May an estate-planning lawyer separately sell financial-planning services and products to legal clients?

Plain-English summary

An estate-planning lawyer proposed a physically and administratively separate financial-planning business, including paid advice and product commissions.

The opinion permits that business and referrals from the law firm if clients receive written information on confidentiality differences, lawyer compensation, independent legal counsel, and the choice of another financial provider, plus written consent under Rule 4-1.8(a). It says referrals from the financial business to the law practice would be prohibited in-person solicitation. The official note says later-adopted Rule 4-5.7 also governs.

Currency note

The official source notes Rule 4-5.7 was adopted effective July 1, 2007, and would also govern this question.

In practice

The opinion distinguishes referrals from legal work to the financial business, which it permits on stated conditions, from referrals back to the law practice, which it rejects.

Common questions

Q: May the lawyer operate the separate business?

A: Yes. The opinion permits an independent financial-planning and insurance practice.

Q: May financial-planning staff refer customers to the law firm?

A: No. The opinion treats that as prohibited in-person solicitation.

Background and rules framework

The opinion applies Rule 4-1.8(a) to written disclosure and consent and notes that Rule 4-5.7, adopted later, would also govern.

Citations and references

Missouri Rules of Professional Conduct:

• Rule 4-1.8
• Rule 4-5.7

See also

• Missouri Informal Op. 20030019: Lawyer Side Business

Source

• Landing page: https://mo-legal-ethics.org/informal-opinion/20020024/

Original opinion text

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

Reference Note: Rule 4–5.7, Responsibilities Regarding Law-Related Services, was adopted effective July 1, 2007. Rule 4–5.7 would also govern this Question and should be consulted, in addition to Rule 4–1.8 cited in the opinion.

QUESTION: Attorney’s practice is limited to estate planning. Attorney accepts referrals from CPA’s, financial service professionals, other attorneys and existing clients. Attorney is not providing financial planning advice for a fee or receiving commissions for the sale of financial products related to such advice, even though Attorney is qualified to do so. Attorney is a certified financial planner and serves as faculty in an estate planning department of a financial planning college. Attorney is also licensed to sell securities and insurance. Attorney plans to become a registered investment advisor. Attorney maintains separate Errors & Omissions insurance coverage for financial planning. Attorney would like to offer financial planning services and products both physically and administratively independent of Attorney’s firm. The financial planning firm would have a separate address, phone number, fax number, business card and support staff. Client files will be separately maintained at the law firm and the financial planning firm, even in instances where the respective firms share the same client. Clients of the law firm will be informed orally and in writing regarding the availability of the financial planning services and products. The communication will inform clients regarding confidentiality, conflicts of interest and independent judgment. May Attorney practice law as an estate planning attorney in a law firm, while offering financial planning advice for a fee and receiving commissions for the sale of financial products related to such advice, as a certified financial planner, in a financial services firm?

ANSWER: It is permissible for Attorney to maintain a financial planning/insurance practice, independent of Attorney’s practice of law. Attorney may refer legal clients to Attorney’s financial planning/insurance practice if, as Attorney has indicated, Attorney advises the clients in writing of (1) the differences in confidentiality, (2) the fact that Attorney will receive compensation if they purchase the products from Attorney’s financial planning practice, and (3) that they have the right to consult with independent legal counsel regarding the advisability of purchasing these products. In addition, Attorney must notify the clients that they have the right to purchase the products from a different financial planning/insurance business. Attorney should review Rule 4–1.8(a), which requires client consent in writing. It will not be permissible to refer clients who come to the financial planning/insurance practice to Attorney’s law practice. That type of referral by Attorney or staff of Attorney’s financial planning/insurance practice would be considered in-person solicitation. It is permissible to let the clients know that Attorney is an attorney and of Attorney’s affiliation with Attorney’s firm.