Publication Date

2018

Journal

University of Illinois Law Review

Abstract

Attorneys in the United States are under increasing pressure to change and adopt practices commonly found in the world of finance and business. Over the past thirty years, the bar and legal academics have debated what to do; the focus of this debate has been whether to change Model Rule of Professional Conduct 5.4 to allow partnerships between attorneys and nonlawyers or partnerships owned by nonlawyer shareholders.

One of the reasons attorneys are debating changes to Rule 5.4 is that the practice of law depends on capital, and the old methods for raising capital are no longer sufficient. Rather than raise capital from nonlawyers by partnering with them or selling equity to them, this Article recommends that attorneys look to their own fees as a source of capital.

This Article argues that there is confusion among state bar ethics committees and some ethics commentators about whether the sale of future, or unmatured, fees is unethical. The argument that lawyers may not sell unmatured fees is based on the claim that it would be fee-splitting. This Article argues that those who think that the sale of unmatured fees is fee-splitting are relying on a theory ofRule 5.4 called the Direct Relation Test, which takes as its premise that it is unethical for an attorney to allow a nonlawyer to invest in her productive capacities with the aim of earning a profit. This Article argues that the Direct Relation Test is incoherent and cannot be consistently maintained in a system, like ours, that allows attorneys to factor their earned fees. This Article also argues that the Direct Relation Test is a deontological principle that lacks normative appeal.

This Article concludes that ethics committees, courts, and legal ethicists should reject the Direct Relation Test and recognize that the sale of unmatured fees is not fee-splitting.

Volume

2018

Issue

4

First Page

1207

Last Page

1254

Publisher

University of Illinois College of Law

Disciplines

Intellectual Property Law | Law | Law and Politics | Legal Profession

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