Florida Firm Loses Again in Dispute Over Referral Fee Agreement

In a decision from the U.S. District Court for the District of Maryland, Florida law firm Michael E. Criden P.A. lost for the second time in its long-running effort to recover a share of $10 million in fees that another firm, Joseph Saveri Law Firm Inc., received in an antitrust litigation in California. Judge Richard D. Bennett’s decision held, among other things, that a fee sharing agreement with a lawyer’s former firm is not enforceable against his new firm.

Criden, who had established a fee-sharing arrangement with Saveri’s former firm, argued that Saveri should be bound by the terms of the agreement with that firm. Criden also claimed that Saveri agreed to abide by the fee-sharing arrangement when he left his former firm and founded his new and current firm.

However, the court held that Criden’s claims failed under basic principles of California corporate law and the legal ethics rules of the state of Maryland; specifically, Maryland Rule of Professional Conduct 19-301.5(e), which governs attorney fee-sharing arrangements.

Among other things, the court held that the 12.5 percent referral fee Criden sought to enforce violated the proportionality mandate in rule 19-1.5(e). This rule requires fee-sharing to be proportionate to each lawyer’s services, unless each assumes joint responsibility for the representation. What’s more, the client did not consent in writing to the purported fee-sharing arrangement as required by the rule. The opinion also noted that the rules of California and Florida would likewise prohibit Criden from enforcing the purported referral fee agreement.

Read the full opinion here.

Nebraska Lawyers Get the Green Light to Accept Bitcoin

In a recent ethics advisory opinion, the Nebraska Supreme Court Advisory Committee declared that attorneys may accept digital currencies such as Bitcoin as payment for legal services, but must immediately convert the currency into U.S. dollars. The opinion is the first by a state ethics body to consider how the ethics rules apply to lawyers accepting this controversial form of currency.

The fluctuating exchange rate of digital currency implicates ethics rules related to the reasonableness of attorney’s fees. The value of Bitcoin, for example, fluctuates as much as ten percent per day. This volatility in value presents the potential for overpayment for legal services.

To combat this risk, the opinion outlines three steps attorney’s must take when accepting payment in digital currencies: (1) notify the client that the payment will be immediately converted to U.S. dollars, (2) make the conversion through a payment processor, and (3) credit the client’s account at the time of payment. The opinion further advises attorney’s to be “careful to see that [digital currency] is not contraband, does not reveal client secrets, and is not used in a money-laundering or tax avoidance scheme; because convertible virtual currencies can be associated with such mischief.”

Read the full opinion here.

Is Avvo’s Referral Service Ethical? Florida May Add its Voice to the Chorus.

The New York State Bar Association recently joined other states that have found that the use of Avvo’s attorney referral service is impermissible as it violates the professional conduct rules that prohibit sharing fees with nonlawyers or paying a nonlawyer for a referral or recommendation. Avvo presents particular problems for the state bars as Avvo collects different fees depending upon the type of case that is referred to an attorney.

The Florida Bar’s Board of Governors is scheduled to consider programs like Avvo at a December 2017 meeting as part of an ongoing attempt to revise the attorney referral rules in Florida. The Florida Bar Rules currently prohibit attorneys from sharing fees with for profit referral companies.

Proposed Advisory Opinion 17-2, which has yet to be drafted, will address whether attorneys may participate in private lawyer referral services, including services such as Avvo. The Florida Bar has solicited comments from Florida Bar members, pursuant to Procedures 6(d) and (e) of The Florida Bar Procedures for Ruling on Questions of Ethics Comments may include issues to be considered, a proposed conclusion, or suggestions for additional types of fee arrangements. Comments will be considered at The Florida Bar’s Fall Meeting on October 13, 2017

To read The Florida Bar’s notice click here click here.

To read more about the other state opinions concerning Avvo check out the informative blog posts at The Professional Responsibility Blog and the Legal Ethics Alert Blogs here and here.

