Also known as: sharing arrangements · revenue sharing arrangement · market sharing arrangement
Written by attorneys · grounded in primary & secondary sources — see below
2 senses
A compensation or retirement plan that includes nonlawyer employees and bases payments in whole or in part on firm profits. The arrangement permits such profit-based benefits without violating the prohibition on fee division with nonlawyers.
A compensation or retirement plan that includes nonlawyer employees and bases payments in whole or in part on firm profits. The arrangement permits such profit-based benefits without violating the prohibition on fee division with nonlawyers.
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A tax concept arising when one party transfers an interest in a mineral property in exchange for the transferee's contribution to acquisition, exploration, or development costs. The parties are treated as having pooled capital in an informal partnership, deferring tax consequences until abandonment or later transfer.
Select any source to read its text and confirm it supports the definition.
A tax concept arising when one party transfers an interest in a mineral property in exchange for the transferee's contribution to acquisition, exploration, or development costs. The parties are treated as having pooled capital in an informal partnership, deferring tax consequences until abandonment or later transfer.
Each sense below has its own examples, sources, and questions.
Prairie Ag Law Group establishes a yearly bonus program for nonlawyer employees Rosa and Malik funded by a fixed percentage of the firm's net income. The payments reward overall firm performance rather than any particular matter. The arrangement qualifies as a permitted sharing arrangement because it operates as a firmwide compensation plan without granting nonlawyers ownership or control over legal work.
GreenEarth Law Group adopts a retirement plan that credits nonlawyer staff including an environmental scientist and a GIS technician with annual amounts calculated from the firm's overall profitability. No nonlawyer receives an ownership interest or authority over case decisions. The plan constitutes a permissible sharing arrangement because it functions as a standard retirement benefit keyed to aggregate results.
A profit-based payment qualifies when it forms part of a compensation or retirement plan available to nonlawyer employees and is calculated from overall firm profits rather than from fees in any specific matter. The plan must not confer ownership interests or control over legal judgment. This structure fits the exception that allows firms to include nonlawyer employees in such plans.
Supporting sources
A percentage payment to a nonlawyer referral source is not permitted because it divides legal fees with a nonlawyer outside the recognized exceptions. The arrangement gives the nonlawyer a direct stake in fees from particular matters, which undermines professional independence. Client consent or bookkeeping labels do not cure the violation.
Supporting sources
A retirement plan remains permissible even if payouts fluctuate with firm profits that include contingent fees, provided the plan is firmwide, available to qualifying nonlawyer employees after a service period, and does not allocate benefits from individual matters. The exception expressly tolerates profit-sharing arrangements for retirement benefits. The key safeguards are the absence of ownership interests and the lack of control over legal work.
Supporting sources