The two sides of Fee-Sharing Paralegals
Fee-sharing or sometimes termed as fee-splitting is a practice which involves the division of attorney’s fees between two or more lawyers especially between the lawyer who handled a matter and the lawyer who referred the matter. Some states consider this practice unethical and under most states’ ethical rules, an attorney is prohibited from splitting a fee with non – lawyer.
Since under most of the states’ ethical rules, fee-sharing is prohibited with non – lawyers, are there fee-sharing paralegals?
In its most obvious sense a fee-sharing paralegal is a non – lawyer who shares a part with an attorney’s fee.
The existence of fee – sharing paralegals will depend upon the ethical rules of a state. In Columbia fee-sharing paralegals are not recognized. Instead they came up with the idea of “success fee” where in a law firm may agree with its clients depending on the outcome of a particular matter that a “success fee” will be paid to both the law firm and a consulting firm of non – lawyer experts retained by the law firm to assist it in connection with the matter. The fact that the portion of the “success fee” payable to the non – lawyer consultants flows from the client through the law firm does not result in a “sharing” by the law firm of legal fees with a non – lawyer proscribed by Rule 5.4 of their rule of conduct.
The bans on fee-sharing with paralegals and other non-lawyers parties have been a feature of codes of legal ethics in Columbia. They were motivated by a number of concerns, chiefly that non – lawyers might through such arrangements engage in the unauthorized practice of law, that client confidences might be compromised, and that non – lawyers might control the activities of lawyers and interfere with the lawyers’ independent professional judgment.
On the other hand, fee-sharing paralegals are recognized in Utah in the sense that this would apply to employee-paralegals and not to paralegals working on an independent-contractor basis, who may only be compensated on a “per task” basis, totally independent from the lawyer’s relationship with, and compensation from, the client.
The fundamental rationale is for the protection of the lawyer’s professional independence of judgment. Since the employee-paralegal is presumed not to be in a position to exert undue influence on the lawyer, fee-sharing is allowed based upon a percentage of gross or net income provided and not tied to specific cases. In other words, a fee – sharing paralegal may be compensated a fixed percentage of gross income from all cases, but not a fixed percentage based upon the outcome of a specific case.