Could a Vermont lawyer receive a fee for referring clients to an investment adviser after disclosure and consent?
Apply this to your situation
This page answers the general question as of 1998. Ask about yours and see what the current Vermont Rules of Professional Conduct say for your facts, with citations.
Plain-English summary
An investment adviser proposed paying a lawyer a percentage of advisory fees for referring clients. The proposal included written disclosure of the compensation arrangement and a limited role for the lawyer in initial meetings and monitoring.
The committee rejected the fee. It discussed DR 5-107 on compensation from someone other than the client, DR 5-105 on independent judgment, and DR 3-102 on fee division with a nonlawyer. It reasoned that clients understood recommendations of other professionals as part of their lawyer’s representation and expected those recommendations to be independent of the lawyer’s financial stake.
The opinion acknowledged that some other jurisdictions permitted such arrangements with disclosure and consent, but it concluded that a Vermont lawyer could not receive the proposed commission or fee.
Currency note
This opinion was issued in 1998 under Vermont's former Code of Professional Responsibility. The Vermont Supreme Court's rules history says the Rules of Professional Conduct replaced the Code and applied to lawyer conduct after September 1, 1999; the court later made comprehensive amendments in 2009. 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 Treat this page as historical context, not current guidance.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.
Common questions
Q: Was written disclosure enough to permit the referral fee?
A: No. The committee rejected the arrangement even with disclosure and client consent.
Q: What compensation was proposed?
A: The adviser proposed paying a percentage of the client’s advisory fee for the lawyer’s referral.
Q: Why did the committee reject the arrangement?
A: It found that the lawyer’s financial interest conflicted with the independent judgment clients expected when receiving professional referrals.
Background and rules framework
The opinion discussed former Code DR 5-107, DR 5-105, and DR 3-102. It cited Vermont Opinion 94-1 and compared opinions from Connecticut, Illinois, Missouri, and New York.
Citations and references
Vermont Code of Professional Responsibility:
- DR 5-107, DR 5-105, DR 3-102
See also
Source
- Landing page: VBA conflict of interest opinions
- Original PDF: Vermont Advisory Opinion 98-08
- Rules history: Vermont Rules of Professional Conduct, “These rules apply to lawyer conduct after September 1, 1999.”
What do the rules say today, for your facts?
This opinion is from 1998. Ezel checks the current Vermont Rules of Professional Conduct against your situation and cites the rules it relies on.
Opens in Ezel Pro.
- Checks the law as it stands today, not only this page
- Cites every source it relies on, so you can verify it
- Chat, drafting and research in one workspace