August 23, 1990
Subject: Division of fees with "of counsel" lawyer.
Summary: A lawyer listed as "of counsel" is not a member of the law firm and any division of fees must satisfy the requirements of Rule 1.5(e).
It is the opinion of the Ethics Committee of the State Bar of South Dakota that the relationship known as of counsel is that of an independent contractor and as such the of counsel lawyer is not a member nor associate nor outside consultant of a firm. Therefore, a division of fees may be made between the firm and such an of counsel lawyer only if the criteria of Rule 1.5(e)(1), (2) and (3) are met. As cited by Committee Member Michael S. McKnight, Arizona Ethics Opinion 86-3 (3-1-86) and District of Columbia Ethics Opinion 197 (1-17-89) are in conformity with this view. Mr. McKnight also points out Texas Ethics Opinion 450 (11-5-87) which appears to state a minority view that so long as the of counsel relationship with the firm is publicly represented, and there is a regular, continuing and substantial relationship with the firm, Rule 1.5 does not apply. Texas appears to treat and of counsel lawyer as a member of the firm for purposes of Rule 1.5.
It is the opinion of this Committee that the of counsel lawyer in South Dakota is not a member of a firm and therefore any division of fees must satisfy Rule 1.5(e) (1), (2) and (5).
Donald E. Covey
Chair, Ethics Committee