Can a Tennessee lawyer team up with a financial brokerage firm so its agents refer clients to the lawyer for estate planning?

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 Treat this page as historical context, not current guidance.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

An attorney asked whether he could join with a financial brokerage firm to provide estate-planning services to the brokerage's financial-planning and investment clients, under three proposed methods. In Proposal One, the attorney would speak at the brokerage's seminars as an introduced "team member," appear on seminar slides and the brokerage's letterhead, and the brokerage would bill clients a lump sum covering both its own fees and the attorney's fee, then remit the legal fee to the attorney. Proposal Two removed the attorney's name from the seminar slides and letterhead and had the brokerage bill the legal fee separately from its own fees. Proposal Three removed any "team member" framing, had the attorney meet clients and execute all matters in his own law office in the traditional manner, and had the attorney bill the client directly.

The opinion applied Disciplinary Rule 2-103(C), which provided that "a lawyer shall not request a person or organization to recommend or promote the use of his services... as a private practitioner." It also applied Canon 5's Ethical Considerations on independent professional judgment, quoting EC 5-1 ("the interests of other clients, nor the desires of third persons should be permitted to dilute his loyalty to his client"), EC 5-21 through EC 5-23 on third-party economic pressure, and noted that DR 5-107(B) made these aspirational standards mandatory. It also cited Tennessee Formal Ethics Opinion 83-F-44, which had held that in-house corporate counsel could not let the corporation bill its customers for the counsel's legal services, reasoning that doing so violated DR 3-101(A) (aiding a non-lawyer in the unauthorized practice of law) and DR 3-103 (forming a partnership with a non-lawyer where the partnership practices law).

Applying these rules, the opinion concluded that in every one of the three proposed methods, including Proposal Three's most attenuated version, the brokerage firm's agents are the ones who identify clients' estate-planning needs and direct them to the attorney. That function makes the brokerage firm a solicitor for the attorney's legal business, and the opinion held the conduct proposed in each of the three methods is, for that reason, prohibited.

Common questions

Q: Can a lawyer be introduced as a "team member" of a financial brokerage firm during its seminars, with the brokerage billing for both services and remitting the lawyer's fee?

A: No. The opinion found this Proposal One arrangement, like the other two it considered, "involves the brokerage firm as a solicitor for legal business and, therefore, prohibited."

Q: Does removing the lawyer's name from the brokerage's letterhead and seminar materials, and billing the legal fee separately, make the arrangement permissible?

A: No. The opinion held Proposal Two also involves the brokerage firm as a solicitor for legal business, because the brokerage's agents are still the ones who identify clients' estate-planning needs and direct them to the lawyer.

Q: What if the brokerage never identifies the lawyer as a team member, and the lawyer signs clients up and bills them directly at his own office?

A: Still prohibited. Even Proposal Three, the version with the least brokerage branding, was found to use the brokerage firm as a solicitor for legal business.

Q: What rule did the opinion rely on to bar these referral arrangements?

A: The opinion cited Disciplinary Rule 2-103(C), which provided that "a lawyer shall not request a person or organization to recommend or promote the use of his services... as a private practitioner," together with the Canon 5 ethical considerations requiring a lawyer's independent professional judgment to remain free of a non-client's economic influence.

Background and rules framework

The opinion applied Disciplinary Rule 2-103(C) (prohibiting a lawyer from requesting that a person or organization recommend or promote the lawyer's services), Canon 5 and its Ethical Considerations on independent professional judgment (made mandatory by DR 5-107(B)), and, by reference to Opinion 83-F-44, DR 3-101(A) (aiding unauthorized practice) and DR 3-103 (partnership with a non-lawyer). The modern correlates are Model Rule 7.3 (solicitation of clients), Model Rule 5.4 (professional independence from a person who recommends, employs, or pays a lawyer to render legal services for another), and Model Rule 5.5 (unauthorized practice), cited here as navigational cross-references rather than rules the opinion itself applied.

Citations and references

Other opinions cited:

• Tennessee Formal Ethics Opinion 83-F-44, prohibition on corporate billing for in-house counsel's legal services

See also

• Alabama Op. 1993-23: Funding a Nominally Separate Firm for Case Referrals
• Tennessee Op. 88-F-115: Bar Referral Service Percentage Fee

Source

• Landing page: https://www.tbpr.org/ethic_opinions/84-f-75

Original opinion text

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

84-F-75 - Lawyer using non-lawyer brokerage firm to solicit clients

BOARD OF PROFESSIONAL RESPONSIBILITY OF THE SUPREME COURT OF TENNESSEE

FORMAL ETHICS OPINION 84-F-75

Inquiry is made concerning the propriety of an attorney entering into a venture with a brokerage firm to provide estate planning services to a financial brokerage firm's clients commensurate with the brokerage firm's services of financial planning, investment counseling, money management and tax counseling services.

