UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.
Ethics Advisory Opinion 02-18
A law firm wants to hire a non-lawyer employee (“lobbyist”) to assist current and future clients in their lobbying efforts with state governmental entities. The lobbyist would not handle any legal files or give legal advice and would provide no services that could be construed as those of a paralegal. Furthermore, the lobbyist would be solely limited to assisting the firm’s clients when interacting with state governmental entities.
The lobbyist would have no ownership interest in the firm and no control over any aspect of the firm’s functions. Moreover, the firm itself would determine which clients the lobbyist could assist.
The lobbyist’s business cards and the firm’s letterhead would clearly designate the lobbyist was neither a lawyer nor partner/shareholder of the firm, but was employed solely to provide “governmental assistance.”
For work performed by the lobbyist, the firm would collect payment and place this payment into a bank account, separate from the firm’s general and trust accounts. Only funds from the lobbyist’s lobbying activities would be deposited in this account. The firm would pay any lobbying-related expenses and then pay the lobbyist out of the remaining funds. Legal fees collected from any client who utilized both the firm’s legal and lobbying services would be deposited in either the firm’s general or trust accounts and would not be used to compensate the lobbyist.
Question
Given the hiring scheme described in the inquiry, under the South Carolina Rules of Professional Conduct is a law firm permitted to hire a non-lawyer lobbyist as an employee of the firm?
Summary
Pursuant to the South Carolina Rules of Professional Conduct a firm is permitted to hire a non-lawyer lobbyist as an employee. Under the facts presented in this inquiry, the inclusion of the lobbyist in the firm would not cause the firm to violate:
1) Rule 5.5(b), SCRPC, because the lobbyist, a non-member of the bar, would not be engaged in the unauthorized practice of law;
2) Rule 5.4(d), SCRPC, because the lobbyist would not have control over the independent judgment of lawyers within the firm;
3) Rules 7.1(a) or 7.5(a), SCRPC, because the firm’s advertisements, with respect to the lobbyist’s presence within the firm, would not be misleading; or
4) Rule 5.4(a)(3), SCRPC, because the firm would not be improperly splitting legal fees with the lobbyist.
Opinion
Unauthorized Practice of Law [Rule 5.5(b)]
Rule 5.5(b), SCRPC, provides “[a] lawyer shall not: assist a person who is not a member of the bar in the performance of activity that constitutes the unauthorized practice of law.” The question of whether a particular activity constitutes the unauthorized practice of law is a legal question about which this Committee offers no opinion. See L.W. Linder v. Ins. Claims Consultants, Inc., 348 S.C. 477, 560 S.E.2d 612 (2002); S.C. Code Ann. § 40-5-320 (2001); S.C. Bar Ethics Adv. Op. # 02-04. However, the facts provided in this inquiry leads this Committee to conclude that so long as the lobbyist’s activities are strictly confined to assisting clients with their lobbying efforts, and the lobbyist would not handle any legal files, give legal advice, or have duties that might be associated with the work of a legal professional, the lobbyist is not likely to have engaged in the unauthorized practice of law. And, therefore, the firm will not have violated Rule 5.5(b), SCRPC. See, e.g., In re Deddish, 347 S.C. 614, 557 S.E.2d 655 (2001); Doe v. Condon, 341 S.C. 22, 532 S.E.2d 879 (2000); S.C. Bar Ethics Adv. Op. # 91-04; 90-03.
Lawyer’s Professional Independence [Rule 5.4(d)]
Rule 5.4(d), SCRPC, states a lawyer is not permitted to form or practice with a professional corporation for profit if: “(1) a nonlawyer owns any interest therein . . . ; (2) a nonlawyer is a corporate director or officer thereof; or (3) a nonlawyer has the right to direct or control the professional judgment of a lawyer.” According to the facts provided in this inquiry, the lobbyist will neither own any interest in the firm, nor have control over any aspect of the firm’s functions. Furthermore, assuming the lobbyist would not serve as a “corporate director or officer” within the firm, hiring the lobbyist to work for the firm should in no way violate Rule 5.4(d), SCRPC. See, e.g., S.C. Bar Ethics Adv. Op. # 02-04; 99-07; 91-04.
Lawyer Advertising [Rules 7.1(a) & 7.5(a)]
Rule 7.1(a), SCRPC, provides a communication by a lawyer violates Rule 7.1 if the communication “contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading.” Rule 7.5(a), SCRPC, provides “[a] lawyer shall not use a . . . letterhead or other professional designation that violates Rule 7.1.” The facts in this inquiry indicate the firm’s letterhead and the lobbyist’s business cards would clearly designate the lobbyist was neither a lawyer nor partner/shareholder within the firm, but rather was employed solely to provide the firm’s clients with “governmental assistance.” Assuming the firm’s other communications were handled similarly, the inclusion of the lobbyist’s name on the firm’s letterhead, and the lobbyist’s use of firm business cards would not violate either Rule 7.1(a) or 7.5(a), SCRPC. See, e.g., S.C. Bar Ethics Adv. Op. # 98-31; 96-01.
Fee Splitting with Non-Lawyers [Rule 5.4(a)(3)]
Rule 5.4(a)(3), SCRPC, provides “[a] . . . law firm shall not share legal fees with a nonlawyer, except that: . . . nonlawyer employees [may be included] in a compensation or retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement.” The facts in this inquiry indicate the firm would collect lobbying fees and place these payments into a bank account separate from the firm’s general and trust accounts. Only lobbying fees would be deposited in this account. The firm would pay any firm-related expenses and then pay the lobbyist a percentage of the remaining funds (profit). Legal fees collected from a client would neither be deposited in this separate lobbying account, nor used to compensate the lobbyist. Pursuant to this detailed arrangement, the firm would not violate Rule 5.4(a)(3), SCRPC. See, e.g., Deddish, 347 S.C. 614, 557 S.E.2d 655 (2001); S.C. Bar Ethics Adv. Op. # 92-03; 91-32; cf. Doe, 341 S.C. at 28-29, 532 S.E.2d at 883 (holding law firm compensating a paralegal based on the “volume and types of cases [the paralegal] ‘handles’” violates Rule 5.4, SCRPC); In re Anonymous Member of South Carolina Bar, 295 S.C. 25, 28, 367 S.E.2d 17, 18 (1988) (indicating “compensation plans [for nonlawyer employees] based upon a percentage of the profits or untied to a percentage of a particular legal fee may be permissible” (emphasis added)).