Ethical issues may be raised when working with outside counsel. The following are examples relevant in California and are not exhaustive.
Fee Splitting – Payment of an outside firm or Attorney for work on a client’s matter is not a division of fees triggering fee splitting requirements pursuant to California Rule of Professional Conduct 2-200, where:
- the amount paid to the outside Attorney is not bargained for or based on the fee paid by the client to Attorney;
- the outside Attorney has no expectation of recieving a percentage fee; and
- the fee paid to the outside Attorney is compensated for work performed and is paid whether or not Attorney is paid by the client. See California State Bar Formal Opn. No. 1994-138; Chambers v. Kay (2002) 29 Cal. 4th 142 [126 Cal.Rptr.2d. 536].
Confidentiality – Any outside contract lawyer must comply with the ethical rules concerning competence, confidentiality, and conflicts of interest. SeeˆState Bar of California Standing Committee on Professional Responsibility And Conduct Formal Opinion No. 2004-165.
Disclosure Relating to Fees or a Significant Development – Consent in writing after full disclosure is required where an additional Attorney proposed is not an Associate and the client’s fee is being divided with the additional Attorney, or if the law office charges the outside lawyers’s fee to the client as a disbursement. Whether utilization of another Attorney constitutes a “significant development” in California requiring disclosure depends on a number of factors and is determined on a case-by-case basis. Those factors are:
- whether responsibility for overseeing the client’s matter is being changed;
- whether the new attorney will be performing a significant portion of the work;
- whether staffing has been changed from what was specifically represented to the client:
- whether staffing is different from the client’s reasonable expectation or;
- whether the change in staffing increases clients’s cost. CA Rules of Professional Conduct Rule 3-500; CA Bus. & Prof. Code §6068(m).