The attorney inquires concerning three specific proposed methods of providing the estate planning services, as follows:

In Proposal One, the attorney will participate in seminars conducted by the brokerage firm. He will be introduced to the seminar participants as a member of the team of agents providing services. The seminars include a slide presentation relating to estate planning containing the attorney's name, firm name, address and telephone number. The brokerage firm's letterhead contains the attorney's name as counsel.

Agents of the brokerage firm inquire of their clients as to the current existence of an attorney-client relationship. In the event of no attorney-client relationship and a need for estate planning, the brokerage agent advises his client that the attorney is a team member and is available to counsel with the client on estate planning. An appointment is made for the attorney and the individual to meet at the financial planner's office. The attorney obtains a written acknowledgment from the individual that the attorney is not giving investment advice, that the brokerage firm is not giving legal advice, and that an independent attorney-client relationship has been established with the attorney. The attorney then reviews the facts and existing documents relating to the proposed estate. An estate plan is recommended and the attorney proceeds to prepare, review and assist the client with execution of the estate plan documents. The attorney submits the statement for his fee to the brokerage firm and the brokerage firm bills the client for the legal fee and the fee for their services in one lump sum. The brokerage firm remits the entire legal fee to the attorney.

Proposal Two is the same as Proposal One, except the attorney's name, firm name, address and telephone number are not included in the seminar slide presentations; the attorney's name is not included on the brokerage firm's letterhead; and, the attorney's fee is segregated from the brokerage firm's fees when billed by the brokerage firm.

Proposal Three is the same as Proposal Two, except when the attorney is introduced at a seminar, or whenever he is introduced to a brokerage firm client, there is no reference to him being a team member of the brokerage firm; execution of the acknowledgment of the attorney-client relationship and all subsequent matters and transactions are conducted in the attorney's law office in the traditional manner; and, the attorney bills the client directly for his legal services.

Tennessee Formal Ethics Opinion 83-F-44 prohibits in-house corporate counsel from allowing the corporation to bill its customers for legal services performed by corporate counsel. The opinion states that such a practice is in violation of Disciplinary Rule 3-101(A) of the Code of Professional Responsibility which prohibits a lawyer from aiding a non-lawyer in the unauthorized practice of law. The opinion also cites DR 3-103 which prohibits a lawyer from forming a partnership with a non-lawyer if any of the activities of the partnership consist of the practice of law.

Canon 5 of the Code requires an attorney to exercise independent professional judgment on behalf of a client. The Ethical Considerations relating to Canon 5 which are material to this inquiry are as follows:

EC 5-1. The professional judgment of a lawyer should be exercised ... solely for the benefit of his client and free of compromising influences and loyalties. Neither his personal interests, the interests of other clients, nor the desires of third persons should be permitted to dilute his loyalty to his client.

EC 5-21. The obligation of a lawyer to exercise professional judgment solely on behalf of his client requires that he disregard the desires of others that might impair his free judgment. The desires of a third person will seldom adversely affect a lawyer unless that person is in a position to exert strong economic, political or social pressures uponthe lawyer. These influences are often subtle, and a lawyer must be alert to their existence ....

EC 5-22. Economic, political or social pressures by third persons are less likely to impinge upon the independent judgment of a lawyer in a matter in which he is compensated directly by his client and his professional work is exclusively with his client. On the other hand, if a lawyer is compensated from a source other than his client, he may feel a sense of responsibility to someone other than his client.

EC 5-23. A person or organization that pays or furnishes lawyers to represent others possesses a potential power to exert strong pressures against the independent judgment of those lawyers. Some employers may be interested in furthering their own economic, political or social goals without regard to the professional responsibility of the lawyer to his individual client. ... an employer may seek, consciously or unconsciously, to further its own economic interests through the action of the lawyers employed by it. Since a lawyer must always be free to exercise his professional judgment without regard to the interests or motives of a third person, the lawyer who is employed by one to represent another must constantly guard against erosion of his professional freedom.

The above aspirational objectives become mandatory in character in Disciplinary Rule 5-107(B) of the Code.

Finally, Disciplinary Rule 2-103(C) of the Code provides, in part, as follows:

A lawyer shall not request a person or organization to recommend or promote the use of his services ... as a private practitioner,....

The conduct proposed in each of the three proposed methods of providing estate planning services involves the brokerage firm as a solicitor for legal business and, therefore, prohibited.

This 18th day of June, 1984.

ETHICS COMMITTEE:

Henry H. Hancock

W. J. Flippin

Edwin C. Townsend

APPROVED AND ADOPTED BY THE BOARD