Supreme Judicial Court Rules  Rules of Professional Conduct Rule 5.4: Professional independence of a lawyer

A lawyer or law firm shall not share legal fees with a nonlawyer, except that: 

(1) an agreement by a lawyer with the lawyer’s firm, partner, or associate may provide for the payment of money, over a reasonable period of time after the lawyer’s death, to the lawyer’s estate or to one or more specified persons; 

(2) a lawyer who purchases the practice of a deceased, disabled, or disappeared lawyer may, pursuant to the provisions of Rule 1.17, pay to the estate or other representative of that lawyer the agreed-upon purchase price; 

(3) a lawyer or law firm may include nonlawyer employees in a compensation or retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement; and 

(4) a lawyer or law firm may agree to share a statutory or tribunal-approved fee award, or a settlement in a matter eligible for such an award, with a qualified legal assistance organization that referred the matter to the lawyer or law firm, if the client consents, after being informed that a division of fees will be made, to the sharing of the fees and the total fee is reasonable.

A lawyer shall not form a partnership or other business entity with a nonlawyer if any of the activities of the entity consist of the practice of law. 

A lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer’s professional judgment in rendering such legal services.

A lawyer shall not practice with or in the form of a limited liability entity authorized to practice law for a profit, if: 

(1) a nonlawyer owns any interest therein, except that a fiduciary representative of the estate of a lawyer may hold the stock or interest of the lawyer for a reasonable time during administration; 

(2) a nonlawyer is a corporate director or officer thereof or occupies the position of similar responsibility in any form of association other than a corporation including a limited liability company; or 

(3) a nonlawyer has the right to direct or control the professional judgment of a lawyer. 

[1] The provisions of this Rule express traditional limitations on sharing fees. These limitations are to protect the lawyer’s professional independence of judgment. Where someone other than the client pays the lawyer’s fee or salary, or recommends employment of the lawyer, that arrangement does not modify the lawyer’s obligation to the client. As stated in paragraph (c), such arrangements should not interfere with the lawyer’s professional judgment. 

[2] This Rule also expresses traditional limitations on permitting a third party to direct or regulate the lawyer’s professional judgment in rendering legal services to another. See also Rule 1.8(f) (lawyer may accept compensation from a third party as long as there is no interference with the lawyer’s independent professional judgment and the client gives informed consent). 

[3] Rule 5.4(a)(4) explicitly permits a lawyer, with the client's consent, to share certain fees with a qualified legal assistance organization that has referred the matter to the lawyer. The financial needs of these organizations, which serve important public ends, justify a limited exception to the prohibition against fee-sharing with nonlawyers. Should abuses occur in the carrying out of such arrangements, they may constitute a violation of Rule 5.4(c) or Rule 8.4(d) or (h). The permission to share fees granted by this Rule is not intended to restrict the ability of those qualified legal assistance organizations that engage in the practice of law themselves to receive a share of another lawyer's legal fees pursuant to Rule 1.5(e).