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End-of-life notice: American Legal Ethics Library

As of March 1, 2013, the Legal Information Institute is no longer maintaining the information in the American Legal Ethics Library. It is no longer possible for us to maintain it at a level of completeness and accuracy given its staffing needs. It is very possible that we will revive it at a future time. At this point, it is in need of a complete technological renovation and reworking of the "correspondent firm" model which successfully sustained it for many years.

Many people have contributed time and effort to the project over the years, and we would like to thank them. In particular, Roger Cramton and Peter Martin not only conceived ALEL but gave much of their own labor to it. We are also grateful to Brad Wendel for his editorial contributions, to Brian Toohey and all at Jones Day for their efforts, and to all of our correspondents and contributors. Thank you.

We regret any inconvenience.

Some portions of the collection may already be severely out of date, so please be cautious in your use of this material.


Pennsylvania Legal Ethics

V. LAW FIRMS AND ASSOCIATIONS

5.1   Rule 5.1 Responsibilities of a Partner and Supervisory Lawyer

5.1:100   Comparative Analysis of Pennsylvania Rule

Primary Pennsylvania References: PA Rule 5.1
Background References: ABA Model Rule 5.1, Other Jurisdictions
Commentary:

5.1:101      Model Rule Comparison

PA-R 5.1 is substantively the same as the Model Rule. However, Pennsylvania has not adopted in its entirety the Model Rule comments to Rule 5.1. Pennsylvania omits any explanatory comments to subparagraphs (a) and (b) of Rule 5.1.

5.1:102      Model Code Comparison

There is no direct counterpart to this Rule in the Model Code. However, DR 1-103(A) does provide that "[a] lawyer possessing unprivileged knowledge of a violation of DR 1-102 shall report such knowledge to a tribunal or other authority empowered to investigate or act upon such violation." This is similar to a Pennsylvania lawyer's obligation under PA-R 5.1(c)(2) to take "reasonable remedial action" for conduct which violates the Rules of Professional Conduct.

5.1:200   Duty of Partners to Monitor Compliance with Professional Rules

Primary Pennsylvania References: PA Rule 5.1
Background References: ABA Model Rule 5.1(a), Other Jurisdictions
Commentary: ABA/BNA 91:201, ALI-LGL 12, Wolfram 16.2

Although few opinions in Pennsylvania consider the scope of the duty to supervise, this duty clearly can extend beyond the physical confines of an individual partner's office. Phila. Eth. Op. 93-29 (1994) (duty to supervise others extends to those at a second professional corporation, comprised of law firm's satellite offices). This supervisory duty can also extend through two or more law firms. Phila. Eth. Op. 89-19 (1989) (noting the duty of a partner to supervise individuals in more than one law firm when the individual is a partner in more than one firm).

5.1:300   Monitoring Duty of Supervising Lawyer

Primary Pennsylvania References: PA Rule 5.1(b)
Background References: ABA Model Rule 5.1(b), Other Jurisdictions
Commentary: ABA/BNA 91:201, ALI-LGL 12, Wolfram 16.2

5.1:400   Failing to Rectify the Misconduct of a Subordinate Lawyer

Primary Pennsylvania References: PA Rule 5.1(c)
Background References: ABA Model Rule 5.1(c), Other Jurisdictions
Commentary: ABA/BNA 91:201, ALI-LGL 5, Wolfram 16.2

PA-R 5.1(c)(1) expresses a general principle of responsibility for the acts of another. Phila. Eth. Op. 94-16 (1995) (associates who are admitted and practicing in Pennsylvania for law firm of a different state would be responsible for any ethical violations committed by non-resident partners of the firm).

5.1:500   Vicarious Liability of Partners

Primary Pennsylvania References: PA Rule 5.1
Background References: ABA Model Rule 5.1, Other Jurisdictions
Commentary: ABA/BNA 91:201, ALI-LGL 8, 10

A lawyer who takes a leave of absence should nonetheless stay in regular contact with the office even if supervision of cases has been delegated to other lawyers. Phila. Eth. Op. 88-14 (1988).

5.2   Rule 5.2 Responsibilities of a Subordinate Lawyer

5.2:100   Comparative Analysis of Pennsylvania Rule

Primary Pennsylvania References: PA Rule 5.2
Background References: ABA Model Rule 5.2, Other Jurisdictions
Commentary:

5.2:101      Model Rule Comparison

PA-R 5.2, and comments thereto, are the same as the Model Rule and its comments.

5.2:102      Model Code Comparison

There is no counterpart to PA-R 5.2 in the Code.

