98-9.

• Case Date: October 13, 1998
• Court: Kansas

Kansas Ethics Opinion 1998. 98-9. October 13, 1998KBA Legal Ethics Opinion No. 98-9October 13, 1998 TOPIC: fee sharing with nonlawyer corporations DIGEST: If an in-house lawyer employed by a for-profit corporation is providing business-related legal services for a corporation's customers and the corporation's "charge" for such services only reimburses the corporation the cost of the employed attorney, such services may be provided by the corporation to its customers. Items of consideration are discussed to help attorneys avoid violating MRPC 5.4. Date of Request:July 30, 1998 Reference:MRPC 5.4, 5.5, 1.6 and 1.7 Boilerplate FACTS An in-house corporate lawyer works for an entity offering new product development services to inventors. The corporation wants to offer engineering and marketing services to customers regarding their invention. The corporation wants its own law department to prepare patent applications which must be filed by a registered patent attorney. Currently the corporation outsources the job of filing the patent application. The requesting attorney is not yet a registered patent attorney but will sit for the exam in late 1998. QUESTIONS 1. Can the non-patent attorney give legal advice to the corporation's customers regarding patent law and procedure? 2. Can a properly registered and qualified in-house attorney file the patent applications for the corporation's customers? ANALYSIS The business within which this request is made is fairly complex. By federal law, lawyers are not the exclusive means by which an inventor seeks and obtains patent protection. Any person, including laypersons, can give advice relative to the law and procedure for obtaining a patent. Laypersons are involved in promoting patents. Many invention submission companies are in business in this country, many run by laypersons. Only registered patent agents can represent someone before the Patent and Trademark Office concerning patent matters. [1] To become registered one must possess certain scientific training credentials and pass an exam. A J.D. is not a prerequisite. Any attorney can represent someone before the PTO on trademark matters but they must sit for, and pass, the exam. The company for which requesting counsel works is not selling a particular product or service, but rather helping persons obtain patent protections under law. The company puts under one roof the personnel with whom the patent owner wishes to work. For the combination of engineering, marketing and legal services, the corporation receives a fee. The lawyer is on salary. Preemption A preliminary issue is whether federal patent law precludes state regulation of patent "agents" and the businesses that employ them. The commerce clause of the U.S. Constitution gives patent and trademark authority to Congress. An elaborate statutory and regulatory system has been developed to regulate the patent and trademark law practice in front of the PTO. States cannot meddle in the PTO's scheme for registering patent practitioners. However, states have authority to prevent the unauthorized practice of law in their jurisdictions. [2] Prohibitions. MRPC 5.4 essentially states three fundamental rules: (1) lawyers cannot share legal fees with a nonlawyer, (2) lawyers cannot enter into a business relationship with nonlawyers if any part of the business constitutes the practice of law, and (3) lawyers cannot allow nonlawyers to influence the lawyer's professional judgment for clients. The rule has withstood equal protection and First Amendment constitutional challenges. [3] The constitution does not grant private entities and individuals the right to be represented by nonlawyers in court. [4] When a lawyer works as in house counsel for a corporation and the corporation and officers are the "client," there is no sharing of fees and the business is not the practice of law. The business is the client. When the corporate lawyer takes on the customers of the corporation as "clients" and gives legal advice, the lawyer walks into a jungle of problems. The purpose of MRPC 5.4's objection to fee splitting with nonlawyers is to protect the lawyer's independent judgment and promote the fiduciary nature of the attorney-client relationship. [5] When someone...