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 91-09
1. The leasing company is a national employee leasing company, which leases thousands of employees to businesses of all types across the country. It is paid a percentage of gross payroll calculated on a ratio of employees to volume of payroll and also provides group health and worker's compensation insurance, and withholds income taxes and FICA. The leasing company receives a payment based on the above formula for each employee in the program on a bi-weekly basis from the law firm and returns checks to the firm for distribution to employees on the first and fifteenth of each month. Bonus payments for the lawyers are also paid through the leasing company, but the leasing company's fee is a handling fee of a few hundred dollars per bonus distribution, rather than a percentage fee. All amounts paid as salary or bonus to the lawyers are determined solely by the law firm. The originator of the question has stated that in reality the leasing company performs only administration and aid to payroll generation, tax withholding and group insurance benefits.
2. The leasing company is not equipped to provide any conflict of interest determinations. Any precautions taken to avoid conflicts of interest would be by the law firms using the leasing service.
3. The leasing company does not take any precautions to insure confidentiality. The only such precautions are those undertaken by the law firms themselves, as the leasing company has no interaction with any employees of the law firm concerning client related matters.
Questions:
1. May a lawyer be employed by an employee leasing company but perform services under the direction and control of a law firm, which leases his services for the law firm?
2. May a law firm lease lawyers from an employee leasing company to perform legal services for the law firm under the direction and control of the law firm?
3. If FIRM A leases lawyers from an employee leasing company and FIRM B leases lawyers from the same employee leasing company, may those lawyers represent adverse parties in litigation without a conflict of interest?
Summary:
The Committee adopts the reasoning of ABA Formal Opinion 88-356, December 16, 1988, in its entirety, a copy of which is attached hereto and made a part hereof. (See also SC Bar Advisory Opinion 84-26 which only applies to temporary lawyers as defined in the ABA Opinion.)
Opinion:
The Committee adopts the reasoning of ABA Formal Opinion 88-356, December 16, 1988, in its entirety. (SC Bar Advisory Opinion 84-26 only applies to temporary lawyers as defined in ABA opinion.) It is assumed that the lawyers would be considered employees of the leasing company and not of the law firm for all purposes, including South Carolina law. It is further assumed that the employee leasing company is not a law firm and that it has one or more equity owners who are not lawyers. The use of an employee leasing company to obtain temporary lawyer services where the company's fee is a portion of the lawyer's compensation does not violate the Rules of Professional Conduct as long as the professional independence of the lawyer is maintained without interference by the company, the total fee by each client to the law firm is reasonable, and the arrangement otherwise is in accord with the guidelines in this opinion. 1. A lawyer may be employed by an employee leasing company to perform services under the direction and control of a law firm, which leases his services for the law firm. 2. A law firm may lease lawyers from an employee leasing company to perform legal services for the law firm under the direction and control of the law firm. 3. If FIRM A leases lawyers from an employee leasing company and FIRM B leases lawyers from the same employee leasing company, those lawyers may represent adverse parties in litigation without a conflict of interest, if the lawyers and the law firm exercise care, in accordance with the guidelines of this opinion, to avoid conflicts of interest, to maintain confidentiality of information, to disclose to clients the arrangement between the lawyer and the firm in some circumstances, and to comply with other applicable provisions of the Rules of Professional Conduct.