Can a lawyer hired by a company that markets living trusts to consumers prepare or review those trusts and split the fee with the company?

Plain-English summary

The inquiry came from a lawyer approached by institutions that wanted to market revocable living trusts to Illinois consumers as estate-planning tools, soliciting buyers by mail and phone. The institution would charge the consumer for the trust, employ the lawyer to prepare or review the documents, and let the lawyer profit from the arrangement. The committee addressed whether the lawyer could prepare or review those trusts and whether billing the institution amounted to an improper partnership with a non-lawyer.

The committee concluded the arrangement was improper. Because the lawyer was employed by the institution, the lawyer owed the institution the duties of a client; but preparing trusts for the institution's consumers created a conflict under Rule 1.7. The institution's interest in profiting from document sales, set against the duty the lawyer would owe the consumer-clients, meant the lawyer could not reasonably believe representation of the consumer would not be adversely affected. The committee drew on ISBA Opinion 89-1, where a lawyer hired by a business broker to prepare closing documents was found to face conflict problems serious enough to be unprofessional.

The committee also held that the institution's preparation of trusts for consumers is the unauthorized practice of law, so the lawyer would violate Rule 5.5(b) by assisting it. On the fee question, the consumer would pay the institution, which would keep a share and pay the lawyer; the committee concluded this fee split violates Rule 5.4(a), and the relationship could amount to a prohibited partnership under Rule 5.4(b) and improper interference with the lawyer's judgment under Rule 5.4(c).

Currency note

This opinion was issued in 1991, before Illinois adopted the 2010 Illinois Rules of Professional Conduct. The ISBA Board of Governors affirmed the opinion in May 2010 as generally consistent with the 2010 Rules (Rules 1.7, 5.4, and 5.5(a)), while cautioning that the specific standards referenced may differ from the 2010 Rules. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule or requirement mentioned here.

Common questions

Q: Can a lawyer hired by a living-trust marketing company prepare the trusts it sells to consumers?

A: No. The opinion concluded that doing so creates a conflict under Rule 1.7 between the institution-client's profit interest and the consumer-clients, and that the lawyer could not reasonably believe representation would not be adversely affected.

Q: Why is assisting the company a Rule 5.5 problem?

A: The opinion concluded the institution's preparation of trusts for consumers is itself the unauthorized practice of law, so the lawyer who reviews or prepares those documents assists that unauthorized practice in violation of Rule 5.5(b).

Q: Can the lawyer let the company collect the fee and pay the lawyer a share?

A: No. The opinion concluded that the consumer paying the institution, which keeps part and pays the lawyer, is a sharing of legal fees with a non-lawyer that violates Rule 5.4(a), and the relationship may also breach Rule 5.4(b) and (c).

Background and rules framework

The opinion applied Rule 1.7 (conflicts of interest) to the lawyer caught between the marketing institution and the consumers buying its trusts, Rule 5.5(b) (assisting unauthorized practice) to the lawyer's role in the institution's document operation, and Rule 5.4(a) through (c) (sharing fees with, partnering with, or taking direction from a non-lawyer) to the fee and business structure (Model Rules 1.7, 5.4, 5.5).

Citations and references

Rules of Professional Conduct:

• Model Rule 1.7 (conflicts of interest) / Illinois Rule 1.7
• Model Rule 5.4 (professional independence; fee sharing and partnership with non-lawyers) / Illinois Rule 5.4(a), (b), (c)
• Model Rule 5.5 (unauthorized practice) / Illinois Rule 5.5(b)

Other opinions cited:

• ISBA Opinion 89-1: lawyer hired by a business broker to prepare closing documents faces disqualifying conflicts.

See also

• ISBA Ethics Op. 90-19: Nonlawyer Preparing Trust Documents
• ISBA Ethics Op. 90-13: Bank Preparing Land Trust or Deed
• ISBA Ethics Op. 90-35: Lawyer Preparing Wills for an Organization's Members

Source

• Landing page: https://www.isba.org/ethics/opinions/9020