Opinion 461NEW YORK STATE BAR ASSOCIATION Committee on Professional Ethics
Opinion #461 – 03/08/1977 (4-77)
Client consent, fees
Topic: Fire adjuster splitting commission with lawyer
Digest: Not improper for lawyer to accept portion of commission obtained by fire adjuster in connection with loss sustained by client, provided client has consented to arrangement and all proceeds thereof are credited to client
Code: EC 2-17, 2-21; DR 2-106, 5-107(A)(2)
May a lawyer share in the proceeds of a commission obtained by a fire adjuster in connection with a loss sustained by the lawyer’s client?
The Committee does not pass on questions of law. If the proposed arrangement is illegal, it would perforce be unethical. Only if it is lawful, need we further examine its ethical implications. Thus, for the purposes of the following analysis, we assume that the fire adjuster may lawfully share the proceeds of his commission with the lawyer and that the proposed arrangement is otherwise free from any taint of illegality.In this context, we find the relevant provisions of the Code of Professional Responsibility set forth at EC 2-21 and DR 5-107(A)(2). EC 2-21 states:”A lawyer should not accept compensation or any thing of value incident to his employment or services from one other than his client without the knowledge and consent of his client after full disclosure.”DR 5-107, provides in pertinent part:”A. Except with the consent of his client after full disclosure, a lawyer shall not:”(2) Accept from one other than his client any thing of value related to his representation of or his employment by his client.”While the Code thus makes clear that a lawyer may accept compensation related to his client’s affairs from persons other than his client, its evident intention is not to augment what would otherwise be an appropriate fee for services rendered, but merely to provide alternative sources for his just compensation. See, EC 2-17, DR 2-106.Prior to adoption of the present Code, we held it was not improper for a lawyer to agree with his client that a portion of his fee would be paid out of the amount recovered for the client, notwithstanding the fact that this arrangement would effectively reduce the amount of compensation ultimately secured by the adjuster. N.Y. State 104 (1969). And, subsequent to the Code’s adoption, in somewhat analogous cases, we have held that lawyers should credit their clients with fees or discounts obtained from title companies in connection with their clients’ affairs. N.Y. State 351 (1974), N.Y. State 320 (1973).The ethics of our profession are intended, inter alia, to secure for lawyers the unwavering confidence of their clients. To that end, we have determined there is but one legitimate reason for a lawyer to become involved in his client’s affairs. It is to protect, preserve or enhance the interests of his client. And, consistent with this principle, any efforts expended by the lawyer in connection with his client’s affairs perforce must redound to the client’s advantage. Self-dealing, even with the client’s informed consent, is fundamentally inconsistent with the lawyer’s role as advocate and adviser.Where compensation is offered to the lawyer simply by virtue of the fact that he enjoys the confidence and trust of his client and is thereby in a position to employ others in his client’s affairs, overriding principles of equity and the very nature of the lawyer’s office would seem to require that any funds secured by the lawyer be credited to his client.Applying the foregoing principles and authorities, we hold that it would not be unethical for a lawyer to accept a portion of the commission obtained by a fire adjuster in connection with a loss sustained by the lawyer’s client, provided the client, with full knowledge of the facts, has consented to the arrangement and all proceeds secured therefrom by the lawyer are credited or otherwise disbursed to the client.