Can a lawyer accept and keep a commission or rebate from an insurer, abstractor, or lender connected to a client's matter?
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This page answers the general question as of 1964. 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
Informal Opinion 1/64 addressed a lawyer who is offered a commission from a small insurance company for recommending business, or a "finder's fee" from a mortgage institution where the lawyer represents a client in a real estate purchase. The opinion grounded its analysis in Canon 38 of the Canons of Professional Ethics, which states that a lawyer should accept no compensation, commissions, rebates, or other advantages from others without the knowledge and consent of his client after full disclosure.
Read together with Canon 6, which requires a lawyer to refrain from representing conflicting interests without full disclosure and to refuse retainers from others in matters adversely affecting the client's position, the opinion found these Canons fairly well define the lawyer's duty. It noted that a 1958 informal opinion of the State Bar Committee on Professional Ethics held it unethical for an attorney to retain any discount, commission, or collection fee unless with the client's full knowledge and complete approval, and that ABA Opinion 196 condemned a lawyer accepting a 25 percent discount from an abstractor while billing the client the full charge.
Quoting Drinker on Legal Ethics, the opinion identified two principles behind Canon 38: first, a lawyer shall receive no secret remuneration from the other side; second, the lawyer must not, even with disclosure, put himself in a position that will interfere with his wholehearted duty to the client. The opinion concluded that where a lawyer discloses a commission or rebate and there would be no interference with loyalty to the client, the acceptance should unquestionably affect the size of the lawyer's fee, noting that DR 5-107(B) would reach the same result.
Currency note
This opinion was issued in 1964, before Wisconsin's July 1, 2007 adoption of the revised Rules of Professional Conduct for Attorneys (the state's Ethics 2000 update). It applied the former Canons of Professional Ethics (Canons 6 and 38) and noted DR 5-107(B) of the Code. The current counterparts addressing payment from a third party and conflicts are SCR 20:1.8 / Model Rule 1.8 (especially 1.8(f), compensation from someone other than the client) and SCR 20:1.7 / Model Rule 1.7 (conflicts of interest). 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: Could a lawyer keep a commission or finder's fee from an insurer or lender in a client's matter?
A: Not without the client's knowledge and consent after full disclosure. The opinion applied Canon 38, under which a lawyer accepts no compensation, commission, rebate, or advantage from others without disclosure and consent.
Q: Was disclosure to the client enough to keep the full payment?
A: No. Even when disclosed, the opinion concluded the acceptance should affect the size of the lawyer's fee, and the lawyer must not put himself in a position that interferes with his wholehearted duty to the client.
Q: What were the two principles behind the rule?
A: Quoting Drinker, the opinion identified them as receiving no secret remuneration from the other side, and not accepting compensation from the other side in a way that interferes with the lawyer's loyalty to the client.
Background and rules framework
The opinion rested on the former Canons of Professional Ethics (Canon 38 on accepting compensation from others, and Canon 6 on conflicting interests), a 1958 State Bar informal opinion, ABA Opinion 196, and Drinker on Legal Ethics, and noted DR 5-107(B). The current counterparts are SCR 20:1.8 / Model Rule 1.8 (transactions and third-party payments, including 1.8(f) on compensation from one other than the client) and SCR 20:1.7 / Model Rule 1.7 (concurrent conflicts of interest).
Citations and references
Rules of Professional Conduct:
- Model Rule 1.8 / SCR 20:1.8 (compensation from a third party; conflicts); former Canon 38, DR 5-107(B)
- Model Rule 1.7 / SCR 20:1.7 (concurrent conflicts of interest); former Canon 6
Other opinions cited:
- ABA Opinion 196 (lawyer retaining an abstractor's discount while billing the client in full)
- State Bar Committee on Professional Ethics, 1958 informal opinion (retaining discounts, commissions, or collection fees)
See also
- WI Ethics Op. E-84-17: Payment for Referrals From Insurance Company Subsidiary
- WI Ethics Op. E-79-4: Bank Referral of Estate Planning Customers
Source
- Landing page: https://www.wisbar.org/formembers/ethics/pages/formal-opinions.aspx
- Original PDF: https://www.wisbar.org/formembers/ethics/Ethics%20Opinions/I-1-64.pdf
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