A lawyer admitted in a United States jurisdiction outside of Arizona is contacted by a potential client with respect to representation on a personal injury matter, the circumstances of which took place in Arizona. The out-of-state lawyer  refers the matter to an Arizona lawyer because the events occurred in Arizona and the matter involves Arizona law. Client retains Arizona lawyer pursuant to a reasonable contingent fee agreement. The questions presented below center on the circumstances under which the Arizona lawyer may divide the fee with the referring out-of-state lawyer.
1. May the Arizona lawyer divide the fee with the referring out-of-state lawyer if the out-of-state lawyer is not included in the contingent fee agreement, does nothing further on the matter and the client’s case then settles without litigation?
2. May the Arizona lawyer divide the fee with the out-of-state lawyer if the out-of-state lawyer is named in the contingent fee agreement, the contingent fee agreement refers to the fact that the lawyers will divide the fee and the client consents to the agreement, even if the out-of-state lawyer does nothing further on the case and the client’s case settles without litigation?
3. Is it permissible for the Arizona lawyer to divide the fee with the non-Arizona lawyer if the matter proceeds to litigation, the referring out-of-state lawyer is not admitted pro hac vice and the case settles before a trial?
4. Is the result to question 3 any different if the out-of-state lawyer and client have entered into a separate contingent fee agreement under which the client will directly pay a fee to the referring out-of-state lawyer?
APPLICABLE ARIZONA RULES OF PROFESSIONAL CONDUCT (“ER __”)
ER 1.5 Fees
. . .
(e) A division of a fee between lawyers who are not in the same firm may be made only if:
(1) each lawyer receiving any portion of the fee assumes joint responsibility for the representation;
(2) the client agrees, in a writing signed by the client, to the participation of the lawyers involved; and
(3) the total fee is reasonable.
ER 5.5 Unauthorized Practice of Law
(a) A lawyer shall not practice law in a jurisdiction in violation of the regulation of the legal profession in that jurisdiction, or assist another in doing so.
. . .
(c) A lawyer admitted in another United States jurisdiction, and not disbarred or suspended from practice in any jurisdiction, may provide legal services on a temporary basis in this jurisdiction that:
(1) are undertaken in association with a lawyer who is admitted to practice in this jurisdiction and who actively participates in this matter;
(2) are in or reasonably related to a pending or potential proceeding before a tribunal in this or another jurisdiction, if the lawyer, or a person the lawyer is assisting, is authorized by law or order to appear in such proceeding or reasonably expects to be authorized;
(3) are in or reasonably related to a pending or potential arbitration, mediation, or other alternative dispute resolution proceeding in this or another jurisdiction, if the services arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice and are not services for which the forum requires pro hac vice admission; or
(4) are not within paragraphs (c)(2) or (c)(3) and arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice.
. . .
(e) Any attorney who engages in the authorized multijurisdictional practice of law in the State of Arizona under this rule must advise the lawyer’s client that the lawyer is not admitted to practice in Arizona, and must obtain the client’s informed consent to such representation.
(f) Attorneys not admitted to practice in the State of Arizona, who are admitted to practice law in any other jurisdiction in the United States and who appear in any court of record or before any administrative hearing officer in the State of Arizona, must comply with Rules of the Supreme Court of Arizona governing pro hac vice admission.
(g) Any attorney who engages in the multijurisdictional practice of law in the State of Arizona, whether authorized in accordance with these Rules or not, shall be subject to the Rules of Professional Conduct and the Rules of the Supreme Court regarding attorney discipline in the State of Arizona.
OTHER RELEVANT RULES OF THE SUPREME COURT
Rule 33 Committees; Practice
. . .
(c) Practice in Courts. No person shall practice law in the State of Arizona without being admitted to the bar by compliance with the following rules, provided that an attorney practicing in another state or territory or insular possession of the United States or the District of Columbia may be permitted by any court to appear in a matter pro hac vice, in accordance with the procedures set forth in Rule 38(a).
