Can a lawyer who also sells life insurance refer a client to an insurance agent and share the commission?

Plain-English summary

An attorney also licensed to engage in the life insurance business sought to refer a client to a life insurance agent, having an agreement with that agent to share any commissions earned from the referral. The inquiry asked whether it is ethical for an attorney to sell life insurance in South Carolina, and whether a practicing attorney may refer clients to a life insurance agent and share in the commissions generated by a policy sale to a client.

The committee answered both questions. It found no ethical rule prohibiting a practicing attorney who is also licensed from selling life insurance in South Carolina. And it concluded the Rules of Professional Conduct would not prohibit a practicing attorney from referring clients and receiving a commission from the referral, provided the requirements of Rules 1.7(b) (conflicts where the lawyer's own interests may materially limit the representation), 1.8(a) (business transactions with a client), and 1.8(f) (compensation from a third party) are met.

Currency note

This opinion was issued in 1998, before the South Carolina Bar's adoption of the 2005 revisions to the Rules of Professional Conduct. 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 Treat this page as historical context, not current guidance.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 South Carolina lawyer also sell life insurance?

A: The committee found no ethical rule prohibiting a licensed attorney from selling life insurance in South Carolina.

Q: Can the lawyer refer a client to an insurance agent and share the commission?

A: The committee concluded the rules would not prohibit it, provided the requirements of Rules 1.7(b), 1.8(a), and 1.8(f) are satisfied.

Background and rules framework

The opinion interpreted South Carolina RPC 1.7(b) (conflicts where the lawyer's own interests may materially limit the representation), 1.8(a) (business transactions with a client), and 1.8(f) (accepting compensation from a third party), corresponding to the like-numbered Model Rules, as applied to a lawyer's outside insurance business and commission sharing.

Citations and references

Rules of Professional Conduct:

• South Carolina RPC 1.7(b) / Model Rule 1.7: conflicts of interest; the lawyer's own interests.
• South Carolina RPC 1.8(a) / Model Rule 1.8: business transactions with a client.
• South Carolina RPC 1.8(f) / Model Rule 1.8: compensation from a third party.

See also

• SC Bar Ethics Op. 02-06: Lawyer-Owned Mortgage Broker
• SC Bar Ethics Op. 00-08: Closing a Loan for Both Sides

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-98-29/

Original opinion text

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

UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.

Ethics Advisory Opinion 98-29

An attorney, also licensed to engage in life insurance business, seeks to refer a client to a life insurance agent. The attorney has an agreement with the other life insurance agent to share commissions which may be earned as a result of the referral.

QUESTIONS:

1. Is it ethical for an attorney to sell life insurance in South Carolina?
2. Is it ethical for a practicing attorney to refer clients to a life insurance agent and share in the commissions generated from the sale of a policy to a client?

OPINION:

1. The Committee finds no ethical rules which would prohibit a practicing attorney, who is also licensed, from selling life insurance in South Carolina.
2. The Rules of Professional Conduct would not prohibit a practicing attorney from referring clients and receiving a commission from the referral, provided the requirements of RPC 1.7 (b), 1.8(a), and 1.8(f) are met.