LEGAL ETHICS
ROBERT
OPINION
BARBEE
14
FACTS
The situation presented is that of an attorney who
has accepted an offer "by an insurance agency that it refer
its clients to him for preparation of a basic will.
The
attorney has agreed to do the work for $50.00 per each
set of simple documents required.
It is agreed that the
agency will bill the client $99-00 for this "complete
financial planning service" and that it will subsequently
pay directly to the attorney his $50.00 fee.
In addition, the attorney plans to set up a "planning
company" which will function in cooperation with a group
of accountants and insurance agents.
The plans call for
the company to sell a "complete package" service consisting
of planning before death and estate administration after
death.
It is understood that each professional will bill
at an hourly rate for the services he renders.
Advertising
is to be a part of the scheme; with-a televised promotion
including the use of the slogan: "We've all got to go
sometime.
We might as well do it right."
For those not able to afford personal contact with
the "associates" of the "planning company", a do-it-yourself
estate planning and administration "kit" is to be offered.
The "kits" are to be marketed in several states, and the
forms and instructions are to be carefully prepared to the
extent that an "ordinarily intelligent" person may follow
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them step "by step and thereby properly execute a "completely
routine case".
OPINION
From these facts we are asked to decide if any of the
described activities raise problems under the Code of Professional Responsibility.
At the outset, it appears that
problems are raised as to so many of the provisions of the
Code that it will aid the clarity of this opinion if we
point out the main theme of violation that is to be discussed
and indicate that we intend to branch out from the discussion
of this main theme to cover incidental violations as they
appear.
The main theme of violation which threads through each
of the proposed activities is that of aiding the unauthorized
practice of law contrary to the duty imposed by Canon 3 of
the Code which states: "A lawyer should assist in preventing
the unauthorized practice of law."-'-
We will proceed by
viewing first the arrangement with the insurance agency,
then the "planning company" proposals, and finally the
proposal to market the do-it-yourself "kit" across state
lines.
Again, the reader should be alert for digressions
within each of these areas wherein we will give peripheral
discussion to violations incidental to the main theme
previously identified.
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By participating in the stated agreement with the
insurance agency, the attorney may very well be aiding the
agency to practice law in violation of code requirements.
What precisely is the agency doing, and does this activity
constitute the practice of law?
These are the pertinent
questions with which we must deal before a decision can
be reached as to violations of the Code in this area.
It
is said that the "practice of law" like "obscenity" defies
accurate definition and that attempts to define it have
often missed the mark due to the stress they place on the
competitive nature of the activities of laymen in formulating
the definitions.^
In contrast, the Code attempts to define
the "practice of law" by stressing the probability of
harm that may result to the public as a consequence of
relying on one not trained to exercise the professional
judgment of a lawyer in activities calling for such ability.
Ethical Considerations EC 3-1 through EC 3-4- are aimed at
the promotion of the public's interest in having only
lawyers practice law.3
Then in EC 3~5 the practice of law
is defined as activity requiring the trained professional
judgment of a lawyer; or in the words of the code, " ...
the
educated ability to relate the general body and philosophy
of law to a specific legal problem ... . I n
the case
at hand, it would be desirable to have more detailed information as to precisely what the agency's activities are in
order to attempt an application of the Code's definition of
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the "practice of law".
Nevertheless, we conclude, as did a
recent Texas ethics opinion, that if the service of the
insurance agency includes advising the client to have certain
necessary instruments drafted in order to implement its
plan for the client and if the drafting of such instruments
constitutes the practice of law, then it is likely that the
service of the agency constitutes the practice of law also.-^
As it is generally held that the drawing of wills constitutes
the practice of law, participation "by the attorney in the
stated agreement would constitute a violation of DR 3~101(A),
"A lawyer shall not aid a non-lawyer in the unauthorized
practice of law."^
Before moving to a discussion of the violations
apprehended under the proposed activities of the "planning
company", we pause to point out other violations of the Code
incident to the arrangement with the insurance agency.
First,
there has been a violation of DR 3-l02(A) , "A lawyer ...
should not share legal fees with a non-lawyer ... .
While there are three exceptions to this requirement,
none apply to the facts of this case.
