Best Intentions or Best Practices?

The ISBA continues to support IRPC 5.4(a) and prohibiting fee sharing with nonlawyers.

The Illinois Rules of Professional Conduct (IRPC) have, for a considerable period of time, mandated a clear ethical prohibition of nonlawyer fee sharing (IRPC 5.4(a)). This Rule has come under attack by some well-intentioned academics, lawyers, and a few organized bar groups who claim to have a better plan. But reasons for opposing IRPC 5.4(a) do not stand up to scrutiny; the ISBA continues to strongly advocate against repealing the Rule.

The Illinois Supreme Court has indicated that fee sharing with nonlawyers violates public policy. The Court’s rationale has always been that it is against the public’s interest for nonlawyers to control cases and provide legal services. Nonlawyer fee sharing promotes specious solicitation, the unauthorized practice of law, and compromises both the public’s interest and the professionalism of lawyers.

Other professions may dabble in fee sharing and debate whether it provides a public benefit, but no advantageous case has been made for consumers of legal services (in professions such as medicine, fee sharing also tends to be strongly discouraged, if not prohibited, by many states and other regulatory bodies.)

Setting the bright line

The most well-intentioned case for fee sharing with nonlawyers is that such an arrangement could help to connect more consumers with lawyers. A number of for-profit referral services exist today and the ISBA does not particularly oppose these for-profit companies, as long as they operate within very limited bounds. It is our position that the danger arises when these service providers want to become fee-sharing partners and begin to assert an expectation of authority that comes with that relationship.

Why is this bright line not to be crossed? The answer is quite simple: Protection of the public, protection of the legal profession, and protection of meaningful professional ethics are all at risk when nonlawyers become economic partners in the delivery of legal services. Should private investigators, business solicitors, and consulting doctors have a say in the litigation of personal injury claims? Will economists and marriage counselors be dictating to their lawyer-partners how to settle family dissolution and custody matters? Will title companies, appraisers, and paralegals dictate how to litigate appeals on real estate taxes? All of these are troubling scenarios. For this very reason, at least eight bar associations have published ethical opinions rejecting nonlawyer fee sharing. While it is assumed by some that the entry of nonlawyers into the economics of the practice of law will promote access to justice, there is absolutely no empirical evidence that has been presented and brought forth to show that this is the case. In fact, nonprofit bar associations and other agencies are better equipped to refer clients because, by definition, profit is not a motive.

A healthy legal marketplace

The ISBA promotes a healthy legal marketplace where clear and accurate information can be presented. Rule 5.4(a) has for many years preserved sound professional standards that protect consumers. It is not a hindrance to the profession or the public, but a protection of both. The fact that legal fees must be paid and are to be shared with nonlawyers will likely place a greater emphasis on profit rather than professional conduct.

In the final analysis, any action or repeal that can possibly affect a lawyer’s independent judgment in representing clients is to be certainly and seriously examined—not just for the legal profession, but for the public good. I have faith that the Illinois Supreme Court and other decision makers in the legal community will do all they can to promote access to justice, protect consumers, and shield attorneys from arrangements that may threaten their ability to fully advocate for their clients.