Ezel / Ethics Opinions / NYSBA
NYSBA 2018-08-31

Can a New York lawyer also work as a financial planner for the same clients, advertise the planning service, and take referral fees from investment firms?

Short answer: A lawyer may provide both legal and financial-planning services if no significant conflict exists, but may not take brokerage commissions on products bought by legal clients, which is a nonconsentable conflict, and may not take referral fees from an investment firm for products clients buy.
Currency note: this opinion is from 2018
Subsequent statutory amendments, court decisions, or later opinions or rule amendments may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
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About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked at the bottom of this page) is the authoritative source for any reliance.

NY State Bar Ethics Opinion 1155: Lawyer and financial planner dual practice

Short answer: A lawyer may offer both legal and financial-planning services where no significant personal-interest conflict exists, but may not also receive brokerage commissions on financial products bought by legal clients or referral fees from an investment firm, which the committee treats as nonconsentable conflicts.

Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the New York Rules of Professional Conduct and are persuasive authority. This summary is for research purposes only and is not legal advice. Verify current rules before acting on any specific guidance.

About this page: The plain-English summary and Q&A below were written by Ezel based on the official opinion. We do not reproduce the opinion text on this page; follow the linked source for the official text, which controls.

View original opinion

Plain-English summary

The inquirer is a family and matrimonial lawyer who became a Certified Financial Planner and wants to offer stand-alone financial-planning services (investment, insurance, education, and retirement recommendations) to existing and new clients. The committee addresses whether the dual practice is permitted, whether the Rules reach the planning work, how the lawyer may advertise it, and whether the lawyer may take referral fees from an investment firm.

On conflicts, the lawyer must first apply Rule 1.7(a)(2): providing both services to the same client is barred where a reasonable lawyer would find a significant risk that the lawyer's professional judgment will be adversely affected by the lawyer's financial interest in the planning services, unless the client gives informed consent confirmed in writing. The committee then draws a hard line on commissions: relying on N.Y. State 619 (1991) and N.Y. State 536 (1981), it concludes that receiving brokerage commissions on financial products bought by a client who also receives legal advice is a nonconsentable conflict, because the lawyer's interest in selling a particular product would unavoidably affect the lawyer's independent judgment and the client could not give meaningful consent. So the lawyer may give both legal and financial-planning advice but may not also collect product commissions from those clients.

On whether the Rules govern the planning work, the committee applies Rule 5.7(a). Non-legal services that are not distinct from legal services are always subject to the Rules; distinct services are subject to the Rules only if the recipient could reasonably believe an attorney-client relationship exists, a presumption the lawyer can overcome with a written notice under Rule 5.7(a)(4). Following N.Y. State 1135 (2017), the committee says the key factor is the degree of integration. For this matrimonial and estate-oriented lawyer, financial planning that shapes the size and composition of an estate or a retirement plan is "nondistinct," so the Rules apply to the planning work even if a separate entity provides it; only where a person uses planning services alone, with no related legal services, are they distinct.

On advertising, because the services are nondistinct here, the advertising rules apply: website and newsletter material about the planning service are "advertisements" under Rule 7.1. The committee concludes, following N.Y. State 1100 (2016), that the lawyer may use "Certified Financial Planner" because financial planning is not an area of law practice and so the designation does not violate Rule 7.4's specialization limits, provided the advertising makes clear the service is not legal and creates no attorney-client relationship. Finally, on referral fees, the committee follows N.Y. State 1086 (2016) and N.Y. State 682 (1996): because financial products are not uniform among providers and are not required in an objectively determinable quantity, and because the products are likely connected to the legal services, taking a referral fee or commission from an investment firm is a nonconsentable conflict. The non-exclusive nature of the referral arrangement is irrelevant to that conflict, and Rule 5.8 does not apply because financial planning is not on the Appellate Division's list of designated non-legal professions and the arrangement is only a non-exclusive referral.

In practice

Under this opinion, a lawyer-financial-planner may serve the same clients in both roles when no significant Rule 1.7(a)(2) conflict exists, but the committee identifies two bright-line prohibitions: the lawyer may not take brokerage commissions on financial products bought by legal clients, and may not take referral fees or commissions from an investment firm to which the lawyer refers those clients. Both are treated as conflicts that client consent cannot cure. For a matrimonial or estate lawyer, the committee treats the planning work as nondistinct from the legal work, so the full Rules, including the advertising rules, apply to the planning side; a "Certified Financial Planner" designation is permitted in advertising that makes clear the planning is not a legal service.

Common questions

Q: Can a lawyer also act as a financial planner for the same client?

A: Yes, if a reasonable lawyer would not find a significant risk that the lawyer's financial interest in the planning work would adversely affect the lawyer's judgment for the client, subject to informed consent where such a risk exists (Opinion 1155 ¶¶ 4-5).

Q: Can the lawyer earn commissions or referral fees on financial products clients buy?

A: No. The committee treats both brokerage commissions on products bought by legal clients and referral fees from an investment firm as nonconsentable conflicts, because the products are not uniform and not objectively quantifiable and the lawyer's financial stake would impair independent judgment (¶¶ 6-8, 22-24).

Q: Do the ethics rules apply to the lawyer's financial-planning work?

A: For this matrimonial and estate lawyer, yes. The committee finds the planning services nondistinct from the legal services because they affect the estate or retirement plan, so the Rules, including the advertising rules, apply to the planning work (¶¶ 14-16).

Q: May the lawyer use the title "Certified Financial Planner" in marketing?

A: Yes. Financial planning is not an area of law practice, so the title does not violate Rule 7.4's specialization limits, as long as the advertising makes clear the service is not legal and creates no attorney-client relationship (¶ 17).

Background and rules framework

The opinion interprets several New York rules together. Rule 1.7 (Model Rule 1.7) governs the personal-interest conflict from the lawyer's financial stake in the planning business, including conflicts the committee deems nonconsentable. Rule 5.7 (Model Rule 5.7) determines whether the Rules reach the non-legal services, turning on whether they are "distinct" from legal services. Rule 7.1 and Rule 7.4 (Model Rules 7.1 and 7.4) govern advertising and the use of credentials. Rule 1.8(f) (Model Rule 1.8) addresses third-party compensation, and Rule 5.8 governs contractual relationships with non-legal professionals, which here does not apply.

Citations and references

Rules of Professional Conduct:

  • New York Rule 1.7 (Model Rule 1.7): personal-interest conflicts; nonconsentable conflicts
  • New York Rule 5.7(a) (Model Rule 5.7): responsibilities for non-legal services; distinctness
  • New York Rule 7.1 (Model Rule 7.1): advertising
  • New York Rule 7.4 (Model Rule 7.4): communication of fields of practice and specialization
  • New York Rule 1.8(f) (Model Rule 1.8): compensation from one other than the client
  • New York Rule 5.8: contractual relationships with non-legal professionals
  • New York Rule 8.4(b) (Model Rule 8.4): illegal acts reflecting on fitness

Other opinions cited:

  • N.Y. State 1135 (2017): integration test for distinct vs. nondistinct non-legal services
  • N.Y. State 1100 (2016): "Accredited Estate Planner" as an improper specialty claim; contrast with non-legal titles
  • N.Y. State 1086 (2016): when a lawyer may accept a third-party referral fee
  • N.Y. State 682 (1996): two-factor test for a nonconsentable referral-fee conflict
  • N.Y. State 619 (1991): nonconsentable conflict from a lawyer's interest in recommended insurance products
  • N.Y. State 536 (1981): dual law and financial-planning practice without product commissions

See also

Source