Can a lawyer employed by an insurance company do estate planning and draft wills and trusts for the insurer's customers?

Plain-English summary

The committee considered a lawyer employed by an insurance company who would plan estates and prepare wills, trust agreements, and partnership and corporate documents for the insurer's customers as part of its service to them. The committee answered no. In those circumstances the insurance company would be engaged in the unauthorized practice of law, and the lawyer would be helping it do so in violation of DR 3-101(A).

The committee was explicit that this was not a mere mechanical application of its cited precedents. Its reasoning rested on disinterestedness: a customer who needs legal advice and services needs disinterested advice and services, and an insurance company has a keen financial interest in estate planning, trust agreements, buy-sell agreements, retirement plans, profit-sharing plans, and the like. Because the advantages of insurance funding are often manifest, the insurer and its employees cannot be disinterested in such matters.

Currency note

This opinion was issued in 1976 under Kentucky's former Code of Professional Responsibility (in effect 1971 to 1990), before the Kentucky Bar Association's 1990 adoption of the Rules of Professional Conduct (SCR 3.130) and the substantial 2009 revisions to those rules. 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 Treat this page as historical context, not current guidance.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 rule, deadline, or requirement mentioned here.

Common questions

Q: Could a lawyer do estate-planning work for an insurer's customers through the insurer?

A: No. The committee held the insurer would be engaged in the unauthorized practice of law and the lawyer would be aiding it, contrary to DR 3-101(A).

Q: Why did the committee say the insurer could not provide this service?

A: Because the customer needs disinterested legal advice, and an insurer with a financial stake in estate-planning and funding decisions cannot be disinterested.

Background and rules framework

The opinion applied DR 3-101(A) of the former Code, which barred a lawyer from aiding a non-lawyer in the unauthorized practice of law. The modern analogs are Model Rule 5.5 (unauthorized practice of law) and Model Rule 5.4 (professional independence of a lawyer, including not letting a non-lawyer employer direct or regulate the lawyer's professional judgment).

Citations and references

Rules of Professional Conduct:

• DR 3-101(A) (aiding unauthorized practice); modern analogs Model Rules 5.5 and 5.4

Cases:

• Frazee v. Citizens Fidelity, 393 S.W.2d 778 (Ky. 1965), unauthorized practice by a corporation
• Kentucky State Bar Assn v. First Federal, 342 S.W.2d 397 (Ky. 1961), unauthorized practice by a financial institution

See also

• KBA Ethics Op. E-255: Employing a Disbarred Lawyer
• KBA Ethics Op. E-147: Lender-Referred Title Work

Source

• Landing page: https://kybar.org/For-Members/Rules-Ethics-Information/Ethics-Opinions
• Original PDF: https://kybar.org/Portals/0/Admin/Ethics%20Opinions/KBA_E-150.pdf

Original opinion text

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

KENTUCKY BAR ASSOCIATION
Ethics Opinion KBA E-150
Issued: July 1976

This opinion was decided under the Code of Professional Responsibility, which was in effect from 1971 to 1990. Lawyers should consult the current version of the Rules of Professional Conduct and Comments, SCR 3.130 (available at http://www.kybar.org), before relying on this opinion.

Question:

May a lawyer employed by an insurance company plan estates and prepare wills, trust agreements, and partnership and corporate documents for the benefit of the insurer's customers, as part of its service to them as an insurer?

Answer:

No

References:

DR 3-101(A); Frazee v. Citizens Fidelity, 393 S.W.2d 778 (Ky. 1965); Kentucky State Bar Assn v. First Federal, 342 S.W.2d 397 (Ky 1961)

OPINION

In these circumstances the insurance company is engaged in the unauthorized practice of law and the lawyer is helping it do so in violation of DR 3-101(A).

This opinion is not a mere mechanical application of the references cited. If the customer needs legal advice and services, he needs disinterested advice and services. Insurance companies have a keen financial interest in certain aspects of estate planning, trust agreements, "buy sell" agreements, retirement plans, profit-sharing plans, and the like. The advantages of insurance funding are often manifest, but an insurance company and its employees cannot be disinterested in such matters.

Note to Reader

This ethics opinion has been formally adopted by the Board of Governors of the Kentucky Bar Association under the provisions of Kentucky Supreme Court Rule 3.530 (or its predecessor rule). The Rule provides that formal opinions are advisory only.