Can a private lawyer contract with a legal aid office to handle its bankruptcy referrals for a set per-case fee?

Plain-English summary

The committee was asked whether an attorney may contract with a legal services office (which provides only free civil legal services to indigent persons) to handle bankruptcy cases the office refers, for an agreed per-case fee paid by the office, and answered yes. It said this type of arrangement, where a legal aid organization contracts with an attorney to handle all cases in a particular area of law, is not forbidden by any disciplinary rule.

The committee added that DR 6-101(A)(1) precludes an attorney from handling a matter outside his competence without associating a competent attorney, so legal aid organizations that do not generally handle bankruptcy cases would be doing indigents a service by formalizing a contract with an attorney to handle them. Finally, it said no disciplinary rule requires that the legal counsel furnished by such an organization come from a salaried employee; outside lawyers may be used so long as the fees are not excessive under DR 2-106(A). The arrangement therefore violates no disciplinary rule and provides indigents with a necessary and competent legal service.

Currency note

This opinion was issued in 1979 under Kentucky's former Code of Professional Responsibility (in effect 1971 to 1990), before the Kentucky Bar Association's 1990 adoption of the Rules of Professional Conduct (SCR 3.130) and the substantial 2009 revisions to those rules. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against the current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a legal aid office pay a private lawyer a per-case fee to take its bankruptcy referrals?

A: Yes, under this opinion. The committee found no disciplinary rule forbids it, provided the fees are not excessive under DR 2-106(A).

Q: Does the legal aid lawyer have to be a salaried employee?

A: No. The committee said no disciplinary rule requires the counsel to be a salaried employee; outside lawyers may be used.

Q: Why is contracting out bankruptcy work seen as beneficial?

A: Because DR 6-101(A)(1) bars handling matters outside one's competence; an office that does not normally do bankruptcy serves indigents by contracting with a competent attorney.

Background and rules framework

The opinion applies DR 2-106(A) (fees must not be excessive) and DR 6-101(A)(1) (competence and association of competent counsel) of the former Code to a legal aid referral-and-fee arrangement. The modern analogs are Model Rule 1.5 (fees), Model Rule 1.1 (competence), and Model Rule 6.1 (voluntary pro bono service).

Citations and references

Rules of Professional Conduct:

• DR 2-106(A) (excessive fees) and DR 6-101(A)(1) (competence); modern analogs Model Rule 1.5, Model Rule 1.1, and Model Rule 6.1

Other opinions cited:

• ABA Informal Opinion 1334

See also

• KBA Ethics Op. E-216: Interest, Advances, and Litigation Costs

Source

• Landing page: https://kybar.org/For-Members/Rules-Ethics-Information/Ethics-Opinions
• Original PDF: https://kybar.org/Portals/0/Admin/Ethics%20Opinions/KBA_E-201.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

KENTUCKY BAR ASSOCIATION
Ethics Opinion KBA E-201
Issued: January 1979

This opinion was decided under the Code of Professional Responsibility, which was in effect from 1971 to 1990. Lawyers should consult the current version of the Rules of Professional Conduct and Comments, SCR 3.130 (available at http://www.kybar.org), before relying on this opinion.

Question:

May an attorney contract with a legal services office, which provides only free civil legal services to indigent defendants, to represent clients in Bankruptcy Court, which are referred to him by the legal services office for which the attorney is paid an agreed per case fee by the legal services office?

Answer:

Yes.

References:

DR 2-106(A), 6-101(A)(1); ABA Informal Opinion 1334

OPINION
This type of arrangement whereby the legal aid organization contracts with an attorney to handle all cases in a particular area of law is not forbidden by any Disciplinary Rule. In fact DR 6-101(A)(1) precludes an attorney from handling a legal matter outside his competence without contacting an attorney competent to handle the matter. Therefore legal aid organizations which generally do not handle bankruptcy cases would be doing indigents a service by formalizing a contract with an attorney to handle such cases.
Finally, no Disciplinary Rule requires that the legal counsel furnished by such organization come from a lawyer who is a salaried employee of the legal aid organization. Outside lawyers may be used in such manner as long as the fees are not excessive, DR 2-106(A).
Therefore a lawyer may contract with a legal aid organization to provide for such service because it does not violate any Disciplinary Rule and would provide indigents with another necessary and altogether competent legal service.

Note to Reader
This ethics opinion has been formally adopted by the Board of Governors of the Kentucky Bar Association under the provisions of Kentucky Supreme Court Rule 3.530 (or its predecessor rule). The Rule provides that formal opinions are advisory only.