Multistate Professional Responsibility Exam Practice Question
Three attorneys, all licensed in State X, want to practice together by forming a professional corporation that will offer legal services to the public. According to the ABA Model Rules of Professional Conduct governing ownership and fee sharing in such entities, which of the following proposed arrangements would comply with the rules?
A non-lawyer holds a minority share of stock in the corporation.
The three lawyers are the sole shareholders and corporate directors.
Because it is a separate legal entity, the corporation is exempt from the Rules of Professional Conduct.
The corporation agrees to pay an outside marketing company a percentage of legal fees as a commission.
Under Model Rule 5.4(d), lawyers may practice in the form of a professional corporation only if non-lawyers neither own an equity interest, serve as corporate directors or officers, nor possess the right to direct or control the lawyers' professional judgment. The arrangement in which the three lawyers serve as the sole shareholders and directors satisfies these requirements. All other options violate Rule 5.4 because they involve non-lawyer ownership, impermissible fee sharing, or the incorrect assumption that the corporation is exempt from ethical rules.
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