UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.
Ethics Advisory Opinion 91-04
Members of a community wish to create an organization that educates and disseminates to the public information pertaining to tax and estate planning. The members of the community that wish to create this organization consist of attorneys, certified public accountants, institutional trust officers, and other professionals associated with tax and estate planning matters.
The organization, for a small annual fee, will permit a subscriber to attend various seminars, receive newsletters, receive limited free consultations with an attorney and a certified public accountant and receive reduced rates with an attorney, certified public accountant and bank services on certain related matters.
Questions:
May an attorney participate in creating and maintaining such an organization? If there is a prohibition against an attorney participating because of one of the particular services offered by the organization, which services would be permissible from the standpoint of an attorney's participation?
Summary:
An attorney may not form a partnership with a non-lawyer if any of the activities of the partnership consist of the practice of law. Rule of Professional Conduct 5.4.
An attorney may not give anything of value in return for referrals except the usual charges of a not-for-profit lawyer referral service or other legal services organization. Rule of Professional Conduct 7.2 (c). (See Comment to Rule 5.5).
Opinion:
The organization, as described in the facts, proposes to provide as one of its services individual legal consultations concerning estate matters. Rule 5.4 (b) prohibits lawyers from forming partnership with non-lawyers when the activities of the organization include the practice of law. While the structure of the organization is not clearly described in the facts, the attorneys' role appears to be part of the management of the organization and, to the extent that subscribers received legal services as part of their membership, the arrangement would violate the rule. A further consideration should be the restrictions of Rule 5.5 (b) which prohibits an attorney from assisting "a person who is not a member of the bar in the performance of activity that constitutes the unauthorized practice of law." American Bar Association Informal Ethics Opinion 1254 (1972) held that merely collecting information about an individual's estate by a non-attorney organization in preparation for the referral of the matter to an attorney constituted the unauthorized practice of law and a lawyer should not participate in such an arrangement. Given the make-up of this organization, an attorney would need to maintain exceptional vigilance to insure that the non-attorneys did not cross the line from permitted activities, i.e., providing general estate information and accounting services, to the practice of law by participation in the drafting of wills and offering legal opinions on a particular person's estate planning problems. (See Comment to Rule 5.5).
If the organization would exclude from its activities the provision of legal services, there may still be problems with an attorney agreeing to accept referrals in exchange for participation in the organization. Rule 7.2 (c) prohibits an attorney from exchanging anything of value for referrals except for the customary charges of not-for-profit lawyer referral services and other legal services organizations. The exchange contemplated in the fact situation is that the attorney would help organize and maintain the organization and in return would be on a reduced fee referral list. This exchange would violate the rule. So long as the attorney agrees not to accept any fee paying referrals, an attorney may participate if the attorney's role is limited to providing legal education programs and materials without any direct referral connection.
The final ethical consideration which may be raised by such an organization concerns the prohibition on fee splitting contained in Rule 5.4 (a). The facts do not state the disposition of the fee paid by the participants in the organization's program. If there was any disbursement of a part of that fee to the attorney who subsequently rendered legal services to the participant as part of the persons membership benefits, it would violate this ethical constraint.