Can a lawyer become a part owner of, or work for a fee with, an interdisciplinary financial-planning firm made up of a lawyer, an accountant, a securities broker, and insurance agents?
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This page answers the general question as of 1984. Ezel answers yours: whether it's allowed on your facts, under the current rules of professional conduct in your state, with citations.
Plain-English summary
Opinion E-84-21 addressed a lawyer considering involvement in an organization "to provide the public with an interdisciplinary approach to financial planning," composed of a lawyer, an accountant, a licensed securities broker, and two life insurance agents, offering services on a percentage-of-income fee basis. The inquiry assumed there was no problem with the lawyer becoming a part owner and asked about referrals and fee division. The committee found it had to examine the threshold propriety of the lawyer's involvement first.
The committee concluded that, under former SCR 20.20, a lawyer may not form a partnership with a nonlawyer if any of the partnership's activities consist of the practice of law, so the lawyer could not be a partner if any of the lawyer's activities as a partner would consist of practicing law (citing Wis. Stat. sec. 757.30(2)'s definition of practicing law).
The committee then explained that even independent participation for a fee would be improper for several reasons. First, under Formal Opinion E-61-1, a lawyer may not permit professional services to be controlled or exploited by a lay intermediary between the lawyer and the client. Second, former SCR 20.09(3) bars a lawyer from requesting a person or organization to recommend the lawyer's employment, and participation would be tantamount to such a request. Third, a lawyer must disregard the desires of others that might impair free judgment (SCR 20.23(4)(a), 20.23(1)), and a participant could be subject to strong economic, political, or social pressures from the other professionals. Finally, the organization's purpose, discussing the client's options "between and among the professionals," would require a blanket consent to disclosure of client confidences before representation could begin, which is not permissible; full disclosure tailored to the client's circumstances is required for any waiver (SCR 20.22(2)(a); ABA Informal Opinion 1287). Because the lawyer's involvement was improper, the committee did not reach the referral and fee-division questions.
Currency note
This opinion was issued in 1984, before Wisconsin's July 1, 2007 adoption of the revised Rules of Professional Conduct for Attorneys (the state's Ethics 2000 update), and it analyzes conduct under the former Code. A lawyer's professional independence and the bar on nonlawyer partnerships and fee-sharing are now governed by SCR 20:5.4 / Model Rule 5.4, confidentiality by SCR 20:1.6 / Model Rule 1.6, and solicitation/recommendation of services by Model Rule 7.2. 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 lawyer be a partner in a multidisciplinary financial-planning firm with nonlawyers?
A: The committee concluded no, if any of the lawyer's activities as a partner would consist of the practice of law, because a lawyer may not partner with nonlawyers in the practice of law.
Q: What about joining as an independent contractor for a fee instead of as an owner?
A: The committee concluded that too would be improper, because it would let a lay intermediary control the lawyer's services, amount to a prohibited request for recommendations, and subject the lawyer to outside pressures.
Q: Why was the confidentiality structure a problem?
A: The committee concluded that discussing the client's options among the assembled professionals would require a blanket consent to disclose confidences before representation, which is impermissible; any waiver requires full disclosure tailored to the client's circumstances.
Background and rules framework
The opinion interpreted the former Code's bar on nonlawyer partnerships (SCR 20.20), its protection of independent judgment from lay control (SCR 20.23), its bar on requesting recommendations of employment (SCR 20.09(3)), and its confidentiality provisions (SCR 20.21, 20.22). Those concerns are now governed by SCR 20:5.4 / Model Rule 5.4 (professional independence; nonlawyer partnerships and fee-sharing), SCR 20:1.6 / Model Rule 1.6 (confidentiality), and Model Rule 7.2 (recommendation of a lawyer's services).
Citations and references
Rules of Professional Conduct:
- Wis. SCR 20.20 / Model Rule 5.4 (nonlawyer partnerships; professional independence) (former Code provision)
- Wis. SCR 20.21, 20.22 / Model Rule 1.6 (confidentiality) (former Code provisions)
- Wis. SCR 20.09(3) / Model Rule 7.2 (recommendation of services) (former Code provision)
Statutes:
- Wis. Stat. sec. 757.30(2) (1981-82) (definition of practicing law)
Other opinions cited:
- Wisconsin Formal Op. E-61-1
- ABA Informal Opinion 1287 (1974)
See also
- WI Ethics Op. E-88-8: Fee-Sharing With a Lawyer Referral Service
- WI Ethics Op. E-94-6: Financial Planners in Estate Planning Practice
- WI Ethics Op. E-85-5: Law and Title Insurance Practice
Source
- Landing page: https://www.wisbar.org/formembers/ethics/pages/formal-opinions.aspx
- Original PDF: https://www.wisbar.org/formembers/ethics/Ethics%20Opinions/E-84-21.pdf
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