Our conclusion here
follows readily from that reached in a similar case
considered by a New York ethics committee.®
There, an
accountant wished to quote a total fee to his tax client
that would cover both his services and those of a lawyer.
The committee concluded that charging one fee to a client to
be fixed in advance to cover the fees of both accountant
5
and attorney violated the prohibition against the sharing of
fees for legal services.
The arrangement with the insurance
agency in the instant case is strictly analogous to that
considered in the New York case, and we concur in that
committee's decision.
In addition, the situation may be ripe for a violation
of DR 5-107(B) which states: "A lawyer shall not permit
a person who recommends ... him to render legal service
for another to direct or regulate his professional judgment
in rendering such legal service."9
It could easily happen
that the lawyer will become so entangled economically or
otherwise with this agency that he cannot feel perfectly
free to criticize a given plan being recommended to tha
client by the agency even though his professional judgment
dictates that the client be advised to the contrary.
There
is the suggestion that this arrangement may not be significantly different from a system of prepaid legal insurance,
but we point out that there can be no support for such a
contention where, as here, the facts indicate that there
may develop a strong outside influence over the attorney's
independent professional judgement.
In a properly constituted
system of prepaid legal insurance, a premium- is paid by
the client for possible future legal assistance.
Later,
if the attorney is called upon to act, he is in no way
concerned with the "plan" itself but rather with the
independent legal problem that has prompted the client
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to seek the benefits secured by his premiums to the "plan".
Thus, the element of preserved independent professional
judgment is the significant difference here between the
present arrangement with the insurance agency and a plan
for prepaid legal insurance.
There could also be a violation of DR 2-l03(D) which
requires a lawyer not to knowingly assist a person that
furnishes legal services to others to promote the use of
his own services and of DR 2-l03(E) which prohibits a
lawyer from accepting a client who he knows has sought
his services as a result of conduct prohibited under
DR 2-103 concerning the general restriction of recommendation
1o
of professional employment.
u
This area is presently
clouded due to a recent Supreme Court decision on advertising
in general, discussion of which we defer to a later section
of this opinion.
Finally, the arrangement with the insurance agency
is to be condemned as failing to come up to the aspirational
standards set by EC 2-21 which asks that a lawyer refrain
from accepting compensation from one other than his client
unless the client has knowingly consented to such an
arrangement after complete disclosure of the circumstances.H
Moving now to a consideration of the proposed "planning
company", we again address our main theme of violation by
first considering whether any of the activities which the
attorney intends to foster constitute the practice of law.
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The statement of principles adopted "by the American Bar
Association and the American Banker's Association, Trust
Division would indicate that the proposed activities go
"beyond those normally carried on "by the trust department
of a hank and do indeed constitute the practice of law.
According to this statement, the formulation and execution
of an estate plan involves the application of legal
principles of the law of wills and decedent's estates,
the law of trusts and future interests, the law of real
and personal property, and the law of taxation, and thus
advice concerning such a plan should come from an attorney.^
The facts before us indicate that the "planning company"
intends to do more than merely disseminate general
information concerning the application, scope, and effect
of various laws while acting primarily for itself in the
proper exercise of fiduciary f u n c t i o n s . I n d e e d , it
appears there will he specific legal advice given to
clients, not to mention the drawing of wills and other
instruments and appearances before the probate courts.
Thus, we conclude that the contemplated activities by the
"planning company" would constitute the practice of law,
and we believe the same conclusion would obtain from
Ik
the guide given in EC 3~5-
I^l other words, the "complete"
service of planning and administering estates will at some
point require the "educated ability to relate the general
body and philosophy of law to the specific legal problem"
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7
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of the client.
It follows that "by participating in the
activities of the "planning company" the attorney would be
failing in his duty under the Code not to assist the
unauthorized practice of law.
And as a corollary, he
will have failed in the duty Imposed upon him by DR 3-103(A)
not to form a partnership with a non-lawyer (the accountants
and insurance agents) when any of the activities of the
partnership consists of the practice of law."^
Support
for this conclusion can be found in the American Bar
Association's Formal Opinion 201 which states: "A business
partnership between an attorney and a layman is not
permissible when the service rendered Is regarded as the
practice of law when performed by an attorney.
