One in a series of ethics opinions from The Florida Bar’s Professional Ethics Committee. This opinion was released on January 11, 2002.
The question
Can an attorney give a bonus to a nonlawyer employee solely based on the number of hours worked by the employee?
The situation
A member of The Florida Bar requested an advisory ethics opinion.
Specifically, the attorney inquires:
“May I bonus a non-lawyer employee based on the number of hours the non-lawyer employee has worked on a case for a particular client? As a family law attorney, I do virtually nothing at a flat rate and certainly no work is done by percentage. I bill my time and the time of my legal assistant at separate hourly rates which are itemized on the client’s bill and described in the written fee agreement with the client. I would like to bonus my employees based on their own productivity. I would not be utilizing any portion of the fees received by me for that purpose.”
Although the attorney did not specifically state it in the written request, during the hotline call the attorney proposed the following: If the legal assistant works 10 hours on a case and the attorney bills the client 10 hours of legal assistant time, may the attorney pay a bonus to the legal assistant based on a certain rate times 10 hours?
Rule 4-5.4(a), Florida Rules of Professional Conduct, provides that a lawyer or law firm “shall not share legal fees with a nonlawyer.” Rule 4-5.4(a)(4), specifically deals with the issue of “bonus” payments to nonlawyer personnel in a law firm. The rule provides as follows:
(a) Sharing Fees with Nonlawyers. A lawyer or law firm shall not share legal fees with a nonlawyer, except that:
(4) bonuses may be paid to nonlawyer employees based on their extraordinary efforts on a particular case or over a specified time period, provided that the payment is not based on the generation of clients or business and is not calculated as a percentage of legal fees received by the lawyer or law firm.
Pursuant to Rule 4-5.4(a)(4), the inquirer may pay the firm’s legal assistant a bonus, but that bonus cannot be based in any way upon a percentage of fees generated by the legal assistant or the firm and cannot be based upon generating clients for the firm. Bonuses to non-lawyer employees cannot be calculated as a percentage of the firm’s fees or of the gross recovery in cases on which the non-lawyer worked. See Florida Ethics Opinion 89-4 (law firm cannot pay to firm marketing manager a bonus based upon percentage of business she generates for the firm). Rule 4-7.2(c)(8), Florida Rules of Professional Conduct, further prohibits attorneys from giving “anything of value to a person for recommending the lawyer’s services. . . . “
The ruling
Based on the rules and opinion, the inquiring attorney may pay the legal assistant a bonus based on the legal assistant’s extraordinary efforts on a particular case or over a specific period of time. While the number of hours the legal assistant works on a particular case or over a specific period of time is one of several factors that can be considered in determining a bonus for the legal assistant, it is not the sole factor to be considered.
It must be remembered that the rule allows a bonus to be paid to a nonlawyer based on “extraordinary efforts” either in a particular case or over a specific time period. A bonus which is solely calculated on the number of hours incurred by the legal assistant on the matter is tantamount to a finding that every single hour incurred was an “extraordinary effort”, and such a finding is very unlikely to be true.
Therefore, unless every single hour incurred by the legal assistant was a truly extraordinary effort, it would be impermissible for the inquiring attorney to pay a bonus to his legal assistant calculated in the manner the inquiring attorney has proposed. .
However, the number of hours incurred by the legal assistant on the particular matter or over a specified time period may be considered by the lawyer as one of the factors in determining the legal assistant’s bonus.