Can a lawyer set up a family-owned holding company to take title to clients' property and hold their funds?

Plain-English summary

A member asked whether it was unethical for an attorney to organize a holding company consisting of himself and two members of his family, who immediately gave him full authority to act on behalf of the corporation, and then to use the corporation to receive title to real estate and other property for clients and open a bank account for client funds. The corporation would own nothing in its own right, would never hold property or money of anyone except the clients and the lawyer, and would make no charge for the service.

The committee found nothing improper or unethical, except as it might be unlawful for such a corporation to function without qualifying as a trust company under the law, and so long as full disclosure is made to clients that the corporation consists of the lawyer and members of his family, that it has no assets other than those of the clients, and that clients are informed their properties (as well as those of other clients) will be held by the corporation.

Currency note

This opinion was issued in 1962, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct. The opinion applied former Canon 6 of the Canons of Professional Ethics; the conflict and disclosure concerns are now addressed by Rule 4-1.7, and the safekeeping of client property and funds by Rule 4-1.15 and Rule 5-1.1, of the Rules Regulating The Florida Bar (Model Rules 1.7 and 1.15). The committee also flagged that operating such a corporation could be unlawful absent qualification as a trust company, a question of substantive law. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against the current rules before relying on any specific requirement mentioned here.

Common questions

Q: Can a lawyer hold clients' property through a corporation he and his family own?

A: The committee found nothing unethical on the stated facts, provided the corporation held only client and lawyer property and full disclosure was made to clients about its makeup and purpose.

Q: What conditions did the committee attach?

A: Full disclosure to clients that the corporation consists of the lawyer and his family, that it has no assets other than the clients' own, and that clients' properties will be held alongside those of other clients. The committee also noted it could be unlawful for the corporation to operate without qualifying as a trust company.

Background and rules framework

The opinion applied former Canon 6 of the Canons of Professional Ethics, concerning adverse and conflicting interests. The conflict and disclosure aspects are now addressed by Rule 4-1.7, and the safekeeping of client property and funds by Rule 4-1.15 and Rule 5-1.1, of the Rules Regulating The Florida Bar (Model Rules 1.7 and 1.15). The committee expressly left the trust-company licensing question to substantive law.

Citations and references

Rules of Professional Conduct:

• Canon 6 [Canons of Professional Ethics; see current Rules 4-1.7, 4-1.15, 5-1.1]

See also

• FL Bar Ethics Op. 63-3: Files and Missing-Client Funds
• FL Bar Ethics Op. 62-71: Exercising a Retaining Lien

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-62-28/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-62-28-1.pdf

Original opinion text

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

FLORIDA BAR ETHICS OPINION
OPINION 62-28
November 1, 1962
Advisory ethics opinions are not binding.
Provided certain conditions are met, there is nothing unethical in a lawyer organizing a holding company consisting of himself and other members of his family, who immediately give him full authority to act on behalf of the corporation, to receive title to real estate and other property of clients.
Canon: 6
Chairman Holcomb stated the opinion of the committee:
A member of The Florida Bar posed a question to the Professional Ethics Committee as to whether there is anything unethical in an attorney organizing a holding company consisting of himself and two members of his family, who immediately give him full authority to act on behalf of the corporation, and then the attorney using the corporation to receive title to real estate and other property for clients, and opening a bank account to receive funds of clients, but the corporation owns nothing in its own right and never has property or money of anyone except his clients and himself, no charge being made on behalf of the corporation or the attorney for this service.
The Committee finds nothing improper or unethical, except as it might be unlawful for such a corporation to function without qualifying as a trust company under the law, and so long as a full disclosure is made to clients that the corporation consists of the lawyer and members of his family and has no assets other than those of the clients and that the clients are also informed that their properties, as well as those of other clients, will be held by the corporation.