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.

In the Cloud? The Florida Bar Publishes Guidelines for Selecting a Cloud Service Provider

In the Cloud? The Florida Bar Publishes Guidelines for Selecting a Cloud Service Provider

The Florida Bar’s Technology Committee in collaboration with The Florida Bar’s Practice Resource Institute have published both a quick start guide to cloud computing and  more comprehensive due diligence guidelines to assist lawyers in selecting a cloud service provider.

The Florida Bar News reports:

“Two things are happening more than ever right now: Lawyers are using the cloud to store sensitive information; and lawyers are under attack from cyber criminals looking to steal sensitive information,” said Tech Committee Chair Al Saikali, who also chairs the Privacy and Data Security Practice area at Shook, Hardy & Bacon. “It was therefore important to develop a document that teaches lawyers about the cybersecurity and legal issues associated with the storage of cloud service providers.”

To read the article that contains links to the new guidelines click here

Up in the ‘Clouds’: Illinois Finds Duty of Competence Applies to Selection of Provider

This fall, the Illinois State Bar Association Committee on Professional Ethics reached two conclusions regarding use of cloud-based services. In Opin. 16-06, the Committee opined that:

(1) a lawyer may use cloud-based services to store confidential client information, so long as the attorney uses reasonable care to make sure that client confidentiality and client information is protected; and

(2) a lawyer is responsible for complying with her duties of competence in selecting a cloud-based services provider, assessing cloud-based services practices, and monitoring compliance with the lawyer’s professional obligations.

 This opinion expands Illinois’s prior opinion where a lawyer may work with a private vendor to monitor the law firm’s computer server, so long as the lawyer takes reasonable steps to ensure the vendor protects client’s confidential information. See, ISBA Op. 10-01 (2009).

Rule 1.1 Competence provides that lawyers must provide competent representation to their clients. Illinois recently amended this rule to include that lawyers who use cloud-based services must have a sufficient understanding of the technology to properly consider the risks of disclosure of confidential information. See Illinois Rule 1.1 Comment 8. Lawyers must also make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, confidential information. See Rule 1.6(e) Confidentiality. Because lawyers hire third-party providers for cloud-based services, lawyers will be subject to the professional rules regarding employing and supervising subordinates. See Rule 5.3 Comment 3.

Due to technology constantly changing, Illinois does not provide any specific requirements for lawyers when choosing a provider. However, Illinois does provide some tips for lawyers when inquiring about a cloud-based services provider, which are:

  • Review cloud computing industry standards and what protections should be put in place when using a cloud-based service;
  • Investigate whether the provider has employed reasonable security measures to protect client data from unintentional disclosures;
  • Investigate the provider’s reputation and history;
  • Look into whether the provider has experiences any security breaches in the past;
  • Demand an agreement to reasonably safeguard that the provider will abide by the lawyer’s duties of confidentiality and will immediately notify the lawyer of any breaches of information;
  • Require that all data is backed up and under the lawyer’s control; and
  • To require reasonable recovery of information if the agreement with the provider is terminated, or if the provider goes out of business.

Several other states have allowed lawyers to use cloud-based services to help with storing client information. See e.g., Alabama Ethics Op. 2010-2; Iowa Ethics Op. 11-01; Tennessee Formal Ethics Op. 2015-F-159; see generally “Cloud Ethics Opinions Around the U.S.”, American Bar Association, Legal Technology Resource Center.

To read the full opinion, click here.


City of New York Opines on the Ethics of Outsourcing

In Formal Opinion 2015-1, the Association of the Bar of the City of New York Committee on Professional Ethics answered “a question of first impression in New York” concerning law firms’ use of professional employer organizations (“PEOs”), which “help small businesses provide employment benefits and human resource services to their employees.” The Committee opined that a law firm may use a PEO’s services, despite the triggering of several New York Rules of Professional Conduct (“Rules”), as long as four requirements are met:

(1) The firm does not allow the PEO to interfere with lawyers’ duty to exercise independent professional judgment and supervise lawyers and nonlawyers.

The Committee noted the value of a lawyer’s professional independence, stating that a PEO “must not be allowed to influence decisions that would impact a lawyer’s ability to provide independent professional judgment. Additionally, the PEO must not have control over law firm employees in connection with the practice of law and thus interfere with law firm’s supervisory responsibilities. See Rules 1.8(f), 2.2, 5.4(c), 5.4(d)(3) as to the interference with independent professional judgment. See Rules 5.1, 5.2 and 5.3 as to supervision.

(2) The firm does not allow the PEO to access confidential client information.

Law firms can comply with confidentiality rules by including in PEO arrangements “reasonable safeguards to prevent” breaches of confidentiality. See Rules 1.6 and 5.1.

(3) The firm complies with the rules regarding conflicts of interest.

PEO employees should be subject to the same conflict-checking procedures as firm employees would also appropriately be subject to. However, the PEO itself is not required to be subject to these procedures. The PEO may provide similar services to one firm as it does “to other law firms that represent adverse clients,” as long as the PEO does not interfere with lawyers’ professional independence, control or supervise employees, or access confidential information. See Rules 1.7, 1.9, and 1.10.

(4) The firm, in compensating the PEO, does not violate prohibitions against sharing fees with nonlawyers.

Payment arrangements with PEOs may not be based on fees paid by clients to the law firm. However, law firms may compensate PEOs based on “a percentage of total payroll, flat fee, or fee per employee or service.” See Rule 5.4(a).

To read the full opinion, click here. Click here, for the New York Rules of Professional Conduct.

The Problems With “One-Stop-Shopping” Discovery Vendors

The Problems With “One-Stop-Shopping” Discovery Vendors

Brian D’Amico takes a compelling look at the growing use of turn-key, “one-stop-shopping” discovery vendors.  His article from the Daily Business Review addresses a recent ethics opinion from the District of Columbia Court of Appeals Committee on the Unauthorized Practice of Law. The Opinion warns that the broad services offered by some discovery vendors venture into the unauthorized practice of law. The Opinion also discusses that some of the vendor’s promotional materials are ambiguous or misleading regarding their capabilities.

The Opinion gives examples of actual promotions from discovery vendors that the committee found concerning.

  • “We design, develop, and manage the entire review process instead of just providing contract attorneys and software and leaving the rest to the client.”
  • “Simply put, our experience in running your project . . . managing a soup-to-nuts document project from process to production – is unparalleled.”
  • “[We have] the ability to run every aspect of discovery management and document review with as much or as little involvement as you require.”
  • “Our consultants develop and implement methods and manage the overall discovery process to yield efficiency and cost savings.”
  • “Our managed services are tailored to specific project needs and include comprehensive project planning, on-site review team supervision, privilege log preparation, e-vender selection, and more.”

 Opinion 21-12, and others like D.C. Bar Ethics Opinion 362 , remind attorneys not to forget local rules regarding supervision of non-lawyers and non-lawyer ownership of law firms.