5.2:200   Independent Responsibility of a Subordinate Lawyer

Primary Pennsylvania References: PA Rule 5.2
Background References: ABA Model Rule 5.2(a), Other Jurisdictions
Commentary: ABA/BNA 91:201, ALI-LGL 5, Wolfram 16.2

Reliance on a supervisor's decision will be relevant in determining whether a lawyer had the knowledge required for a violation of the Rules. See Phila. Eth. Op. 94-16 (1995) (warning that both Pennsylvania associates and the out-of-state partners of a firm must comply with, and are subject to Rule 5.2; supervising attorney's instruction to subordinate lawyer not to disclose settlement offer did not release subordinate lawyer from ethical responsibility to disclose); Phila. Eth. Op. 94-25 (1994) (a lawyer must advise a client of a settlement offer, even when the lawyer's supervisor directs the lawyer otherwise).

5.2:300   Reliance on a Supervisor's Resolution of Arguable Ethical Issues

Primary Pennsylvania References: PA Rule 5.2
Background References: ABA Model Rule 5.2(b), Other Jurisdictions
Commentary: ABA/BNA 91:201, ALI-LGL 5, Wolfram 16.2

When an ethical matter involves a matter of professional judgment, a supervisor may assume responsibility for making the judgment call. However, if the question can reasonably be answered in only one way, both supervisor and subordinate are equally responsible for fulfilling the ethical duty. Phila. Eth. Op. 94-25 (1994).

5.3   Rule 5.3 Responsibilities Regarding Nonlawyer Assistants

5.3:100   Comparative Analysis of Pennsylvania Rule

Primary Pennsylvania References: PA Rule 5.3
Background References: ABA Model Rule 5.3, Other Jurisdictions
Commentary:

5.3:101      Model Rule Comparison

PA-R 5.3 is substantively the same as MR 5.3.

The Pennsylvania Rule does, however, contain two additional comments that are absent from the Model Rule comments. The first clarifies the need for partners in law firms to affirmatively establish measures to ensure that each person's conduct is compatible with the professional obligations of the lawyer. The second comment explains that any lawyer with direct supervisory authority over a nonlawyer must make reasonable efforts to ensure that person's conduct is compatible with the professional obligations of the lawyer.

5.3:102      Model Code Comparison

While there is no direct counterpart to this Rule in the Model Code, DR 4-101(D) does provide that "[a] lawyer shall exercise reasonable care to prevent his employees, associates, and others whose services are utilized by him from disclosing or using confidences or secrets of a client . . . ." Moreover, DR 7-107(J) provides that "[a] lawyer shall exercise reasonable care to prevent his employees and associates from making an extrajudicial statement that he would be prohibited from making under DR 7-107." The broad language of PA-R 5.3 probably includes the instruction of both these Disciplinary Rules.

5.3:200   Duty to Establish Safeguards

Primary Pennsylvania References: PA Rule 5.3
Background References: ABA Model Rule 5.3(a), Other Jurisdictions
Commentary: ABA/BNA 91:201, ALI-LGL 4, 5, Wolfram 16.3

The duty to establish and maintain safeguards does not end in the lawyer's absence. Phila. Eth. Op. 88-14 (1988) (during extended leave of absence from practice, lawyer still responsible for supervising subordinates who will be there in his absence).

5.3:300   Duty to Control Nonlawyer Assistants

Primary Pennsylvania References: PA Rule 5.3
Background References: ABA Model Rule 5.3(b), Other Jurisdictions
Commentary: ABA/BNA 21:8601, ALI-LGL 4, 5, Wolfram 16.3

Since lawyer assistants are not subject to the Rules of Professional Conduct yet are regularly privy to sensitive and confidential information, a duty to control is imposed on the lawyers for whom they work. Phila. Eth. Op. 94-7 (1994) (firm must make reasonable efforts to ensure that paralegal who recently joined the firm from an opposing firm in litigation preserves the confidences relating to representation of clients); Phila. Eth. Op. 92-21 (1992) (although permissible to advertise about, and employ non-lawyer translators and other employees, adequate supervision must be given to non-lawyers to ensure compliance with ethical rules); Phila. Eth. Op. 90-5 (1990) (while it is permissible for paralegal to send a demand letter, attorney must supervise and review the paralegal's work product for accuracy and completeness). At least for the lawyer who must protect his client's confidences, this duty can place the lawyer at odds with the duties of another professional assistant. See Phila. Eth. Op. 92-22 (undated) (lawyer who handled legal matter for client and supervised a social worker in connection therewith, must make reasonable efforts to insure that social worker maintains the client's confidences, despite social worker's statutory duty to report an allegation of the client's misconduct).

