Can a lawyer pay a living-trust company for 'document preparation' when the company refers clients to the lawyer to review the trusts it sells?

Plain-English summary

A Maine lawyer was offered affiliation with an entity in the business of selling inter vivos trusts. The entity solicits clientele through non-lawyer representatives (said to receive no compensation for a sale, though they may be paid for related services such as transfers of title). Under the proposal, the entity would prepare the trust documents and the lawyer would "review" them for suitability and conformity with local law and meet with the client; the client would pay the lawyer's fee, and the lawyer would then pay the entity for the documents on an agreed schedule. The question was whether this violates the Maine Bar Rules.

The Commission analyzed the arrangement under Bar Rule 3.9(f)(2), which bars a lawyer from compensating or giving anything of value to a person or organization to recommend or secure employment, or as a reward for a recommendation resulting in employment. Here the entity would receive cash as a consequence of having made a recommendation that resulted in the lawyer's employment. The Commission concluded that if the payment can reasonably be characterized as fair compensation for the service of preparing trust documents, it would not be a prohibited reward; but if the fee is excessive compensation for the document-preparation services, all or part of it must be treated as a reward for recommending the lawyer and a violation of Rule 3.9(f)(2).

Applying that test, the Commission observed that the circumstances strongly suggested the so-called document-preparation fee was a thinly disguised reward for the referral: the documents could and normally would be generated by the attorney without an outside drafting service, an estate-planning practice typically has model documents on file and staff to adapt them, and the real value to the attorney in such arrangements is almost always the referral rather than the documents. It concluded that if the document-preparation service has no significant independent value, a violation of the Bar Rules would appear to be inevitable, and noted the attorney would know the truth of the matter.

Currency note

This opinion was issued in 1998, before Maine's replacement of the former Maine Bar Rules with the Maine Rules of Professional Conduct (effective August 1, 2009). 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, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer pay a living-trust company for documents when it refers clients to the lawyer?

A: The opinion concluded it depends on the payment. If it is fair compensation for genuine document-preparation services, it is permissible; if it is excessive, all or part is a disguised referral reward barred by Rule 3.9(f)(2).

Q: How did the opinion separate a legitimate fee from a referral reward?

A: By the independent value of the service. The opinion asked whether the document-preparation service had significant independent value; if not, the payment was really a reward for the referral and a violation appeared inevitable.

Q: Why was the Commission skeptical of this arrangement?

A: Because the documents could normally be produced by the attorney's own office. The opinion noted that an estate-planning practice typically has model documents and staff to adapt them, so the real value to the attorney was usually the referred client, not the documents.

Background and rules framework

The opinion interprets Maine Bar Rule 3.9(f)(2), which prohibits a lawyer from compensating or giving anything of value to a person or organization to recommend or secure employment, or as a reward for a recommendation resulting in employment. This corresponds to ABA Model Rule 7.2 (payment for recommending a lawyer's services). The Commission's analysis turned on whether the payment was fair compensation for a service of independent value or a disguised reward for the referral.

Citations and references

Rules of Professional Conduct:

• Model Rule 7.2 (payment for recommendations)
• Maine Bar Rule 3.9(f)(2)

See also

• Maine Ethics Op. 167: Referring Attorneys
• ABA Formal Op. 474: Referral Fees and Conflicts of Interest
• Maine Ethics Op. 87: Privately Operated Lawyer Referral Service

Source

• Landing page: https://mebaroverseers.org/attorney_services/opinion.html?id=89545

Original opinion text

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

Issued by the Professional Ethics Commission

Date Issued: December 2, 1998

Question

A Maine lawyer has been offered affiliation with an entity that is in the business of selling inter vivos trusts. The entity solicits its clientele through non-lawyer representatives, who receive no compensation for effecting a sale, or so it is claimed, but may be compensated if they are used by the trust settlors to perform related services such as effecting transfers of title. The proposal made to the lawyer contemplates that the entity prepare the trust documents and that the lawyer ?review? them for suitability to the client?s needs and conformity with local law. The lawyer is expected to meet with the client. The fee for all of these services is to be paid by the client to the lawyer. The lawyer is then obligated to pay the entity for the trust documents according to a previously agreed schedule. The question is whether this arrangement violates the Maine Bar Rules.

Opinion

Rule 3.9 (f)(2) provides in pertinent part:

A lawyer shall not compensate, or give anything of value to, a person or organization to recommend or secure employment by a client, or as a reward for having made a recommendation resulting in employment by a client ....

In the arrangement under consideration an organization would receive a thing of value, namely cash as one consequence of having made a recommendation resulting in employment of the inquiring lawyer. If this payment reasonably may be characterized as fair compensation to the entity for the service of preparing trust documents, we would be unable to conclude that it is a reward for recommending the lawyer and therefore a violation of Rule 3.9(f)(2). If, however, the fee is excessive compensation for the document preparation services to be rendered by the entity, all or part of the fee must be considered a reward for recommending the lawyer and a violation of Rule 3.9(f)(2).

As presented to the Commission, the circumstances strongly suggest that the so-called document preparation fee is in reality a thinly disguised reward for the referral. The documents could and normally would be generated by the attorney without the assistance of an outside drafting service. Such documents are available from many sources normally found in a law office. If the attorney practices in the field of estate planning and personal counseling, the overwhelming likelihood is that several examples are available in office files and that the attorney has an office staff experienced in following directions to adapt the models at hand to a new case. In short, in arrangements of this kind, the real value to the attorney will almost always be, not the documents, but referral of the client. Of course, the attorney will know what the truth is. If the service of document preparation has no significant independent value, a violation of the Bar Rules would appear to be inevitable.