BAR ASSOCIATION OF NASSAU COUNTY
COMMITTEE ON PROFESSIONAL ETHICS
Opinion No. 1992-3
(Inquiry No. 386 )
Payment of a forwarding fee to a member of the Judiciary proportionate to the legal services rendered by the forwarding attorney before becoming a Judge.
If payment of a forwarding fee by one attorney to another would otherwise be proper, and if the right to such a fee would be enforceable by the forwarding attorney, payment of such a fee would not be rendered improper solely because the referring attorney became a member of the Judiciary after earning the fee but prior to payment. The judge should, however, liquidate all fee claims as soon as possible to avoid any appearce of impropriety.
Code of Judicial Conduct Canon 2, 5(C) & F
DR 2-107 (A}
Inquiring counsel’s firm is handling several negligence matters referred to an attorney of the firm by a then practicing attorney who is now a sitting Judge. A forwarding fee in an amount equivalent to the services actually rendered by the forwarding attorney in those matters prior to the forwarding attorney becoming a judge had been earned, but has not yet been paid to the forwarding attorney.
May an otherwise unobjectionable forwarding fee be paid by one attorney to another after the referring attorney has become a member of the Judiciary and is a sitting Judge?
On the facts presented it is not improper for inquiring counsel to pay the described fee to the former attorney now a Judge.
We assume for purposes of this analysis that, independent of the ascendancy of the forwarding attorney to the Judiciary, the “forwarding fee” described in inquiring counsel’s letter would otherwise be permitted under the provisions of DR 2-10.7. That Rule prohibits a lawyer from dividing a fee for legal services with another lawyer who is neither a partner nor an associate of the lawyer’s firm or office, unless consented to by the client after full disclosure (DR 2-107 (A) (1) ], and unless either the division is proportional to the services performed by each lawyer, or each lawyer assumes joint responsibility for the representation in writing to the client [DR 2-107 (A) (2), amd. eff. Sept. 1, 1990]. We also presume that the subject fee is neither illegal nor excessive, DR 2-106, and is not so large as to create an appearance of impropriety, EC 9-6, Canon 2 of the Code of Judicial Ethics. The described facts indicate only that the forwarding attorney is to be paid “an amount equivalent to the services rendered”.
This Committee has previously determined that a straight “referral fee” cannot be paid to a forwarding attorney for the referral alone. See, Opinions 90-14, 88-48, and New York State opinion 408. Whether the provisos of DR 2-107 are applicable here to remove the subject “forwarding fee” from the general proscription of that Rule cannot be ascertained from the limited facts supplied. As the inquiry focuses upon the status of the forwarding counsel as a sitting judge subsequent to the provision of his or her legal services to be reflected in the forwarding fee, it will be presumed that the DR 2-107 provisos do apply, and that the payment of the fee would thus have been unobjectionable had forwarding counsel remained a practicing attorney.
The question then is whether accepting the office of judge, of itself, precludes inquiring counsel from honoring, and the now member of the Judiciary from accepting performance of what is otherwise an unobjectionable, unfulfilled contractual obligation.
Because we presume applicability of provisos of DR 2-107, we further presume that the arrangement involving the forwarding attorney was not gratuitous on the part of either attorney, and that the forwarding attorney’s services gave rise to an enforceable right to payment. This presumption is critical, in view of the proscriptions against the giving and receiving of most gifts between attorneys and sitting judges.
DR 7-110(A) states that “a lawyer shall not give or lend anything of value to a judge, official, or employee of a tribunal except as permitted by Section C(4) of Canon 5 of the Code of Judicial Conduct ••• “.
Cannon 5 of the Code of Judicial Conduct establishes standards for a judge’s extra-judicial activities to minimize the risk of conflict with his judicial duties. section C of canon 5 pertains to the judge I s extra-judicial financial activities, and section C(4) referred to in DR 7-110(A) proscribes acceptance by the judge or his family residing in his household from accepting a “gift, bequest, favor, or loan from anyone”, subject to specified exceptions not applicable here.
Read in conjunction with the section of the Judicial Canon to which it refers, it is evident that the seemingly all-inclusive language of DR 7-110(A) to the effect that a “lawyer shall not give anything of value to a judge” must be understood to pertain to “things” in the nature of gifts, and not to items or fees for which the judge has given adequate consideration and has thus acquired an enforceable contract right or other entitlement at law.
This construction is reenforced by reference to EC 7-34, the Ethical Consideration parallel to DR 7-110(A) , which states “The impartiality of a public servant in our legal system may be impaired by the receipt of gifts or loans. A lawyer, therefore, is never justified in making a gift or a loan to a judge, a hearing officer, or an official or employee of a tribunal.”
