Well, this may be the most rapid Friday follow up in this blog’s history.
A wise and well-connected reader has been in touch to let me know why my analysis yesterday of NYSBA Op. 1160 was all wet. He was, of course, right as I somehow managed to blow past a very important piece of the puzzle regarding the situation NYSBA Op. 1160 was addressing. The inquiring lawyer was actually willing to put together an arrangement that would have made the out-of-state lawyer a part of his “firm.”
I wrote that was not the case prior to discussing the part of the opinion that sought to distinguish prior guidance from about 8 years earlier. Specifically, where I went awry was here:
New York’s 1.5(g) only lets lawyers not in the same law firm (and to be clear the inquirer’s desire to affiliate did not apparently involve actually forming a law firm together) share legal fees if, among other bells and whistles regarding consent and the existence of a writing, the amount of the division of the fee is either proportional to the service performed or (if it is going to be disproportionate in that respect) if both lawyers assume joint responsibility for the work.
The “facts” section of the opinion, however, makes clear that I got that wrong.
The inquirer, an attorney recently admitted to practice in New York, is acquainted with another lawyer. The other lawyer, like the inquirer, resides in New York, but the other attorney is admitted only in another state, not New York, though the latter is admitted to practice in federal courts located in New York. According to the inquirer, the other lawyer is capable of generating business, and the inquirer would like to affiliate with this other lawyer, listing the other lawyer as a partner, associate, counsel, or otherwise, on letterhead showing that the other lawyer is admitted solely in the other state and not New York. The inquirer anticipates that the other lawyer would attend initial meetings with the clients being produced by the other lawyer, but then would not deal with any of the legal work being performed.
I certainly regret my error.
I particularly regret my error because it was part of my thinking when I said at the outset of yesterday’s post that NYSBA Op. 1160 still got the answer right. Now that I actually am paying better attention to the facts, I realize that the opinion absolutely did not get to the correct answer. Instead it was flat wrong.
Rule 1.5(g) wouldn’t be in the mix since that is sharing of fees among lawyers not in the same firm. Likewise, the stated concerns in the opinion about Rule 7.2(a) are irrelevant because that rule surely is not intended to apply to arrangements among lawyers within the same law firm.
There are multi-state law firms all over this nation that have partners who do absolutely nothing on a particular client matter beyond what is described as the role the out-of-state lawyer would have had under the inquiry. Those lawyers most definitely share in the fees of the client when they make rain through something often called “origination credit” by law firms.
Some of those firms most certainly have offices in New York and I just about guarantee that no one would think twice about such internal compensation arrangements in terms of questioning whether they are ethical because all of those lawyers are in the same firm and the decisions they make about how to divide fees are treated as pure business questions of compensation.
The rules in that regard shouldn’t be any different for a firm of two lawyers than for a firm of 2,000.