ETHICS DOCKET NO. 2002-20

MARYLAND STATE BAR ASSOCIATION, INC.

COMMITTEE ON ETHICS

ETHICS DOCKET NO. 2002-20

The premise that there are non-lawyers who are providing what you believe amounts to legal advice by giving guidance to employers as to the terms and conditions contained in employment manuals.

Your inquiry letter ofDecember 29,2001 was considered by the Maryland State Bar Ethics Committee at its meeting on January 16,2002, and I have been asked to respond on behalfof the Committee.

Your inquiry is based on the premise that there are non-lawyers who are providing what you believe amounts to legal advice by giving guidance to employers as to the terms and conditions contained in employment manuals. You have asked this Committee if it would be appropriate for you, as a lawyer, to involve yourself in a business arrangement with one or more of these non-lawyer "consultants" who provide
such services.

Specifically, you have advised us that you have extensive experience as an employment lawyer, with considerable experience assisting clients review and draft employment handbooks and fair employment practices and policies. In your experience, you have encountered instances in which non-lawyers are providing similar kinds of advice and services to employers which your inquiry implies may be the unauthorized practice of law. You are concerned that, as a solo or small firm lawyer, the activity of these non-lawyers places you in the unenviable position ofhaving to compete against unlicensed individuals who are unregulated as to the advice they provide.

With the foregoing as the backdrop, you have asked this Committee if it is permissible for you, as a lawyer, to construct an arrangement with a non-lawyer consultant which would be consistent with the Maryland Rules ofProfessional Conduct. Specifically, you have asked us the following question: "My specific question is whether a business relationship could be structured in a way which would could(sic) avoid implicating these rules [the Maryland Rules of Professional Conduct]. I believe that it would be permissible under the Rules ofProfessional Conduct to agree to review and revise employee handbooks forwarded to a lawyer by a non-lawyer, for the benefit of another party, under the following arrangement. .. ". You then have provided a series of bulleted items which you believe make such an arrangement permissible, including that the non-lawyer would secure the commitment from the employer, pay the lawyer a mutually agreed upon fee to review and revise an employee handbook which would not be contingent upon the consultant's securing payment from the employer. You have also suggested that the lawyer would have no direct interaction with the employer and that the "non-lawyer" would exercise no control over the judgment or discretion of the lawyer. You have said that the lawyer would owe nothing to the non-lawyer other than the completion of the work agreed upon and that the lawyer would remain an independent contractor.

Having provided this general description of such an arrangement, you have asked us a number of questions as to whether the arrangement involves impermissible feesplitting, or other ethical concerns.

This Committee understands the frustration which underlies questions of the type you have presented to us. In fact, on a number of occasions over the last several years, we have responded to questions from lawyers of the type you have described and concerns under the Maryland Rules of Professional Conduct. For your reference, please consult the following opinions which are available to you, as a member of the Maryland State Bar Association, on-line. See Ethics Docket Nos. 01-21; 99-34; 96-44; 96-17 (Business arrangement between settlement attorneys and financial planning
organization); 96-35 (Law firm seeking to create separate affiliate entity, staffed by nonlawyers, to provide pension management services); 95-34; and 94-7 (Proposal to establish entity owned by non-lawyers which would provide legal services by hiring attorneys as employees or as independent contractors.).

In these Opinions, as you will see, we have expressed various concerns about arrangements of the type you have described. More specifically, we have said:

"The Committee has previously opined that the conduct of an "ancillary business" by an attorney is not per se unethical. I In our prior opinions, the Committee has described the various ethical issues and concerns which arise from the conduct of such an
ancillary business. Those issues include:

(i) the potential for compromise ofthe lawyer's independent judgment;
(ii) conflicts of interest;
(iii) client confusion as to provider of services;
(iv) potential loss of confidentiality;
(v) compelling legalclients to use the business;
(vi) impermissible feeding ofthe law practice by customers ofthe business;
(vii) sharing of fees with non-lawyers; and
(viii) responsibilities concerning non-lawyer assistants."

See Ethics Docket 96-44.

This Committee, as reflected in these opinions and by this Committee's Guidelines ("5. The Committee will not issue opinions on questions of law... "), cannot provide legal advice as to whether any arrangement could be structured with a nonlawyer to accomplish some of the objectives you have described. However, under our prior decisions and the Maryland Rules ofProfessional Conduct, we do have various concerns about the proposed arrangement whereby you would structure an independent contractor arrangement with a non-lawyer consultant for the purpose of drafting language for employment manuals that the consultant would ultimately present to an employer. Our concerns include the following:

1  While some jurisdictions have adopted the ABA Model Rule (Rule 5.7), which specifically addresses the
provision oflaw-related services, Maryland has not adopted this rule.

1. You yourself have expressed the concern that the consultant's activity may involve the unauthorized practice oflaw. If you provide services, in essence, as a subcontractor for that consultant, you conceivably could place yourself in a position where you will be collaborating in the unauthorized practice oflaw.

2. We have reservations about the structure of an arrangement whereby a lawyer would provide contracted services to a consultant, but the employer is the ultimate beneficiary of the services, where the lawyer is not in a position to interface with the "client" and ensure that the product, as presented to the client, adheres to the law.

3. We are concerned that regardless ofhow the arrangement is structured, your not permissible under the existing ethical rules. In that regard, please review our opinion in Ethics Docket 94-7. The inquirer, in that situation, had proposed setting up three organizations to provide legal services to the federal government and other clients. The proposed organizations were to provide legal services by hiring attorneys, either as employees or as independent contractors. We concluded, in that case, that the proposed arrangement ran afoul ofRule 5.4 ofthe Maryland Rules ofProfessional Conduct. We have similar concerns about the arrangement you have proposed.

In short, while we understand your frustration, this Committee has significant reservations about the ethical propriety ofthe arrangement you have described.