Opinion 1991

The inquirer is a sole practitioner practicing through a professional services corporation. She wishes to provide services described as “risk management consulting services” to customers of an insurance broker, which would either employ her or hire her as an independent contractor. In this context, she specifically inquires whether:
1. The provision of these services would violate Rule 5.4(c) or (d)(3) of the Rules of Professional Conduct (“RPC”); and
2. Any other RPCs would be violated by their provision.

The inquirer requests an opinion concerning the propriety under the RPCs of rendering services that she calls “risk management consulting services.” The inquirer describes the services to be provided by her as an employee or independent contractor of a non-lawyer as including the “auditing of employment records and documents, providing training, making recommendations about better employment practices like the use of dispute resolution, and doing ... risk management analysis for businesses within the context of preventing insurance claims and losses.”

The inquirer was telephonically contacted for further explanation regarding the nature of the services under inquiry. According to the inquirer, she would be primarily engaged by an insurance broker (“broker”) to examine the records of the broker’s insureds (“insureds”) and verify the insured’s compliance with conditions for coverage and/or their fulfillment of representations made in order to obtain coverage. This review would result in the Inquirer notifying the insureds of insurance deficiencies and in her making recommendations for additional or supplemental coverage. The inquirer would also perform risk management analysis. The inquirer described this service more or less as being a liability exposure assessment based on her acquired knowledge of the insured’s business practices, followed by counseling of the insured on recommended remedial measures.

It is the committee’s opinion that while it may be ethically possible to perform the requested consulting services, the risk of running afoul of the RPCs is high.

A substantive law question exists as to whether or not any professional legal services are provided by the inquirer in her three-party consulting arrangement with an insurance broker and its customers. The services in issue include assessing and advising on the liability exposure of the customers and advising them on measures to minimize liability. The answer to this substantive law question is outside the purview of the committee. The inquirer, however, should bear in mind that “it is the nature and character of the service[s] performed” that determines whether or not such services are professional legal services. See State v. Hunt, 75 Wn. App. 795, 880 P.2d 96 (1994) (quoting Washington State Bar Association v. Great Western Union Fed. Sav. and Loan Ass’n., 91 Wn.2d 48, 54, 586 P.2d 870 (1978)).

To the extent that no legal services are provided by the inquirer, certain RPCs may not be applicable to her provision of consulting services. However, the inquirer must completely separate her professional services corporation and her consulting activities. RPC 1.7; RPC 1.8; RPC 5.4; RPC 5.5; RPC 7.2. In addition to the disclaimer of provision of legal services to the insured (as proposed by the inquirer), the disclaimer should include a warning that any information learned from the risk management investigation will not be confidential and will be provided to the brokerage.

Regardless of the characterization given the services in issue, the Inquirer is prohibited from using her professional knowledge in conjunction with or under the direction of a non-attorney in order to assist or allow the non-attorney to engage in any activity that is considered within the practice of law. RPC 5.5 To the extent any legal services are provided, RPC 2.1, RPC 5.2, and RPC 5.4 must be observed. The inquirer is also prohibited from sharing professional fees with a non-attorney or the holding of any equity with a non-attorney in an entity that provides legal services. RPC 5.4

The inquirer may not use her consulting services to channel customers to her legal practice as clients or her legal practice to channel clients to consulting activities. The financial interest of the attorney in such a situation creates a conflict of interest which is inherent and, thus, non-waivable. A non-waivable conflict may also arise depending on the inquirer’s recommendation of risk-avoidance measures to the broker’s customers. See Washington State Bar Association Rules of Professional Conduct Committee Formal Op. 187 (1990); Washington State Bar Association Rules of Professional Conduct Committee Informal Op. 1926 (2000); RPC 1.7(b); RPC 1.8(a). Also, the attorney must protect confidences and secrets, both during and after a representation. RPC 1.6(a); RPC 1.9(b). Lastly, any communication regarding the inquirer’s professional services must be clear and not create confusion that consulting services are being offered as legal services or vice versa. See Washington State Bar Association Rules of Professional Conduct Committee Formal Op. 87 (1960); RPC 7.1(a).

The provision of any professional legal services by the inquirer under the title of “consultant” cannot be used as a liability or professional responsibility shield. RPC 1.8(h). Similarly, any waiver provision in a consulting agreement, oral disclaimer, or other contractual means cannot be used as a liability shield where the provided services are substantively legal in nature. RPC 1.8(h).