Can a lawyer prepare estate analyses for insurance agents to use with their prospects, with the fee tied to insurance sales?

Plain-English summary

A life insurance general agent's agents approached prospects and offered an estate analysis: a computation of estate taxes as if the prospect had died, an analysis of critical estate-planning areas, and proposed solutions. If insurance was needed, the agent sold it; if not, the prospect referred the agent to three other persons of similar financial standing. The general agent wanted to employ a lawyer to prepare the analyses and supply estate-analysis information for the agents to use, with the lawyer's only contact being the agents and his name not appearing on the analysis. The lawyer would be paid by the general agent, who would pass on all or part of the cost to his agents.

The committee unanimously concluded the work was improper, finding violations of Canons 6 and 35 for the reasons stated in the second situation of its earlier Opinion 64-33, and treating it as immaterial that the lawyer's name would not appear. On the fee question, it said that even if the arrangement were otherwise proper, making the fee contingent in whole or part on the sale of insurance would be improper, because the effect is to render a service to a prospect through an intermediary where the lawyer is paid only if the client buys insurance from the intermediary. The committee added that it could conceive of no effective steps to keep agents from disclosing who prepared the analyses; that it would be wise to decline representation of a prospect referred by an agent, to avoid the criticism that the arrangement channels legal employment; and that direct contact with the prospect to gather information would be unwise for the same reason. A majority did say it would not be improper for the lawyer to confer with the prospect's own attorney or accountant if the meeting amounted to negotiations at arm's length.

Currency note

This opinion was issued in 1964, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct. The opinion applied former Canons 6, 12, 13, 27, and 35 of the Canons of Professional Ethics; conflicts of interest are now governed by Rule 4-1.7, the lawyer's professional independence (including practice through lay intermediaries) by Rule 4-5.4, and fees by Rule 4-1.5 of the Rules Regulating The Florida Bar (Model Rules 1.7, 5.4, and 1.5). 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: Could the lawyer prepare the estate analyses for the agents?

A: No. The committee found the work improper under Canons 6 and 35 as practice for prospects through an intermediary, following its Opinion 64-33.

Q: Did it matter that the lawyer's name would not appear on the analysis?

A: No. The committee said it did not consider that material to the impropriety.

Q: Could the fee be tied to whether insurance was sold?

A: No. Even if the arrangement were otherwise proper, the committee said a fee contingent in whole or part on the sale of insurance would be improper.

Q: Could the lawyer meet with the prospect's own attorney or accountant?

A: A majority said it would not be improper to confer with them if the meeting amounted to negotiations at arm's length.

Background and rules framework

The opinion turned on former Canons 6 (conflicting interests) and 35 (practice through a lay intermediary), with a fee point under Canons 12 and 13. Those subjects are now addressed by Rule 4-1.7 (conflicts), Rule 4-5.4 (professional independence and lay intermediaries), and Rule 4-1.5 (fees) of the Rules Regulating The Florida Bar (Model Rules 1.7, 5.4, and 1.5).

Citations and references

Rules of Professional Conduct:

• Canons 6, 35 [Canons of Professional Ethics; conflicting interests; practice through a lay intermediary; see current Rules 4-1.7, 4-5.4]
• Canons 12, 13 [fees; see current Rule 4-1.5]

Other opinions cited:

• Florida Opinion 64-33: earlier opinion whose second situation the committee found controlling

See also

• FL Bar Ethics Op. 67-15: A Trust Company Referral to Prepare a Trust
• FL Bar Ethics Op. 67-14: A Broker Employing a Lawyer to Prepare a Deed

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-64-70/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-64-70.pdf

