Opinion 89-5
(March 1989)
 
You have inquired of the Professional Guidance Committee as to whether Rule 5.4 of the Rules of Professional Conduct pertaining to the Professional Independence of a Lawyer would prohibit a particular agreement between two attorneys regarding the purchase by one of the other's practice at his death. Specifically, as we understand it, attorney X and attorney Y are planning to enter into an agreement to the effect that Y will purchase X's largely personal injury/contingent fee practice at X's death and will, thereafter, pay X's wife fifty percent of any fees collected by Y plus reimbursement of case costs advanced by X during his lifetime to the extent Y is so reimbursed.
 
Rule 5.4(a) generally forbids a lawyer from sharing legal fees with a non-lawyer 1.
 
There are three distinct exceptions to this general rule, only one of which would appear to squarely address the proposed agreement you have outlined. Rule 5.4(a)(2) provides:
 
(2) 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 which fairly represents the services rendered by the deceased lawyer ... Rule 5.4(a)(20).
 
As worded, Rule 5.4(a)(2) would appear to pose several obstacles to the agreement between X and Y.
 
First, your letter of inquiry indicates that Y's remittance of fees is to be made to X's wife rather than his estate. To the extent this subparagraph of the Rule permits fee sharing with a non-lawyer, it is limited explicitly to the estate of the deceased lawyer. You correctly point out that the companion provisions of Rule 5.4(a)(1) governing agreements for the payment of money by a deceased lawyer's firm, partner or associate to the lawyer's estate or to one or more specified persons would appear to permit payments to beneficiaries other than a deceased lawyer's estate. Obviously, however, the agreement X and Y propose to make is not of the type contemplated by Rule 5.4(a)(1). Moreover, the specific inclusion of the phrase or to one or more specified persons in subparagraph (1) of Rule 5.4(a) and the omission of the same phrase from subparagraph (2) suggest that the drafters of the Rule intended specifically to preclude payments to any person or entity other than the deceased lawyer's estate. A possible rationale for this distinction lies in the fact that subparagraph (1) addresses the payment of money, a phrase which may or may not include remittances of earned fees while subparagraph (2) is geared strictly to compensation (fees) earned by a lawyer before his death.
 
A second obstacle identified by the Committee is the language of Rule 5.4(a)(2) that payments to the estate must be that proportion of the total compensation which fairly represents the services rendered by the deceased lawyer .... The agreement between X and Y, however, provides that the payments by Y to X's wife are to be 50% of Y's fee .... The Committee is not prepared to opine that a flat fifty percent split of such a fee would not fairly represent the services rendered by the deceased lawyer. The Committee acknowledges that considerations other than the mechanical tasks of lawyering go into the concept of services rendered, one such consideration being, as you have pointed out, the ability to obtain the case in the first place. Unfortunately, neither the comments to Rule 5.4(a) which do not have the force of law in Pennsylvania in any event nor the comparable prior provisions of the Code of Professional Responsibility provide any particular guidance on this point 2. The Committee does wish to point out, however, that Rule 5.4(a)(2) is keyed to the concept of proportionality and any agreement to share fees on a flat percentage with a nonlawyer otherwise permissible under this subparagraph basis could run afoul of this concept.
 
Your letter of inquiry also does not make it clear that the agreement between X and Y contemplates that Y will remit fifty percent of collected fees to X's wife on X's cases only. We have assumed, however, that this was the intent of the agreement and wish only to remind you that any agreement between X and Y, if it can be made otherwise permissible under the Rules, should be explicit on this score.
 
Finally, it is the Committee's feeling that consistent with the general emphasis of the Rules in favor of disclosure, X's clients, upon his death, should be informed of the agreement between X and Y and given the option of electing whether their case is to remain with Y after X's death.
Notes

1. We have assumed, for purposes of responding to this Inquiry, that X's wife is a non-lawyer.

2. The Code provision, DR3-102(A)(2) was identical to Rule 5.4(a)(2). However, Ethical Consideration 3-8 of Canon 3 did indicate: [T]his does not mean, however, that the pecuniary value of the interest of a deceased lawyer in his firm or practice may not be paid to his estate or a specified person such as his widow or heirs.

The Philadelphia Bar Association's Professional Guidance Committee provides, upon request, advice for lawyers facing or anticipating facing ethical dilemmas. Advice is based on the consideration of the facts of the particular inquirer's situation and the Rules of Professional Conduct as promulgated by the Supreme Court of Pennsylvania. The Committee's opinions are advisory only and are based upon the facts set forth. The opinions are not binding upon the Disciplinary Board of the Supreme Court of Pennsylvania or any other Court. They carry only such weight as an appropriate reviewing authority may choose to give it.