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ASSOCIATION OF THE BAR OF THE CITY OF NEW YORK COMMITTEE ON PROFESSIONAL AND JUDICIAL ETHICS
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Year 1989 Ethics Opinions
Formal Opinion 1989-3 Formal Opinion 1989-2 Formal Opinion 1989-1

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.

 


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