Offering Law Related Services to a Legal Client
Opinion rules that a lawyer is subject to the Rules of Professional Conduct with respect to the provision of a law related service, such as financial planning, if the law related service is provided in circumstances that are not distinct from the lawyer's provision of legal services to clients.
Attorney A's law practice is limited to estate planning. To accomplish the objectives of an estate plan, a client frequently needs financial planning and advice about financial products such as annuities, life insurance policies, securities, etc. Often, the client's current financial and insurance advisors are unfamiliar with the legal rationale of an estate plan and are, therefore, unable to meet the client's needs. Frequently, a client does not have a financial advisor. It is often difficult to identify a competent financial advisor who will not undermine the advice of Attorney A.
Attorney A believes that the employment of a financial planner by her law firm will resolve these problems. The financial planner will provide competent advice to clients who have questions about their retirement plans, charitable giving, asset allocation, and asset preservation. Providing this service at the law firm will assure achievement of the client's estate planning goals. May an estate planning law firm employ a financial advisor to provide financial planning to clients of the firm?
Yes, however, a lawyer is subject to the Rules of Professional Conduct with respect to the provision of a law related service, such as financial planning, if the law related service is provided by the lawyer in circumstances that are not distinct from the lawyer's provision of legal services to clients.
If the financial advisor is a nonlawyer, he or she may be an employee of the law firm but may not become a partner, shareholder, or otherwise own an interest in the law firm. See Rule 2.3 and comment. Moreover, legal fees may not be shared with a nonlawyer employee. Rule 3.2.
In addition, the law firm must have in effect measures giving reasonable assurance that the conduct of a nonlawyer financial advisor will be compatible with the lawyer's professional obligations. Rule 3.3. In particular, the financial advisor may not be held out as offering legal services. Rule 3.1(a). Also, reasonable measures must be taken to explain to the client that the financial advisor is a nonlawyer who cannot provide legal advice.
May an estate planning law firm provide financial products to clients as an extension of the services available to clients?
Yes, subject to the requirements of the Rules of Professional Conduct. To avoid conflicts of interest, no commission or fee may be earned (by the law firm, any lawyer with the law firm, or the financial advisor) on any financial product purchased by a client upon the recommendation of a lawyer in the firm or the financial advisor. Rule 5.4(c).