Can lawyers form a company that prepares and places legal public-notice ads and sell those services to their own clients?

Plain-English summary

A group of lawyers proposed forming a company to create public-notice advertisements and place them with newspapers, offering the service to the lawyers' own clients and to non-clients. Profits would be divided among the lawyer-owners by ownership share, their capital would be at risk, and they would give clients a disclosure letter about the lawyers' financial interest and obtain consent.

The opinion concluded that the arrangement is a business transaction with a client governed by Rule 1.7(b) (representation materially limited by the lawyer's own interest) and Rule 1.8(a) (business transactions with clients). It surveyed the committee's dual-profession line of opinions (93-01 on title insurance, 85-03 accounting, 89-14 life insurance, 90-16 economic analyses, 90-32 insurance) holding that a lawyer may conduct business with a client and accept compensation for non-legal services so long as the legal services comply with the rules and the lawyer obtains informed consent after disclosure. It cited Monco v. Janus for the principle that lawyer-client business transactions are presumptively fraudulent, and required the lawyer to rebut the presumption of undue influence as discussed in companion Opinion 97-04.

The opinion held that, where the inquiring lawyer recognized the need for full disclosure and informed consent under Rule 1.8(a) and reasonably believes the representation will not be adversely affected, the rules do not prohibit the arrangement. It expressly assumed the company complies with all statutory requirements, does not perform functions constituting the practice of law, and that the lawyers keep publication-notice fees separate and distinct from legal fees. If not, it noted, questions arise under Rule 1.5(f) (dividing fees with non-lawyers), Rule 5.5 (assisting the unauthorized practice of law), and Rule 5.4 (non-lawyer ownership), and it pointed to ABA Model Rule 5.7 on law-related services delivered through a separate entity a lawyer controls.

Currency note

This opinion was issued in 1998, before Illinois adopted the 2010 Illinois Rules of Professional Conduct. The ISBA Board of Governors affirmed the opinion in January 2010 as generally consistent with the 2010 Rules (referring to Rules 1.7 and 1.8(a)), while noting 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 lawyers sell their own clients a service from a company they own?

A: The opinion concluded yes, treating it as a business transaction with a client under Rules 1.7(b) and 1.8(a), permitted if the lawyer makes full disclosure, obtains informed consent, reasonably believes the representation will not be adversely affected, and rebuts the presumption of undue influence.

Q: What must the lawyer disclose to the client?

A: Per the opinion, the lawyer must disclose the lawyer's financial interest in the company and obtain the client's consent, consistent with Rule 1.8(a) and the committee's dual-profession opinions.

Q: Does the company's revenue have to be kept separate from legal fees?

A: Yes. The opinion assumed the lawyers keep publication-notice fees separate and distinct from legal fees; otherwise it warned of issues under Rule 1.5(f) (dividing fees with non-lawyers), Rule 5.4 (non-lawyer ownership), and Rule 5.5 (unauthorized practice).

Q: What if the company performs work that counts as practicing law?

A: The opinion assumed it does not. It pointed to ABA Model Rule 5.7, under which the Rules of Professional Conduct apply to law-related services from a lawyer-controlled entity unless the lawyer takes reasonable measures to ensure recipients know the services are not legal services and lack client-lawyer protections.

Background and rules framework

The opinion interpreted Illinois Rule 1.7(b) (conflicts from the lawyer's own interest; Model Rule 1.7) and Rule 1.8(a) (business transactions with clients; Model Rule 1.8(a)), read against Illinois case law presuming undue influence in lawyer-client dealings. It referenced Rule 1.5(f), Rule 5.4, and Rule 5.5 for the fee-separation and non-lawyer concerns, and ABA Model Rule 5.7 for law-related services.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.7 (conflicts of interest) / Illinois Rule 1.7(b)
• Model Rule 1.8(a) (business transactions with clients) / Illinois Rule 1.8(a)
• Model Rule 5.7 (law-related services)

Cases:

• Monco v. Janus, 222 Ill.App.3d 280, 583 N.E.2d 575 (1991), lawyer-client business transactions presumptively fraudulent

Other opinions cited:

• ISBA Advisory Opinion No. 97-04: rebutting the presumption of undue influence
• ISBA Advisory Opinions Nos. 84-01, 85-03, 89-14, 90-16, 90-32, 93-01: dual-profession practice

See also

• ISBA Ethics Op. 97-04: Referral Fees From Nonlawyer Professionals
• ISBA Ethics Op. 97-06: Prerecorded Telephone Legal Information Hotline

Source

• Landing page: https://www.isba.org/ethics/opinions/9707