NEW YORK STATE BAR ASSOCIATIONCommittee on
Opinion #461 - 03/08/1977
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
"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
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.