Advisory Opinion: 2061

Year Issued: 2004

RPC(s): RPC 1.4(b), 1.7(b)

Subject: Referrals by a financial services company

QUESTIONS PRESENTED:
May an attorney ethically accept frequent referrals of clients for estate planning advice from a financial services company which is an occasional client where there is no sharing of fees or quid pro quo and the attorney’s judgment remains independent?

FACTS:
A financial services company sells a variety of financial products and services such as portfolio management, life insurance, health insurance, property and casualty insurance, securities, annuities, and mortgages. A nonlawyer representative of the company counsels with the client during which the representative may learn that the client needs a will, trust, durable power of attorney, etc. The representative tells the client that those kinds of services need to be provided by an attorney and that they should contact their own attorney or they could have an attorney the company has worked with contact them. If the client expresses a desire to speak with the attorney with whom the company has worked, a referral is made to that lawyer. The attorney has the client complete a questionnaire, reviews it, and makes recommendations as to what estate planning documents are needed and then prepares them, for which the attorney is paid a fee directly from the client and does not share the fee with anyone. The attorney has no ownership interest in the referring company, and when s/he renders the company legal services, it is billed at the regular rate.

DISCUSSION:
The inquiry was triggered by an article appearing in the Bar News dated March, 2004 entitled, “An Unholy Alliance: Nonlawyers Who Mass-Market Trusts, and the Lawyers Who Assist Them.”

RPC 1.4(b) states “A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.”

Here, information is obtained from the client, allowing the attorney to make an informed and rational recommendation as to what estate planning documents should be prepared and signed. The inquirer offers no facts, and none can be inferred, whereby the attorney’s representation of the client is materially limited by responsibilities to the person or firm making the referral, and thus there is no violation of RPC 1.4(b).

The attorney must independently determine whether RPC 1.7(b) is implicated - whether his representation may be materially limited by his responsibilities to the financial services company, or by his own interests in receiving further referrals and business from the company. If the representation may be limited, then the attorney must determine whether he reasonably believes that the representation will not be adversely affected, and the client must consent in writing after full disclosure.

The absence of a fee-sharing or quid pro quo for referrals distinguishes this inquiry from those ethical perils described in the Bar News article and California State Bar Association Formal Opinion No. 1997-148 and WSBA Informal Opinion No. 2068. Here the referral source and the attorney remain independent and there are no tradeoffs.

RESPONSE:
Yes. The question as presented involves no ethical improprieties per RPC 1.4(b) or RPC 1.7(b).

Advisory Opinions are provided for the education of the Bar and reflect the opinion of the Committee on Professional Ethics (CPE) or its predecessors. Advisory Opinions are provided pursuant to the authorization granted by the Board of Governors, but are not individually approved by the Board and do not reflect the official position of the Bar association. Laws other than the Washington State Rules of Professional Conduct may apply to the inquiry. The Committee's answer does not include or opine about any other applicable law other than the meaning of the Rules of Professional Conduct.