The Florida Bar

October 1, 1992
It is unethical for an attorney to enter into a working arrangement with a public adjuster. Ethical problems exist regarding solicitation, fee-splitting, and assisting the unlicensed practice of law.

RPC: 4-5.4(a); 4-5.5(b); 4-7.4(a); 4-8.4(a)
Statutes: F.S. § 316.066

The inquiring attorney has been contacted by a public adjusting firm (the "Company") regarding participation in a proposed arrangement involving personal injury claims. The Company would employ a nonlawyer to pick up accident reports each week from local law enforcement agencies. Those persons with significant claims who have been injured by insured vehicles would then be solicited by the Company. The injured persons (the "claimants") would be given the opportunity to contract with the Company, which, for a fee of 20% of the claimant's recovery, would attempt to negotiate settlement of the claimant's personal injury claim within the tortfeasor's policy limits.

The Company has asked if the inquiring attorney would be interested in representing claimants who need the services of an attorney in the event that the Company is unable to effectuate a settlement. The Company would recommend the attorney to the claimant. The attorney would have contact with the client, would contract directly with the claimant, and would have total control over the handling of the case. In exchange for referring the claimant to the attorney, the attorney would agree to recognize the Company's "contract" with the claimant and agree to protect the Company's "lien." The inquiring attorney describes these financial arrangements as follows:

[I]f the lawyer settled a case for $100,000.00 after suit was filed and was entitled to a 40% contingent fee, i.e., $40,000.00, he would agree to pay the Company 20% of his fee (or a negotiated lesser amount) in order to protect the Company's contract and lien with the client, which they claim would entitle them to 20% of the gross recovery. The Company claims that this is not "fee splitting with a non-lawyer" in that it is no different than a lawyer agreeing to protect the lien of a health care provider such as a physician or hospital by way of a letter of protection. Further, the Company claims that it is to the benefit of the client, since it is no extra money out of the client's pocket, as the real division is between the lawyer and the Company out of the gross attorneys' fees. [Emphasis added.]

The attorney has requested an advisory opinion regarding whether it would be unethical for him to participate in this proposed arrangement. Specifically, the attorney has asked whether doing so would violate the rule prohibiting fee-splitting with a nonlawyer.

It would be unethical for the attorney to participate in the proposed arrangement. A number of ethical problems are apparent. For example, the proposed fee division arrangements would violate Rule 4-5.4(a), Rules Regulating The Florida Bar, which prohibits attorneys from sharing legal fees with nonlawyers. The Company's fee would be paid out of the attorney's portion of the recovery, which clearly would constitute improper fee-splitting.

Additionally, the proposed arrangement would result in violation of the rules governing advertising and solicitation. Rule 4-7.4(a) provides:

A lawyer shall not solicit professional employment from a prospective client with whom the lawyer has no family or prior professional relationship, in person or otherwise, when a significant motive for the lawyer's doing so is the lawyer's pecuniary gain. A lawyer shall not permit employees or agents of the lawyer to solicit in the lawyer's behalf. A lawyer shall not enter into an agreement for, charge, or collect a fee for professional employment obtained in violation of this rule. The term "solicit" includes contact in person, by telephone, telegraph, or facsimile, or by other communication directed to a specific recipient and includes any written form of communication directed to a specific recipient and not meeting the requirements of paragraph (b) of this rule. [Emphasis added.]

See also 4-8.4(a), which provides:

A lawyer shall not:
(a) Violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another[.]

The solicitation problem is amplified because the Company would use traffic accident reports to solicit claimants. Florida Statutes section 316.066 prohibits the use of accident reports for commercial solicitation purposes.

Furthermore, the Bar's Unlicensed Practice of Law Counsel has taken the position that a public adjuster engages in the unlicensed practice of law if the adjuster acts on behalf of a claimant against a tortfeasor's insurance company; the authorized activities of a public adjuster are limited to adjusting claims with the claimant's insurer. Therefore, an attorney who is involved in a situation in which a public adjuster is acting on behalf of a claimant against a third party's insurer would be in violation of Rule 4-5.5(b), which prohibits attorneys from assisting someone in activity that constitutes the unlicensed practice of law.

[Revised: 08-24-2011]