ETHICS COMMITTEE OPINION NO. 18-02 THIS OPINION IS ADVISORY ONLY
FACTS An attorney licensed in North Dakota, who practices and resides out-of-state in Texas( Texas attorney), engages in a joint venture with another attorney who is licensed in and resides in North Dakota. The purpose of the joint venture is to represent clients in North Dakota cases.
The Texas attorney is the only attorney in his firm that is licensed in North Dakota. This attorney is leaving that firm(“ former firm”). North Dakota clients have signed new contracts so they remain clients of the Texas attorney as well as the attorney who currently resides and practices in North Dakota. These contracts are contingency fee contracts. The former firm is asking for a percentage of the contingency fee as a requirement to release their interests or alleged interests in the firm’ s former clients’ cases.
QUESTIONS PRESENTED Under the North Dakota Rules of Professional Conduct, is it required that the Texas attorney share contingency fees with the former firm:
1. If no other attorneys at the former firm are licensed in North Dakota; and
2. If there is no current contract or joint responsibility agreement signed by the client?
OPINION I. APPLICABLE NORTH DAKOTA RULES OF
PROFESSIONAL CONDUCT
North Dakota Rules of Professional Conduct, Rule 1.5( Fees) and Rule 5.6( Restrictions on Right to Practice) are most applicable in this case.
In pertinent part, the Rules state: Rule 1.5( e) A division of fee between lawyers who are not in the same firm may be made only if:( 1) the division of fee is in proportion to the services performed by each lawyer or each lawyer, by written agreement, assumes joint responsibility for the representation....
Rule 5.6 A lawyer shall not participate in offering or making:( a) a partnership, shareholders, operating, employment, or other similar type of agreement that restricts the right of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon such termination....
Comment: [ 1 ] An agreement restricting the right of lawyers to practice after leaving a firm not only limits their professional autonomy but also limits the freedom of clients to choose a lawyer. Paragraph( a) prohibits such agreements except for restrictions incident to provisions concerning benefits after termination of a relationship with the firm.
II. DISCUSSION Whether the former firm has no other attorneys licensed in North Dakota is not applicable to the situation because, regardless of the former firm’ s out-of-state licenses, this type of agreement would violate the North Dakota Rules of Professional Conduct.
a. Rule 1.5 North Dakota’ s Rule 1.5 prohibits a division of fees between attorneys who are not in the same firm if that fee is not proportional to the services performed by each attorney or each attorney has not agreed in writing to assume joint responsibility for the representation. This rule would apply because the Texas attorney will no longer be in the same firm as the attorneys( former firm) who are requesting a portion of the fees.
Rule 1.5 allows a division of fees between firms if the fee is proportional to the services performed by each attorney. Therefore, if there was a prior agreement with a client for a matter under which the former firm has already rendered services to the client but has not been compensated, it may be necessary to compensate the former firm based on the portion of the work completed for the same matter. Based on the facts given, the percentage of fee is not based on work performed by the former firm; it is a percentage of the contingency fee earned after the Texas attorney leaves former firm based on releasing interests as opposed to work performed.
Another avenue where the former firm may be compensated would be if the former firm and the Texas attorney assume joint responsibility for the representation. The American Bar Association issued ABA Formal Opinion 474 in April 2016 advising on Rule 1.5 of the Model Rules. The North Dakota rule follows form to this rule. In that opinion, the ABA cites Comment 7 of the Model Rule, which states:“ Joint responsibility for the representation entails financial and ethical responsibility for the representation as if the lawyers were associated in a partnership.” Presumably, then, joint responsibility would be synonymous with joint representation.
It does not appear there has been any joint responsibility assumed by the former firm. Unless there are proportional fees owed for services rendered, the fees the former firm are requesting do not comply with Rule 1.5.
b. Rule 5.6 North Dakota’ s Rule 5.6 prohibits attorneys from offering or making an agreement that would restrict the attorney’ s right to practice and thereby limiting an attorney’ s professional autonomy as well as
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