ATTORNEY'S PARTICIPATION IN LAY ESTATE PLANNING ¾ An attorney's regular, systematic and agreed participation in a layman-initiated scheme of "estate planning" wherein the lay estate planner regularly refers clients to the attorney for "drafting the necessary instruments" for customers of the estate planner constitutes unethical solicitation and can constitute unethical regulation of his professional judgment in rendering legal services, and unethical aiding of a non-lawyer in the unauthorized practice of law.
Code of Professional Responsibility: DR 2-103(B), (D), AND (E); DR 3-101(A); AND DR 5-107(B).
Does a lawyer who is asked by a lay individual or firm offering "estate planning" services of the type currently done by many major insurance companies to "draft the necessary instruments" for customers of such lay individual or firm, in cases where the prospective estate planees do not have an attorney whom they have used in the past, violate any of the disciplinary rules by permitting the "estate planner" to suggest to his or its customers that the lawyer's services be used and by undertaking to "draft the necessary instruments" utilized by such lay-initiated "estate plans?"
The particular inquiry made of this Committee states that in such arrangement
"it would necessarily be definitely understood by and between the estate planner and the attorney that there would be no partnership between them nor would the attorney consider accepting any potential estate planees unless the estate planner had first qualified them as to using their own attorney and further that the estate planner had fully apprised the estate planees that in naming said attorney he was only recommending said attorney based upon his own personal past association with said attorney and further that the choice of attorney to be used was entirely up to the estate planees. There would be no sharing of fees between the estate planner and the attorney."
The situation inquired about is potentially violative of three areas of professional responsibility; Solicitation by a lay intermediary, direction or regulation of a lawyer's professional judgment by a lay intermediary, and participating or aiding in the unauthorized practice of law.
DR 2-103, "Recommendation of Professional Employment", provides, in its relevant subsections, the following:
"(B) Except as permitted under DR 2-103(C), a lawyer shall not compensate or give anything of value to a person or organization to recommend or secure his employment by a client, or as a reward for having made a recommendation resulting in his employment by a client. . . .
"(D) A lawyer shall not knowingly assist a person or organization that recommends, furnishes, or pays for legal services to promote the use of his services or those of his partners or associates. . . .
"(E) A lawyer shall not accept employment when he knows or it is obvious that the person who seeks his services does so as a result of conduct prohibited under this Disciplinary Rule."
The line between permissible referral of clients to a lawyer by friends and clients, warranted by personal relations, and prohibited solicitation by a lay intermediary is often difficult to draw. Generally speaking, the rule is that unless warranted by personal relations, all solicitation whether direct or indirect is prohibited. See ABA Opinion 35. In Texas Opinion 346 this Committee held that the recommending of a particular lawyer by an association or group to its members to represent them in their personal matters constituted, to the attorney allowing such, unethical solicitation. In ABA Informal Decision No. 551 it was held that a working agreement between an insurance agent and an attorney to send each other all the business they could would be unethical solicitation on the part of the attorney.
While it is not clearly established in the facts given to this Committee in the particular case that the referrals would constitute a systematic scheme by which all clients of the lay individual or firm would be referred to this particular attorney, such is strongly suggested by those facts except in the case where the client had a regular attorney of his own. In the Committee's opinion this would constitute a violation of DR 2-103(D) and (E), in that the lawyer would knowingly be assisting a person or organization that recommends legal services to promote the use of his services, and would be accepting employment when he knows or it is obvious that the person seeking his services does so as a result of such recommendation. The inquiry states that the "estate planner" approaches an attorney to "ask that attorney if he would consider drafting the necessary instruments." Presumably the drafting of these "necessary instruments" are legal services recommended by the "estate planner", putting the transaction squarely within the language of DR 2-103(D).
The most serious problem suggested by the inquiry received in this instance concerns the application of DR 5-107, "Avoiding Influence by Others Than the Client." Subdivision (B) of this Disciplinary Rule reads as follows:
"(B) A lawyer shall not permit a person who recommends, employs or pays him to render legal services for another to direct or regulate his professional judgment in rendering such legal services."
Again, there is no direct statement in the facts given this Committee that the lawyer in question would permit the lay individual or firm recommending him to direct or regulate his professional judgment in the rendering of the proposed legal services. However, the possibility of such is strongly suggested by the situation itself and by the language of the statement. It is stated that the recommending individual or firm's primary service is to provide estate planning and that he or it approaches an attorney to ask "if he would consider drafting the necessary instruments," presumably meaning the instruments deemed necessary by the individual or firm providing the estate planning service. It may well be that the attorney in question would not allow any direction or regulation from the referring party, but the relationship that would exist between the attorney and the individual or firm regularly referring such clients appears calculated to make the lawyer's independent exercise of professional judgment subject to compromise. If, for example, the referring individual or firm is in the business of selling insurance, and the "estate plan" includes the purchase of such insurance, will the lawyer feel completely free to advise on a completely candid and perhaps critical analysis of the "estate plan" itself? It appears highly unlikely that the contemplated relationship allows for the sort of independent exercise of professional judgment required by DR 5-107(B). A lawyer's devotion to the interest of his client must not be diluted by loyalty to others.
Certain of the Ethical Considerations given under Canon 5 of the Code of Professional Responsibility are relevant to this inquiry. EC 5-1 reads as follows:
"EC 5-1 The professional judgment of a lawyer should be exercised, within the bounds of the law, solely for the benefit of his client and free of compromising influences and loyalties. Neither his personal interests, the interests of other clients, nor the desires of third persons should be permitted to dilute his loyalty to his client."
EC 5-21 provides:
"EC 5-21 The obligation of a lawyer to exercise professional judgment solely on behalf of his client requires that he disregard the desires of others that might impair his free judgment. The desires of a third person will seldom adversely affect a lawyer unless that person is in a position to exert strong economic, political, or social pressures upon the lawyer. These influences are often subtle, and a lawyer must be alert to their existence. A lawyer subjected to outside pressures should make full disclosure of them to his client; and if he or his client State Bar of Texas believes that the effectiveness of his representation has been or will be impaired thereby, the lawyer should take proper steps to withdraw from representation of his client."
This consideration was the basic reason for the State Bar of Michigan holding in its Opinion No. 136 that a lawyer cannot ethically permit an insurance salesman to act as intermediary between a testator and himself in the matter of drawing a will. It was there stated that the lawyer must have a personal relationship with the testator in both the preparation of a will as well as in its execution, and it goes without saying that the basis for such is to preserve the integrity of the attorney-client relationship protected by the Disciplinary Rule above quoted.
Finally, there is a serious question implied in the facts being considered here as to whether the lawyer in question is aiding or participating in the unauthorized practice of law. As this Committee stated in its Opinion 346, we are not concerned with the conduct of the lay individual or firm here involved. Without a prior Opinion by the Unauthorized Practice of Law Committee, we do not here decide whether the conduct of the lay individual or firm in question constitutes unauthorized practice of law. Further, we do not have sufficient information to know what the "estate planning" services furnished by the lay individual or firm consist of. However, it would appear that if the service is to advise the drafting of certain "necessary instruments" for the implementation of the plan furnished, which instruments are presumably those the drafting of which constitutes the practice of law, it is likely that the service of the lay individual or firm constitutes the practice of law likewise. If so, the participation of the lawyer in drafting the "necessary instruments" would clearly violate the provisions of DR 2-101(A). Earlier opinions holding that lawyers should not aid or participate in any way in the practice of law by laymen or lay agencies, nor should they in any way sanction the same or profit therefrom (ABA Opinion 35), are still authority under this Rule.
In conclusion, we hold under the facts stated in the request for an opinion, as follows: