Ezel / Ethics Opinions / DCBAR
DCBAR November 23, 1993

Can a lawyer accept and keep a commission for recommending that corporate clients use a particular company as their registered agent?

Short answer: The opinion concluded that a lawyer may not retain a referral fee or commission from a third party for referring a client's business. Any such payment must be disclosed to the client, the client must consent, and the payment must be turned over to the client, because the lawyer's judgment must rest on the quality and fairness of the service, not on a personal financial benefit.

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This page answers the general question as of 1993. Ezel answers yours: whether it's allowed on your facts, under the current rules of professional conduct in your state, with citations.

Currency note: this opinion is from 1993
Subsequent statutory amendments, court decisions, or later opinions or rule amendments may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Disclaimer: Advisory only. Not binding precedent.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked on this page) is the authoritative source for any reliance.

Plain-English summary

Opinion 245 (adopted November 23, 1993) responded to a company that offers statutory registered-agent services for District of Columbia corporations. The company wanted to solicit D.C. Bar members and pay them a commission for listing it as registered agent in articles of incorporation or applications for certificates of authority, and asked whether a lawyer could ethically accept such commissions.

The committee analyzed the question under Rule 1.7(b)(4), which bars a lawyer from representing a client where the lawyer's professional judgment will be or reasonably may be adversely affected by the lawyer's responsibilities to a third party or the lawyer's own financial interests. When a lawyer engages or recommends a third party's services (the committee gave examples such as title insurers, bonding companies, printers, court reporters, and expert witnesses), the lawyer's paramount concern must be the client's interest in a good product at a fair price, and that judgment cannot be influenced by a promised payment from the third party.

Drawing on its Opinion 138 (a permitted bank-referral arrangement where the lawyer received no payment) and on opinions from the ABA and other jurisdictions, the committee concluded that a lawyer may not retain a referral fee or commission from a third party for referring a client's business. Any payment offered to the lawyer for referring a client's business must be disclosed to the client, the client must consent to it, and the payment must be turned over to the client directly or as a credit against the legal bill. The lawyer's referral judgment must be based on the quality and fairness of the third party's services, not on a potential financial benefit to the lawyer.

Currency note

This opinion was issued in 1993, before the District of Columbia's adoption of the 2007 revisions to the Rules of Professional Conduct. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer keep a commission for steering clients to a registered-agent company?

A: No. The committee concluded a lawyer may not retain a referral fee or commission from a third party for referring a client's business.

Q: What must happen to a referral payment the lawyer is offered?

A: It must go to the client. The committee concluded the payment must be disclosed to the client, the client must consent, and the payment must be turned over to the client directly or as a credit to the legal bill.

Q: Why does accepting the commission raise an ethics problem?

A: It threatens the lawyer's independent judgment. The committee concluded that under Rule 1.7(b)(4) a lawyer's recommendation of a third party's services must rest on quality and fair price, not on a promised payment to the lawyer.

Background and rules framework

The opinion interpreted D.C. Rule 1.7(b)(4), the personal-interest branch of the conflict-of-interest rule, which forbids a lawyer from representing a client where the lawyer's professional judgment may be adversely affected by the lawyer's responsibilities to a third party or the lawyer's own financial interests. The committee noted that the prior Code's DR 5-101(A) stated the same rule.

Citations and references

Rules of Professional Conduct:

  • D.C. RPC 1.7(b)(4) / Model Rule 1.7 (personal-interest conflict; independent professional judgment)

Other opinions cited:

  • ABA Informal Op. 1020 (Feb. 9, 1968): a lawyer may not accept remuneration for referring inventor clients to an investment company, even with disclosure and consent
  • D.C. Bar Opinion 138: a no-payment bank-referral arrangement was permitted only where the lawyer had no interest in the bank and was satisfied the terms were fair and in the client's interest
  • New Jersey Ethics Op. 416 (1979): a real estate referral commission must be disclosed, consented to, and credited to the client

See also

Source

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