Qualified non-lawyer support staff is a key component to the operation of many law firms and law offices across the country. Accordingly, the lawyers in those firms have a great interest in retaining exceptional nonlawyer staff. But the Ohio Board of Professional Conduct (the “Board”), recently reminded lawyers of the ethical restrictions placed upon them when it comes to financially incentivizing these outstanding employees they seek to retain. Just last month, the Board issued Opinion 2023-11, which concludes that lawyers are prohibited from paying bonuses to nonlawyer staff when exclusively based on the staff member receiving a positive online review. While the opinion was addressed to a specific request regarding online reviews, the Board also explained why other similar arrangements are ethically impermissible.
Sharing of legal fees
As with the Model Rule adopted in most states, lawyers in Ohio are forbidden from sharing in legal fees with nonlawyers pursuant to Ohio’s Rule 5.4. The Board clarified that non-lawyers may receive bonuses in several contexts, including retirement and other compensation plans like profit-sharing agreements and annual bonuses tied to the gross fees earned by the specific lawyer they are assigned to during the year. But the Board concluded that lawyers fall out of bounds when nonlawyers participate in plans that tie the shared profits to specific clients or specific matters.
Turning to Texas and Florida for guidance, the Board suggests that lawyers may permissibly consider the following factors when assessing whether to pay a bonus to nonlawyer staff: (1) revenue, (2) expenses, (3) profit, or (4) the exceptional efforts of a nonlegal staff member. But the Opinion cautions that the Rule may be broken when bonuses are: (1) reliant on the outcome of a case, (2) based on the number of clients worked with, (3) treated as a “commission” or “referral” payment for bringing clients to the firm, (4) solely based on number of hours billed by the nonlegal staff member, or (5) based on the percentage of fees earned on any particular case. The Board explained that a managerial lawyer’s duty to supervise staff under Ohio’s Rule 5.3 requires the lawyer to be aware of when a specific staff member is providing extraordinary service to firm clients. Even so, receiving a positive online review is not necessary in deciding whether a nonlawyer employee is providing excellent service. Accordingly, the Board concluded that tying a bonus to whether the nonlawyer staff received a positive online review is prohibited as it ties the bonus to a specific client or matter.
Undue influence, intimidation, or overreaching
The Board also addressed the interplay with Ohio’s Rule 7.2(b), which prohibits giving something of value for recommending the lawyer’s services. While tying a bonus to a positive online review may not necessarily result in a violation of 7.2(b), the potential for undue influence, intimidation, or overreaching certainly exists within that type of bonus structure. For instance, if the nonlawyer staff notifies the client that their bonus is contingent upon the client posting a positive online review, the client may feel uneasy or pestered to provide the review especially if the request is made repeatedly or during the representation. The client may also feel forced to leave a positive review for fear that the quality of the representation may suffer if they don’t leave a good review. The Opinion ends with the Board advising lawyers that while “the rules do not exhaust the moral and ethical considerations that should inform a lawyer”, lawyers should avoid bonus structures that cast doubt on whether the lawyer or their nonlawyer staff has exercised undue influence, intimidation, or overreaching to advance his or her own interests.