Can a lawyer own stock in a bail bond company, and can he send his clients to that company?

Plain-English summary

A lawyer had been asked to buy stock in a corporation being formed to operate a bail bond business, and stated he would not participate in management. He asked whether buying the stock would be unethical, whether the answer turned on the percentage of control his shares represented, and whether it would matter if he adopted a categorical policy of not representing anyone bonded by the corporation.

The committee said the Code did not appear to prohibit, per se, a lawyer from owning stock in a bail bond corporation, especially when he did not participate in management. It restated its prior advice that a lawyer is not ethically restrained from engaging in business if he does not mingle the business with his law practice, physically or functionally, and the business does not operate as a feeder to his practice. The lawyer also should not use his position to direct a client's patronage to the business unless the client suffers no detriment, knows of the lawyer's relation to the business, and nevertheless chooses or consents to give his patronage. The committee cautioned that finding no disciplinary-rule violation should not be construed as advice that the activity should be encouraged as being in the best interest of the profession. Two members found impropriety in the proposed stock ownership because of the close relationship between the corporate business and the practice of law.

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 Treat this page as historical context, not current guidance.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 4-1.7 and 4-1.8 before relying on any specific requirement mentioned here.

Common questions

Q: Could the lawyer own stock in the bail bond company?

A: Under this opinion, yes, especially where he did not participate in management, because the Code did not prohibit a lawyer from engaging in business so long as it was not mingled with his practice and did not feed it.

Q: Could he refer his clients to the company?

A: Only if the client suffered no detriment, knew of the lawyer's relationship to the business, and still chose or consented to give it his patronage.

Q: Was the committee unanimous?

A: No. Two members found impropriety in the stock ownership because of the close relationship between the bail bond business and the practice of law.

Citations and references

Rules of Professional Conduct:

• CPR (Code of Professional Responsibility) generally; no specific disciplinary rule cited

Other opinions cited:

• Florida Opinions 65-16 (since withdrawn), 66-16 (since withdrawn), 66-21 (since withdrawn), 66-30 (since withdrawn)

See also

• FL Bar Ethics Op. 73-17: Lawyer's Stock in a Legal-Fee Insurance Corporation
• FL Bar Ethics Op. 74-50: Undisclosed Title Company Endorsement Fee

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-72-26/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-72-26-1-2.pdf

Original opinion text

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

FLORIDA BAR ETHICS OPINION
OPINION 72-26
July 10, 1972
Advisory ethics opinions are not binding.
A lawyer is not prohibited from owning stock in a corporation engaged in the bail bond business, especially when he does not participate in its management. The lawyer should not refer clients to the business unless the lawyer's interest is disclosed and the client would suffer no detriment.
Opinions: 65-16, 66-16, 66-21, 66-30
Committeeman Kittleson stated the opinion of the committee:
A Florida lawyer submitted the following succinct inquiry:
I have been asked to buy stock in a corporation being formed for the purpose of operating a bail bond business. Under no circumstances would I participate in the management of the corporation.
1. Is it unethical for me to do so? Does the answer turn on the percentage of control which my shares would represent?
2. Would the ethical considerations be different if I had a categorical policy of not representing any persons bonded by the corporation?
The CPR does not appear to prohibit, per se, a lawyer from owning stock in a corporation engaged in bail bond business, especially when he does not participate in management of the business. The Committee has several times advised that a lawyer is not ethically restrained from engaging in business, if he does not mingle the business with his law practice, either physically or functionally, and if the business does not operate as a feeder to his law practice. See, for example, Opinions 66-16 [since withdrawn], 66-21 [since withdrawn] and 66-30 [since withdrawn]. He also should not use his position as a lawyer to direct a client's patronage to the business, unless the client not only suffers no detriment thereby but also knows of the lawyer's relation to the business and nevertheless chooses or consents to give his patronage to the business.
We caution that our failure to find a violation of a disciplinary rule in the CPR should not be construed as advice that a particular activity should be encouraged as being in the best interest of the legal profession.
Two members of the Committee, relying in part upon our Opinion 65-16 [since withdrawn], find impropriety in the proposed stock ownership because of the close relationship between the corporate business and the practice of law.