Informal Opinion Number: 960124

QUESTION: Attorney asks about a program involving referrals to a investment advisor and securities broker-dealer. The program would involve Attorney identifying clients who need financial management assistance and referring those clients to investment advisors associated with a particular company. Attorney is not involved in the financial management services. Attorney is paid an ongoing fee for the referral if the account is opened and thereafter monitors the client´s account as Attorney deems appropriate. The referral fee is a split of the investment management fee in an amount agreed upon by the attorney and the investment advisor. ANSWER: If Attorney participates in the program Attorney has described, Attorney will violate Rule 4-1.7(b), unless Attorney fully discloses Attorney´s relationship and the potential for Attorney to receive a financial benefit as a result of the referral to Attorney´s client at the time of the referral. Attorney must also make the referral based on objective criteria without regard to Attorney´s potential for financial benefit. The risk that Attorney will be viewed to have engaged in a conflict of interest is quite high in this type of situation.

Informal Opinions are ethics advisory opinions issued by the Office of Legal Ethics Counsel to members of the Bar about Rule 4 (Rules of Professional Conduct), Rule 5 (Complaints and Proceedings Thereon), and Rule 6 (Fees to Practice Law) pursuant to Missouri Supreme Court Rule 5.30(c). Written summaries of select Informal Opinions are published for informational purposes as determined by the Advisory Committee of the Supreme Court of Missouri pursuant to Rule 5.30(c). Informal opinion summaries are advisory in nature and are not binding. These opinions are published as an educational service and do not constitute legal advice.

To request an Informal Opinion, please visit: http://mo-legal-ethics.org/for lawyers/requesting-an-informal-advisory-opinion/.

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