This duty of control is only implicated when a lawyer is "practicing law." Yet, there are no definitive guidelines to indicate when an attorney actually is practicing law. See Phila. Eth. Op. 91-13 (1991) (lawyer who wished to establish non-legal claims processing center with his wife might be considered "practicing law," and thus responsible for supervising any employees, including his wife); Phila. Eth. Op. 87-21 (1987) (lawyer who wished to start business and employ husband to assist companies in avoiding employee lawsuits may potentially be practicing law, thus subject to ethical obligations including supervising her non-lawyer husband employee). If a state agency permits nonlawyers to appear on behalf of clients, a law firm may hire a certified public accountant in that capacity. Pa. Eth. Op. 92-115 (1992).

5.3:400   Responsibility for Misconduct of Nonlawyer Assistants

Primary Pennsylvania References: PA Rule 5.3(c)
Background References: ABA Model Rule 5.3(c), Other Jurisdictions
Commentary: ABA/BNA 91:201, ALI-LGL 4, 5, Wolfram 16.3

Not only do the Pennsylvania Rules impose a duty to control nonlawyer assistants, they also can hold a lawyer vicariously responsible for the ethical transgressions of his assistants. See Phila. Eth. Op. 90-24 (1990) (violation of Rule 5.3(c) occurs when non-lawyer employee of an insurance holding company uses a form demand letter bearing the letterhead and facsimile signature of in-house counsel). Cf. In re Fleet (E.D. Pa. 1989), where the court articulates its concern that attorneys involved in litigation may have ratified fraudulent conduct of nonlawyers by accepting referrals and participating in a fee-splitting arrangement.

5.4   Rule 5.4 Professional Independence of a Lawyer [Restrictions on Form of Practice]

5.4:100   Comparative Analysis of Pennsylvania Rule

Primary Pennsylvania References: PA Rule 5.4
Background References: ABA Model Rule 5.4, Other Jurisdictions
Commentary:

5.4:101      Model Rule Comparison

PA-R 5.4 is substantially the same as MR 5.4. It expresses traditional limitations on the sharing of fees. By design, these limitations protect the lawyer's professional independence of judgment.

The Pennsylvania Rule does, however, differ from the Model Rules. Of notable exception is subparagraph (a)(2). While the Pennsylvania Rule simply states that a lawyer who undertakes the unfinished business of a deceased lawyer may pay to the estate of the deceased an amount which fairly represents the services rendered by the deceased lawyer, the Model Rule considers the purchase of the law practice of a deceased, disabled or disappeared lawyer. The explanation for this variance is simple; the ABA substantially rewrote subparagraph (a)(2) in 1990 in order to conform Rule 5.4 to the changes brought about by the addition of MR 1.17, which now permits the sale of a law practice. In fact, (a)(2) of PA-R 5.4 tracks verbatim the language of pre-1990, subparagraph (a)(2) of Model Rule 5.4. Pennsylvania has yet to rewrite or reconsider its Rules.

Pennsylvania also includes an additional subparagraph (d)(4) which precludes a lawyer from practicing with "any form of association other than a professional corporation, in which the organic law governing the internal affairs of the association provides the equity owners of the association with greater liability protection than is available to the shareholders of a professional corporation." With this section, Pennsylvania rejects the result reached in First Bank & Trust Co. v. Zagoria, (Ga. 1983). Notably, subparagraphs (1), (2) and (4) do not apply to a Pennsylvania lawyer employed in the legal department of a corporation or other organization.

5.4:102      Model Code Comparison

Rule 5.4 of the Pennsylvania Rules of Professional Conduct is fashioned after several Disciplinary Rules (DRs) and an Ethical Consideration (EC). For example, paragraph (a) of the Pennsylvania Rules Rule 5.4 is substantially identical to DR 3-102(A). Paragraph (b) tracks the exact language of DR 3-103(A). Likewise, paragraphs (c) and (d) are virtually identical to DR 5-107(B) and DR 5-107(C), respectively. Finally, EC 5-24 is also relevant to PA-R 5.4 because it outlines in broad terms the necessity of a lawyer always maintaining his professional independence, no matter what type of business entity employs that lawyer.

5.4:200   Sharing Fees with a Nonlawyer

Primary Pennsylvania References: PA Rule 5.4
Background References: ABA Model Rule 5.4(a), Other Jurisdictions
Commentary: ABA/BNA 41:801, ALI-LGL 60, Wolfram 16.4, 16.5

Since sharing fees with nonlawyers can threaten the professional independence of lawyers, it is strictly prohibited. In re Fleet, (E.D. Pa. 1989)("[L]arge amount of funds transferred [by](sic) Daniels over a relatively short period of time [to](sic) an agency providing no service to consumers other than referral to the attorney paying the fee is strongly suggestive of a payment for referral or fee-splitting arrangement."); Phila. Eth. Op. 96-5 (1996) (business's employment agreement letter which required the payment of 25% of the gross fees earned by a lawyer rendering services to any person who previously engaged the business's services, violates Rule 5.4). However, a lawyer employed as a salaried in-house counsel who is awarded fees in a matter may reimburse his employer for the time spent in the litigation for which the employer has already compensated him. Pa. Eth. Op. 93-189 (undated).

