Rules of Professional Conduct Related Ethical Opinions

5.4  Professional Independence of a Lawyer


11-02: Internet; Advertising; Referral Service; Fee Sharing

A lawyer may ethically participate in an Internet-based group advertising program that limits participation to a single lawyer for each ZIP code from which prospective clients may come, provided that the service fully and accurately discloses its advertising nature and, specifically, that each lawyer has paid to be the sole lawyer listed in a particular ZIP code.  To remain a permissible group advertising program, such a service may do nothing more to match clients with lawyers than to provide inquiring clients with the name and contact information of participating lawyers, without communicating any substantive endorsement. The service will lose the protection afforded by the required disclosures and cross the line that distinguishes permissible advertising from an impermissible for-profit referral service if the required disclosures are difficult to find, read, or understand; are contradicted by other messages on the website; or are made so late in the process that the consumer of legal services is unlikely to read them before contacting participating lawyers.

A lawyer also may ethically participate in Internet advertising on a pay-per-click basis in which the advertising charge is based on the number of consumers who request information or otherwise respond to the lawyer’s advertisement, provided that the advertising charge is not based on the amount of fees ultimately paid by any clients who actually engage the lawyer.

10-01: Referral Service; Fee Sharing; Referral Fees

In anticipation of the formal release of this opinion, the Maricopa County Bar Association (MCBA) petitioned the Arizona Supreme Court to change, on an emergency basis, ERs 5.4 and 7.2 to resolve the problems this opinion identifies. The Court granted that request and adopted the MCBA’s proposed rule changes on an emergency basis, effective April 6, 2010. The Court then adopted the changes permanently, effective September 2, 2010. As a result of the rule-change petition and Court’s order, the rules now in effect are different from the rules at issue in this opinion.

A lawyer may not ethically participate in a not-for-profit lawyer referral service if, as a condition of such participation, the lawyer is required to pay the service a percentage of the fees earned on the case.

06-04: Disclosure; Third Parties; Prepaid Legal Services; Conflict

In the context of a prepaid legal services program, attorneys may not release confidential or privileged information to a third-party auditor without the client's informed consent.  Because billing information often contains confidential information, contractual provisions requiring an attorney to allow, without exception, third parties to review the client file and billing records violate ER 1.6(a).

An attorney may agree to represent a client under a prepaid legal services agreement that limits the presumptive compensation allowable for "basic" legal services if the attorney complies with ER 1.8(f)(2), including determining that the limit on payment does not interfere "with the lawyer's independence of professional judgment or with the client-lawyer relationship."  When agreeing to accept third-party payments, the attorney must be careful to abide by the client's "decisions concerning the objectives of representation and ... whether to settle a matter."  ER 1.2(a).  An attorney's agreement to limit compensation from a third party does not limit the attorney's duty provide a diligent and thorough representation of the client.

Provisions in a prepaid legal services contract between a client and the issuing trust do not excuse a lawyer's compliance with applicable ethical rules. An attorney may not enter into a contract that requires the attorney to violate his or her ethical duties.

05-02: Advertising - Referral Gifts/Fees; Inactive Lawyer

An attorney who is on inactive status and not practicing law must comply with the Rules of Professional Conduct. An inactive attorney may pay a referral fee to a third party so long as the fee is not related to legal services and does not constitute sharing of legal fees. An inactive attorney may not, however, pay the referral fee to a practicing attorney.

01-06: Conflicts of Interest; Criminal Representation; Court-Appointed

A lawyer should not enter into a criminal defense contract to provide legal services paid by a third party if the contract might induce the lawyer improperly to curtail services or to perform them in a way contrary to the client's interests because of insufficient funding and that requires authorizations from non-lawyer third parties. [ERs 1.7(b), 1.8(f), 5.4(c)]

00-10: Division of Fees with Nonlawyers; Employment Agencies; Temporary Lawyers; Referral Fees

When a law firm pays a fee to a staffing agency for services rendered in connection with the temporary employment of a lawyer, ER 5.4(a), Ariz. R.S.Ct. 42, is not violated if the fee is independent of any amounts actually received from the client. This remains true even when the agency compensates the temporary lawyer out of the sum received from the law firm. [ER 5.4]

99-12: Conflicts of Interest; Division of Fees with Nonlawyers; Independent Professional Judgment; Lawyer Referral Service

A lawyer employed by an architectural firm may not provide legal services to the firm's clients, where the firm pays the attorney a salary but charges the clients an hourly rate for the lawyer's services, because of possible conflicts of interest and impermissible fee-sharing with non-lawyers. [ER 1.7, 1.8(f), 5.4, 7.1]

99-13: Paralegals; Nonlawyers; Unauthorized Practice of Law; Employees of Lawyers; Jurisdiction; Conflicts of Law

An Arizona attorney may permit his non-lawyer paralegal, who is a licensed tribal advocate, to represent clients in tribal court if that court’s rules so permit, because that court’s rules govern the conduct. Such representations will not run afoul of the Arizona lawyer’s duty to not assist unauthorized practice of law as long as the paralegal representation is limited to tribal court. [ER 5.3, 5.4, 5.5, 8.5]

99-08: Confidentiality; Conflict of Interest; Insurance Representation; Audits; Independent Professional Judgment

Insurance defense lawyers ethically cannot participate in an audit review program by an insurance carrier's outside auditor where the program requires: 1) disclosure of confidential information about the client/insured (without the client's informed consent); 2) restricts the lawyer's independent professional judgment by limiting the services the lawyer may perform; and 3) grants the auditor permission to review client files. [ER 1.6(a), 1.7(b), 1.8(f), 5.4(c)]

