Can a lawyer run a side business selling mutual funds, annuities, and insurance while continuing to practice law?

Plain-English summary

The inquiry concerned a lawyer who wanted to conduct a business selling mutual funds, annuities, and life and disability insurance while continuing to practice law. The committee stated that it would be difficult to do so. As a lawyer, the inquirer is bound by the Rules of Professional Conduct in any enterprise in which the lawyer engages, including the sale of these investments.

The committee identified a serious risk that the responsibilities the lawyer brings from the profession would be materially limited by the lawyer's own interest in earning commissions or by responsibilities to the companies whose products the lawyer sells. It said that if the lawyer decided to proceed with both professions, the lawyer must comply with all the Rules of Professional Conduct whether practicing law or selling investments, with particular attention to RPC 1.7(b), 1.8(a) and (f), 1.10(a), and 5.4(c).

The committee added that the lawyer would also have to assure compliance with RPC 7.3 on direct contact with potential clients when soliciting customers for the investments business, and that RPC 1.10 may extend the ethical implications of the dual role to the lawyer's law firm, so the lawyer may need to notify the firm.

Currency note

This opinion was issued in 1999, before the Washington State Bar Association's adoption of the 2006 revisions to the Rules of Professional Conduct. 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 Treat this page as historical context, not current guidance.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. The conflict, imputation, and solicitation rules the opinion cites (RPC 1.7, 1.8, 1.10, 5.4, and 7.3) were all restructured in the 2006 revisions, so verify the current rule text before relying on it.

Common questions

Q: Can a lawyer sell mutual funds, annuities, and insurance on the side while practicing law?

A: The committee said it would be difficult. A lawyer is bound by the Rules of Professional Conduct in any enterprise, including selling investments, and must comply with all of them while doing both.

Q: Which rules did the committee flag in particular?

A: It pointed to RPC 1.7(b), 1.8(a) and (f), 1.10(a), and 5.4(c), and to RPC 7.3 on direct contact when soliciting investment customers.

Q: Does the dual role affect the lawyer's firm?

A: The committee said RPC 1.10 may extend the ethical or other implications of the dual role to the law firm, and the lawyer may need to notify the firm.

Background and rules framework

The opinion applied several Washington Rules of Professional Conduct, each corresponding to its ABA Model Rule: RPC 1.7(b) (material-limitation conflict of interest, MR 1.7); RPC 1.8(a) (business transactions with a client, MR 1.8(a)) and RPC 1.8(f) (compensation from a third party, MR 1.8(f)); RPC 1.10(a) (imputation of conflicts within a firm, MR 1.10); RPC 5.4(c) (a third party who recommends or pays for legal services may not direct the lawyer's professional judgment, MR 5.4(c)); and RPC 7.3 (direct contact with prospective clients, MR 7.3). The committee framed the issue as the lawyer's continuing obligation under the Rules across both businesses.

Citations and references

Rules of Professional Conduct:

• ABA Model Rule 1.7 (conflict of interest: current clients); Washington RPC 1.7(b)
• ABA Model Rule 1.8(a), (f) (business transactions with clients; third-party compensation); Washington RPC 1.8(a), 1.8(f)
• ABA Model Rule 1.10 (imputation of conflicts); Washington RPC 1.10(a)
• ABA Model Rule 5.4(c) (professional independence; third-party direction); Washington RPC 5.4(c)
• ABA Model Rule 7.3 (direct contact with prospective clients); Washington RPC 7.3

See also

• WA Ethics Op. 1606: Lawyer Selling Insurance Door-to-Door
• WA Ethics Op. 1295: Lawyer Also a Mortgage Broker
• WA Ethics Op. 1599: Lawyer and Insurance Adjuster

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=1067

Original opinion text

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

Advisory Opinion: 1874
Year Issued: 1999
RPC(s): RPC 1.7 (b); 1.8(a); 1.8(f); 1.10 (a); 5.4(c); 7.3
Subject: Conducting a business selling mutual funds, annuities, life and disability insurance while continuing to be a lawyer

It will be difficult for you to conduct a business selling mutual funds, annuities, and life and disability insurance while continuing to be a lawyer.

As a lawyer, you are bound by the Rules of Professional Conduct in any enterprise in which you engage, including the sale of these investments. There is a serious risk that the responsibilities you bring to your investment sales business from your profession as lawyer will be materially limited by your own interest in earning commissions or your responsibilities to the companies whose investment products you are selling. If you decide to proceed with these dual professions, you must comply with all the Rules of Professional Conduct whether you are conducting a law practice or selling investments. You should pay particular attention to RPCs 1.7(b), 1.8(a) and (f), 1.10(a) and 5.4(c).

You will also have to assure compliance with RPC 7.3 regarding direct contact with potential clients when you are soliciting customers for your investments business. In addition, RPC 1.10 may also extend any ethical or other implications of your dual role to your law firm and you may need to notify your firm of your dual professional role.