney of record? In matters which you take over from Attorney A, conclude and collect the entire fee, can you pay Attorney A for work done prior to your involvement on a quantum merit basis after he is readmitted to practice? If you take over a matter from Attorney A, can you be compensated by him on an hourly basis for the work you do on the case leaving to him the collection of fees?
Although your letter deals only with the question of the propriety of dividing fees with a suspended lawyer, it raises a second question, that is, how are a suspended lawyer's cases in progress to be completed? Rule 1.16 of the Maryland Rules of Professional Conduct, Maryland statutes and court opinions provide guidance on this issue.
Maryland Rule 1.16 provides in pertinent part:
(a) *** a lawyer shall not represent a client or, where representation has commenced, shall withdraw from the representation of a client if:
(1) the representation will result in violation of the rules of professional conduct or other law;
(d) Upon termination of representation, a lawyer shall take steps to the extent reasonably practicable to protect a client's interests, such as giving reasonable notice to the client, allowing time for employment of other counsel, surrendering papers and property to which the client is entitled and refunding any advance payment of fee that has not been earned. The lawyer may retain papers relating to the client to the extent permitted by law.
Pursuant to Maryland statutes, a suspended lawyer may not engage in acts which constitute the practice of law during the period of suspension. ~ Mci. Rule BV13(a)(2); Maryland Lawyers Act, Section 10-601(b), Business Occupations and Professions (Annotated Code of Md., 1989) Therefore, as Rule 1.16 requires a lawyer to withdraw from an ongoing representation if continuation would violate the law, a suspended lawyer would violate Rule 1.16 if he or she did not withdraw from current representations.
The activities which a suspended lawyer may engage in relative to his or her law practice are detailed in Section 10-601(b), supra. That section provides that a lawyer whose right to practice law has been suspended may:
(1) discharge existing obligations;
(2) collect and distribute accounts receivable; or
(3) perform any other act that is necessary to conclude the affairs of a law practice but that does not constitute practicing law.
As indicated by the foregoing, Attorney A must withdraw from those matters in which he commenced representation prior to his suspension, and should not be holding himself out as a practicing attorney during the period of his suspension.1 In connection with his notification to his clients of his withdrawal, Attorney A may wish to assist them in obtaining substitute counsel. Therefore, he can notify them of your availability. Those clients who wish to utilize your services may then contact you. In that context, your questions about the division of fees is relevant.
Rules 1.5 and 5.4 of the Maryland Rules of Professional Conduct set out the circumstances pursuant to which lawyers may share fees. Rule 1.5(e) applies to the sharing of fees by lawyers in the same firm, while Rule 5.4 details the circumstances for sharing fees with a non-lawyer.
Rule 1.5 permits a division of fees between lawyers not in the same firm to be made if the division is in proportion to the services performed by each lawyer or by written agreement with the client each lawyer agrees to assume joint responsibility for the representation. This Rule contemplates that both lawyers are capable of providing representation to the client. A lawyer who has been suspended from the bar is disabled from representing a client. Therefore, Rule 1.5(e) is not applicable to your relationship with Attorney A, and if fees may be shared with him it could only be in accordance with the specifications of Rule 5.4.
Rule 5.4 provides in pertinent part:
(a) A lawyer or law firm shall not share legal fees with a non-lawver, 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
See Kennedy v. Bar Association of Montgomery County, Inc., 561 A.2d 200,212 (Md. Ct. of Appeals 1989). Lawyer who was not a member of the bar in Maryland, was found to have engaged in the unauthorized practice of law, and was ordered to remove from the building in Maryland in which he maintained an office and all other places of display any references to his name which include the word "attorney." 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 been indefinitely suspended from practice.
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 suspended lawyer pursuant to a fee-sharing agreement made prior to the suspension, but a lawyer may not make an agreement to share legal fees with an already suspended lawyer. Such an agreement would constitute the sharing of legal fees with a non-lawyer. Therefore, so long as A is suspended you may make no agreement to share fees with him.
However, this does not mean that Attorney A cannot be compensated by his clients for work performed prior to his suspension. Section 10-601(b), suora, specifically provides that a suspended attorney "may collect and distribute accounts receivable." With regard to contingent fee cases in which the representation is terminated by the client or, with justification, by the attorney, the rule is that the attorney is only entitled to the reasonable value of the services provided, not to the higher amount which would be obtained under a contingent fee agreement. See Attorney Grievance Commission of Maryland v. Korot~:±, Misc. Docket (Subtitle BV) No. 24, slip opinion at 27 (Ct. of Appeals Feb 21, 1990); Ethics Docket 79-19.
Accordingly, Attorney A may contact those clients for whom he performed work up to the date of his suspension and make arrangements for them to pay him for that work. Attorney A cannot hand over his cases to a substitute attorney and make arrangements with the substitute attorney for payment. If any of Attorney A's clients agree to accept your services, you must enter into a new fee agreement with each client which conforms to the requirements of Rule 1.5 and which is based on the services which you will perform for the client.
This opinion, 90-31 makes references to opinions 79-19, 84-101 and 88-81.
References: Maryland Rules 1.5, 1.16, 5.4,
Md. Rule BV13(a)(2)Maryland Lawyers Act, Section 10-601(b), Business Occupations and Professions (Annotated Code of Md., 1989) Kennedy v. Bar Association of Montgomery County, 561 A.2d 200,212 (Md Ct. of Appeals 1989) Attorney Grievance Commission of Maryland v. Korotki, Misc. Docket (Subtitle BV) No. 24, slip opinion at 27 (Ct. of Appeals Feb. 21, 1990)