Advisory Opinion:
1853
Year Issued:
1998
RPC(s):
RPC 1.6; 1.7(b); 1.8(a); 1.8(f)
Subject:
Conflict of interest; referral of clients to nonlawyer; lawyer to receive referral fee for clients referred to investment firm
I have been instructed by the Rules of Professional Conduct Committee to respond to your ethics inquiry concerning the referral of clients to non-lawyers. [An investment firm proposed to pay the lawyer, in return for referring his clients, a fee based on the dollar amount of each client's investments managed by the investment firm.]
The Committee has reviewed your inquiry and determined the following: it is the opinion of the RPC Committee that the proposed arrangement between you and [an investment firm] may violate one or more of the Rules of Professional Conduct, including RPC 1.6 requiring client confidences because you need to use information obtained from the client as to their need for financial services; RPC 1.7(b) because the arrangement includes either a non-waiveable conflict of interest, or because the Agreement prohibits the lawyer from making the disclosures which the rules mandates; RPC 1.8(a) because the arrangement contemplates your obtaining a pecuniary interest in the client’s property and sufficient disclosure is prohibited; RPC 1.8(f) because the arrangement suggests that your independent judgment and advice are surrendered under your agreement with [the investment firm]; RPC 1.8(h) because some of the terms of the arrangement suggest that the lawyer is limiting his liability to his client; and RPC 2.1 because your relationship with your client could include duties which require you to render advice to your client which are prospectively prohibited under your agreement with [the investment firm].
The committee was also of the view that your arrangement strikes at the most fundamental basis of the attorney-client relationship and the client’s trust for the opinions, guidance and directions of the lawyer.
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