Although fee-sharing agreements or employment relations can at times indirectly pay moneys to nonlawyers thereby masking a potential ethical violation, such situations are nonetheless strictly prohibited. See, e.g., Grigsby v. Major (Common Pleas Court of Philadelphia County, Civil Division 1994)(attorney's agreement to repay monies advanced by client as a loan, out of funds that might be recovered from suit, runs afoul of Rule 5.4); Phila. Eth. Op. 91-25 (1991) (lawyer representing business which performs appellate printing services and occasionally researches and writes briefs, could not research and write briefs at the business's request pursuant to pro se litigants needs, because payment to lawyer from business would then constitute fee-splitting); Phila. Eth. Op. 88-26 (undated) (employment with foreign business consulting firm may violate prohibition on fee-splitting). Likewise, referral fees cannot be paid to nonlawyers. Phila. Eth. Op. 90-3 (1990) (proposed referral agreement which included a referral fee between immigration lawyer and business entity engaged in advising international clients would contravene Rule 5.4).

The prohibition against sharing fees with nonlawyers extends to lawyers who have been suspended or disbarred. See Office of Disciplinary Counsel v. Jackson, (1994)(splitting fee with suspended attorney, in violation of Rule 5.4, warrants private reprimand); In re Weinfeld (E.D. Pa. 1994) (agreements to pay fees to disbarred attorney for referring former clients to specific attorneys violated Rule 5.4); but see Phila. Eth. Op. 93-3 (1993) (referral fee can be paid to lawyer who is indicted and may potentially be disbarred so long as the referral occurred while the attorney was in good standing); Phila. Eth. Op. 89-26 (1989) (fee splitting agreement between three lawyers based on relative work done on particular case is permissible, even though one of the lawyers was subsequently suspended from the practice of law).

The prohibition against fee-splitting with nonlawyers is not without exceptions in Pennsylvania. Generally, exceptions are made in the event of a practicing lawyer's death or retirement. For example, a lawyer who will receive as his fee 20% of monthly payments to be paid over a three year period may designate his wife a beneficiary. Pa. Eth. Op. 93-113 (1993). See Phila. Eth. Op. 92-1 (1992) (referral fee can be paid to either a lawyer, or, after his death, to his estate, for clients referred by that lawyer during his lifetime); Phila. Eth. Op. 89-5 (1989) (agreement to purchase law practice and to pay the seller's wife 50% of fees obtained after lawyer's death conflicts with Rule 5.4(a)(2)).

Moreover, Rule 5.4 does not prohibit a lawyer from performing pro bono services conditioned upon the client making a charitable contribution to a designated charity. Phila. Eth. Op. 91-34 (1991). And if counsel fee sanctions are imposed by the court, these moneys can be credited to a client if a recovery is ultimately made, despite Rule 5.4. Phila. Eth. Op. 95-14 (1995). Additionally, nominal fees paid by a law firm that represent actual costs incurred by the company in connection with forwarding a foreclosure package to the law firm does not run afoul of Rule 5.4. Phila. Eth. Op. 93-15 (1993).

5.4:300   Forming a Partnership with Nonlawyers

Primary Pennsylvania References: PA Rule 5.4
Background References: ABA Model Rule 5.4(b), Other Jurisdictions
Commentary: ABA/BNA 91:401, ALI-LGL 60, Wolfram 16.4, 16.5

The prohibition against forming partnerships with non-lawyers does not in itself prevent a lawyer from joining a union. See City of Philadelphia ex rel. Harris v. Pennsylvania Labor Relations Board, (Commw. Ct. 1994) (Rule 5.4's obligation to exercise independent professional judgment does not prohibit attorney from being a member of a union).

5.4:400   Third Party Interference with a Lawyer's Professional Judgment

Primary Pennsylvania References: PA Rule 5.4(c)
Background References: ABA Model Rule 5.4(c), Other Jurisdictions
Commentary: ABA/BNA 51:901, ALI-LGL 60, Wolfram 8.8

Since Rule 5.4 is designed to ensure an attorney's professional independent judgment, attorney involvement or employment with non-legal businesses is fraught with possible ethical conflicts. Phila. Eth. Op. 89-1 (1989) (expressing concern that a lawyer's position with an environmental consulting firm might alter the lawyer's professional judgment). See also Phila. Eth. Op. 93-1 (1993), and Phila. Eth. Op. 88-26 (undated), (where the guidance committee expressed the same concerns with respect to possible in-house counsel positions).

