Can North Carolina lawyers use a placement service that matches contract attorneys with firms for temporary work and takes a fee out of what the firm pays?

Plain-English summary

Attorneys Placement Service (APS) contracted with independent licensed attorneys willing to provide hourly legal services and placed them with attorneys, firms, or corporate counsel needing temporary help. APS viewed itself as a placement consultant hired by both sides, charging a placement fee paid by the employing attorney out of the total, with the contract attorney paid that total minus the placement fee. The placed attorneys were not employed by APS, could accept or decline positions, and APS tried to screen for conflicts while expecting the lawyers themselves to handle conflicts ethically. The inquiry asked whether North Carolina lawyers could contract with APS as either employing or contracting attorneys.

The opinion answered yes. The arrangement did not appear structured to impinge on the lawyers' ability to exercise independent judgment in performing legal services. The contracting and employing lawyers would need to be careful to avoid potential conflicts of interest under Rule 5.1 and to preserve confidential information under Rule 4, just as whenever a lawyer or firm contracts with another lawyer to assist in a representation. Assuming the contracts specified what the employing attorney or firm was paying, the rate to the contracting attorney, and the placement fee to APS, the arrangement would not violate Rule 2.6(d) or Rule 3.2.

Currency note

This opinion was issued in 1988, before the North Carolina State Bar's adoption of the 2003 revisions to the Rules of Professional Conduct. The provisions it applies (Rule 5.1 on conflicts, Rule 4 on confidentiality, Rule 2.6(d) on fee division, and Rule 3.2 on sharing fees with nonlawyers) have since been renumbered and revised (the corresponding Model Rules are 1.7, 1.6, 1.5, and 5.4). Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can lawyers use a temporary-placement service that takes a fee from what the firm pays?

A: Yes. The opinion concluded the arrangement is permissible because it does not impair the lawyers' independent judgment, given proper safeguards.

Q: What must the lawyers watch for in the arrangement?

A: The opinion concluded they must avoid potential conflicts of interest under Rule 5.1 and preserve client confidences under Rule 4.

Q: What keeps the placement fee from violating the fee rules?

A: The opinion concluded that if the contracts specify what the firm pays, the contract attorney's rate, and the placement fee, the arrangement does not violate Rule 2.6(d) or Rule 3.2.

Background and rules framework

The opinion applied North Carolina Rule 5.1 (conflicts of interest, corresponding to Model Rule 1.7), Rule 4 (confidentiality, corresponding to Model Rule 1.6), Rule 2.6(d) (division of fees, corresponding to Model Rule 1.5), and Rule 3.2 (sharing legal fees with nonlawyers, corresponding to Model Rule 5.4). The analysis treated the placement fee as a transparent service charge rather than improper fee-sharing, so long as the payments were fully specified.

Citations and references

Rules of Professional Conduct:

• North Carolina Rule 5.1 (conflicts of interest)
• North Carolina Rule 4 (confidentiality)
• North Carolina Rule 2.6(d) (division of fees)
• North Carolina Rule 3.2 (sharing legal fees with a nonlawyer)
• MR 1.7 (conflicts); MR 1.6 (confidentiality); MR 1.5 (fees); MR 5.4 (professional independence)

See also

• NC Ethics Op. RPC 148: division of fees
• NC Ethics Op. RPC 147: percentage bonuses for paralegals

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/rpc-38/

Original opinion text

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

Inquiry:

Attorneys Placement Service, or APS, contracts with independent licensed attorneys willing to provide legal services on an hourly basis for placement of those attorneys with other attorneys, law firms, or corporate counsel needing some assistance temporarily because of lack of time, lack of expertise in a particular area, or other reasons. APS views its role as one of a placement consultant hired by both the employing attorney or firm and the independent attorneys who are placed. APS charges a placement fee which is paid directly by the employing attorneys or firms prior to paying the contracting attorney. The contracting attorney has entered into the arrangement to be paid at a rate equal to the amount paid by the employing attorney minus the placement fee, which is included in the agreement with the employing attorney as being deducted from the total amount paid by the employing attorney.

The attorneys placed by APS are not employed by APS. They are free to accept or decline any temporary position in which APS otherwise is able to place them. APS makes an effort to determine whether there could be a conflict of interest prior to placing any contracting attorney. However, APS also expects the employing attorneys or firms and the contracting attorneys to be sensitive to a possible conflict of interest and to handle any potential conflicts in an ethical manner.

May licensed attorneys in North Carolina ethically contract with APS as either employing attorneys wishing to have other attorneys placed with them on a temporary basis or as contracting attorneys seeking temporary placement with other attorneys or firms?

Opinion:

Yes. This arrangement does not appear to be structured in any way so as to impinge upon the lawyers' ability to exercise their independent judgment in performing legal services. The contracting attorneys, as well as the employing attorneys or firms, would need to be very careful to avoid any potential conflicts of interest under Rule 5.1 and to preserve confidential information appropriately under Rule 4 in the same way as is necessary whenever an attorney or firm representing a client contracts with another attorney to assist in performance of legal services and representation of the client. Assuming that the contractual arrangements specify what the employing attorney or firm is paying, the rate to be paid to the contracting attorney, and the placement fee to be paid to APS, the arrangement would not violate either Rule 2.6(d) or Rule 3.2.