Can a lawyer arrange medical expert testimony through an agency that charges a contingent fee for finding the experts?

Plain-English summary

An organization proposing to locate medical experts for litigants and charge a contingent fee for its services asked the Committee to declare the practice ethical. The Committee answered no. It worked through several rules. On unauthorized practice (DR 3-101(A)), it noted that under Crawford's Adm'r v. Ross, 186 S.W.2d 797 (Ky. 1945), merely procuring witnesses is not the practice of law, but an agency that goes beyond procurement to evaluate the value or merits of a case might be found to be practicing law. On a possible attorney-doctor partnership, DR 3-103(A) would bar an attorney from joining a nonlawyer partnership engaged in the practice of law, and a lawyer aware of such a violation would have a duty to report it under DR 1-103(A).

On witness payment, the opinion found that DR 7-109(C) (which bars paying a witness contingent on the outcome) would not be violated where experts are paid regardless of outcome, unless an expert holds an interest in the agency. The core problem was the contingent fee itself. Drawing on Crawford's Adm'r v. Ross, the opinion reasoned that contracting with a layman to procure witnesses for compensation based on the outcome contravenes public policy, so a lawyer recommending such a contract violates DR 1-102(A). It also identified a fee-reasonableness problem (DR 2-106): if the attorney reduces the contingent fee to reflect work taken over by the agency, the arrangement looks like a subterfuge for fee splitting with nonlawyers under DR 3-102(A) and DR 1-102(A)(2); if the attorney does not reduce the fee, the fee becomes unreasonable. Disagreeing with ABA Informal Opinion 1375, the Committee concluded that the duty to maintain the integrity of the profession and avoid even the appearance of impropriety precludes lawyers from condoning the arrangement.

Currency note

This opinion was issued in 1983 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 Treat this page as historical context, not current guidance.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 Kentucky lawyer use an expert-finding agency that charges a contingent fee?

A: Under this opinion, no. The Committee concluded a lawyer may not offer or recommend a contingent-fee contract with such an agency.

Q: Is paying an expert witness a contingent fee the problem?

A: Not directly. The opinion found DR 7-109(C) is not violated where experts are paid regardless of outcome; the problem is the agency's contingent fee for its services and the fee-splitting and public-policy concerns it raises.

Q: Why did the Committee call it a subterfuge for fee splitting?

A: The opinion reasoned that if the lawyer reduces the contingent fee to reflect work the agency takes over, the agency-client contract effectively splits the lawyer's fee with a nonlawyer in violation of DR 3-102(A) and DR 1-102(A)(2).

Background and rules framework

The opinion applied DR 3-101(A) (aiding unauthorized practice), DR 3-103(A) (partnership with nonlawyers), DR 7-109(C) (paying witnesses), DR 2-106 (reasonable fees), DR 3-102(A) (fee splitting with nonlawyers), and DR 1-102(A) of the former Code. The modern analogs are Model Rule 3.4 (fairness, including witness payment), Model Rule 5.4 (fee sharing with nonlawyers), and Model Rule 1.5 (fees). The analysis turned on the inherent conflicts created by an agency contingent fee layered onto the lawyer's own contingent fee.

Citations and references

Rules of Professional Conduct:

• DR 3-101(A); DR 3-103(A); DR 7-109(C); DR 2-106; DR 3-102(A); DR 1-102(A); EC 5-1; EC 7-28 (former Code)
• MR 3.4 (fairness); MR 5.4 (fee sharing with nonlawyers); MR 1.5 (fees)

Cases:

• Crawford's Adm'r v. Ross, 299 Ky. 699, 186 S.W.2d 797 (1945), procuring witnesses and contingent compensation
• Person v. Association of the Bar of the City of New York, 554 F.2d 534 (2d Cir. 1977), constitutionality of DR 7-109(C)

Other opinions cited:

• ABA Opinion 198 (1939); ABA Informal Opinion 1375 (disagreed with)

See also

• KBA Ethics Op. E-394: Contingent Fees for Expert Witnesses and Litigation Support
• KBA Ethics Op. E-400: Compensating Non-Expert Witnesses for Lost Time
• KBA Ethics Op. E-288: Funding a Lawyer Referral Service With a Percentage of Fees

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-276.pdf

Original opinion text

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

KENTUCKY BAR ASSOCIATION
Ethics Opinion KBA E-276
Issued: September 1983

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 ethically arrange for medical expert testimony through an
organization that charges a contingent fee for its services?

Answer:

No.

References:

ABA Opinion 198 (1939); DR 1-102(A); DR 1-103(A); DR 2-106(B); DR
3-101(A); DR 3-102(A); DR 3-103(A); DR 7-109(C); EC 5-1; EC 7-28;
Canon 1; Canon 9; Crawfords Adm'r v. Ross, Ky., 186 S.W.2d 797 (1945);
Person v. Association of the Bar of the City of New York, 554 F.2d 534
(2nd Cir., 1977); ABA I.O. 1375
OPINION

An organization which proposed to locate medical experts for litigants and charge a
contingent fee for its services seeks an opinion declaring the practice ethical and authorized
by the Kentucky Bar Association. Whether an attorney may ethically deal with such an
agency raises several questions as to the relationships that would be created between the
attorney, his client, the search agencies, and the experts they offer to procure.
DR 3-101(A) prohibits attorneys from aiding non-lawyers in the unauthorized
practice of law.
"What constitutes unauthorized practice of law in a particular jurisdiction is a
matter for determination by the courts of that jurisdiction." ABA Opinion 198 (1939).
According to Crawfords Adm'r v. Ross, 299 Ky. 699. 186 S.W.2d 797 (1945), in
Kentucky "…interviewing and procuring of witnesses to testify in favor of a litigant is a
service which may be rendered by a layman …", and "…it is not to be considered as
practicing law." (p. 799).
Thus, the mere procurement of witnesses does not constitute the practice of law.
A different question would be presented if a search agency goes beyond
procurement and seeks to offer opinions on the value or merits of a case. While no

