Rutgers School of Law, OAL case ACPE056

87 N.J.L.J. 700
October 29, 1964

ADVISORY COMMITTEE ON PROFESSIONAL ETHICS

Appointed by the New Jersey Supreme Court

OPINION 56

Services of Professional Adjustor
Intermediaries Aiding Unlawful Practice

This inquiry poses the questions:

        Is it proper for an attorney who represents a plaintiff in an automobile accident case to hire an independent, non-attorney, adjustor to negotiate and come to a settlement of the plaintiff's case with the defendant's insurance carrier?

        If the answer to the foregoing inquiry is in the affirmative, is it proper for the attorney to pay the lay adjustor a fixed percentage of the settlement as his fee?

    The last paragraph of Canons of Professional Ethics, Canon 33

provides:

Partnerships between lawyers and members of other professions or non-professional persons should not be formed or permitted where any part of the partnership employment consists of the practice of law.

Canon 34 prohibits division of legal fees with a layman; Canon

35 directs the attorney to avoid performing professional legal

services through lay intermediaries; and Canon 47 provides:

No lawyer shall permit his professional services, or his name, to be used in aid of, or to make possible, the unauthorized practice of law by any lay agency, personal or corporate.

The engagement of a layman to settle a claim offends Canons 33 and 35; and, to the extent it enables the adjustor to perform legal
services, it constitutes aiding the unlawful practice contrary to Canon 47.

This inquiry included an example where the adjustor's fee was treated as "reasonable costs" over the attorney's fee. This adjustor's compensation is a fee for professional legal services rather than "costs." The lawyer in effect is adding the adjustor's fee to his attorney's fee and splitting the fee for professional services with the layman, contrary to Canon 34. See Ass'n. of the Bar, City of N.Y., Committee on Professional Ethics, Opinion 154 (1930), where it was held improper to pay a lay adjustor a percentage of the recovery. And, see N.Y. County Lawyers Ass'n., Committee on Professional Ethics, Opinion 287 (1931), and the recent opinion of the same committee precluding payment of office
rent on a percentage of the attorney's income, 87 N.J.L.J. 641 (1964). The practice posed in this inquiry would put an attorney in the position of appearing to solicit via the adjustor. See Ass'n.
of the Bar, City of N.Y., Committee on Professional Ethics Opinion 286 (1931).
For the foregoing reasons each of the proposed practices is disapproved.

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