Professor Dane Ciolino recently offered a summary of the N.Y. Bar Association Opinion in his Louisiana Legal Ethics newsletter and blog, explaining that the ethical use of a “crowdfunding” platform would depend upon the model:Movie Carol (2015)
Royalty and Equity Models. These models give the contributor some ownership interest in the firm or some right to a portion of the firm’s legal fees. According to the committee: “The royalty model contemplates the investor receiving a percentage of revenues, and would therefore violate Rule 5.4(a) (‘A lawyer shall not share legal fees with a nonlawyer’). Similarly, the equity model violates Rule 5.4(d) (lawyer shall not practice law in a for-profit entity if a non-lawyer owns any interest therein.).”
Reward Model. This model gives the contributor some reward, such as an informational pamphlet or pro bono services provided by the firm to a charitable organization. The committee found no per se prohibition with this model: “[A] law firm may send a funder non-confidential memoranda discussing legal issues (provided the law firm complies with any applicable advertising rules), or may agree that the law firm will provide pro bono legal services to certain charitable organizations, provided that the lawyer complies with Rule 1.1 regarding competence and the representation does not involve conflicts in violation of Rule 1.7 or Rule 1.9.”
Donation Model. This model gives the contributor nothing—just the ability to contribute gratuitously to the firm. Said the committee, “we see no ethical issues with the donation model, as long as the lawyers make clear that donors will receive nothing in return and that the law firm is designed to be a profit-making enterprise.”
Lending Model. This model gives the contributor the right to repayment of the contribution. The committee offered no opinion on this model because it “would only increase debt and therefore would not meet the law firm’s goal.”
See New York State Bar Association Ethics Opinion No. 1062 (June 29, 2015).