Rule 5.4(c) does not, however, necessarily prohibit a third-party from paying the fees of a lawyer representing another. Phila. Eth. Op. 92-4 (1992) (lawyer can represent patient for petitioning a Worker's Compensation insurance carrier to pay overdue medical bills, even though doctor will pay lawyer and receive all proceeds of any recovery). Nor does Rule 5.4(c) necessarily prohibit nominal gifts made to individuals who assist the firm in the providing client services, and who also occasionally refer clients to the firm. Phila. Eth. Op. 93-26 (1994).

5.4:500   Nonlawyer Ownership in or Control of Profit-Making Legal Service Organizations

Primary Pennsylvania References: PA Rule 5.4(d)
Background References: ABA Model Rule 5.4(d), Other Jurisdictions
Commentary: ABA/BNA 91:401, ALI-LGL 60, Wolfram 16.4, 16.5

The prohibition against non-lawyer ownership in or control of a for-profit legal organization is also designed to ensure the complete professional independence of the lawyer. Often, this Rule is implicated when lawyers attempt to establish or join some sort of consulting practice, which may or may not be "practicing law." Phila. Eth. Op. 87-21 (1987) (consulting company established by husband who is a dentist and wife who is an attorney, which does not practice law but nonetheless gives legal advice may in fact be "practicing law" and thus subject to Rule 5.4). The Rule permits a lawyer to practice in the form of a Pennsylvania business trust under certain state law restrictions. Pa. Eth. Op. 93-142 (1993). A lawyer may not practice law as owner of a professional corporation that provides legal services if a non-lawyer is an officer and director of the corporation, under Rule 5.4(d)(2). Pa. Eth. Op. 92-199 (1993).

5.4:510      Group Legal Services

[The discussion of this topic has not yet been written.]

5.4:520      Nonprofit Organizations Delivering Legal Services

[The discussion of this topic has not yet been written.]

5.5   Rule 5.5 Unauthorized Practice of Law

5.5:100   Comparative Analysis of Pennsylvania Rule

Primary Pennsylvania References: PA Rule 5.5
Background References: ABA Model Rule 5.5, Other Jurisdictions
Commentary:

5.5:101      Model Rule Comparison

Pennsylvania Rule 5.5 differs slightly from MR 5.5. MR 5.5(b) states that a lawyer shall not assist a person who is not a member of the bar in the performance of activity that constitutes the unauthorized practice of law. By contrast, PA-R 5.5(a) contains a more general prohibition which states that a lawyer shall not aid a non-lawyer in the unauthorized practice of law. Notwithstanding this difference, the commentary of PA-R 5.5 is identical to that of MR 5.5.

5.5:102      Model Code Comparison

Rule 5.5 is the equivalent of DR 3-101 of the Pa.C.P.R.

5.5:200   Engaging in Unauthorized Practice

Primary Pennsylvania References: PA Rule 5.5
Background References: ABA Model Rule 5.5(a), Other Jurisdictions
Commentary: ABA/BNA 21:8001, ALI-LGL 3, 4, Wolfram 15.1

5.5:210      Practice of Law by Nonlawyers

Practicing law without admission to the bar is a third degree misdemeanor under 42 Pa.C.S.A. 2524. The Pennsylvania courts have declined to define specifically what constitutes the "practice of law" other than to say that it is more than mere appearances in court and the conduct of litigation and that it involves the application of legal knowledge and techniques. Dauphin County Bar Assoc. v. Mazzarco, (1976); Shortz v. Farrell (1937); Shortz v. Yetter (Luzerne Co. C.P. 1940). Bankruptcy courts are obliged to invoke their broad equity powers to develop and define the parameters of the practice of law in bankruptcy proceedings. In re Arthur, (Bankr. E.D. Pa. 1981); In re Campanella (Bankr. E.D. Pa. 1997). Accordingly, the standard for determining whether a person is engaged in the unauthorized practice of law is "whenever and wherever the service requires legal knowledge, training, skill, and ability beyond those possessed by the average man." In re Arthur (Bankr. E.D. Pa. 1981); In re Campanella (Bankr. E.D. Pa. 1997), See also Shortz v. Farrell (1937); Blair v. Motor Carriers (Phila. Co. C.P. 1939).

