May a lawyer accept a referral fee from a savings institution for recommending that a client invest there?

Currency note

Opinion 60-26 was modified by Opinion 70-13, which added the requirement that the client receive the benefit of the referral fee or that the attorney credit the client with the fee against the attorney's fees. This opinion was issued in 1961, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct. It applied former Canons 6, 11, 32, and 38 of the Canons of Professional Ethics; a lawyer's acceptance of compensation from a third party in connection with a client's matter and the related conflict are now addressed by Rules 4-1.7 and 4-1.8 of the Rules Regulating The Florida Bar (Model Rules 1.7 and 1.8). Treat this page as historical context, not current guidance. Verify against the current rules and the modification in Opinion 70-13 before relying on any specific requirement mentioned here.

Plain-English summary

A member asked about an offer by a savings institution to pay attorneys a referral fee for recommending that clients invest their funds in that institution. The committee analyzed the offer under the Canons. Under Canon 38, a lawyer should accept no compensation, commissions, rebates, or other advantages from others without the client's knowledge and consent after full disclosure. Canon 11 provides that a lawyer should refrain from any action by which, for his personal benefit, he abuses or takes advantage of the confidence reposed in him by his client. Canon 32 addresses the lawyer's duty in its last analysis.

The committee did not disapprove of an institution paying a lawyer a fee for recommending investment of a client's funds there, provided the lawyer first satisfies himself by an independent investigation that the investment is proper under all the circumstances, and provided he first makes full disclosure to the client of all the facts, including the prospective payment of a fee by the firm with whom the funds are placed, and secures the client's written consent to that payment. The committee stressed that the opinion did not approve investment in the particular institution making the offer; it was a general opinion applying to all investments of funds.

Common questions

Q: Could a lawyer take a referral fee from an institution for steering a client's investment there?

A: Under this opinion, yes, but only after an independent investigation showing the investment is sound and after full disclosure to the client and the client's written consent to the fee. Opinion 70-13 later added that the client must receive the benefit of the fee or be credited with it.

Q: Did the opinion endorse the particular institution that made the offer?

A: No. The committee stated the opinion was general, applying to all investments of funds, and did not approve investment in the particular institution that made the offer.

Citations and references

Rules of Professional Conduct:

• Canon 6 [Canons of Professional Ethics; see current Rule 4-1.7]
• Canon 11 [Canons of Professional Ethics]
• Canon 32 [Canons of Professional Ethics]
• Canon 38 [Canons of Professional Ethics; see current Rule 4-1.8]

Other opinions cited:

• Florida Opinion 70-13 (modifying this opinion)

See also

• FL Bar Ethics Op. 70-13: Finder's Fee on Client Investments
• FL Bar Ethics Op. 67-25: Hidden Insurance Referral Fee
• FL Bar Ethics Op. 61-13: A Lawyer's Interest in a Bond Fiscal-Agent Corporation

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-60-26/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-60-26-1.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

FLORIDA BAR ETHICS OPINION
OPINION 60-26
February 7, 1961
Advisory ethics opinions are not binding.
Subject to full disclosure to and written consent by his client, and the condition that the lawyer is not abusing the confidence which the client places in him, a lawyer may recommend that a client invest in a certain way even though the lawyer receives a "referral fee" from the institution for making such a recommendation. This recommendation is proper only after the lawyer has made a complete investigation before giving such advice and feels it to be sound.
Note: This opinion was modified by opinion 70-13, which adds the requirement that the client receive the benefit of the referral fee or that the attorney credit the client with the fee against the attorney's fees.
Canons: 6, 11, 32, 38
Chairman Holcomb stated the opinion of the committee:
A member of The Florida Bar submits an inquiry concerning an offer made by a savings institution to pay attorneys a referral fee for recommending investment of clients' funds in that institution. The matter has been submitted to the Committee, and we find as follows:
Under Canon 38, a lawyer should accept no compensation, commissions, rebates or other advantages from others without the knowledge and consent of his client after full disclosure.
Canon 11 provides: "A lawyer should refrain from any action whereby for his personal benefit or gain he abuses or takes advantage of the confidence reposed in him by his client...."
Canon 32 provides for the lawyer's duty in its last analysis, and is too long to quote here.
Under the circumstances, the Committee does not disapprove of the payment of a fee by an institution to a lawyer for recommending investment of his client's funds in that institution provided the lawyer first satisfies himself by an independent investigation that the investment is a proper one under all of the circumstances, and provided he first makes a full disclosure to his client of all of the facts, including the fact of a prospective payment of a fee to him by the firm with whom the funds are placed and secures his client's consent in writing to such payment.
This opinion is not to be construed as approving investment of funds in the particular institution making the offer involved herein, but is a general one applying to all investments of funds.