Florida Contemplates Fee Sharing with Out of State NonLawyers

A proposed advisory opinion by The Florida Bar’s Professional Ethics Committee addresses fee-splitting with out-of-state lawyers when the out-of-state lawyer practices in a law firm with nonlawyer ownership. In the opinion, the committee states that a Florida Bar member should not be subject to discipline simply because a nonlawyer owner of an out-of-state law firm could receive a portion of the legal fees.

Partnerships with out-of-state lawyers are hardly new, but tensions between Florida’s Rules of Professional Conduct, and the organization and ownership of out-of-state-firms led the Florida Bar to clarify the matter.

Under Florida Rule of Professional Conduct 4-5.4, lawyers are prohibited from partnering or sharing legal fees with a nonlawyer. However, some U.S. jurisdictions—Washington, D.C. and Washington state—permit nonlawyer ownership of law firms.

The Florida Bar proposed advisory opinion follows in the footsteps of ABA Formal Opinion 464, and several other jurisdictions, in deciding that nonlawyer ownership of law firms in jurisdictions where permissible should not cause collaborating Florida lawyers to violate the prohibition against fee sharing set forth in Rule 4-5.4.

The underlying policy of Rule 4-5.4  concerns the improper influence of a nonlawyer may on a  lawyer’s professional judgment. However in the scenario analyzed in the proposed opinion, Florida Bar committee believes that a lawyer’s professional independence is not at risk simply because a nonlawyer owner receives a portion of an out-of-state lawyer’s fees.

Ultimately, the proposed opinion encourages attorneys to work with out-of-state lawyers despite differences in ownership structure, and allows clients to maintain flexibility in choosing counsel from other jurisdictions. 

To read the proposed opinion please click here.  

From the Florida Bar webpage:

Pursuant to Rule 4(c) and (d) of The Florida Bar Procedures for Ruling on Questions of Ethics, comments from Florida Bar members are solicited on the proposed opinion. The committee will consider any comments received at a meeting to be held in conjunction with The Florida Bar’s Fall Meeting at 9:30 a.m. on Friday, October 13, 2017, at the Tampa Airport Marriott.Comments should be submitted to Elizabeth Clark Tarbert, Ethics Counsel, The Florida Bar, 651 E. Jefferson Street, Tallahassee 32399-2300, and must be postmarked no later than August 15, 2017.

Show Me The Money: Lawyers May Withdraw If Not Paid Fees

The American Bar Association released Formal Opinion 476, which addresses whether a lawyer can withdraw from a civil case because a client failed to pay the lawyer’s fees, without jeopardizing the duty of confidentiality and balancing this with information that the Court would need to consider granting a lawyer’s motion to withdraw. Withdrawal from a case in any instance invokes ABA Model Rule 1.6—Confidentiality of Information—however, lawyers may choose to withdraw from a case under Rule 1.16(b): Declining or Terminating Representation.

Failure to pay a lawyer’s fees is one reason a lawyer may withdraw from a civil litigation matter under 1.16(b)(5). A lawyer cannot go too in-depth and disclose confidential client information in motions for withdrawal, but previous opinions and Comment 16 to Rule 1.6 permit a lawyer to advise the court that “professional considerations” require withdrawing from the case.

Trial court judges also have to be aware of this balancing act between confidentiality and withdrawal because of unpaid fees. Judges have wide discretion in ruling on such motions. Along with considering the lawyer’s reasons, judges must consider the Court’s calendar and how the withdrawal will impact the parties to the case. Withdrawal motions are less problematic in earlier stages of litigation when these factors (along with the reasons the lawyer provides) are considered; when the case is further along and the trial is approaching, it falls more to the judge’s discretion.

In order to avoid breaching confidentiality when withdrawing over unpaid fees, a lawyer could vaguely reference “professional considerations” with no client information and persuade the court that more is not necessary. Or, if needed the lawyer may submit information deemed reasonably necessary by the court to minimize disclosure if it is appropriate. Lawyers and judges must cooperate in order to protect client confidentiality in motions for withdrawal.