RELEVANT ETHICS OPINION
Ariz. Ethics Op. 04-02
The inquiring lawyer asks several questions regarding the circumstances under which an Arizona lawyer may participate in a fee division agreement with an out-of-state lawyer. We start with the premise that Arizona does not allow a lawyer to be paid a fee merely for recommending another lawyer or referring a case. See Ariz. Ethics Op. 04-02. However, Arizona’s Ethical Rules allow the division of a fee between lawyers so long as the requirements of ER 1.5(e) are met. ER 1.5(e) provides that a division of a fee between lawyers not in the same firm may be made if each lawyer receiving a portion of the fee assumes joint responsibility for the representation, the client agrees in a writing signed by the client to the participation of all of the lawyers involved, and the total fee is reasonable.
In the first question presented, the out-of-state lawyer performs no work in the matter and is not included in or referenced in the contingency fee agreement. Arizona fee division rules do not require that a lawyer have substantive involvement in the matter on which the fee is divided. See Ariz. Ethics Op. 04-02. The client must, however, consent to the fee division arrangement in writing and the lawyers must assume joint responsibility for the representation. See ER 1.5(e). Therefore, in response to the first question, a fee may not be divided with the out-of-state lawyer due to non-compliance with ER 1.5(e).
In the scenario presented in the second question, the out-of-state lawyer is named in the contingent fee agreement and the client consents in writing to the division of the fee between the out-of-state lawyer and the Arizona lawyer. Provided that both lawyers assume joint responsibility for the representation and the overall fee is reasonable, this arrangement complies with ER 1.5(e).
We now must examine whether dividing the fee with the non-Arizona lawyer is otherwise permissible under the Ethical Rules. In analyzing this issue, we must determine whether the out-of-state lawyer is considered a “lawyer” under ER 1.5(e). This Committee has not previously addressed the issue of dividing a fee with an out-of-state lawyer. The issue was addressed in Peterson v. Anderson, 155 Ariz. 108, 745 P2d 166 (App. 1987). In Peterson, the Court considered a dispute over a fee division arrangement between an Arizona lawyer and an Illinois lawyer residing in Arizona. The Peterson court found it important that Peterson, the out-of-state lawyer, actually provided independent legal advice to the client in the matter, the matter was litigated with Peterson providing services in court during the litigation, and Peterson never applied for pro hac vice admission. The Peterson court rejected Peterson’s argument that, although he was a “non-member,” he was not a “non-lawyer,” and, therefore, the fee division was permissible under the Ethical Rules. Acknowledging that the terms lawyer and non-lawyer were not defined in the then-existing applicable rules, and also that there may be some distinction between the terms, the Peterson court nonetheless elected to use the terms interchangeably and held the fee division arrangement unenforceable.
Our current Ethical Rules still do not provide any definition of “lawyer” and there is no distinction that makes it clear that the term “lawyer” only refers to a person admitted to practice in the State of Arizona. The Supreme Court Rules related to the Regulation of Law Practice provide a definition for the term “non-member.” “Non-member” is a “person licensed to practice law in a state or possession of the United States or a non-lawyer permitted to appear in such capacity, but who is not a member of the [Arizona] State Bar.” See Ariz. Supreme Court Rule 32(b)(6) and (7). The rules related to pro hac vice admission make it clear that such admission requires that a non-resident lawyer understand and comply with the standards of professional conduct required of all members of the State Bar of Arizona. See Supreme Court Rule 38(a)(4)(M).
Since the Peterson case was decided, ER 5.5, addressing the unauthorized practice of law, was amended significantly. ER 5.5 now sets forth several options for a “lawyer admitted in another United States jurisdiction” to provide legal services in Arizona. Specifically, since 2003, a lawyer admitted and in good standing in another United States jurisdiction may temporarily provide legal services in Arizona when the services are undertaken in association with a lawyer who is admitted to practice in Arizona and who actively participates in the matter. ER 5.5(c)(1). We first note that ER 5.5(c)(1) uses the word “lawyer” to refer to a person admitted outside of the State of Arizona. Reading ER 5.5 together with the definitions contained in Supreme Court Rules 32 and 38, described above, we conclude that “lawyer” must include a person admitted as a lawyer in a jurisdiction in the United States outside of Arizona and that “non-lawyer” refers to an individual not admitted to practice law in any United States jurisdiction.
