Can a lawyer accept a referral fee or commission for placing a client's funds without telling the client?

Plain-English summary

A member submitted a question about a letter from A., Inc. of New York City, suggesting he take advantage of referral fees offered for placing funds in insured savings and loan associations. The company promised referral fees on any accounts he placed, as well as on his personal deposits. He asked whether lawyers can accept secret commissions for such references.

The committee answered that no attorney is permitted to make a secret commission on the placement of a client's funds, or to obtain commissions from an outside source, without the full knowledge, approval, and consent of the client.

Currency note

The Bar's note states this opinion was modified by Opinion 70-13 (1970), which adds the requirement that the client receive the benefit of the referral fee, or that the attorney credit the client with the fee against the attorney's fees. This opinion was issued in 1963, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct. The opinion applied former Canon 38 (compensation, commissions, and rebates) of the Canons of Professional Ethics; the subject is now addressed by Rule 4-1.8 (business transactions with a client and acquiring interests) and Rule 4-1.5 (fees) of the Rules Regulating The Florida Bar (Model Rules 1.8 and 1.5). Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against the current rules before relying on any specific requirement mentioned here.

Common questions

Q: Can a lawyer take a referral fee for placing a client's funds?

A: Not secretly. The committee held a lawyer may not make a secret commission on placing a client's funds, or take outside commissions, without the client's full knowledge, approval, and consent. (Opinion 70-13 later added that the client must receive the benefit of the fee or a credit against the lawyer's fees.)

Q: What did Opinion 70-13 change?

A: Per the Bar's note, 70-13 modified this opinion to require that the client receive the benefit of the referral fee, or that the attorney credit the client with the fee against the attorney's own fees, rather than disclosure-and-consent alone.

Background and rules framework

The opinion applied former Canon 38 (compensation, commissions, and rebates) of the Canons of Professional Ethics. The subject is now addressed by Rule 4-1.8 (business transactions with a client and acquiring interests adverse to a client) and Rule 4-1.5 (fees) of the Rules Regulating The Florida Bar (Model Rules 1.8 and 1.5). As modified by Opinion 70-13, the analysis requires not just disclosure and consent but that the financial benefit run to the client.

Citations and references

Rules of Professional Conduct:

• Canon 38 [Canons of Professional Ethics; compensation, commissions, and rebates; see current Rules 4-1.8, 4-1.5]

Other opinions cited:

• Florida Op. 70-13: modified this opinion to require the client to receive the benefit of the referral fee

See also

• FL Bar Ethics Op. 70-13: Finder's Fee on Client Investments
• FL Bar Ethics Op. 67-25: Hidden Insurance Referral Fee

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-63-14/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-63-14-1.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

FLORIDA BAR ETHICS OPINION
OPINION 63-14
July 11, 1963
Advisory ethics opinions are not binding.
No attorney is permitted to make a secret commission on placement of his client's funds or to obtain commissions from an outside source without the full knowledge, approval and consent of his client.
Note: This opinion was modified by opinion 70-13, which adds the requirement that the client receive the benefit of the referral fee or that the attorney credit the client with the fee against the attorney's fees.
Canon: 38
Chairman Holcomb stated the opinion of the committee:
A member of The Florida Bar submits a question concerning a letter sent him by A., Inc. of New York City, suggesting that he take advantage of referral fees offered by them for the placement of funds in insured savings and loan associations, promising referral fees on any accounts placed by him as well as his personal deposits. His question is whether lawyers can accept secret commissions for such references.
No attorney is permitted to make a secret commission on placement of his client's funds or to obtain commissions from an outside source without the full knowledge, approval and consent of his client.