Can a law firm pay a temporary-lawyer placement agency a fee tied to the temporary lawyer's hours or pay, and what must the firm tell the client?

Plain-English summary

In Formal Opinions 1988-3 and 1988-3-A the committee had set guidelines for agencies that recruit temporary lawyers and place them with law firms and other legal-service providers. After other bar committees, including the ABA in Formal Opinion 88-356, addressed the subject, this committee reconsidered and modified the first of its guidelines while reaffirming the rest. (Three members dissented from both the reconsideration and the modification.)

The earlier opinions had treated an agency fee tied to the temporary lawyer's time or compensation as a division of a legal fee with a non-lawyer in violation of DR 3-102(A). On reconsideration, the committee concluded that because the agency provides non-legal services (locating, recruiting, screening, and placing temporary lawyers), the firm's payment for those services is not a legal fee under DR 3-102(A), whether the fee is fixed or calculated by reference to the temporary lawyer's time or compensation. To ensure the arrangement does not become an indirect fee split, the committee required two safeguards: the agreement should state the agency fee separately and identify it as compensation for the placement services, and the agency fee may not be included in the legal fee charged to the client, but if passed through must be separately billed to the client as a disbursement like other non-legal disbursements.

The committee reaffirmed two further points. The law firm has an ethical obligation in every case to disclose in advance the temporary lawyer's participation in the firm's services and to obtain the client's consent, citing DR 2-107(A)(1), DR 5-107(A)(1), and EC 2-22. And the remaining guidelines from Formal Opinion 1988-3 continue to apply and should be memorialized in written agreements among the firm, the temporary lawyer, and the agency.

Currency note

This opinion was issued in 1989, before New York replaced the Code of Professional Responsibility (the Disciplinary Rules cited here) with the New York Rules of Professional Conduct, effective April 1, 2009. Sharing legal fees with non-lawyers is now governed by Rule 5.4, fees by Rule 1.5, and the treatment of temporary and contract lawyers has since been addressed by later authorities. 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 a law firm pay a placement agency a fee tied to the temporary lawyer's hours or pay?

A: The committee concluded yes; such a fee is payment for the agency's non-legal placement services and is not a division of a legal fee barred by DR 3-102(A), whether it is fixed or varies with the temporary lawyer's time or compensation.

Q: What safeguards keep the agency fee from being an improper fee split?

A: The committee required that the agreement state the agency fee separately as compensation for placement services, and that the fee not be included in the firm's legal fee, but be billed to the client as a disbursement if passed through.

Q: Does the firm have to tell the client a temporary lawyer is working on the matter?

A: The committee concluded yes; the firm must disclose the temporary lawyer's participation in advance and obtain the client's consent in every case.

Background and rules framework

The opinion applied New York Code DR 3-102(A) (dividing legal fees with a non-lawyer), DR 2-107(A)(1) (division of fees among lawyers), and DR 5-107(A)(1) (compensation from one other than the client), informed by EC 2-22 and EC 4-2. These correspond to ABA Model Rule 5.4 (professional independence and fee-sharing with non-lawyers) and Model Rule 1.5 (fees).

Citations and references

Rules of Professional Conduct:

• New York Code DR 3-102(A), DR 2-107(A)(1), DR 5-107(A)(1); EC 2-22, EC 4-2 (applied in the opinion)
• MR 5.4 (fee-sharing with non-lawyers); MR 1.5 (fees)

Other opinions cited:

• N.Y. City Formal Op. 1988-3 and 1988-3-A: the original temporary-lawyer guidelines, modified here
• ABA Formal Opinion 88-356 (1988): temporary lawyers
• Connecticut Informal Op. 88-15; Florida Op. 88-12 (1988): temporary lawyering

See also

• NYC Bar Formal Op. 1994-3: For-Profit Lawyer Referral Services
• NYC Bar Formal Op. 1994-2: Part-Time Administrative Law Judge and a Referral Fee

Source

• Landing page: https://www.nycbar.org/reports/formal-opinion-1989-2/