Can a lawyer help run a membership organization of lawyers and other professionals that offers subscribers legal consultations and referrals?

Plain-English summary

Members of a community (attorneys, certified public accountants, institutional trust officers, and other professionals) wished to create an organization that would educate the public about tax and estate planning. For a small annual fee, subscribers would attend seminars, receive newsletters, receive limited free consultations with an attorney and a CPA, and receive reduced rates from an attorney, CPA, and bank on related matters. The committee was asked whether an attorney could participate in creating and maintaining the organization, and which services would be permissible.

The committee identified several problems. Under Rule 5.4(b), a lawyer may not form a partnership with non-lawyers if any of the organization's activities consist of the practice of law; because subscribers would receive individual legal consultations as part of membership and the attorneys appeared to be part of management, that arrangement would violate the rule. Under Rule 5.5(b), the lawyer may not assist non-lawyers in the unauthorized practice of law; citing ABA Informal Opinion 1254 (1972), the committee noted that even a non-attorney organization's collection of estate information in preparation for referral can constitute UPL, so the lawyer would need exceptional vigilance to keep non-attorneys from crossing into drafting wills or giving estate-planning opinions. Even if the organization excluded legal services, Rule 7.2(c) prohibits an attorney from giving anything of value for referrals except the usual charges of a not-for-profit lawyer referral service; trading organizing help for a place on a reduced-fee referral list would violate that rule. Finally, Rule 5.4(a) bars fee splitting, so disbursing any part of the membership fee to the attorney who later rendered legal services would violate that constraint. The committee said a lawyer may participate only if his role is limited to providing legal education programs and materials with no direct referral connection and he accepts no fee-paying referrals.

Currency note

This opinion was issued in 1991, before the South Carolina Bar's adoption of the 2005 revisions to the Rules of Professional Conduct. 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 Treat this page as historical context, not current guidance.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 lawyer partner with non-lawyers in an organization that offers legal consultations?

A: The committee said no; Rule 5.4(b) bars a lawyer from forming a partnership with non-lawyers if any of its activities consist of the practice of law.

Q: Can the lawyer take referrals in exchange for helping run the organization?

A: The committee said no; Rule 7.2(c) prohibits giving anything of value for referrals except the usual charges of a not-for-profit lawyer referral service, so trading organizing help for referrals would violate the rule.

Q: What participation is permissible?

A: The committee said a lawyer may participate only if his role is limited to legal education programs and materials with no direct referral connection, he accepts no fee-paying referrals, and no membership fee is split with him for legal services.

Background and rules framework

The opinion interprets Rule 5.4 (professional independence, including the partnership bar in 5.4(b) and the fee-splitting bar in 5.4(a)), Rule 5.5 (unauthorized practice), and Rule 7.2(c) (payment for referrals), each corresponding to the like-numbered Model Rule. The committee analyzed each service the organization offered against these rules.

Citations and references

Rules of Professional Conduct:

• South Carolina RPC 5.4(b) / Model Rule 5.4: a lawyer shall not form a partnership with a non-lawyer if any of its activities consist of the practice of law.
• South Carolina RPC 5.4(a) / Model Rule 5.4: a lawyer shall not share legal fees with a non-lawyer.
• South Carolina RPC 5.5(b) / Model Rule 5.5: a lawyer shall not assist a non-lawyer in the unauthorized practice of law.
• South Carolina RPC 7.2(c) / Model Rule 7.2: a lawyer shall not give anything of value for a referral except the usual charges of a not-for-profit referral service.

Other opinions cited:

• ABA Informal Opinion 1254 (1972): a non-attorney organization's collection of estate information for referral can constitute the unauthorized practice of law.

See also

• SC Bar Ethics Op. 91-32: Working With a Third-Party Counterfeit-Recovery Company
• SC Bar Ethics Op. 02-04: Lawyer at a Nonlawyer Nonprofit

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-91-04/

Original opinion text

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

UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.

Ethics Advisory Opinion 91-04

Members of a community wish to create an organization that educates and disseminates to the public information pertaining to tax and estate planning. The members of the community that wish to create this organization consist of attorneys, certified public accountants, institutional trust officers, and other professionals associated with tax and estate planning matters.

The organization, for a small annual fee, will permit a subscriber to attend various seminars, receive newsletters, receive limited free consultations with an attorney and a certified public accountant and receive reduced rates with an attorney, certified public accountant and bank services on certain related matters.

Questions:
May an attorney participate in creating and maintaining such an organization? If there is a prohibition against an attorney participating because of one of the particular services offered by the organization, which services would be permissible from the standpoint of an attorney's participation?

Summary:
An attorney may not form a partnership with a non-lawyer if any of the activities of the partnership consist of the practice of law. Rule of Professional Conduct 5.4.

An attorney may not give anything of value in return for referrals except the usual charges of a not-for-profit lawyer referral service or other legal services organization. Rule of Professional Conduct 7.2 (c). (See Comment to Rule 5.5).

Opinion:
The organization, as described in the facts, proposes to provide as one of its services individual legal consultations concerning estate matters. Rule 5.4 (b) prohibits lawyers from forming partnership with non-lawyers when the activities of the organization include the practice of law. While the structure of the organization is not clearly described in the facts, the attorneys' role appears to be part of the management of the organization and, to the extent that subscribers received legal services as part of their membership, the arrangement would violate the rule. A further consideration should be the restrictions of Rule 5.5 (b) which prohibits an attorney from assisting "a person who is not a member of the bar in the performance of activity that constitutes the unauthorized practice of law." American Bar Association Informal Ethics Opinion 1254 (1972) held that merely collecting information about an individual's estate by a non-attorney organization in preparation for the referral of the matter to an attorney constituted the unauthorized practice of law and a lawyer should not participate in such an arrangement. Given the make-up of this organization, an attorney would need to maintain exceptional vigilance to insure that the non-attorneys did not cross the line from permitted activities, i.e., providing general estate information and accounting services, to the practice of law by participation in the drafting of wills and offering legal opinions on a particular person's estate planning problems. (See Comment to Rule 5.5).

If the organization would exclude from its activities the provision of legal services, there may still be problems with an attorney agreeing to accept referrals in exchange for participation in the organization. Rule 7.2 (c) prohibits an attorney from exchanging anything of value for referrals except for the customary charges of not-for-profit lawyer referral services and other legal services organizations. The exchange contemplated in the fact situation is that the attorney would help organize and maintain the organization and in return would be on a reduced fee referral list. This exchange would violate the rule. So long as the attorney agrees not to accept any fee paying referrals, an attorney may participate if the attorney's role is limited to providing legal education programs and materials without any direct referral connection.

The final ethical consideration which may be raised by such an organization concerns the prohibition on fee splitting contained in Rule 5.4 (a). The facts do not state the disposition of the fee paid by the participants in the organization's program. If there was any disbursement of a part of that fee to the attorney who subsequently rendered legal services to the participant as part of the persons membership benefits, it would violate this ethical constraint.