021413 RIEO, 13-01

• Case Date: February 14, 2013
• Court: Rhode Island

13-01 Opinion No. 2013-01 Rhode Island Ethics Opinions Rhode Island Supreme Court February 14, 2013          FACTS:          The inquiring attorney manages several of his/her law firm’s office locations. The law firm plans to hire an experienced “claims adjuster/paralegal.” The adjuster will be a full-time employee of the law firm. He or she would have normal paralegal duties, such as calling the firm’s clients to track medical appointments and medical treatment, requesting medical bills and reports, and sending bills and reports to insurance companies. Under the inquiring attorney’s direct supervision, the claims adjuster/paralegal also will communicate with insurance company adjusters about claims, draft demand letters, and negotiate settlements. The inquiring attorney states that the adjuster will have no authority to send out demand letters to insurance company claims adjusters, or to negotiate any settlement, without the inquiring attorney’s authority. The inquiring attorney states that only the inquiring attorney will review settlement offers with clients. He/she further states that the inquiring attorney will make recommendations about settlement to clients and that the ultimate decisions about settlement will be made by the clients.          The law firm proposes to pay the adjuster/paralegal a base salary, plus a quarterly bonus. The bonus will be calculated on the basis of four factors, “including but not limited to things such as:

1.) Their attitude displayed toward my other staff and my clients;

2.) The number of cases they assist me in settling;

3.) The fees generated from said settled cases; and

4.) The improvement displayed in the [City X] office in a number of criteria including but not limited to a) getting the staff to obtain medical records in a more timely fashion, and b) getting the staff to get demand letters out to insurers.”

The inquiring attorney asks whether the proposed compensation is permissible.

         ISSUE PRESENTED:          May the inquiring attorney’s law firm base the adjuster/paralegal’s quarterly bonus on the number of cases that the adjuster/paralegal assists in settling, and on the attorney’s fees generated from those cases?          OPINION:          No. The proposed compensation arrangement is a fee-sharing arrangement with a nonlawyer, and violates Rule 5.4(a) of the Rules of Professional Conduct.          REASONING:          Rule 5.4 entitled “Professional independence of a...