Again, we pause to consider what other violations of
the Code lurk within the facts presented by the "planning
company" proposal; notwithstanding the more flagrant
violation just discussed.
hourly billing rates.
First, there is the matter of
We do not say that such a concept
is a per se violati on, but we do feel compelled to caution
that the administration of such rates should take pains to
comply with DR 2-lo6(B) which requires a lawyer to consider
1R
eight factors when fixing his fee.
This is to insure
that the fee so fixed will not be clearly excessive.
At
the outset, it would seem highly unlikely that one could
simply quote an hourly figure for each and every hour of
legal service rendered in the many situations that will
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arise and yet remain faithful to the duty imposed by
DR 2 - l 0 6 ( B ) c ^ ^
hourly schedule be devised that
will "automatically" consider the dictated factors in any
given case?
It would seem that our attorney in this case
would need to possess the talents of a mathematician as
well as those of an accountant and an insurance agent.
And this brings us to the next danger area.
Will this situation lend itself to a violation
arising out of the fact that the attorney may be engaging
in both the practice of law and another profession (accounting or insurance)?
Quite possibly it will.
In Formal
Opinion 328, it was concluded that so long as a lawyer
complied with all of the provisions of the Code, he could
properly engage in another occupation while at the same
time practicing law.^°
But the committee was quick to
warn of the great danger of Code violations when the other
occupation is a law related one such as accounting.
For
example, DR b-101 requires the lawyer to hold inviolate
01
the confidences and secrets of his clients.
But will
it be possible to fulfill this duty when his insurance agent
colleagues, who are under no such duty, gain access to
client files?
Thus, even if such a venture were sanctioned
by the Code, it would expose the lawyer embarked upon it
to such a high degree of danger of Code violations that
we fail to see how it could be worth the risk.
Next, we deal with the proposed advertising program.
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While it may "be true that DR 2-101, imposing a general ban
on advertising by lawyers, has been modified by the recent
decision in Van 0' Steen v. State Bar of Arizona, it cannot
op
be said to have been entirely eliminated.
In Van 0'Steen,
the court simply held that the state may not prevent
lawyers from publishing in a newspaper a truthful advertisement concerning the availability and prices of routine legal
services.
It warned that regulation was still possible,
however, and hinted that claims as to the quality of legal
services could be held so likely to mislead the public
as to warrant prohibition.
The television advertisement
proposed for the "planning company", urging the audience
to "do it right", lends itself to an interpretation that
the quality of legal services offered by the "planning
company" are somehow superior to tho.se offered by others
who may "do it wrong or poorly" by comparison, and we
therefore conclude that it may be prohibited within the
bounds set by the Van 0'Steen decision.
Finally, we consider the plan to offer the "package
service" whereby there would automatically be included in
each transaction the provision that the "planning company"
take up the administration of the planned estate after
death.
This would seem to require the total disregard
of EC 5-6 which states: "A lawyer should not consciously
influence a client to name him as executor ... in an
instrument ... . " 2 3
j s this not precisely what is con-
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templated in the proposed "package" service?
Thus at hest,
this element of the plan is unbecoming to one who would
aspire to the higher goals of the profession even if it is
not, strictly speaking, a violation of the Code.
Returning to the thread of violation which runs unbroken through our fact situation, we consider the proposal
to market the do-it-yourself estate planning and administration "kit" among the various states.
As with the other
activities discussed,we will first resolve the question of
whether the marketing of such "kits" constitutes the practice
of law.
The courts are divided on this issue.
In New York
County Lawyer's Asso. v. Dacey, the facts revealed that
a layman was marketing a book entitled "How to Avoid Probate"
which contained legal forms and advice on how to use them
to achieve certain results in the routine case.
The
court held that there could be no "practice of law" involved
unless a personal relationship was established between the
person receiving and the person presuming to give legal
advice on a particular problem.
However, in The Florida
Bar v. Stupica, where it was established that a layman
had been marketing a publication similar to that in Dacey
entitled "Divorce Kit", the court held that all the dangers
were present which the licensing of the legal profession
was designed to protect the public against, and therefore
such activity could be prevented as the practice of law by
one unauthorized to do s o . w
e
find ourselves in agreement
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with the Florida courts.