Because we presume that the subject “forwarding fee” is not in the nature of a gift, but is, as the inquiry describes, in an amount equivalent to services actually rendered by the forwarding attorney who is now a judge, it is concluded that the payment by inquiring counsel and the acceptance of such payment by the judge would not contravene DR 7-110(A), EC 7-34, or Canon 5(C) of the Code of Judicial Conduct.
There remains the question as to whether the mandate of section 5 (F) of the Code of Judicial Conduct, which states that “a judge should not practice law”, impairs the ability of the inquiring attorney or the judge to perform their agreement respecting payment of an otherwise unobjectionable forwarding fee. This Committee concludes that the proscription against a judge’s practicing law is not implicated by his receipt of compensation solely for services performed prior to his or her becoming a judge.
There is no question but that any active participation by the forwarding attorney in the litigation of inquiring counsel’s cases after taking judicial office would violate section 5(F), whether or not compensation were received for the representation. Moreover, an attorney cooperating with a judge in his improper practice of the law may be found to have aided and abetted the judge’s impropriety, e.g., Matter of Bonafield, 75 N.J. 490, 383 A.2d 1143 (1978) (judge suspended for illegal practice of law, attorney aider and abettor reprimanded).
ABA Informal Opinion 433/61 found to be a violation of the ABA’s Canons of Professional Ethics the payment to a sitting judge of “customary referral fee” of one-third of a contingent fee upon settlement, where the judge made the referral while holding his judicial office and which he was prohibited from practicing law. The judge was thus found not to be “another lawyer” with whom a fee might be divided.
This Committee has previously determined that, for purposes of DR 2-107 (A), the critical period during which a recipient of divided legal fees must have been a practicing lawyer is when his or her services were rendered, not when the earned portion of the fee is paid. Opinion 90-14 approved the sharing of a fee with a forwarding attorney who had since resigned from the Bar, in proportion to the attorney’s services performed and responsibilities assumed prior to his resignation. Opinion 83-5 approved a quantum meruit division of fees between a partnership and one of its disbarred or suspended members for services rendered prior to the effective date of the disbarment or suspension. A fortiori, a forwarding attorney’s subsequent disqualification from engaging in the private practice of law due to attaining the honor of judicial appointment should not impair his or her right to receive a quantum meruit division of fees for services rendered prior thereto. A judicial oath of office does not require an abandonment of personal claims for sums due or to become due.
ABA Informal Decision C-676/63 did not disapprove per se a judge’s division of fees in personal injury matters with a successor attorney as the cases are closed out, where the division truly reflects compensation for work done and responsibility assumed by the judge prior to his appointment. The judge was admonished, however, that he “should avoid all appearances of impropriety by liquidating as soon as possible all claims that he may have for fees while he was engaged in the active practice of the law.” It was reasoned that the judge’s arrangement amounted to an investment in the fees of the law firm, which should be disposed of rapidly by payment to the judge upon fixing the amounts due. (One member of the ABA committee did not believe the judge should retain any contingent interest in fees.)
Similarly, ABA Informal opinion 1215/72 approved the receipt by a sitting judge of a proposed share of a contingent fee for a matter that he had investigated, researched and filed prior to notification of his appointment as a state judge. Prior to his taking the oath and assuming his judicial duties, he arranged for another firm to handle the case if it had not settled by then. He rendered additional services in the interim, and thereafter the successor firm litigated the matter until it was settled. Finding that the fee in question was not illegal or clearly excessive (DR 2-106), and that the division was permissible under DR 2-107, the Opinion stated:
The fact that initial counsel became a judge and because his involvement with this case properly ended on that account should not prejudice his right to just and fair compensation for those services he rendered. He accepted the case before his court appointment.
Citing Informal Decision C-676/63, supra, Informal opinion 1215/72 repeated the ABA Committee’s prior admonishment that this type of investment in a law firm’s fees “should be disposed of as rapidly as possible”, and that “[a} judge should avoid all appearance of impropriety by liquidating as soon as possible all claims that he may have for fees while he was engaged in the active practice of law.”
We note that prompt liquidation of outstanding claims for fees that were earned by a judge prior to assuming office is counselled even where no contingency factor is involved. While the absence of a contingent fee arrangement may remove the troublesome “investment” element, the perpetuation of a debtor-creditor relationship between a practicing member of the bar and a member of the judiciary arising from unpaid fees for services rendered is not calculated to promote public confidence in the legal systems. See generally, EC 9-1, and Canon 2 of the Code of Judicial Conduct. Indeed, inquiring counsel and the judge/forwarding attorney may well transgress their respective ethical obligations by not performing their arrangement by payment of the “forwarding fee” at the earliest available opportunity, so to avoid any adverse inference as to the judge’s impartiality that might arise from the existence of inquiring counsel’s unpaid indebtedness to the judge.
[Approved by the Executive Subcommittee on approved by the Full Committee on 2/19/92]