Opinion ID: 1454365
Heading Depth: 1
Heading Rank: 9

Heading: twenty-eighth cause of complaint

Text: In this cause, the Bar alleged that Griffith violated former DR 1-102(A)(4), supra, and former DR 3-102 Dividing Legal Fees with Non-Lawyer (A) A lawyer or law firm shall not share legal fees with a non lawyer, except [do not apply.] [19] because of the following conduct: Griffith shared legal fees with the nonlawyer stockholders of First Northwest by allowing First Northwest to collect and keep legal fees that were owed to Griffith's law firm. Griffith's answer denied these allegations. The evidence showed that on about July 1, 1980, Wolf formed a joint venture for several individuals in the Medford area under the name of Village Joint Venture. Shortly thereafter First Northwest loaned to Village Joint Venture the sum of $959,000. In October 1981, First Northwest added to the balance due it the sum of $52,385 representing legal fees, some of which went back as far as 1978, for services rendered to some of the people that made up the joint venture. In July 1982, Columbia Pacific loaned the corporations which succeeded the joint venture $1,100,000 to retire the debt owed to First Northwest. Included in the payoff to First Northwest was the above mentioned $52,385 in attorney fees. In September 1982, the Medford people who were stockholders in the new corporations complained. At that time, Griffith refunded the sum of $25,000 to the Medford group. The balance of $27,385 was kept by First Northwest. Brookens and Hardy, who were stockholders of First Northwest, were not lawyers in any jurisdiction. The Trial Panel made the following findings: There is no evidence indicating or supporting the charge that the Accused engaged in any conduct involving dishonesty, fraud, deceit or misrepresentation with respect to the attorney's fees. Nor is there any evidence that the Accused even knew that First Northwest had collected the attorney's fees until after they had been collected and retained by First Northwest. However, when the Accused discovered that First Northwest had collected fees that were rightly the property of Accused's law firm, Accused failed to take action to see that the fees were paid to the law firm and thereby shared fees which were the property of the law firm with non-lawyers in violation of DR 3-102(A). We agree with the Trial Panel that there is no evidence supporting the charge that Griffith's conduct under this cause involved dishonesty, fraud, deceit or misrepresentation and therefore he is not guilty of violating former DR 1-102(A)(4). However, we disagree with the Trial Panel that Griffith shared attorney fees with non-lawyers. We find Griffith not guilty of violating DR 3-102(A). The prohibition of DR 3-102(A) that a lawyer    shall not share legal fees with a non-lawyer has its roots in Canon 3: A lawyer should assist in preventing the unauthorized practice of law. We may also use the Ethical Considerations to help us determine the intent of the Disciplinary Rules. In re Moore, 299 Or. 496, 507, 703 P.2d 961 (1985). [20] The Ethical Considerations which are relevant to the interpretation of DR 3-102(A) are: EC 3-1 The prohibition against the practice of law by a layman is grounded in the need of the public for integrity and competence of those who undertake to render legal services. Because of the fiduciary character of the attorney-client relationship and the inherently complex nature of our legal system, the public can be assured of the requisite responsibility and competence only if the practice of law is confined to those who are subject to the requirements and the regulations imposed upon members of the legal profession. EC 3-2 The sensitive variations in the considerations that bear on legal determinations often make it difficult even for a lawyer to exercise appropriate judgment. Competent professional judgment is the product of a trained familiarity with law and legal processes, a disciplined, analytical approach to legal problems, and a firm ethical commitment. EC 3-3 Non-lawyers who undertake to handle legal matters are not regulated as to integrity or legal competence. A lawyer is not only subject to that regulation but also is committed to high standards of ethical conduct. EC 3-4 A layman who seeks legal services often is not in a position to judge whether he will receive proper professional attention. The entrustment of a legal matter may well involve the confidences, the property, the freedom, or even the life of the client. Proper protection of members of the public demands that no person be permitted to act in the confidential and demanding capacity of a lawyer unless he is subject to the regulations of the legal profession.    EC 3-8 Since a lawyer should not aid or encourage a layman to practice law, he should not practice law in association with a layman or otherwise share legal fees with a layman.   . Canon 3 and the Ethical Considerations demonstrate that the prime purpose of DR 3-102(A) is to keep non-lawyers from practicing law. The underlying purpose is to protect the public from non-expert legal advice. In Com. On Professional Ethics v. Lawler, 342 N.W.2d 486 (Iowa 1984), the lawyer charged with unethical conduct had employed a former inmate of the Iowa Men's Reformatory as a legal assistant and investigator. The former inmate referred a current inmate to the lawyer to pursue post-conviction relief. The lawyer and the current inmate entered into an employment agreement. $1,500 was paid to the lawyer and $500 to the investigator as retainers. The lawyer was to receive $60 an hour and the investigator $25 an hour for their services. The Iowa Supreme Court suspended the lawyer for three years. After considering the above quoted portion of EC 3-8, the court said: A rationale advanced for the prohibition against sharing fees with laypersons, beyond the obvious observation that fee splitting encourages laypersons to practice law, has been stated as follows: `[T]he underlying purpose of regulating the practice of law is not so much to protect the public from having to pay fees to unqualified legal advisors as it is to protect the public against the often drastic and far reaching consequences of their inexpert legal advice. In re Baker, 8 N.J. 321, 339, 85 A.2d 505, 514 (1951).' 342 N.W.2d at 488. See also Matter of Weinroth, 100 N.J. 343, 349-350, 495 A.2d 417 (1985). We hold that DR 3-102(A) prohibits a lawyer from giving a non-lawyer a share of a legal fee in exchange for services related to the obtaining or performance of legal work. Here Griffith is accused of sharing the legal fee from the Medford Group with First Northwest. The fee in question was added to the mortgage balance due from the Medford Group to First Northwest. The Bar specifically claims that because Brookens and Hardy, non-lawyers, were shareholders in First Northwest, they shared in the legal fee. First Northwest was used only as a vehicle to collect the fee. There is no evidence that First Northwest, Brookens or Hardy did anything to generate or perform the legal services. None of them was engaged in the unauthorized practice of law. It is true that First Northwest directly, and Brookens and Hardy indirectly, had the use of the money that represented the legal fees. The money was owed to Griffith's law firm. When and how the funds should have been transmitted to the law firm is a question that is not before us. We find Griffith not guilty of the twenty-eighth cause of complaint.