Ezel / Ethics Opinions / NYSBA
NYSBA 2020-07-21

Can a lawyer also work as a wealth manager, charge the same clients for both, send clients to a financial planner for a referral fee, or sell financial products to non-clients?

Short answer: The opinion concludes a lawyer may not provide legal and wealth management services to the same client for separate fees (an unconsentable conflict), may not take a referral fee for sending a law client to a financial planner, but may provide wealth management to non-law clients if Rule 5.7's disclaimer is given.
Currency note: this opinion is from 2020
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.
Disclaimer: Advisory only. Not binding precedent.
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.

NYSBA Ethics Opinion 1200: Practicing Law and Providing Wealth Management Services

Short answer: The opinion concludes that a lawyer may not provide legal and wealth management services to the same client for separate fees, may not take a referral fee for sending a law client to a financial planner, but may provide wealth management services to non-law clients subject to Rule 5.7.

Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the New York State Bar Association's view of New York's 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.

Plain-English summary

A New York lawyer with a long wealth-management career (fee-based planning, insurance sales, asset management) wants to resume practicing law while continuing to provide investment advisory services and broker financial products for commissions through a separate entity. The lawyer asks three questions: whether the lawyer may provide both legal and wealth management services to the same client for separate fees, whether the lawyer may provide wealth management to non-law clients, and whether the lawyer may take a referral fee for sending a law client to a third-party financial planner.

On the first question, the answer is no. While Rule 5.7 allows a lawyer to provide non-legal services, Rule 1.7(a) bars a representation when a reasonable lawyer would see a significant risk that the lawyer's own financial or business interests will adversely affect professional judgment. The committee, following a line of opinions (chiefly on lawyer-as-real-estate-broker, e.g., N.Y. State 752 (2002), and N.Y. State 1155 (2018) on commissions), treats the dual provision of legal and commission-earning financial services to the same client (for example, creating a life insurance trust while selling the insurance policy) as a conflict so severe that client consent under Rule 1.7(b) cannot cure it.

On the second question, the answer is yes: a lawyer may provide non-legal wealth management services to non-law clients under Rule 5.7(a)(3), but Rule 5.7(a)(4) presumes the recipient believes a lawyer-client relationship exists unless the lawyer gives a written disclaimer that the services are not legal services and that the protections of a lawyer-client relationship do not apply. On the third question, the answer is no: under Rule 1.7(a)(2) and Rule 1.8(f), and following N.Y. State 1086 (2016) and N.Y. State 682 (1996), a referral fee is unconsentable where the financial products vary among providers and are not required in an objectively determinable amount, and where the recipient is also a legal client the products are likely connected to the legal services. The committee anchors the result in the loyalty and independent judgment a lawyer owes the client.

In practice

Under this opinion, a New York lawyer may not charge the same client separately for legal work and for wealth management services tied to commissions, and may not accept a referral fee for steering a law client to a financial planner, because both create conflicts that client consent cannot cure under Rule 1.7(b). The opinion holds that the lawyer may still offer wealth management to people who are not law clients through a separate entity, provided the lawyer gives the written Rule 5.7(a)(4) disclaimer rebutting the presumption of a lawyer-client relationship. Per the opinion, the referral-fee bar turns on whether the product is uniform among providers and required in an objectively determinable amount; here it was neither.

Common questions

Q: Can a lawyer charge the same client for both legal work and wealth management?

A: No. Per the opinion, doing so for separate fees is a conflict under Rule 1.7(a) that consent cannot cure under Rule 1.7(b), following the lawyer-as-broker line of opinions.

Q: Can a lawyer take a referral fee for sending a client to a financial planner?

A: No. Per the opinion, where the financial products vary among providers and are not required in an objectively determinable amount, the referral-fee conflict under Rules 1.7(a)(2) and 1.8(f) cannot be cured by consent.

Q: Can the lawyer provide wealth management to people who are not law clients?

A: Yes. Per the opinion, Rule 5.7 permits it through a separate entity if the lawyer gives the written Rule 5.7(a)(4) disclaimer that the services are not legal services and that lawyer-client protections do not apply.

Background and rules framework

The opinion interprets New York Rule 1.7(a) and (b) (concurrent conflicts and consent), Rule 1.8(f) (compensation from one other than the client), and Rule 5.7 (responsibilities regarding non-legal services, including the 5.7(a)(3)-(4) disclaimer presumption). These correspond to ABA Model Rules 1.7, 1.8, and 5.7.

Citations and references

Rules of Professional Conduct:

  • New York Rules of Professional Conduct 1.7(a), 1.7(b); 1.8(f); 5.7(a)(3), 5.7(a)(4), and Cmt. [1]
  • ABA Model Rules 1.7, 1.8, 5.7 (analogues)

Other opinions cited:

  • N.Y. State 1086 (2016): referral fees from third-party service providers
  • N.Y. State 682 (1996): when consent cannot cure a referral-fee conflict
  • N.Y. State 1155 (2018): commissions and dual practice
  • N.Y. State 752 (2002): lawyer as lawyer and real estate broker in the same transaction

See also

Source