Is it a conflict for a lawyer to represent a bank while being paid by a client whose business the bank and an insurance company solicited?

Plain-English summary

A member described a pension-plan arrangement much like the one in companion Opinion 64-71. A bank retained an attorney to process pension plans, stating the reason was to protect the bank from poorly drawn plans. The bank kept control of every step with the IRS in qualifying the plans, sent part of the funds to a northern bank for investment, and purchased an insurance policy. The bank and the insurance company solicited the business, the plans were standardized mimeographed forms worked up by the northern bank, and the attorney was to receive a $300 fee from the persons setting up each plan. The insurance company planned to send customers to the bank from across the state, and the bank's trust officer was verbally advertised as a licensed Florida attorney. The question was whether it is a conflict of interest for an attorney to represent a bank and be paid by a client whose business was solicited by the bank and an insurance company.

The committee unanimously concluded that a conflict of interest existed and that the proposed arrangement was improper. It said its recent companion opinion (64-71) answered the primary questions. The committee added that this arrangement contained a possible vice not apparent in 64-71: the attorney would receive a set fee for his services. While it is not necessarily unethical to contract to serve a client for a specified, volume-reduced fee, the committee said care should be taken so the fee bears a reasonable relationship to the elements outlined in Canon 12, and attention must be given to the considerations relating to minimum fee scales.

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, 27, and 35 of the Canons of Professional Ethics; conflicts of interest are now governed by Rule 4-1.7, the reasonableness of fees by Rule 4-1.5, and the lawyer's professional independence (including lay intermediaries) by Rule 4-5.4 of the Rules Regulating The Florida Bar (Model Rules 1.7, 1.5, and 5.4). 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 Treat this page as historical context, not current guidance.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: Was the arrangement a conflict of interest?

A: Yes. The committee unanimously found that a conflict existed and that the proposed arrangement was improper, following its companion Opinion 64-71.

Q: What was different from Opinion 64-71?

A: The attorney here would receive a set fee for his services. The committee said that, while a specified volume-reduced fee is not necessarily unethical, the fee must bear a reasonable relationship to the Canon 12 fee factors.

Q: Did the committee reach the minimum-fee-scale point?

A: It said attention must also be given to the considerations relating to use of minimum fee scales, without resolving the fee amount.

Background and rules framework

The opinion rested on former Canon 6 (conflicting interests), drawing on companion Opinion 64-71, and added a fee caution under former Canon 12. Conflicts of interest are now governed by Rule 4-1.7, fee reasonableness by Rule 4-1.5, and the lawyer's professional independence (including practice through lay intermediaries, the subject of former Canons 27 and 35) by Rule 4-5.4 of the Rules Regulating The Florida Bar (Model Rules 1.7, 1.5, and 5.4).

Citations and references

Rules of Professional Conduct:

• Canon 6 [Canons of Professional Ethics; conflicting interests; see current Rule 4-1.7]
• Canon 12 [reasonableness of fees; see current Rule 4-1.5]
• Canons 27, 35 [solicitation/channeling of employment; lay intermediaries; see current Rule 4-5.4]

Other opinions cited:

• Florida Opinion 64-71: companion pension-plan opinion the committee said answered the primary questions

See also

• FL Bar Ethics Op. 64-71: Bank-Paid Work on a Corporation's Pension Plan
• FL Bar Ethics Op. 65-12: Drafting Trust Guidelines for a Bank

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-64-74/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-64-74.pdf

Original opinion text

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

FLORIDA BAR ETHICS OPINION
OPINION 64-74
December 14, 1964
Advisory ethics opinions are not binding.
It is improper for an attorney to represent a bank and to be paid by a client whose business was solicited by the bank and an insurance company.
Canons: 6, 12, 27, 35
Opinion: 64-71
Chairman Smith stated the opinion of the committee:
A member of The Florida Bar inquires:
A bank hires or retains an attorney to process pension plans for the stated reason that the attorney will protect the bank from poorly drawn pension plans. The bank retains control of all steps of the procedure with the Internal Revenue Service in qualifying the plans. The bank will send part of the funds received to a northern bank for investment and also purchases an insurance policy. The bank and the insurance company will solicit the business. The pension plans will be mimeographed forms worked up by the northern bank and sent to the attorney retained by the bank. The attorney is to receive $300 as fee from the persons setting up the plan. The bank advises verbally that the fees are the cheapest obtainable and the plan has already been worked up by the bank. The insurance company plans to send all customers to the bank from all over the state. The local bank's trust officer is verbally advertised as an attorney licensed to practice law in the State of Florida.
Is it a conflict of interest for an attorney to represent a bank and to be paid by a client whose business was solicited by the bank and an insurance company?
It is the unanimous opinion of this Committee that a conflict of interest does exist and that the arrangement proposed is improper.
We have recently responded to a similar inquiry which, we believe, answers the primary questions which are posed. (Op. 64-71.)
The arrangement which is outlined possibly contains a vice which was not apparent in the facts stated in our Opinion 64-71. It is indicated that the attorney will receive a set fee for the services he renders. While it is not necessarily unethical to contract to serve a client for a specified fee which, because of the volume of work, may be somewhat reduced, care should be taken to insure that the fee has reasonable relationship to the elements which are outlined in Canon 12 as pertinent to such matters. Attention must also be given to the considerations which relate to use of minimum fee scales.