Can a lawyer join a barter system that assigns members a trade broker, requires referral by that broker before services are rendered, and charges a 10% fee on every transaction?

Currency note

This opinion was issued in 1980, before Tennessee's adoption of the 2003 Rules of Professional Conduct, which replaced the former Code of Professional Responsibility. A related Formal Ethics Opinion 80-F-3(a), adopted in 1984, addressed a barter group without a broker or approval requirement but with a similar per-transaction fee. Subsequent rule amendments 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 Treat this page as historical context, not current guidance.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.

Plain-English summary

The Board considered whether a barter system, in which legal services would be traded for other goods or services after referral by a trade broker within the system, and on which the system charged a fee for each transaction, would conflict with the Code of Professional Responsibility. The system's general trading policies provided that all trade transactions had to be approved by the barter system's office, each member was assigned a trade broker to assist him, services could be provided only after referral by the trade broker, and the system charged a 10% service fee on each transaction.

The Board identified the most apparent conflicts as the referral of legal matters to a lawyer by another person for compensation, and the resulting interference with a lawyer's exercise of independent professional judgment on behalf of the client. It concluded that a barter system structured this way is in direct conflict with Disciplinary Rule 2-103(B), (C), and (D), and Disciplinary Rule 5-107(C) of the Code of Professional Responsibility, and violates Tennessee Code Annotated 29-3-108(2).

Common questions

Q: Can a lawyer accept clients only through a paid broker inside a barter exchange?

A: No. The opinion holds that a system where "services could only be provided after referral by the trade broker" and the system "charged by the system on each transaction" is "in direct conflict with DR 2-103(B), (C) and (D), and DR 5-107(C) of the Code of Professional Responsibility."

Q: What is the core ethical problem the Board identified?

A: Paid, third-party referral of legal matters. The opinion states "the more apparent conflicts stemming from this system are referral of legal matters to a lawyer by another person for compensation and it prohibits a lawyer from exercising independent professional judgment on behalf of his or her client."

Q: Does this violate anything beyond the Code of Professional Responsibility?

A: Yes, the opinion also cites a Tennessee statute. It concludes the arrangement "is in violation of Tennessee Code Annotated 29-308(2)."

Background and rules framework

The opinion applied Disciplinary Rule 2-103(B), (C), and (D) (recommendation of professional employment) and Disciplinary Rule 5-107(C) (compensation for legal services from a third party affecting independent judgment) of the Tennessee Code of Professional Responsibility, together with a Tennessee statute governing referral of legal business. The modern correlates are Model Rule 7.2 (advertising, including referral arrangements) and Model Rule 5.4 (professional independence of a lawyer), noted here as navigational cross-references rather than rules the opinion itself applied.

Citations and references

Rules of Professional Conduct:

• DR 2-103(B), (C), and (D) (recommendation of professional employment) and DR 5-107(C) (third-party compensation for legal services), Tennessee Code of Professional Responsibility
• Model Rule 7.2 (advertising) and Model Rule 5.4 (professional independence of a lawyer), modern correlates

Statutes:

• Tennessee Code Annotated 29-3-108(2)

See also

• Tenn. Ethics Op. 80-F-3(a): Barter Exchange Group With Per-Transaction Fee
• Colo. Bar Ethics Op. 38: Referral Fees and Disclosure

Source

• Landing page: https://www.tbpr.org/ethic_opinions/80-f-3

Original opinion text

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

80-F-3 - Trade Exchange for Barter of Legal Services

BOARD OF PROFESSIONAL RESPONSIBILITY OF THE SUPREME COURT OF TENNESSEE

FORMAL ETHICS OPINION 80-F-3

This Ethics Committee of the Disciplinary Board of the Supreme Court of Tennessee has been requested to consider whether or not a barter system wherein legal services would be traded for other goods or services and after referral by a trade broker within the system and a fee charged on each transaction by the system would be in conflict with the Code of Professional Responsibility.

The general trading policies and procedures of the barter system provide, among other things, that

• All trade transactions must be approved by the barter system office;

• Each member is assigned a trade broker to assist him;

• Services could only be provided after referral by the trade broker; and

• A service fee of 10% is charged by the system on each transaction.

The more apparent conflicts stemming from this system are referral of legal matters to a lawyer by another person for compensation and it prohibits a lawyer from exercising independent professional judgment on behalf of his or her client.

It is the opinion of the Committee that a barter system structured such as this is in direct conflict with DR 2-103(B), (C) and (D), and DR 5-107(C) of the Code of Professional Responsibility and is in violation of Tennessee Code Annotated 29-308(2).

This 6th day of October, 1980.

ETHICS COMMITTEE:

Randall Burcham

George E. Morrow

W. H. Lassiter

APPROVED AND ADOPTED BY THE BOARD