Can a lawyer who places a client's investments charge a full fee and also keep a finder's fee from the institution?

Plain-English summary

The Board of Governors asked the committee to review Florida Opinion 60-26 in light of banks advertising and soliciting Florida Bar members to induce their clients to deposit money with the banks, with the banks paying the lawyers a finder's fee. Opinion 60-26 had determined that, with full disclosure and the client's written consent, a lawyer could recommend a particular investment even though the lawyer received what amounted to a finder's or referral fee.

The committee said the inquiry was now controlled by DR 5-107(A) and that, on the language of that provision, the answer would appear to be the same as under the old Canons and Opinion 60-26. A majority, with one dissent, decided to partially amend the prior opinion. It held that full disclosure under DR 5-107(A) does not authorize an attorney to charge the client a full fee and at the same time accept and retain a finder's fee for placing investments in a particular institution; if the attorney passes the benefit of the finder's fee on to the client, or credits it against the fees ordinarily charged, there would be no question of propriety. The committee reaffirmed Opinion 60-26 with the added requirement that the client receive the benefit of the finder's or referral fee, and stated this applies to all investments of funds.

Currency note

This opinion was issued in 1970, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct. It applied DR 5-107(A) of the former Code of Professional Responsibility and amended prior Florida Opinion 60-26. A lawyer's receipt of value from a third party in connection with a representation is now addressed by Rule 4-1.8(f). Treat this page as historical context, not current guidance.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 keep a bank's finder's fee for steering a client's deposits there?

A: Under this opinion, not while also charging the client a full fee. The committee required that the client receive the benefit of the finder's or referral fee.

Q: Was full disclosure enough to keep the finder's fee?

A: No. The committee held that full disclosure under DR 5-107(A) does not authorize charging a full fee and also retaining the finder's fee; the benefit must go to the client or be credited against the lawyer's usual fee.

Background and rules framework

The opinion applied DR 5-107(A) of the former Code of Professional Responsibility, which governed a lawyer's acceptance of value from a third party in connection with a representation, and amended Florida Opinion 60-26. That subject is now addressed by Rule 4-1.8(f) of the Rules Regulating The Florida Bar; the Model Rule analogue is Rule 1.8(f).

Citations and references

Rules of Professional Conduct:

• DR 5-107(A) [Code of Professional Responsibility; third-party value now in Rule 4-1.8(f)]

Other opinions cited:

• Florida Opinion 60-26 [reaffirmed as amended]: recommending investments where the lawyer receives a finder's fee

See also

• FL Bar Ethics Op. 70-49: Title Insurance Premium Rebate

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-70-13/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-70-13-1.pdf

Original opinion text

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

FLORIDA BAR ETHICS OPINION
OPINION 70-13
November 16, 1970
Advisory ethics opinions are not binding.
An attorney investing funds for a client may not charge a full fee to his client and at the same time accept a finder's fee for placing the investments in a particular institution.
CPR: DR 5-107(A)
Opinion: 60-26
Chairman Massey stated the opinion of the committee:
The Board of Governors of The Florida Bar has requested this Committee to review Florida Opinion 60-26 in the following context. Banks are advertising and soliciting lawyers who are members of The Florida Bar to have the lawyers induce their clients to deposit money with said banks with the banks paying the lawyers a finder's fee therefore. Certain specific promotional material has been furnished to the Committee for its review.
In Opinion 60-26, it was determined that subject to full disclosure and written consent of the client, a lawyer could ethically recommend to a client to invest in a certain way, even though the lawyer received what amounts to a finder's or referral fee. The conclusion there reached is amplified in the opinion found in Professional Ethics, The Florida Bar, 1959-1967, at pages 60-61.
The inquiry is now controlled by CPR DR 5-107(A). Based on the language of the cited provision, it would appear that the answer today should be the same as that which obtained under the old Canons and Opinion 60-26. However, a majority of the present Committee determines to partially amend the prior opinion, there being one dissent.
Full disclosure under DR 5-107(A) should not and does not authorize an attorney to charge a full fee to his client and at the same time accept and retain a finder's fee for placing investments for the client in a particular institution. Should the attorney pass on the benefit of the finder's fee to the client or credit the same against fees ordinarily charged for the attorney's services, then there would be no question of the propriety of the practice. Thus, the Committee advises the Board of Governors that Opinion 60-26 is reaffirmed with the additional requirement that the client shall receive the benefit of the finder's or referral fee paid the attorney by the institution seeking the investment. It is intended that this opinion shall apply to all investments of funds.