96-F-139 - Estate Planning Company

Formal Ethics Opinion 96-F-139


Inquiry is made as to the propriety of a lawyer vbeing employed by an estate planning service company which specializes in selling living trusts to the public.


The estate planning service company (the Company) is in the business of selling living trust packages to the public. The Company's product is marketed to potential clients by independent sales agents. The agents meet with a person (the client) who requests information regarding estate planning services. That person is the client. The agent conducts a presentation on revocable living trusts offered by the Company. If the client is interested, the agent assists in completing a Trust Application, which compiles the necessary information for drafting a revocable living trust. The cost for the living trust ranges from approximately $1,100 to $3,500 depending on the type of package purchased. The client pays the fee to the Company.


The Trust Application is forwarded to the lawyer, who calls the client to confirm the information on the Trust Application and answer any questions the client has concerning the revocable living trust. Once the Application is confirmed, the lawyer forwards it to the Company, which prepares the revocable living trust and related documents. The completed package is sent back to the lawyer, who conducts a final review. If the documents are all in proper order, the lawyer forwards the package to the local office of the Company, where it is delivered to the client. The lawyer is paid between $50 to $125 per trust reviewed. In addition, the lawyer receives $500 per month
from the Company to be available to answer questions from the client.


DR 3-101(A) prohibits a lawyer from aiding a non-lawyer in the unauthorized practice of law. DR 3-103 states a lawyer shall not form a partnership with a non-lawyer if any of the activities consist of the practice of law. However, whether the Company's or its agents' activities constitute the unauthorized practice of law is a legal question beyond the scope of this opinion. If it is determined that their activates do constitute the unauthorized practice of law, the lawyer's participation in these activities would be prohibited under DR 3-101(A) and 3-103.


There are other ethical issues raised by the lawyer's employment by the Company. First and foremost is the impact on the lawyer's independent professional judgment. 96-F-139 Opinion. There is no direct attorney-client relationship between the lawyer and the client. Contact with the client is conducted through the sales agents and by telephone.


DR 5-107(B) states a lawyer "shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer's professional judgment in rendering such legal services". The Company is in the business of selling living trust packages. The higher the price is for the package the agent sells to the client, the more commission he earns. By the time the lawyer receives the Trust Application, the client has been sold a living trust package without the benefit of a lawyer's independent evaluation of their estate planning needs. The lawyer is paid by the Company to set up a living trust for the client; therefore, the lawyer has a financial interest in promoting the living trust package over other estate planning services. This arrangement could deter the lawyer from questioning whether the client's needs are best served by a living trust package.


DR 3-102(A) states "A lawyer or law firm shall not share legal fees with a nonlawyer...". The client makes one payment to the Company and the Company pays the lawyer from those funds. Furthermore, the fee paid by the client is not related to the lawyer's time or quality of work. It is very likely that an independent lawyer could draw up the same documents for a lower fee. Considering these factors, the fee paid to the lawyer may be excessive in violation of DR 2-106(A). For these reasons, it is the opinion of the Board of Professional Responsibility that the lawyer's participation in the scenario as outlined would violate the Code of Professional Responsibility.


This 8th day of March, 1996.


ETHICS COMMITTEE:


Donna Simpson Massa, Chair
Barbara J. Moss
Larry D. Wilks


APPROVED AND ADOPTED BY THE BOARD