Kentucky case deals with this specific problem, it is likely that a court could find this to be
at the heart of the practice of law. If a Kentucky court so found, then DR 3-101(A) would
prohibit an attorney from dealing with such an agency. Until a Kentucky court renders an
opinion on the aforementioned question, this Committee cannot say that an attorney who
allows a non-lawyer to evaluate the merits of a claim is in violation of DR 3-101(A). We
can, however, advise attorneys to be keenly aware of the possibility of such conduct
creating an appearance of impropriety and of allowing such opinions to adversely affect
their independent professional judgment.
The request for this opinion also noted that this search agency would be made up
of attorneys and doctors. DR 3-103(A) forbids an attorney from entering into a
partnership with non-lawyers if any of the partnership activities consist of the practice of
law. This Committee has made no attempt to ascertain what activities are or could be
engaged in by these search agencies, nor do we express an opinion on what is or is not
the practice of law. However, if these agencies engage in any activity which involves the
practice of law, then those attorneys in the agency would be in violation of DR 3-103.
Any attorney dealing with such an agency with knowledge of this infraction or any other
violation of such a disciplinary rule would be under a duty per DR 1-103(A) to report
such conduct or else be liable himself for violating this section.
DR 7-190(C) precludes attorneys from participating or acquiescing in the payment
of a witness contingent upon the outcome of the litigation. Since the arrangement we are
considering calls for payments of the expert witnesses by the client or the agency regardless
of the outcome neither DR 7-190(C) nor EC 7-28 would be violated. DR 7-109(C) was
held constitutional in Person v. Association of the Bar of the City of New York, 554 F. 2d
534 (2nd Cir. 1977). This result would be different if any of the experts obtained by the
agency hold any interest in the agency because they would stand to receive some benefit
which is dependent on the outcome of the litigation.
The problems set out above are only potential problems. A case by case
determination would be necessary to ascertain if an attorney is in violation of any of the
sections set forth above. While those potential problems are of great concern to this
Committee, taken in the abstract there is no built-in violation which cannot be avoided by
self-imposed limitations and careful planning on the part of both the attorney and the search
agency. An attorney may not ethically offer or recommend to his client a contingent fee
contract with a search agency because of existing problems inherent in the contingent fee
arrangement which we feel cannot be cured by any amount of manipulation.
Crawfords Adm'r v. Ross, supra, states that "…where (a witness procuring
layman's) compensation does not depend upon the outcome of the litigation a contract to
render such services does not contravent public policy; …" (p. 799). A direct corollary to
that statement is that contracting with a layman to procure witnesses with the layman's
compensation based on the outcome of the litigation does contravene public policy. So, an
attorney who recommends or offers such a contract to his client would be encouraging his
client to enter into a contract which is contrary to the public policy of the Commonwealth.

Obviously, an attorney offering or recommending such a contract is in violation of DR
1-102(A).
Another inherent problem would be the reasonableness of an attorney's fee. DR
2-106(A) states in part that "a lawyer shall not enter into, charge, or collect an illegal or
clearly excessive fee."
DR 2-106(B) states in part that "factors to be considered as guides in determining
the reasonableness of a fee include the following: (1) the time and labor required, …"
Obviously, the agencies are not bound by the disciplinary code of attorneys but
the reasonableness of an attorney fee must be reassessed in light of the fee contracted for
by the agency.
Finding medical experts and requesting from them medical reports, testimony and
advice are part of the services presently being rendered by attorneys for a contingency fee.
We see great problems with attorneys contracting for a percentage contingency while at the
same time (or later) offering or advising a client to contract with an agency for another
contingent percentage. If an attorney contracts with a client to perform services which
normally includes those taken over by the agency, then the fee of the attorney must be
reduced proportionately. However, if an attorney does reduce the fee according to the
services taken over by the agency, the arrangement takes on the characteristics of a
subterfuge for fee splitting with non-lawyers. Since an attorney must reduce the contingent
fee according to the contingent fee contracted for by the search agency, the search
agency/client contract is, for all intent and purposes, a mere subterfuge for fee splitting with
the agency in violation of DR 3-102(A) and DR 1-102(A)(2) which forbids an attorney
from circumventing disciplinary rules by the actions of others.
On the other hand, if an attorney failed to reduce his fee, this would lead to a
conclusion that his fee is now unreasonable in light of his reduced labor or that the
agency's services are not in fact worth their contracted-for contingent fee. If the services
offered are not in fact worth the contracted-for fee, then the attorney cannot ethically offer
such a contract to his client. EC 5-1 states "the professional judgment of a lawyer should be
exercised within the bounds of the law, solely for the benefit of his client and free of
compromising influences and loyalties. Neither his personal interest, the interests of other
clients, nor the desire of third persons should be permitted to dilute his loyalty to his
client."
If these services are not worth their contracted-for contingent fee, it is not in the
client's best interest and cannot be recommended. It is true that the final decision to accept
the agency's service would be the client's, but it is also true that the client would be relying
on the attorney's judgment that such service is necessary or advantageous. After all, it
would be the attorney who first brings this service to the client's attention.
With all due respects, we do not agree with the American Bar Association I.O.
1375 that an attorney recommending this contingent fee arrangement, in its purest form,

would violate more than one disciplinary rule. In addition, such an arrangement is fraught
with so many inherent potential problems and pitfalls, that even if there was not a direct
violation of a disciplinary rule the duty of attorneys to maintain the integrity of the
profession and avoid even the appearance of impropriety would preclude attorneys from
condoning this type of arrangement.

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.