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Ethics Byte

Exercise caution when a third party foots the bill

By Diane Karpman

Diane KarpmanHighly placed sources at the State Bar Court (who are often seen in black robes) have remarked that suddenly the Office of Chief Trial Counsel is actually charging violations of Rule 3-310 (F) of the Rules of Professional Conduct.

This is known as the third-party payer rule and is triggered when someone other than the client is paying the lawyer’s fees. For example, Mom and Pop are paying for their minor’s DUI/shoplifting offense, or Dad is paying for his daughter’s dissolution of marriage. Or, on a much more sinister level, a crime boss is paying for a minion’s silence, or a drug cartel is paying for a mule’s (carrier’s) defense.

Sidebar: Long ago during a more innocent time, your author in several MCLE programs mentioned an internationally infamous drug cartel in South America to illustrate this topic. Guess what? Cartels have real lawyers in Los Angeles who may have sought ethics legal advice at one time or another. We all know lawyers who are or are rumored to be all “mobbed up,” but some people may not want to be remotely involved with drug cartels. Thus, the particular name of that cartel has been dropped from your author’s vocabulary.

Third-party payments should trigger alarm bells arousing any lawyer’s suspicion. If a criminal organization promised a defense to a member on arrest, and you are the “defense,” arguably you may be a link in the criminal conspiracy. In U.S. v. Hodge and Zweig, 548 F. 2d 1347 (9th Cir. 1977), the lawyer was deemed to be furthering the criminal conspiracy by providing representation.

Do not become a criminal collaborator or confederate in a crime. For an outstanding analysis of this quagmire, see: David Orentlicher, “Fee Payments to Criminal Defense Lawyers from Third Parties.” Orentlicher maintains that just because it’s a family member does not mean it’s kosher. Often, Mafia bosses direct their business to their family members, which is of course why there are “crime families.”

Nevertheless, it is surprising to see prosecutors going after violations of the third-party payer prohibition. In terms of practice areas, criminal defense lawyers are woefully thin, if not anorexic about having the proper paperwork such as retainers and third-party payer written consents. It’s understandable, because when you are pulling on your jeans at 3 a.m. to bail someone out of jail you may not have ready access to the proper forms in your back pocket.

The most ubiquitous scenario involving third-party payers on a national level is the typical insurance defense scenario known as the tripartite relationship. The carrier designates and pays a lawyer to defend claims against the insured policyholder. However, in California there is a special carve out making it clear that Rule 3-310 (F) is not intended to abrogate existing insurance relationships (see the Official Discussion, 3-310 F).

If a third party is paying legal fees, certain conflicts are anticipated. Compliance with the rule is intended to address, expose, and minimize those problems. Remember, accepting payment from a third party does not inherently create an attorney-client relationship. Still, it’s a good idea to notify the payer regarding the absence of “clienthood” for risk management purposes. Importantly, if there is a refund, determine how that will be disposed of at the beginning of the relationship.

In order to prevent being prosecuted for a failure to comply with Rule 3-310 (F), the lawyer must obtain an informed written consent from the client. That consent must reassure the client that their confidences will be protected and that the lawyer’s independent judgment will not be impaired due to the payment of fees by a third party. 

Generally, a generic conflict (Rule 3-310) will not result in discipline. About five years ago at a National Ethics Conference, there was an entire program addressing the dearth of prosecutions for conflicts violations. Think about all the disqualification motions all over the country. The lawyers involved are generally not subject to discipline. In or around 2000, in assisting the American Bar Association Ethics 2000 Committee, I researched the status of California’s conflicts prosecutions. There was not a single stand-alone reported decision for conviction of a Rule 3-310 violation. There were reported cases noting convictions for Rule 3-310 in conjunction with much more serious acts of misconduct like trust account violations. In those cases, the conflict violation looked like just another garish ornament on an already overly decorated Christmas tree. 

Legal ethics expert Diane Karpman can be contacted at 310 887-3900 or at