Opinion #128. Lawyer as Director of Non-Profit Corporation Providing Legal Services to Indigents

Issued by the Professional Ethics Commission

Date Issued: December 30, 1992

Question

A Lawyer wishes to participate in the formation of a non‑profit corporation which, among other services, will provide legal representation to indigents. The question is whether she can also serve on its Board of Directors.

Opinion

The commission concludes that no Bar Rules are violated if the lawyer merely serves on the Board of Directors. Bar Rule 3.2(a)(2) states that “A lawyer shall not form a partnership or a professional corporation with a person not licensed to practice law if any of the activities of the partnership or corporation consist of the practice of law.” The Reporter’s Notes to the Rule state:

The commission was aware of the growing interest in interdisciplinary service organizations but believed the public interest would not be best served by their encouragement on a proprietary level, in the legal profession.

The question presented assumes that the entity the lawyer contemplates serving is formed under Title 13‑B of the Maine Revised Statutes and is neither a partnership, joint venture, business or professional corporation. It also asks the Commission to assume that the entity qualifies as a tax exempt organization, presumably under Section 501(c)(3) of the Internal Revenue Code (which explicitly requires that the organization’s earnings not “inure to the benefit of any private shareholder or individual”).

Although the Rule does not specifically so state, we believe that participating on the Board of Directors of an organization that by definition will not be proprietary and whose property and activities will not inure to the benefit of its directors or its members, is not prohibited by the Rule. In Opinion 79 this Commission concluded that a lawyer could not form a business relationship with an accountant that provided legal services to clients. We reasoned that regardless of the formal structure selected for the organization, Rule 3.2(a)(2) prohibited the formation of a proprietary relationship with non lawyers. The question presented here is different because the lawyer as a director will not be permitted to receive any proprietary benefit from the economic success of the organization as she most certainly would if it were a business enterprise in which she were an owner or co‑owner. If the lawyer were to be employed by the organization and her compensation related to the income received by the organization for her services, there may be a question as to whether such relationship would be a proprietary one similar to the type prohibited in Opinion 79. Since the Request does not address such a situation, we express no opinion about the permissibility of such an employment relationship.


Enduring Ethics Opinion