Opinion #166. Affiliation with Entity Selling Inter Vivos Trusts

Issued by the Professional Ethics Commission

Date Issued: December 2, 1998

Question

A Maine lawyer has been offered affiliation with an entity that is in the business of selling inter vivos trusts. The entity solicits its clientele through non-lawyer representatives, who receive no compensation for effecting a sale, or so it is claimed, but may be compensated if they are used by the trust settlors to perform related services such as effecting transfers of title. The proposal made to the lawyer contemplates that the entity prepare the trust documents and that the lawyer “review” them for suitability to the client’s needs and conformity with local law. The lawyer is expected to meet with the client. The fee for all of these services is to be paid by the client to the lawyer. The lawyer is then obligated to pay the entity for the trust documents according to a previously agreed schedule. The question is whether this arrangement violates the Maine Bar Rules.

Opinion

Rule 3.9 (f)(2) provides in pertinent part:
A lawyer shall not compensate, or give anything of value to, a person or organization to recommend or secure employment by a client, or as a reward for having made a recommendation resulting in employment by a client ....

In the arrangement under consideration an organization would receive a thing of value, namely cash as one consequence of having made a recommendation resulting in employment of the inquiring lawyer. If this payment reasonably may be characterized as fair compensation to the entity for the service of preparing trust documents, we would be unable to conclude that it is a reward for recommending the lawyer and therefore a violation of Rule 3.9(f)(2). If, however, the fee is excessive compensation for the document preparation services to be rendered by the entity, all or part of the fee must be considered a reward for recommending the lawyer and a violation of Rule 3.9(f)(2).

As presented to the Commission, the circumstances strongly suggest that the so-called document preparation fee is in reality a thinly disguised reward for the referral. The documents could and normally would be generated by the attorney without the assistance of an outside drafting service. Such documents are available from many sources normally found in a law office. If the attorney practices in the field of estate planning and personal counseling, the overwhelming likelihood is that several examples are available in office files and that the attorney has an office staff experienced in following directions to adapt the models at hand to a new case. In short, in arrangements of this kind, the real value to the attorney will almost always be, not the documents, but referral of the client. Of course, the attorney will know what the truth is. If the service of document preparation has no significant independent value, a violation of the Bar Rules would appear to be inevitable.


Enduring Ethics Opinion