Please explain the prohibition of fee sharing between lawyers and paralegals/legal assistants, as well as the exceptions.
What will be an ideal response?
Both the Model Rules, in MR 5.4, and the Mode Code, in DR 3-102, prohibit lawyers from sharing legal fees with nonlawyers. That covers nonlawyer employees. The policy behind such a prohibition involves protecting the professional judgment of lawyers. Namely, if a paralegal/legal assistant were allowed to directly share in the lawyer’s fee, the paralegal/legal assistant’s work might be slanted in a way that could be detrimental to the client. The lawyer’s work, although highly compensated, must be done with professional objectivity, and the rules prohibit fee sharing between lawyers and nonlawyers to protect the lawyer’s judgment from being tainted by those whose judgment might be tainted if their performance was directly tied to fees. [This is not to say that paralegals/legal assistants would automatically lose objectivity if allowed to share in fees.] An example of illegal fee sharing would be if a plaintiff’s lawyer were to pay his or her paralegal/legal assistant a percentage of the settlements reached in cases that were brought in by the paralegal/legal assistant.
The exceptions that most directly concern paralegals/legal assistants is the allowance of including nonlawyer employees in retirement or compensation schemes. This means that paralegals may be the beneficiaries of retirement plans, such as a 401(k), or also of bonuses. But in order for such compensation schemes to be valid, the extra compensation generally needs to be paid from the net proceeds of earned legal fees, and the extra compensation needs to come from the general success of the firm, not from a specific success. For example, a bonus could be paid to a paralegal/legal assistant, but it should not be tied to a specific case
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