Can a lawyer own stock in a corporation formed to sell legal-fee insurance policies?

Plain-English summary

A member of The Florida Bar wished to form a Florida corporation to sell insurance policies that would pay the legal fees insureds incurred while the policies were in effect. The inquirer recognized that Florida Statutes Chapter 641 would have to be amended to permit such a corporation, and asked whether a corporation owned partly or entirely by Florida Bar members would violate Canon 2 and DR 2-101 and 2-102 if the solicitation was removed entirely from the attorneys, who would not be named in the advertising and would not show the company's name on their letterhead or other public materials.

Assuming arguendo that the statute were amended to permit such corporations, and assuming no statutory prohibition on lawyer ownership, a majority of the committee saw nothing per se unethical in the mere ownership of such stock. The committee was careful to note the narrow scope of the question: it had not been asked whether such a corporation could sell the policies without ethical impropriety, or whether lawyers could properly do anything beyond owning stock, and it saw many areas of ethical concern that the program might implicate depending on its form and operation, to be addressed if and when they arose. A minority of the committee took the view that it would be impossible under any circumstances to observe the bounds of propriety in selling such policies, so that even mere ownership of stock would be improper.

Currency note

This opinion was issued in 1974, 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. The opinion also predates Florida Statutes Chapter 642, noted by the committee as enacted in 1979. Treat this page as historical context, not current guidance. Verify against current rules and statutes before relying on any specific requirement mentioned here.

Common questions

Q: Could a lawyer own stock in a legal-fee insurance corporation?

A: Under this opinion, a majority found mere stock ownership not per se unethical, assuming no statutory prohibition; a minority disagreed entirely.

Q: Did the committee approve selling the insurance itself?

A: No. The committee stressed it was asked only about stock ownership and reserved the many ethical questions the corporation's actual operation might raise.

Q: Was the committee unanimous?

A: No. A minority concluded it would be impossible to sell such policies within the bounds of propriety, so even owning stock would be improper.

Background and rules framework

The opinion was framed around Canon 2 and DR 2-101 (advertising) and DR 2-102 (professional notices, letterheads, and firm names) of the former Code of Professional Responsibility, together with Florida Statutes Chapter 641. In current practice a lawyer's interest in a business providing services related to legal practice corresponds to the rules on law-related (nonlawyer) services, Model Rule 5.7 and Florida Rule 4-5.7, and the advertising and letterhead concerns correspond to the Rule 4-7 advertising rules and Rule 4-7.21.

Citations and references

Rules of Professional Conduct:

• CPR Canon 2; DR 2-101 (advertising); DR 2-102 (professional notices, letterheads, firm names)

Statutes:

• Fla. Stat. Ch. 641 (would require amendment to permit such corporations)
• Fla. Stat. Ch. 642 (noted by the committee as enacted in 1979)

See also

• FL Bar Ethics Op. 73-20: A Lawyer-Owned Jury-Investigation Service

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-73-17/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-73-17-1-1.pdf

Original opinion text

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

FLORIDA BAR ETHICS OPINION
OPINION 73-17
June 14, 1974
Advisory ethics opinions are not binding.
A lawyer is not prohibited, per se, from owning stock in a corporation formed to sell legal fee insurance policies.
Note: See F.S. Ch. 642, enacted in 1979.
CPR: DR 2-101, 2-102
Statute: F.S. Ch. 641
Vice Chairman Daniels stated the opinion of the committee:
A member of The Florida Bar wishes to form a Florida corporation to sell insurance policies which would pay the legal fees of the insureds incurred while the policies were in effect. The inquirer recognizes that Florida Statutes Ch. 641 would have to be amended so as to permit the formation of a corporation for such purposes. We are asked to answer the following question:
Will a corporation created and designed to sell insurance coverage on lawyers' fees be in violation of Canon 2 and DR 2-101 and 2-102 when such a corporation is owned partially or entirely by lawyers admitted to The Florida Bar; but when the solicitation process done by the corporation is removed entirely from the attorneys themselves; that is, when the attorneys connected with the company are (1) not named in the advertising and (2) do not indicate the company's name on their letterhead or other printed material used to communicate with the public?
Assuming arguendo that Florida Statutes Ch. 641 were amended to permit corporations to sell legal fee insurance policies, such amendments might or might not contain restrictions on lawyers owning stock in such corporations. Assuming no statutory prohibition against such ownership by lawyers, a majority of the Committee sees nothing per se unethical in the mere ownership of such stock. We have not been asked whether it would be possible for such a corporation to sell such insurance policies without ethical impropriety nor have we been asked whether lawyers could, with propriety, do anything other than own stock in such a corporation. The Committee sees many areas of ethical concern that such a program might violate, depending on the form and manner of its operation. Answers to these issues can only be given when and if they arise in the future.
A minority of the Committee is of the opinion that it would be impossible, under any circumstances, for the bounds of propriety to be observed in the sale of such insurance policies. Hence, the minority feels that even the mere ownership of stock would be improper.