Can a lawyer join a trade exchange or barter group that charges a percentage fee on every transaction, without a trade broker or approval process for the trades?

Currency note

This opinion was issued in 1984, before Tennessee's adoption of the 2003 Rules of Professional Conduct, which replaced the former Code of Professional Responsibility. 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 Treat this page as historical context, not current guidance.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.

Plain-English summary

Following Formal Ethics Opinion 80-F-3, the Board was asked about an attorney participating in a trade exchange association or barter group that charges a fee or membership charge on each transaction. Under the plan described, the group had no provisions for approving trade transactions, no trade broker assigned to assist with any transaction, and no requirement that services be provided only after referral by a broker; the exchange simply took a percentage fee on each transaction as a membership charge.

The Board applied Disciplinary Rule 2-103(C), which barred a lawyer from permitting the recommendation or promotion of his services except through a bar-association-sponsored, operated, or approved referral service, or one of the organizations listed in DR 2-103(D)(1) through (4), such as a legal aid or public defender office, a military legal assistance office, or a group legal service plan meeting specific standards. Sharing legal fees with a non-lawyer is prohibited. The Board found no prohibition against one-on-one barter or trade exchange by an attorney, while noting the attorney should be mindful of the tax-law implications of such arrangements.

The Board concluded that an attorney is ethically prohibited from participating in a trade exchange association or barter group that charges a fee or membership charge on each transaction. A footnote to the opinion cited Oregon State Bar Ethics Opinion 445, which warned that participating in a business exchange exposes a lawyer to suspicion of income tax evasion eroding public confidence in the profession, and New York City Bar Association Ethics Opinion 81-11, which allowed a lawyer to join a barter group only if the group is sponsored or approved by a bar association.

Common questions

Q: Can a lawyer join a barter exchange group that takes a percentage fee on every transaction the lawyer completes through it?

A: No. The opinion concludes "the attorney is ethically prohibited from participating in a trade exchange association or barter group wherein a fee or membership charge is made by the association or group on each transaction."

Q: Is direct, one-on-one bartering of legal services for goods or services still permitted?

A: Yes. The opinion states "there is no prohibition against one-on-one barter or trade exchange by an attorney," while cautioning that "the attorney should recognize the application of tax laws to such arrangements."

Q: Why does a per-transaction membership charge make the group different from a bar-sponsored referral service?

A: Because the rule permits promotion of a lawyer's services only through bar-sponsored referral services or specific enumerated organizations. The opinion quotes DR 2-103(C): "a lawyer shall not permit the recommendation or promote the use of his services except (1) upon referral services sponsored, operated or approved by a bar association; or (2) any of the organizations enumerated in DR 2-103(D)(1) through (4)," none of which described this unsponsored, unapproved barter group.

Background and rules framework

The opinion applied Disciplinary Rule 2-103(C) and (D) of the Tennessee Code of Professional Responsibility, governing permissible referral arrangements and prohibiting fee division with non-lawyers. The modern correlates are Model Rule 7.2 (advertising, including referral arrangements) and Model Rule 5.4 (professional independence; fee division), noted here as navigational cross-references rather than rules the opinion itself applied.

Citations and references

Rules of Professional Conduct:

• DR 2-103(C) and DR 2-103(D) (permissible referral services and organizations), Tennessee Code of Professional Responsibility
• Model Rule 7.2 (advertising) and Model Rule 5.4 (professional independence of a lawyer), modern correlates

Other opinions cited:

• Tennessee Formal Ethics Opinion 80-F-3: the predecessor opinion this one supplements
• Oregon State Bar Ethics Opinion 445: participation in a business exchange exposes a lawyer to suspicion of tax evasion
• New York City Bar Association Ethics Opinion 81-11: a lawyer may join a barter group only if bar-sponsored or approved

See also

• Tenn. Ethics Op. 80-F-3: Barter Exchange With a Referral Broker and Transaction Fee

Source

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

Original opinion text

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

80-F-3(a) - Trade Exchange for Barter of Legal Services

BOARD OF PROFESSIONAL RESPONSIBILITY OF THE SUPREME COURT OF TENNESSEE

FORMAL ETHICS OPINION 80-F-3(a)

Subsequent to the issuance of Formal Ethics Opinion 80-F-3, inquiry is made concerning the propriety of an attorney participating in a trade exchange association or barter group wherein a fee or membership charge is made by the association or group on each transaction.

The policies of the trade exchange or barter group have no provisions for the approval of trade transactions, no trade broker is assigned to assist with the transaction and there is no requirement that services are provided only after referral by the trade broker. The plan provides that the exchange association or barter group receives a percentage fee on each transaction as a membership charge.

Disciplinary Rule 2-103(C) provides that a lawyer shall not permit the recommendation or promote the use of his services except (1) upon referral services sponsored, operated or approved by a bar association; or (2) any of the organizations enumerated in DR 2-103(D)(1) through (4) which includes a legal aid or public defender office, military legal assistance office, and group legal service plans that meet specific standards.

The sharing of legal fees with a non-lawyer is prohibited. There is no prohibition against one-on-one barter or trade exchange by an attorney. The attorney should recognize the application of tax laws to such arrangements.

The attorney is ethically prohibited from participating in a trade exchange association or barter group wherein a fee or membership charge is made by the association or group on each transaction.*

This 12th day of April , 1984.

ETHICS COMMITTEE:

G. Wilson Horde

T. Maxfield Bahner

Charles T. Herndon III

APPROVED AND ADOPTED BY THE BOARD

• Ethics Opinion 445 of the Ethics Committee of the Oregon State Bar states that a lawyer who participates in a business exchange exposes himself to suspicion of income tax evasion which erodes public confidence in the legal profession. Ethics Opinion 81-11 of the New York City Bar Association states that a lawyer may join a barter group only if the group is sponsored or approved by the bar association.