Original opinion text

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

FLORIDA BAR ETHICS OPINION
OPINION 64-70
December 8, 1964
Advisory ethics opinions are not binding.
It would be improper for an attorney to prepare proposed estate analyses for insurance agents. Even if the proposed arrangement were otherwise proper, it would be improper to make the fee for professional services rendered contingent in whole or in part upon the sale of insurance.
Canons: 6, 12, 13, 27, 35
Opinion: 64-33
Chairman Smith stated the opinion of the committee:
A member of The Florida Bar requests our opinion on the following facts and questions.
The general agent for a life insurance company has agents working under his supervision. These agents approach prospective insurance clients and propose an estate analysis. The analysis includes: (1) mathematical computation of estate taxes as if the insurance client had died yesterday, (2) an analysis of critical areas in estate planning and (3) proposed solutions for critical areas. If insurance is needed to solve estate problems the agent sells the insurance. If insurance is not needed the insurance client refers the agent to three other persons of equivalent financial standing.
The general agent wishes to employ the lawyer to prepare the proposed analyses and to supply information concerning estate analysis which is needed by the agents for their respective insurance clients. The analyses would be limited to explaining the various instruments which should be prepared in a particular case and to stating the provisions which such instruments would contain. The lawyer's only contact would be with the insurance agents, and his name would not appear on the analysis.
In some manner which is not stated, the analysis initially prepared would first be presented to attorneys and accountants employed by the prospective client, and the analysis might be changed after conferences with those individuals. After those conferences and changes, if any, the analysis would be presented to the agent's prospective client with a written explanation, and an oral explanation would be given by the agent.
The lawyer would be paid for his service by the general agent who, in turn, would pass on all or part of the cost to his agents as he sees fit.
Our opinion is sought as to the following questions:
1. Is the above arrangement in any way unethical? If so, in what way? Does it in any way violate Canon 35 dealing with intermediaries?
2. In setting the fee in such a situation is it unethical to set the fee either in whole or in part on a contingent basis depending on the sale of insurance?
3. What steps must the lawyer take, if any, to prevent the agents from disclosing that the analysis is prepared by him?
4. If the insurance client does not have an attorney does the lawyer have any responsibility to prevent the agent from recommending his services?
5. Although it is contemplated that the agent will gather all information, would it be unethical for the lawyer to participate in gathering information from the insurance client, which would involve disclosure of the lawyer's name?
6. Would it be unethical for the lawyer to participate in conferences with the insurance client's attorney and accountant?
Questions of similar nature have previously been propounded to our Committee. In our Opinion 64-33 we covered, particularly in the second situation discussed there, a problem quite similar to the one now posed.
In connection with the specific questions which are presented, the Committee unanimously agrees as follows:
1. It would be ethically improper to engage in the work outlined in the factual situation above. Violations of Canons 6 and 35 are involved for the reasons presented in connection with the second factual situation outlined in Opinion 64-33. The Committee does not consider material that the lawyer's name will not appear on the proposed analyses.
2. Even if the proposed arrangement was otherwise proper, it would be ethically improper to make the fee for professional services rendered contingent in whole or part upon the sale of insurance. The effect of such arrangement is to attempt rendition of a service to a prospective insurance client through an intermediary when the lawyer would be paid by the intermediary only if the client purchased insurance from the intermediary. Canons 6 and 35 are involved.
3. We can conceive of no effective steps which could be taken to prevent the agents from disclosing who prepared the analyses if the agents desired to do so.
4. Although it is not always improper to accept employment upon reference by a layman, we believe it would be wise to decline to represent the prospective insurance client even if he is referred by the insurance agent without the lawyer's knowledge or consent. Otherwise, the whole arrangement could be subject to criticism as a device for channeling legal employment.
5. We also believe it would be unwise to participate in gathering information from the prospective client by direct contact with the client. We understand the lawyer would be employed by the general agent to render advice on the basis of information he furnishes. Direct contact with the prospective insurance client would offer the same possibility for criticism mentioned immediately above.
6. Assuming that he was to render the services contemplated, a majority of the Committee believes it would not be improper for the lawyer to confer with attorneys or accountants representing the prospective insurance client provided the meeting, in effect, amounts to negotiations "at arm's length."