The Indiana Supreme Court Disciplinary Commission recently advised caution for attorneys who may be approached by non-lawyer companies or out-of-state law firms offering an affiliation and fee sharing to provide legal services to Indiana clients.
Known as the “license rental” model, this practice involves a non-lawyer business or an out-of-state law firm affiliating with a licensed Indiana lawyer to offer legal services in Indiana. For a small fee and minimal involvement, the Indiana attorney’s name is used to engage in the practice of law. The out-of-state firm may create an “Office Counsel” position or another similar arrangement to nominally add the Indiana lawyer to the firm. The firm directs cases to the Indiana lawyer for a portion of the legal fees, often while requiring relatively minimal work by the Indiana lawyer.
The practice is not without its risks, the Disciplinary Commission advised. These models may result in clients being initially advised by a nonlawyer. Additionally, clients may neither directly consult with an Indiana attorney, nor be informed as to a local attorney’s relatively small fee and limited scope of involvement. Thus, attorneys risk violating Rule 5.3(b) which regulates the failure to supervise non-lawyer assistants.
The potential ethical violations are numerous and include the unauthorized practice of law, in the abdication of an attorney’s professional independence of the attorney, improper fee splitting, and the failure to supervise non-lawyers. The Indiana opinion advises that lawyers review both the legal ethics rules and the affiliation agreement before contracting with an out-of-state company or law firm.
Read the opinion here.
