May a lawyer refer legal clients to a separate investment or insurance business the lawyer owns?

Plain-English summary

A lawyer proposed a separate investment advisory or life-insurance business that would receive referrals from the law practice.

The opinion permits the business if communications make its separation clear, each referral discloses the lawyer’s interest and the client’s ability to use another provider, and the lawyer follows Rule 4-1.8(a), including written disclosure and consent. The official reference note says Rule 4-5.7 was later adopted and would also govern the question.

Currency note

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

In practice

The opinion permits the proposed side business subject to the specified separation, disclosure, client-choice, and written-consent terms.

Common questions

Q: Can the lawyer own the separate business?

A: Yes. The opinion expressly permits establishing it.

Q: What must a client referral disclose?

A: The lawyer’s interest in the side business and the client’s option to use another provider.

Background and rules framework

The opinion applies Rule 4-1.8(a) and notes that later-adopted Rule 4-5.7 would also apply.

Citations and references

Missouri Rules of Professional Conduct:

• Rule 4-1.8
• Rule 4-5.7

See also

• Missouri Informal Op. 20050041: Third-Party Fee Security

Source

• Landing page: https://mo-legal-ethics.org/informal-opinion/20030019/

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 wants to establish a separate investment advisory and/or life insurance business. There would be a referral relationship between Attorney and the new business. May attorney do this? If so, what information must be disclosed to clients when referred to the side business?

ANSWER: Attorney is permitted to establish the side business. All communications should clearly state that it is a completely separate business from the law firm. All referrals will need to make full disclosure regarding Attorney’s interest in the side business and that the client has the option of going to any other similar business for that type of service. Attorney must follow the steps outlined in Rule 4–1.8(a), which requires written disclosure and consent, among other things.