How can the author of the proposed
"kits" know that only persons of "ordinary intelligence"
will attempt to use them or that the "ordinarily intelligent"
person will in every case "be able to clearly discern whether
he is in fact applying the "kit" in a "completely routine"
case?
We submit that he cannot, and therefore these "kits"
represent
an extreme danger to the public and serve to
defeat the whole purpose behind the requirement that
attorneys be licensed and that only licensed attorneys
may practice law.
Thus, the marketing of these "kits"
should be prevented as the unauthorized practice of law
where an attorney licensed in one state seeks to market
them in another state in which he is unlicensed.
And it is
to be hoped that the general ban on advertising and
commercialism together with the attorney's duty not to
attempt to limit his liability under DR 6-102 will
indirectly prevent the marketing of such kits by the attorney
in the state in which he is licensed.
We hasten to point out that we have not ignored EC 3-9
by our decision in this last area.^
This ethical
consideration calls on the legal profession to discourage
regulation that unreasonably Imposes territorial limitations
upon the right of a lawyer to practice.
But the reason for
placing this consideration in the Code appears to be the
genuine need, brought about by the increasing unitary
quality of our nation, for attorneys to be able to handle
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their client's multistate transactions as one integrated
whole rather than as a piecemeal affair broken by state
lines.28
Such a reason must fail to support its rule
in a case such as we face today which asks that we liberalize
the foreign attorney practice in order to further the
proliferation of these impersonal, standardized, and
therefore dangerous "kits".
To hold otherwise would be
to use an ethical consideration whose reason for being is
the furtherance of the public interest to promote a scheme
that can only endanger that interest.
We conclude that the
proposed "kits" are inherently dangerous to the public
interest and should therefore be the subject of disciplinary
action should they be marketed as proposed.
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FOOTNOTES
1.
American Bar Association Code of Professional Responsibility (hereinafter cited, ABA Code), Canon 3-
2.
Sutton, The Impact of the Code of ProfessionalResponsibility Upon the Unauthorized Practice of Law,
47 N.C. L. Rev. 633 (1969)•
3.
ABA Code, EC 3-1, EC 3-2, EC 3 - 3 .
4.
Id., EC 3-5.
5.
Texas State Bar Committee on Professional Ethics, Opinion
374 (197*0. 37 Tex. B.J. 1084 (197*0.
6.
ABA Code, DR 3-l0l(A).
7.
Id., DR 3~102(A).
8.
Selected Opinions of the Committee on Professional Ethics,
The Association of the Bar of the City of New York (1923-1956),
9.
Opinion 614 (1942), 350.
ABA Code, DR 5-l07(B).
10.
Id., DR 2-103(D), DR 2-103(E).
11.
Id., EC 2-21.
12.
Martindale - Hubbell Law Directory, Vol. 6 (1977),
Statements of Principles with Respect to the Practice of
Law, 72C.
13.
State Bar Asso. v. Connecticut Bank & Trust Co.,
145 Conn. 222, 140 A.2d 863, 69 A.L.R.2d 394, (1958).
14.
ABA Code, EC 3 - 5 .
15.
Id.
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16.
ABA Code, DR 3-103(A).
17.
ABA Comm. On Professional Ethics (hereinafter cited,
ABA Opinions), Formal Opinion 201 (1940).
18.
ABA Code, DR 2-l06(B).
19.
Id.
20.
ABA Opinions, Formal Opinion 328 (1972).
21.
ABA Code, DR 4-101.
22.
Van O'Steen v. State Bar of Arizona, 45 U.S.L.W. 4895
(1977).
23.
ABA Code, EC 5-6.
24.
New York County Lawyer's Asso. v. Dacey, 21 N.Y.2d 694,
287 N.Y.S.2d 422, 234 N.E.2d 459 ( 1 9 6 7 ) .
25.
The Florida Bar v. Stupica, 300 So.2d 683, 71 A.L.R.3d 992
(1974).
26.
ABA Code, DR 6-102.
27.
Id., EC 3-9.
28.
Note, A Lawyer's Duty Not to Aid the Unauthorized Practice
i ,
of Law - Canon 3 and the Code of Professional Responsibility, 79 Dick. L. Rev. 701,708 (1975).
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