Turning back to the second scenario presented, because the provision of the services by the out-of-state lawyer in conjunction with the Arizona lawyer is permissible, the fee division between the out-of-state lawyer and the Arizona lawyer also is permissible so long as the requirements of ER 1.5(e) are met.  The out-of-state lawyer engaging in this authorized multi-jurisdictional practice must advise the client that he or she is not admitted to practice in Arizona and must also obtain the client’s informed consent to the representation. See ER 5.5(e). Therefore, the client must consent in writing to the fee division between the out-of-state lawyer and the Arizona lawyer, acknowledge the out-of-state lawyer is not admitted in Arizona, and consent to the out-of-state lawyer’s representation in the matter.
In the third question posed by the inquiring lawyer, the matter proceeds to litigation and the referring out-of-state lawyer is not admitted pro hac vice in the case. As explained above, the out-of-state lawyer is permitted to provide certain legal services without pro hac vice admission pursuant to ER 5.5. However, some services, such as signatures on pleadings and appearances in court or administrative hearings, require pro hac vice admission. See ER 5.5(f); see also, Supreme Court Rule 38. The division of the fee between the Arizona lawyer and the out-of-state lawyer is permissible without pro hac vice admission so long as the out-of-state lawyer does not provide services which require such admission. In order to meet the obligations under ER 5.5(a), the Arizona lawyer is responsible to ensure that the out-of-state lawyer is either providing services permitted under ER 5.5 or admitted pro hac vice and thus that the Arizona lawyer is not assisting the out-of-state lawyer in the unauthorized practice of law.
If the out-of-state lawyer is admitted pro hac vice, services provided by the out-of-state lawyer may, of course, include court appearances, listing on pleadings, and all other activities in the tribunal before which the case is pending. Again, so long as the Arizona lawyer and the out-of-state lawyer comply with the provisions of ER 1.5(e) and ER 5.5, fee division between the lawyers is permissible. We also note that by engaging in the multi-jurisdictional practice in Arizona, the out-of-state lawyer is subject to the Rules of Professional Conduct and Rules of the Supreme Court regarding lawyer discipline. ER 5.5(g).
The final question presented is whether fee division is permissible if the out-of-state lawyer and client directly entered into a signed contingent fee agreement. Under those circumstances, it appears that, rather than being a fee division agreement, the out-of-state lawyer would have a direct relationship with the client as to the payment of a fee. So long as the out-of-state lawyer is not dividing any fee from the Arizona lawyer, this arrangement would not be considered fee division under ER 1.5(e). Of course, the out-of-state lawyer still must ensure that he or she does not run afoul of ER 5.5(b) either with respect to practicing in Arizona or holding himself or herself out as being admitted to practice in Arizona and also must ensure compliance with all other applicable rules.
An Arizona lawyer may divide a fee with an out-of-state lawyer as long as the arrangement complies with the requirements of ER 1.5(e), and the out-of-state lawyer’s services to the client comply with the requirements of ER 5.5 and all rules pertaining to pro hac vice admission.
Formal opinions of the Committee on the Rules of Professional Conduct are advisory in nature only and are not binding in any disciplinary or other legal proceedings. This opinion is based on the Ethical Rules in effect on the date the opinion was published. If the rule changes, a different conclusion may be appropriate. © State Bar of Arizona 2010
 The term “out-of-state lawyer” is used in this opinion to mean a lawyer who is admitted to practice law in another United States jurisdiction and not admitted to practice law in Arizona.
 It should also be noted that an out-of-state lawyer may, in certain circumstances, provide legal services under the multi-jurisdictional practice rules without associating an Arizona lawyer if such services arise out of or are reasonably related to the lawyer’s practice in the jurisdiction in which the lawyer is admitted. ER 5.5(c)(4). The physical location of the out-of-state lawyer when providing the services is irrelevant. The analysis turns on whether the out-of-state lawyer is properly performing the services pursuant to ER 5.5 or pro hac vice admission.