99-06: Internet; Referral Fees; Division of Fees with Nonlawyers; Lawyer Referral Services; Advertising and Solicitation

Arizona lawyers ethically may not participate in an Internet service that sends legal questions from individuals to attorneys based upon the subject matter of the question. Lawyers also could not pay a fee for such referrals or give the service a portion of the legal fees earned from the referral. [ER 1.5, 5.4, 5.5, 7.1(j), 7.1(r)(3), 7.4]

98-08: Paralegal; Nonlawyer; Estate Planning; Employees of Lawyer; Initial Interviews

An attorney ethically may contract with a paralegal to have the paralegal assist with conducting initial interviews of and signing of documents by estate planning clients, as long as: 1) the attorney supervises and controls the paralegal’s activities to assure that the paralegal does not engage in the unauthorized practice of law; 2) there is no fee sharing; 3) the initial interviews are only with existing clients; and 4) there is no solicitation of new business by the paralegal. [ER 1.6, 5.3, 5.4, 5.5, 7.3]

98-05: Confidentiality; Billing; Collection of Legal Fees; Client Files

This opinion discusses a lawyer's ethical obligations when he/she desires to sell his client accounts receivable to a factor with the consent of each client after consultation. [ERs 1.6, 1.7, 1.8, 5.4]

97-08: Business Activities; Accountants; Sharing Office Space

A lawyer who is also an accountant may indicate both professional titles on his legal stationery, but: (1) the business must remain separate (financially and for advertising purposes although they may "reside" in the same physical location); (2) the non-legal business may not be used as a "feeder" for the law firm (i.e. clients of the non-legal business should not be solicited for legal work); (3) clients who are referred to the non-legal business must be advised of the lawyer's interest in the accounting firm and that the attorney-client privilege does not extend to the accounting work; (4) appropriate safeguards must be in place to assure against breaches of confidentiality and conflicts for the legal practice; and (5) the lawyer should not indicate that he is a lawyer in his accounting advertisements unless he complies with the Ethical Rules on advertising. [ERs 1.6, 1.7, 1.8, 5.4, 7.1, 7.5]

96-11: Non Lawyer Referral Business; Lawyer Employed by Non Lawyer Business

A lawyer may not have legal fees paid for a client through a referring business and the lawyer may not be employed part-time, by the nonlawyer referring business to provide legal services to clients of the business.  [ERs 1.8, 5.4, 7.1]

96-05: COnflicts; Business Transactions; Chiropractic Referrals; Business Activities; Personal Injury; Referrals

There are significant potential conflicts in an attorney referring a legal client to a chiropractic clinic in which the lawyer owns an interest such that the Committee discourages such arrangements. [ERs 1.7, 1.8, 5.4]

94-14: Donating Fee to Charity; Advertising Donation

An attorney may offer to donate 10% of a legal fee to the charity of a client's choosing as long as: 1) the total fee charged is reasonable; 2) the attorney's independent professional judgment is not affected; 3) charities are not paid for referrals; and 4) the advertisement of the offer complies with ER 7.1.

94-08: Limitation on Representation; Reporting Misconduct; County Attorney Contract

Private practitioner offered a contract to represent a county commission may not agree to terms that would require the attorney to seek prior approval of the board of supervisors before proceeding beyond filing an answer. Opinion also discusses whether it is an ethical violation to offer such a contract.

94-03: Insurance; Representation

An attorney retained by an insurance company to represent an insured owes primary allegiance to the insured. That allegiance requires the client's consent before the attorney may file a motion for summary judgment in a third party matter that would benefit the insurance company but could be disadvantageous to the insured.

93-05: Employment of Non-Lawyers; Trial Consultants

Lawyer may employ a non-testifying trial consultant, and pay him a prearranged bonus fee of if the case settles or is won at trial, subject to certain guidelines.

93-01: Non-Lawyer Assistants; Unauthorized Practice of Law; Lawyer Referral Service

Lawyer may not cooperate with a non-lawyer-generated business which prepares documents and gives advice to landlords in landlord/tenant matters.

90-18: Conflict of Interest; Professional Independence of Lawyer

Contractual provisions between Department of Economic Security and County Attorney who provides representation on child support and paternity matters to the DES may violate his professional duty to exercise independent judgment, depending on whether the DES is his client.

90-14: Professional Independence of a Lawyer

Propriety of law firm compensating its non-lawyer marketing director by a base monthly fee plus quarterly bonuses. Three dissents.

90-10: Declining or Terminating Representation; Responsibilities of Supervisory Lawyer; Responsibilities of Subordinate Lawyer; Professional Independence of Lawyer

Ethical obligations of Public Defender and individual attorneys in his office who are carrying unduly high annual caseloads.

89-10: Confidentiality of Information; Conflict of Interest; Professional Independence of Lawyer

Guidelines for accepting credit cards for payment of legal fees and retainers.

87-23: Professional Independence of Lawyers; Direct Contact with Prospective Clients

Attorney participating with nonlawyer financial planner in presenting seminars for general public on financial planning, estate planning, and probate problems.

87-13: Professional Independence; Conflicts

Possible conflict or interference with professional judgment when director or public defender agency follows directions of governing body which funds the agency.

85-07: Advertising; Professional Independence Fees

Law firm may not enter into an arrangement for representation of company supplying non-lawyer agents who appear and represent clients before Department of Economic Security.