May an attorney allow a financial planning organization to refer its members to him for preparation of wills and trusts and accept payment of part or all of his fee from the organization?
An organization that provides financial planning services to individuals conducts seminars which, among others things stress the importance of setting financial goals, making a will, choosing the right type of insurance, etc. Individual counseling and advice is also available to participants. The individual services consist of a review of a member's income tax returns for the last three years, insurance review and advice, and investment counseling. No legal advice or legal services are rendered by the organization but in explaining to prospective members the services that are offered, a member is advised that $150.00 of his membership fee goes towards the preparation of a will and living trust for the member and his spouse.
Prospective members are told that if they are represented by local counsel, the organization will forward $150.00 of the membership fee to their local counsel after the member consults with the attorney of his choice concerning terms and provisions which the financial planning group deems to be advantageous for the member. If the attorney's fee exceeds the $150.00 paid by the organization, that fee is billed to the member by the attorney.
If a prospective member is not represented by counsel, the organization provides the member with a list of attorneys with whom it has communicated and informs the member that the attorneys on the list have agreed to prepare two fairly simple wills and one living trust for $150.00. The organization then forwards to an attorney in the area pertinent financial information pertaining to the member and the member is told that the attorney will contact the member to verify the financial information and ask any additional questions the attorney deems advisable.
The organization contacts attorneys to inquire as to whether they are willing to make their services available to members of the financial planning group at the rate specified but promises no work and no referrals to attorneys. The organization does submit to the prospective attorneys a proforma copy of the simple wills and living trust recommended by the organization to its members, but the drafting of the wills and trust agreements for a member are left entirely to the attorney.
If a member does not have a will and trust agreement prepared, a refund or adjustment in his membership fee is not made. In other words, the organization retains the $150.00 that it would have been paid to an attorney.
The relevant disciplinary rules are DR 2-103, DR 2-106, DR 3-102 and DR 5-107.
DR 2-103(E)(5) expressly allows an attorney to cooperate in a dignified manner with the legal services activities of a bona fide organization that recommends, furnishes or pays for legal services to its members or beneficiaries provided the conditions therein are satisfied. This is conditioned, of course, upon the fact that the lawyer's independent professional judgment is exercised in behalf of his client without interference or control by the organization.
The financial planning organization described above derives no profit from the legal services rendered by lawyers to whom its members are referred. There is no indication that any lawyer to whom referrals are made initiated or promoted the formation of the organization or that it is operated for the purpose of procuring legal work or financial benefit for any lawyer as a private practitioner. The inquiry upon which this opinion is based clearly indicates that the member of the organization, and not the organization, is recognized as the client of the lawyer.
If the statement of the services to be rendered for the flat fee of $150.00 is not misleading or deceptive and the member is free to select an attorney of his choice, or reject an attorney whose name has been recommended by the organization, the guidelines under which the organization is operated appear to comport with the requirements of DR 2-103(E)(5). To eliminate the possibility of a violation of DR 2-101(A)(1), the organization must clearly inform its members that the $150.00 does not necessarily cover the entire fee of an attorney for preparing the wills and trust agreement.
DR 2-106 prohibits an attorney from entering into an agreement for, charging or collecting illegal or clearly excessive fees. Any attorney who accepts a referral from the organization must satisfy himself that the fee charged is not excessive for the services rendered. Further, an attorney who accepts a referral must not so "underprice" his services to enable an organization to profit from them by an indirect feesharing arrangement (DR 3-102), or by underpricing or otherwise, compensate the organization for recommending the lawyer's services (DR 2-103(C)).
DR 5-107 is intended to prohibit a lawyer from being influenced by others than his client. Under the facts presented, the client has full knowledge that $150.00 of the attorney's fee is being paid by the financial planning organization and there is no indication that the organization attempts to direct or regulate the attorney's professional judgment in rendering legal services to one of its members.
No violation of the disciplinary rules results from an attorney allowing a financial planning organization to recommend him to a member of the organization who has no attorney or accepting payment for part or all of his fee for services rendered to a member under the facts set out above.