It is clear that the preparation of pleadings and other types of legal papers and giving of advice in legal matters constitutes the practice of law. Childs v. Smeltzer (1934)(holding that preparation of mortgages, deeds, assignments, releases and other legal papers by notary public constituted unauthorized practice of law). See also In re Skobinsky (E.D. Pa. 1994)(holding that bankruptcy agent may not fill out bankruptcy forms and advise debtors regarding filing for bankruptcy); In re Evans (Bankr. E.D. Pa. 1993)(holding that bankruptcy agents may not advise clients regarding filing for bankruptcy, assist debtors in preparing documents, prepare motions, answers, and adversary complaints); In re Harris (Bankr. W.D. Pa. 1993)(holding that preparation of bankruptcy petitions by paralegal constituted unauthorized practice of law); In re Arthur (Bankr. E.D. Pa. 1981)(holding that non-attorney's preparation and filing of bankruptcy applications and petitions constituted unauthorized practice of law). See also Phila. Eth. Op. 90-5 (1990) (advising that paralegal may not prepare draft of demand letter including compilation of facts and damages calculations, nor may provide judgements concerning application of law to facts); Phila. Eth. Op. 88-26 (undated) (advising that consulting firm attempting to package lawyer services together with company services may violate PA-R 5.5); Phila. Eth. Op. 87-21 (1987) (advising that attorney may violate PA-R 5.5 by advising corporation's clients on issues involving health care insurance coverage or employers' liability for workplace-related illnesses or by permitting non-lawyer employees to pass judgment or render advice upon employer policies and procedures).

Similarly, most Pennsylvania courts agree that in-court representation of another constitutes a paradigmatic function of attorneys and thus amounts to "practice of law." Compare Kohlman v. Western Penn. Hospital (1994)(holding that county prothonotary may not represent defendant doctor with respect to motion to strike, specifically, and with respect to medical malpractice action, generally); Dauphin County Bar Assoc. v. Mazzacaro (1976)(holding that a public adjuster may not represent an accident victim as an attorney-in-fact because the "proper protection of members of the public demands that no person be permitted to act in the confidential and demanding capacity of a lawyer unless he is subject to the regulations of the legal profession") and Commonwealth v. Carroll (Super. Ct. 1986)(holding that defendant could not be represented in court by a nonlawyer; determination of qualifications required to be a lawyer was exclusively within authority of Supreme Court) and McCain v. Curione (1987)(holding that the Commonwealth Court was without jurisdiction to consider arguments and motions made on behalf of parolee in a civil action that was filed by another prisoner who was not licensed to practice law) with In re Estate of Reifsneider (1992)(holding that a power of attorney authorizing attorneys-in-fact to commence legal proceeding touching any matter in which the principal might be in any way concerned encompassed act of filing election to take share of estate of principal's deceased spouse) and Shortz v. Farrell (1937)(holding that the preparation and filing of workmen's compensation pleadings does not constitute the practice of law because the forms are prepared by the Workman's Compensation Board, are elementary in character, and do not rise to the dignity of "pleadings" as that term is understood in other judicial proceedings).

5.5:220      Admission and Residency Requirements for Out-of-State Lawyers

[The discussion of this topic has not yet been written.]

5.5:230      Pro Hac Vice Admission [see also 8.1:240]

Pa. St. Bar Admin. Rule 301(a) states that an attorney, barrister or advocate who is qualified to practice in the courts of another state or of any foreign jurisdiction may be specially admitted to the bar of this Commonwealth for purposes limited to a particular matter. He or she shall not, however, thereby be authorized to act as attorney of record.

5.5:240      Performing Legal Services in Another Jurisdiction

PA-R 5.5(b) has been interpreted to require lawyers engaged in interstate transactions to review their credentials and consider their status in jurisdictions where they are not licensed to practice law. See Pa. Eth. Op. 90-02 (Pa. B.A. Comm. Legal Ethics and Prof. Resp.)(Mar. 2, 1990) (advising that attorneys not licensed to practice law in Pennsylvania may, under certain conditions, prepare loan documentation for lender clients, negotiate lending agreements, offer opinions regarding lender authority to do business and enforceability of loan documents, and travel to Pennsylvania to negotiate on foreign client's behalf without violating PA-R 5.5(b)); Phila. Eth. Op. 91-36 (1991) (advising that, short of filing or defending suit in a foreign jurisdiction, PA-R 5.5(b) generally permits Pennsylvania lawyers to represent clients residing in a foreign state in matters over which foreign state has exclusive jurisdiction); Phila. Eth. Op. 96-13 (undated) (advising that PA-R 5.5(b) authorizes member of Supreme Court of Pennsylvania and United States Supreme Court to represent clients in Pennsylvania but that rule requires lawyer to verify authority to practice in foreign jurisdictions according to foreign states' laws).

