Can a law firm provide 'general legal services' to a mutual fund, including drafting prototype trust instruments for the fund's agents to use with customers?

Plain-English summary

A firm asked whether it could provide "general legal services" to a mutual fund. The firm would first prepare "prototype trust instruments" for the fund's agents to use with customers, and later, if asked by a customer or the customer's attorney, would analyze whether a trust was warranted and which form to use. The fund would pay the firm except when the firm prepared documents at a customer's request, in which case the customer or the customer's attorney would pay directly.

The committee said it was again being asked whether proposed representation of a lay agency in the estate-planning field could violate ethical precepts. It explained that arrangements between lawyers and mutual funds, life insurance agents, or other lay agencies active in estate planning are fraught with ethical pitfalls, and that both the former canons and the present code had condemned similar relationships because of the inherent conflict of interest, the inevitable imposition of a lay intermediary between attorney and client, and the strong likelihood that the attorney's services might unwittingly aid the unauthorized practice of law. The proposed method too readily lent itself to selling a package that included legal services. For the reasons stated in detail in its former opinions 64-33, 64-70, and particularly 67-11, the committee concluded the lawyer should not undertake the representation as proposed.

Currency note

This opinion was issued in 1972, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct. It applied the former Code of Professional Responsibility, which has since been replaced. Treat this page as historical context, not current guidance. Verify against current Rules 4-5.5 and 4-5.4 before relying on any specific requirement mentioned here.

Common questions

Q: Could the firm provide "general legal services" to the mutual fund as proposed?

A: Under this opinion, no. The committee concluded the lawyer should not undertake the representation because of the conflicts and unauthorized-practice problems the arrangement created.

Q: What was wrong with preparing prototype trust instruments for the fund's agents?

A: The committee viewed the arrangement as placing a lay intermediary between the attorney and the customer and as too readily lending itself to selling a package that included legal services, raising the likelihood of aiding the unauthorized practice of law.

Background and rules framework

The opinion addressed a lawyer's relationship with a lay agency that would stand between the lawyer and the ultimate customer in estate-planning work. In current Florida practice the unauthorized-practice concern corresponds to Rule 4-5.5 and the interference of a non-lawyer in the lawyer's professional judgment to Rule 4-5.4; the Model Rule analogues are Rules 5.5 and 5.4.

Citations and references

Other opinions cited:

• Florida Opinions 64-33, 64-70, 67-11

See also

• FL Bar Ethics Op. 72-26: A Lawyer's Stock in a Bail Bond Business
• FL Bar Ethics Op. 17-1: Fee Division With a Nonlawyer-Owned Out-of-State Firm

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-72-21/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-72-21-2.pdf

Original opinion text

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

FLORIDA BAR ETHICS OPINION
OPINION 72-21
June 21, 1972
Advisory ethics opinions are not binding.
A lawyer should not undertake to provide "general legal services" to a mutual fund when such services would include preparation of "prototype trust instruments" for use by agents of the mutual fund in dealing with customers.
Opinions: 64-33, 64-70, 67-11
Chairman Clarkson stated the opinion of the committee:
We are again called upon to determine whether proposed legal representation of a lay agency in the estate planning field may violate ethical precepts.
The inquiring member of The Florida Bar states that his firm has been asked to provide "general legal services" to a mutual fund. Initially, the firm would prepare "prototype trust instruments" for use by agents of the mutual fund in dealing with customers. Thereafter, if requested to do so by a customer or his attorney, the law firm would "make an analysis as to whether or not a trust was warranted, and if so, which of the trust forms should be used." The law firm's compensation would be paid by the mutual fund except in those instances in which the firm prepared legal documents upon request of the customer or his attorney, in which event the firm would be paid directly by the customer or his attorney.
As we have consistently noted in the past, arrangements between lawyers and mutual funds, life insurance agents or other lay agencies active in estate planning work are fraught with ethical pitfalls. Both the former canons and the present code have condemned similar relationships because of the inherent conflict of interest, the inevitable imposition of a lay intermediary between attorney and client and the strong likelihood that the attorney's services may occasionally and unwittingly aid the unauthorized practice of law. The proposed method of dealing between the mutual fund and its potential customers too readily lends itself to the sale of a package which includes legal services.
For the reasons stated in exhaustive detail in our former opinions 64-33, 64-70 and particularly 67-11, we have concluded that the inquiring lawyer should not undertake the representation as proposed.