North Carolina Administrative Code
Title 27 - STATE BAR
Chapter 02 - RULES OF PROFESSIONAL CONDUCT OF THE NORTH CAROLINA STATE BAR
Section 02 RULE 5.04 - PROFESSIONAL INDEPENDENCE OF A LAWYER
Universal Citation: 27 NC Admin Code 02 RULE 5.04
Current through Register Vol. 38, No. 18, March 15, 2024
(a) A lawyer or law firm shall not share legal fees with a nonlawyer, except that:
(1) an agreement by a lawyer with the
lawyer's firm, principal, or associate may provide for the payment of money,
over a reasonable period of time after the lawyer's death, to the lawyer's
estate or to one or more specified persons;
(2) a lawyer who purchases the practice of a
deceased, disabled, or disappeared lawyer may, pursuant to the provisions of
Rule 1.17, pay to the estate or other representative of that lawyer the
agreed-upon purchase price;
(3) a
lawyer who undertakes to complete unfinished legal business of a deceased
lawyer or a disbarred lawyer may pay to the estate of the deceased lawyer or to
the disbarred lawyer that portion of the total compensation that fairly
represents the services rendered by the deceased lawyer or the disbarred
lawyer;
(4) a lawyer or law firm
may include nonlawyer employees in a compensation or retirement plan even
though the plan is based in whole or in part on a profit-sharing
arrangement;
(5) a lawyer may share
court-awarded legal fees with a nonprofit organization that employed, retained
or recommended employment of the lawyer in the matter; and
(6) a lawyer or law firm may pay a portion of
a legal fee to a credit card processor, group advertising provider, or online
marketing platform if the amount paid is for payment processing or for
administrative or marketing services, and there is no interference with the
lawyer's independent professional judgment or with the client-lawyer
relationship.
(b) A lawyer shall not form a partnership with a nonlawyer if any of the activities of the partnership consist of the practice of law.
(c) A lawyer shall not permit a person who recommends, engages, or pays the lawyer to render legal services for another to direct or regulate the lawyer's professional judgment in rendering such legal services.
(d) A lawyer shall not practice with or in the form of a professional corporation or association authorized to practice law for a profit, if:
(1) a nonlawyer owns any interest therein,
except that a fiduciary representative of the estate of a lawyer may hold the
stock or interest of the lawyer for a reasonable time during administration;
or
(2) a nonlawyer has the right to
direct or control the professional judgment of a lawyer.
Comment
[1] The
provisions of this Rule express traditional limitations on sharing fees. These
limitations are to protect the lawyer's professional independence of judgment.
Where someone other than the client pays the lawyer's fee or salary, or
recommends employment of the lawyer, that arrangement does not modify the
lawyer's obligation to the client. As stated in paragraph (c), such
arrangements should not interfere with the lawyer's professional
judgment.
[2] A determination under
paragraph (a)(6) of this rule as to whether an advertising provider or online
marketing platform (jointly "platform") will interfere with the independent
professional judgment of a lawyer requires consideration of a number of
factors. These factors include, but are not limited to, the following:
(a) the percentage of the fee or the amount
the platform charges the lawyer;
(b) the percentage of the fee or the amount
that the lawyer receives from clients obtained through the platform;
(c) representations made to prospective
clients and to clients by the platform;
(d) whether the platform communicates
directly with clients and to what degree; and
(e) the nature of the relationship between
the lawyer and the platform. A relationship wherein the platform, rather than
the lawyer, is in charge of communications with a client indicates interference
with the lawyer's professional judgment. The lawyer should have unfettered
discretion as to whether to accept clients from the platform, the nature and
extent of the legal services the lawyer provides to clients obtained through
the platform, and whether to participate or continue participating in the
platform. The lawyer may not permit the platform to direct or control the
lawyer's legal services and may not assist the platform to engage in the
practice of law, in violation of Rule 5.5(a).
[3] This Rule also expresses traditional
limitations on permitting a third party to direct or regulate the lawyer's
professional judgment in rendering legal services to another. See also Rule
1.8(f)(lawyer may accept compensation from a third party as long as there is no
interference with the lawyer's independent professional judgment and the client
gives informed consent).
[4]
Although a nonlawyer may serve as a director or officer of a professional
corporation organized to practice law if permitted by law, such a nonlawyer
director or officer may not have the authority to direct or control the conduct
of the lawyers who practice with the firm.
Authority
G.S.
84-23;
Adopted by the Supreme
Court: July 24, 1997;
Amendments Approved by the Supreme Court:
March 1, 2003; September 22, 2016; March 27,
2019.
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