5.5:300   Assisting in the Unauthorized Practice of Law

Primary Pennsylvania References: PA Rule 5.5
Background References: ABA Model Rule 5.5(b), Other Jurisdictions
Commentary: ABA/BNA 21:8201, ALI-LGL 4, Wolfram 15.1

Although Pennsylvania courts have not defined what constitutes "aiding" in the unauthorized practice of law, ethics opinions make clear that allowing a nonlawyer to assume traditionally legal responsibilities, i.e., drafting legal documents or rendering legal opinions, violates Rule 5.5(a)'s prohibition against assisting in the unauthorized practice of law. See Phila. Eth. Op. 91-25 (1991) (advising that provision of legal documents by attorney to corporate client for purpose of allowing client to draft briefs constitutes aiding nonlawyer in unauthorized practice of law); Phila. Eth. Op. 90-24 (Phila. B.A. Prof. Guid. Comm.)(advising that in-house council may not permit use of his name and facsimile signature by non-lawyer generating and mailing employee's demand letter); Phila. Eth. Op. 90-3 (Phila. B.A. Prof. Guid. Comm.)(1990)(advising that nonlegal corporation may not render to clients legal opinions provided by lawyer).

5.6   Rule 5.6 Restrictions on Right to Practice

5.6:100   Comparative Analysis of Pennsylvania Rule

Primary Pennsylvania References: PA Rule 5.6
Background References: ABA Model Rule 5.6, Other Jurisdictions
Commentary:

5.6:101      Model Rule Comparison

On April 11, 1995, the Commonwealth of Pennsylvania adopted an amended version of PA-R 5.6 which differs from MR 5.6. Model Rule 5.6(a) states that "[a] lawyer shall not participate in offering or making a partnership or employment agreement that restricts the right of a lawyer to practice after termination of the relationship." By contrast, PA-R 5.6(a) states that "[a] lawyer shall not participate in offering or making a partnership, shareholders, operating, employment or other similar type of agreement that restricts the rights of a lawyer to practice after termination of the agreement... (remainder identical)

The commentary of PA-R 5.6 also differs from that of MR 5.6 in that the latter states that Rule 5.6 does not apply to prohibit restrictions that may be included in the terms of the sale of a law practice pursuant to Rule 1.17. The commentary of PA-R 5.6 omits this language.

5.6:102      Model Code Comparison

Rule 5.6 is substantially similar to DR 2-108.

5.6:200   Restrictions on Lawyers Leaving a Firm

Primary Pennsylvania References: PA Rule 5.6
Background References: ABA Model Rule 5.6(a), Other Jurisdictions
Commentary: ABA/BNA 51:1201 ALI-LGL 10

Although Rule 5.6 prohibits restrictive covenants in the legal profession, law firms may stipulate in advance on the amount of damages which might be caused by the erosion of their client base upon the termination of the firm's lawyers/employees. Phila. Eth. Op. 87-24 (Phila. B.A. Prof. Guid. Comm.)(Apr. 1988). The determination as to the validity of such liquidated damages provisions depends upon whether the amount of damages would be so large as to be considered a penalty. Id. In general, the higher the post termination payment, the more likely the firm risks violating 5.6(a). Id. (advising that agreement requiring departing lawyer who retains clients to pay firm 50% of fees earned over one year period following termination of employment contract may violate 5.6(a) depending on totality of circumstances surrounding agreement); Phila. Eth. Op. 90-10 (Phila. B.A. Prof. Guid. Comm.) (Jun. 1990)(advising that liquidated damages clause requiring departing attorney to pay 80% of the preceding two years billing to the clients retained, or, if the departing attorney is a stockholder, 80% of the billings to the retained client for each year of stock ownership plus two additional years, violates 5.6(a) given under totality of surrounding agreement); Phila. Eth. Op. 96-5 (Phila. B.A. Prof. Guid. Comm.)(May 1996)(advising that agreement providing that departing attorney will not perform services of any type that the firm can render to persons or entities who have engaged the firm for services and that departing attorney may not directly or indirectly solicit or retain current or former attorneys of the firm violates 5.6(a); Phila. Eth. Op. 89-3 (Phila. B.A. Prof. Guid. Comm.)(1989)(advising that agreement requiring departing lawyer who retains clients to pay individual and disparate amounts for each file taken by attorney effectively restricts lawyer's right to practice given the possible magnitude of post-termination payments).

5.6:300   Settlements Restricting a Lawyer's Future Practice

Primary Pennsylvania References: PA Rule 5.6(b)
Background References: ABA Model Rule 5.6(b), Other Jurisdictions
Commentary: ABA/BNA 51:1201, ALI-LGL 10, Wolfram 16.2.3

A lawyer cannot agree to refrain from representing other clients as a condition of settlement of present cases. Phila. Eth. Op. 95-13 (1995) (advising that settlement offer requiring attorney to accept payment of $50,000 allocated to "reimbursement of fees and costs" and to return $50,000 to defendants in the event attorney's firm "directly or indirectly" represents another worker from plaintiff's workplace on similar claims limits attorney's involvement on behalf of future clients in violation of PA-R 5.6(b)).

