I was skimming my second-favorite law blog this morning, and ran across an interesting post by Elie Mystal on Upstart.com, a crowdfunding site where “Upstarts” sell their soul pledge a percentage of their income for the next ten years in exchange for present-day funding. The gist is “give me money now, and if I don’t fail at life, I’ll give you a percentage of my income, per my tax filings, for the next ten years.”

It’s a nice concept, and could pay off if you back a winner. Plus, who needs student loan debt relief more than lawyers?

Assuming his appellate advocacy skills match his pedigree, he should be able to run a successful law firm, even if, as Mystal points out, appellate firms don’t exactly make it rain.

There’s still one big issue: fee splitting.

I may be wrong (that’s often the case), but wouldn’t the model rules prohibit an arrangement where backers fund a law firm and get a cut of the firm’s income?

Model Rule 5.4, “Professional Independence of a Lawyer” prohibits fee-sharing with nonlawyers except:

  • Sharing with the estate of a deceased lawyer;
  • Sharing, as part of a compensation plan, with employees;
  • Sharing court-awarded fees with a nonprofit that made the case referral;

Now, presumably, he’d be sharing his income rather than the firm’s income, but that’s a narrow distinction if he operates as a sole practitioner.

While crowdfunding sites are one of the bigger trends today, with backers funding everything from smartwatches to someone’s birthday party, if the funding will be used to open a legal practice, and a percentage of your income has to be kicked back to your backers, it might be worth your time to consult with your state bar’s ethics committee first.

Related Resources:

  • Happy Graduation: Recent Cal Law Grad Gets Jail for Bird Beheading (FindLaw’s Greedy Associates)
  • Want to Discharge Student Loan Debt? Fail Bar, Wait 10 Years (FindLaw’s Greedy Associates)
  • Law Sucks. What Else is There? Legal Startup Companies (FindLaw’s Greedy Associates)

You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help

Civil Rights

Block on Trump’s Asylum Ban Upheld by Supreme Court

Criminal

Judges Can Release Secret Grand Jury Records

Politicians Can’t Block Voters on Facebook, Court Rules