Professional Guidelines

An agency of the Supreme Court of Virginia

The Virginia State Bar

Professional Guidelines

Rule 5.4

Professional Independence Of A Lawyer

  • (a) A lawyer or law firm shall not share legal fees with a nonlawyer, except that:
    • (1) an agreement by a lawyer with the lawyer's firm, partner, or associate may provide for the payment of money, over a reasonable period of time after the lawyer's death, to the lawyer's estate or to one or more specified persons;
    • (2) a lawyer who undertakes to complete unfinished legal business of a deceased, disabled, or disappeared lawyer may pay to the estate or other representative of that lawyer that portion of the total compensation that fairly represents the services rendered by the deceased, disabled or disappeared lawyer;
    • (3) a lawyer or law firm may include nonlawyer employees in a compensation or retirement plan, even though the plan is based in whole or in part on a profitsharing arrangement; and
    • (4) a lawyer may accept discounted payment of his fee from a credit card company on behalf of a client.
  • (b) A lawyer shall not form a partnership with a nonlawyer if any of the activities of the partnership consist of the practice of law.
  • (c) A lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer's professional judgment in rendering such legal services.
  • (d) A lawyer shall not practice with or in the form of a professional corporation or association authorized to practice law for a profit, if:
    • (1) a nonlawyer owns any interest therein, except as provided in (a)(3) above, or except that a fiduciary representative of the estate of a lawyer may hold the stock or interest of the lawyer for a reasonable time during administration;
    • (2) a nonlawyer is a corporate director or officer thereof, except as permitted by law; or
    • (3) a nonlawyer has the right to direct or control the professional judgment of a lawyer.

Comment

[1] The provisions of this Rule express traditional limitations on sharing fees. These limitations are to protect the lawyer's professional independence of judgment. Where someone other than the client pays the lawyer's fee or salary or recommends employment of the lawyer, that arrangement does not modify the lawyer's obligation to the client. As stated in paragraph (c), such arrangements should not interfere with the lawyer's professional judgment. See also Rule 1.8(f).

Virginia Code Comparison

Paragraph (a)(1) is identical to DR 3-102(A)(1).

Paragraph (a)(2) is substantially similar to DR 3-102(A)(2) which stated: "A lawyer who undertakes to complete unfinished legal business of a deceased lawyer may pay to the estate of the deceased lawyer that proportion of the total compensation that fairly represents the services rendered by the deceased lawyer."

Paragraph (a)(3) is substantially the same as DR 3-102(A)(3).

Paragraph (a)(4) had no counterpart in the Virginia Code.

Paragraph (b) is identical to DR 3-103(A).

Paragraph (c) is identical to DR 5-106(B).

Paragraph (d) is identical to DR 5-106(C).

Committee Commentary

Paragraph (d)(2) was amended to reflect Virginia Code §54.1-3902(B)(1), which creates an exception to the general rule that a nonlawyer may not be a director or officer of a professional corporation, professional limited liability company, or registered limited liability partnership that provides legal services.

The ABA Model Rule generally paralleled various Disciplinary Rules.

The amendments effective January 1, 2004, added paragraph (a)(4).

Amendments effective November 1, 2013, revised paragraph (d)(2) in light of legal authority permitting a nonlawyer to serve as the secretary, treasurer, office manager, or business manager of a professional entity that is authorized to practice law, notwithstanding the Rule’s prohibition against a lawyer practicing in a law firm in which a nonlawyer serves as a corporate officer.

Updated: November 5, 2013