5.7   Rule 5.7 Responsibilities Regarding Law-Related Services

5.7:100   Comparative Analysis of Pennsylvania Rule

Primary Pennsylvania References: PA Rule 5.7
Background References: ABA Model Rule 5.7, Other Jurisdictions
Commentary:

5.7:101      Model Rule Comparison

On August 14, 1996, the Commonwealth of Pennsylvania adopted an amended version of PA-R 5.7 which differs significantly from MR 5.7. See also Pa. St. PA-R Rule 5.7 (1997). First, MR 5.7 is entitled Responsibilities Regarding Law-Related Services whereas PA-R 5.7 is entitled Responsibilities Regarding Nonlegal Services. Second, MR 5.7(a) states that "[a] lawyer shall be subject to the Rules of Professional Conduct with respect to the provision of law-related services" that are provided either (1) in circumstances that are not distinct from the lawyer's provision of legal services to clients or (2) by a separate entity controlled by the lawyer individually or with others if the lawyer fails to assure that the person obtaining the services knows that the services of the separate entity are not legal and that the protection of the client-lawyer relationship do not exist. By contrast, PA-R 5.7(a) states that a lawyer who provides nonlegal services that are not distinct from legal services provided to that recipient is subject to the Rules of Professional Conduct with respect to the provision of both legal and nonlegal services.

Moreover, PA-R 5.7(b) states that a lawyer who provides nonlegal services to a recipient that are distinct from any legal services provided to the recipient is subject to the Rules of Professional Conduct with respect to the nonlegal services if the lawyer knows or reasonably should know that the recipient might believe that the recipient is receiving the protection of the client-lawyer relationship. PA-R 5.7(c) expands upon MR 5.7(a)(2) by stating that a lawyer who is an owner, controlling party, employee, agent, or is otherwise affiliated with an entity providing nonlegal services to a recipient is subject to the Rules of Professional Conduct with respect to the nonlegal services if the lawyer knows or reasonably should know that the recipient might believe that the recipient is receiving the protection of a client-lawyer relationship.

Unlike MR 5.7, PA-R 5.7(d) provides an exemption from liability which states that paragraph (b) or (c) do not apply if the lawyer makes reasonable efforts to avoid any misunderstanding by the recipient receiving nonlegal services. Those efforts must include advising the recipient that the services are not legal services and that the protection of a client-lawyer relationship does not exist with respect to the provision of nonlegal services to the recipient. MR 5.7 contains no such provision.

Finally, MR 5.7(b) defines "law-related services" as services that might reasonably be performed in conjunction with and in substance are related to the provision of legal services, and that are not prohibited as unauthorized practice of law when provided by a nonlawyer. PA-R 5.7 contains no such provision, however, the commentary to PA-R 5.7 similarly defines nonlegal services as those that are not prohibited as unauthorized practice of law when provided by a nonlawyer.

Although the commentaries to MR 5.7 and PA-R 5.7 are substantially similar, they differ in several ways. First, the commentary to PA-R 5.7 acknowledges that in recent years there has been significant debate about the role the Rules of Professional Conduct should play in regulating the degree and manner in which a lawyer participates in the delivery of nonlegal services. The approach adopted by the Pennsylvania rules does not try substantively to limit the lawyer's provision of nonlegal services, but instead attempts to clarify the conduct to which the Rules of Professional Conduct apply and to avoid misunderstandings on the part of the recipient of the nonlegal services. The Model Rule commentary, by contrast, does not discuss any particular approach to the issue of nonlegal or law-related services.

In addition, the commentaries of the Model Rules and PA-Rs differ with respect to law-related services provided through an entity distinct from that through which the lawyer provides legal services. The commentary to MR 5.7 states that a lawyer's control of an entity extends to the ability to direct its operation. Whether a lawyer has such control will depend upon the circumstances of the particular case. The commentary to PA-R 5.7 makes clear that section (c) applies where nonlegal services are provided through an entity with which a lawyer is somehow affiliated, for example, as owner, employee, controlling party or agent.

Finally, the commentary to PA-R 5.7 makes clear that neither the Rules of Professional Conduct nor paragraphs (b) or (c) will apply if, pursuant to paragraph (d), the lawyer takes reasonable efforts to avoid any misunderstandings by the recipient. The commentary to MR 5.7 contains no such discussion.

5.7:102      Model Code Comparison

There is no counterpart to this Rule in the Code.

5.7:200   Applicability of Ethics Rules to Ancillary Business Activities

Primary Pennsylvania References: PA Rule 5.7
Background References: ABA Model Rule 5.7, Other Jurisdictions
Commentary: ABA/BNA 101:2103, ALI-LGL , Wolfram

Newly revised PA-R 5.7 has not yet been interpreted by Pennsylvania courts or the Philadelphia or Pennsylvania Ethics Committees.